MASTER DRILLING GROUP LIMITED - Acquisition by Master Drilling of the business of the Atlantis Group of Companies (Pty) Ltd and its subsidiaries

Release Date: 04/09/2018 16:30
Code(s): MDI
 
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Acquisition by Master Drilling of the business of the Atlantis Group of Companies (Pty) Ltd and its subsidiaries

Master Drilling Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 2011/008265/06)
JSE share code: MDI
ISIN: ZAE000171948
(“Master Drilling” or the “Company”)



ACQUISITION BY MASTER DRILLING OF THE BUSINESS OF THE ATLANTIS GROUP OF COMPANIES (PTY) LTD
AND ITS SUBSIDIARIES (“ATLANTIS GROUP”)



1.           INTRODUCTION

Shareholders are advised that Master Drilling and its subsidiaries have entered into various sale of business
agreements (“the Agreement”) with Atlantis Group in respect of the proposed acquisition of the businesses of
the Atlantis Group in the various countries in which these operate, subject to the fulfilment of the conditions
precedent as set out in paragraph 6 below, (“the Acquisitions”).


2.           NATURE OF BUSINESS

The Acquisitions relate to the purchase of the businesses of the Atlantis Group in:

     (i)        India [raiseboring business];
     (ii)       Brazil [raiseboring business];
     (iii)      Zambia [raiseboring business]; and
     (iv)       South Africa [both a raiseboring business and a mining suppliers and parts manufacturing
                business].

The Acquisitions are divisible and none of them are dependent on the conclusion of the remaining
Acquisitions.


3.           RATIONALE FOR THE ACQUISITIONS

The Acquisitions will strengthen Master Drilling’s businesses in each of the above regions and will augment the
skills and expertise of the group in these various countries.

The Acquisitions should have a positive effect on growth in earnings of Master Drilling, and should reduce
capital expenditure budgeted for the financial year.

The purchase consideration will be financed principally from internal resources.


4.         EFFECTIVE DATE OF THE ACQUISITION

The later of 1st September 2018 or the date of fulfilment of the last of the conditions precedent in paragraph 6
below.



5.         PURCHASE CONSIDERATION

The purchase consideration to be paid by Master Drilling for the Business is R107,5 million less the aggregate
of the liabilities of the businesses. Payments will be in instalments over 12 months.


6.         CONDITIONS PRECEDENT

The acquisitions are subject to, inter alia, the fulfilment of the following conditions precedent:

     6.1      competition commission approval, if required;

     6.2      statutory and regulatory approvals in RSA, India, Brazil and Zambia;

     6.3      written approval of the shareholders in each of the Atlantis Group companies affected by the sale
              transaction;

     6.4      assignment of the major raisebore contracts (or completion of the share sale in respect of the
              relevant subsidiaries if Master Drilling resolves to proceed on such alternative basis, as provided
              for under the agreement);

     6.5      written approval of any financiers;

     6.6      confirmation by the directors of the Atlantis Group that each company in the Group affected by
              the transactions herein described are solvent.


7.         ASSET VALUES AND PROFITABILITY OF THE ACQUISITION

The purchase consideration for the assets is below their replacement value, and is predicated on a 4(four)
times estimated future profits multiple. As this is a purchase of assets, it is not possible to provide further
information regarding the financial effects of the Acquisitions.


8.         CATEGORISATION OF THE ACQUISITION

The acquisition is classified as a category 2 transaction in term of Section 9.15 of the JSE Listing Requirements
and accordingly will not require shareholder approval.


9.          FURTHER ANNOUNCMENT

Shareholders will be notified once the last of the conditions precedent has been fulfilled.



Fochville
4 September 2018


Investment Bank and Sponsor
Investec Bank Limited

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