SOUTH OCEAN HOLDINGS LIMITED - Disposal of Radiant Group Proprietary Limited and Renewal of Cautionary Announcement

Release Date: 14/08/2018 16:30
Code(s): SOH
 
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Disposal of Radiant Group Proprietary Limited and Renewal of Cautionary Announcement

South Ocean Holdings Limited
(Registration number 2007/002381/06)
Incorporated in the Republic of South Africa
(“South Ocean Holdings”, “the Group”)
Share code: SOH      ISIN: ZAE000092748




DISPOSAL OF RADIANT GROUP PROPRIETARY LIMITED AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT


1.   INTRODUCTION
     Shareholders are referred to the announcement released on SENS on 3 July 2018 and are
     advised that South Ocean Holdings has entered into an agreement with Eurolux Proprietary
     Limited (“Eurolux”), a controlled subsidiary of ARB Holdings Limited (“ARB”), for the disposal of
     100% of the issued share capital in and claims against Radiant Group Proprietary Limited
     (“Radiant”) a wholly owned subsidiary of South Ocean Holdings.

     The Group has furthermore, through its wholly-owned subsidiary, Anchor Park Investments 48
     Proprietary Limited (“Anchor Park”), entered into an agreement with Eurolux for the disposal of
     the properties from which Radiant operates (these two transactions together referred to as
     “the Transaction”).

     The Transaction remains subject to the fulfilment of a number of suspensive conditions as set
     out in paragraph 6 below.

2.   DESCRIPTION OF RADIANT AND ANCHOR PARK
     Radiant is a leading supplier of light fittings and lamps in South Africa and is growing its share
     of the electrical products business. Radiant mainly imports its product ranges for distribution
     throughout Southern Africa from its operations in the Wynberg (Sandton) area. The Radiant
     brand is well recognised for its wide range of competitively priced quality products.

     Anchor Park holds the property assets of the Group.

3.   RATIONALE FOR THE DISPOSAL
     South Ocean Holdings intends to focus its future growth and expansion on its core business of
     manufacturing electrical power cables and closely related products and is accordingly
     disposing its non-core businesses and assets. Radiant has been loss-making for a number of
     years mainly as a result of the entry of a large number of competitors into the importation and
     wholesale of light fittings, lamps and electrical products business. The management team
     accordingly believes that the disposal of Radiant will enable the Group to normalise its gearing
     levels and focus on its strengths, to the benefit to all stakeholders.

4.   DISPOSAL CONSIDERATION
     South Ocean Holdings will sell 100% of the total issued share capital in, and shareholders' claims
     against, Radiant (together referred to as the “Sale Equity”), to Eurolux with effect from the last
     day of the month in which the last of the suspensive conditions is fulfilled or waived, or such
     other date as may be agreed on in writing by the parties (“Effective Date”) and will sell the
     properties from the relevant date on which transfer of title is registered.

      Radiant Disposal Consideration-
      The “Radiant Disposal Consideration” for the Sale Equity will be calculated on the Effective
      Date as follows:
     - The tangible net asset value of Radiant to be determined as at the Effective Date (“Effective
       Date TNAV”), less;
     - A fixed amount of R20 million,
     subject to a maximum Radiant Disposal Consideration of R117 million.

     The Effective Date TNAV will be calculated based on the Statement of Financial Position of
     Radiant as at the Effective Date prepared by the auditors of Radiant and reviewed by the
     auditors of Eurolux.

     Properties Disposal Consideration
     The “Properties Disposal Consideration” for the properties (being Erven 445 & 446 Wynberg, Erf
     539 Wynberg and Erven 1111 & 1112 Marlboro) is a fixed amount of R88 million, subject to
     receipt of a structural engineer's report, electrical compliance certificate and an entomologist’s
     report on each property.

     The Radiant and Properties Disposal Considerations will be applied to reduce interest bearing
     debt within the Group.

5.   OTHER SIGNIFICANT TERMS
     The parties will agree on the sale or winding up of Icembu Services (Pty) Ltd.

6.    SUSPENSIVE CONDITIONS
      The implementation of the Transaction is subject to the fulfilment or waiver of certain suspensive
      conditions, which include, but are not limited to:
     - the completion of a due diligence investigation to the satisfaction of Eurolux by 14 September
       2018;
     - the passing of the necessary resolutions required to approve the Transaction by the boards of
       directors of Eurolux and ARB;
     - obtaining all third-party consents to the extent necessary to affect the implementation of the
       Transaction, including the written consent of the relevant third parties to any material contracts
       which contain restrictions or a right to terminate on a change of control of Radiant that will
       result from the Transaction;
     - the release of any security held by third party funders over any of the assets of Radiant;
     - the approval of the Transaction by the shareholders of South Ocean Holdings at a properly
       constituted shareholders' meeting in terms of the Companies Act and the JSE Listings
       Requirements;
     - that prior to the Transaction becoming unconditional as to its terms, there is no material
       adverse change to the financial condition, assets, operations or business of Radiant; and
     - the notification to and obtaining of the unconditional approval of the Transaction by the
       Competition Commission or other relevant competition authorities in terms of the Competition
       Act, 1998, or if such approval is conditional, then on such conditions as may be acceptable to
       the Company.

     The Agreements contains warranties and indemnities which are considered normal in respect of
     a transaction of this nature.

 7. PROFIT AND NET ASSET VALUE ATTRIBUTABLE TO RADIANT
    The tangible net asset value of the Transaction as per the unaudited interim financial statements
    as at 30 June 2018, was R200 771 000. The revenue and losses after tax attributable to Radiant
    shareholders for the 6 months ended 30 June 2018 were R137 776 000 and -R11 469 000
    respectively (2017: R142 355 000 and R10 512 000). These losses included significant impairments
    and write-downs of R13 237 000 (2017: R9 801 000).

    The unaudited consolidated interim financial statements for the six months ended 30 June 2018
    were prepared in accordance with the framework concepts and the measurement and
    recognition requirements of the International Financial Reporting Standards (“IFRS”).

8.  CATEGORISATION
    The transaction constitutes a Category 1 transaction in terms of the JSE Listings Requirements
    and shareholder approval is accordingly required. A circular containing full details of the
    Disposal will be distributed to South Ocean Holdings shareholders in due course.

9.  RENEWAL OF CAUTIONARY ANNOUNCEMENT
    Given that the Effective Date and the final disposal consideration is still to be determined as
    set out above, shareholders are advised to continue to exercise caution when dealing in the
    Company’s securities until a further announcement containing the Effective Date and the final
    disposal consideration is released on SENS.

Johannesburg
14 August 2018




Sponsor
Arbor Capital Sponsors Proprietary Limited

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