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Announcement In Relation To An Acquisition By Metrofile In East Africa And Withdrawal Of Cautionary Announcement
Metrofile Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1983/012697/06)
Share code: MFL
ISIN Code: ZAE000061727
(“Metrofile”)
ANNOUNCEMENT IN RELATION TO AN ACQUISITION BY METROFILE IN EAST AFRICA
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Pursuant to the cautionary announcement released on the Stock Exchange News
Service of the JSE Limited (“JSE”) on 29 November 2017 (“the Cautionary
Announcement”), the board of directors of Metrofile (“the Board”) is pleased to announce
that Metrofile has concluded a Share Purchase Agreement to acquire the entire issued
share capital of G4S Secure Data Solutions (Kenya) Limited (“SDS Kenya”), the largest
records management company in East Africa, from G4S International Holdings Limited,
incorporated in the United Kingdom, and from Nurun Investments Limited, a Kenyan
company (“the Transaction”) for a maximum purchase consideration of KES2.125 billion
(approximately R281,4million*.)
*based on the exchange rate as at 8 December 2017
2. Rationale for the Transaction
The Transaction is a strategic move which will increase Metrofile’s footprint in Africa and
provide it with an expanded international client base, strong management team and local
expertise in the records management industry. The Transaction demonstrates Metrofile’s
positive intention to continue the roll-out of its services into selected African countries
through organic as well as acquisitive growth.
The Board believes that the Kenyan records management market has significant
potential for growth, and that SDS Kenya is a well-established business that will provide
an ideal strategic platform to extend Metrofile’s presence in the broader East Africa
region.
The Transaction is in line with G4S’ stated intention to dispose of operations not core to
its security business.
3. Overview of SDS Kenya
SDS Kenya, currently a member of the multinational G4S Group, was established in
2004 and operates a records management business based in Nairobi, Kenya,
specialising in all aspects of corporate archiving and record management, including
storage, indexing, retrieval, tracking, archiving and records management digital services.
4. Purchase Price and Conditions Precedent
4.1. The purchase price, which will be settled in cash, comprises –
4.1.1. an initial tranche equal to the Sterling equivalent (at an agreed exchange
rate) of KES2 billion (approximately R264,3 million), on a cash-free, debt-
free basis, adjusted for a normalised level of working capital; and
4.1.2. a post-closing adjustment on the basis of a performance driven aggregate
consideration.
4.2. The Transaction, which is effective from the closing date, is subject to certain
conditions precedent, all of which are expected to be fulfilled on or before the Long
Stop Date of 31 January 2018, including:
4.2.1. the Transaction having been excluded by the Competition Authority of Kenya
from the provisions of Part IV of the Kenya Competition Act or the granting
by the Competition Authority of Kenya of its approval of the Transaction;
4.2.2. approval by the South African Reserve Bank (“SARB”) of the Transaction;
and
4.2.3. obtaining change of control consents from relevant third parties.
4.3. The purchase consideration will be settled in cash from Metrofile’s existing
resources and a facility arranged for this purpose with The Standard Bank of South
Africa Limited. The Metrofile Board is considering a capital raise of up to R100m
by way of an underwritten rights issue to reduce the bank debt utilised to fund the
purchase consideration. An announcement will be made in this regard in due
course.
4.4. The Transaction provides for warranties and indemnities in favour of Metrofile that
are usual for transactions of this nature.
5. Financial information and categorisation
5.1. On the basis of unaudited management accounts as at 31 October 2017, SDS
Kenya’s net asset value is stated to be KES159,9 million (approximately R21,2
million). SDS Kenya’s EBITDA for the ten month period ended 31 October 2017 is
stated to be KES173,3 million (approximately R23,0 million and R27,5m
annualised.)
5.2. Metrofile is satisfied with the quality of the unaudited management accounts.
5.3. The Transaction is classified as a Category 2 transaction for Metrofile in terms of
the Listings Requirements of the JSE.
5.4. There is no matter in the constitutional documents of SDS Kenya which will
preclude Metrofile from continuing to comply with its obligations in terms of the
Listings Requirements of the JSE.
6. Withdrawal of cautionary announcement
Shareholders are advised that the Cautionary Announcement (which pertained to the
Transaction) is hereby withdrawn.
Senderwood
11 December 2017
Sponsor
The Standard Bank of South Africa Limited
Corporate Advisors to Metrofile Financial and Tax Advisors to Metrofile
K-2 Partners LLC BDO Corporate Finance (Pty) Ltd
Legal Advisors to Metrofile - South Africa
PricewaterhouseCoopers Legal (Pty) Limited
Regulatory Advisors to Metrofile – Kenya
PricewaterhouseCoopers Limited
Legal Advisors to Metrofile - English Law
PricewaterhouseCoopers LLP (United Kingdom)
Date: 11/12/2017 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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