TORRE INDUSTRIES LIMITED - Acquisition of the trading business housing Buccaneer Slurry Pumps

Release Date: 05/07/2018 16:04
Code(s): TOR
 
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Acquisition of the trading business housing Buccaneer Slurry Pumps

TORRE INDUSTRIES LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2012/144604/06)
Share code: TOR     ISIN: ZAE000188629
(“Torre” or “the Company”)


ACQUISITION OF THE TRADING BUSINESS HOUSING BUCCANEER SLURRY
PUMPS


1. INTRODUCTION

The board of directors of Torre (“the Board”) is pleased to
announce that it has, through its wholly-owned subsidiary Torre
Holdings Proprietary Limited (“Torre Holdings”), concluded an
agreement with Mining and Slurry Technologies Proprietary
Limited (“MST”) to acquire the trading business housing the
Buccaneer brand of Slurry Pumps (“the Acquisition”), effective
1 August 2018 (“effective date”).

2. OVERVIEW OF BUCCANEER SLURRY PUMPS

Buccaneer Slurry Pumps are designed, manufactured and assembled
in South Africa. The brand is known for its robust and heavy-
duty slurry pumps for all abrasive applications, providing
solutions to the mining industry with its range of horizontal
and vertical centrifugal pumps.

3. RATIONALE FOR THE ACQUISITION

The Acquisition provides a unique opportunity for Torre to
expand its business and product offering by acquiring the
trading business of a quality South African slurry pump business
as a bolt-on acquisition to its existing pump business in the
Capital Equipment segment.

4. FINANCIAL INFORMATION

The value of the net assets that are subject to the Acquisition,
including the moulds and pattern equipment, and intangible
assets   being   the  patent,   trademark,   designs,   customer
relationships, inventory and goodwill (“trading business”) is
R33 million. Specific historical profits attributable to the
acquired net assets cannot be determined reliably as the trading
business being acquired was not separately reported on by MST
and was historically aggregated with the other businesses of
MST.

The Board anticipates that the Acquisition will immediately be
earnings accretive to Torre. Operating profit relating to the
Acquisition is forecasted by the Company to be between R5 million
to R10 million for the next 12 months, based on estimated
historical results and taking into account Torre’s increased
product offering and established routes to market.

This forecast has not been audited, reviewed or reported on by
Torre' auditors.

5. THE ACQUISITION CONSIDERATION

Torre will acquire the trading business from MST for a maximum
cash consideration of R33 million, of which up to R15 million
(dependent on actual inventory levels on hand at the effective
date) will be paid in cash on the effective date and the balance
of up to R18 million will be paid over a two-year period
(“deferred acquisition consideration”). The deferred
acquisition consideration will be paid, subject to certain
conditions being met in relation to revenue targets, as follows:

  -   R4 million , subject to a revenue target of R90 million
      being achieved within one year of the effective date; and
  -   R14 million, subject to a revenue target of R108 million
      being achieved within two years of the effective date.

Torre will issue an R8 million guarantee for a two-year period
in relation to the deferred acquisition consideration on behalf
of Torre Holdings. The acquisition consideration will be funded
from Torre’s available internal cash resources.

6. CONDITIONS PRECEDENT TO THE ACQUISITION

There are  no outstanding conditions precedent to the
Acquisition.

5. CATEGORISATION

The Acquisition is classified as a Category 2 transaction for
Torre in terms of the JSE Limited Listings Requirements.

Johannesburg
5 July 2018

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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