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BELL EQUIPMENT LIMITED - Small Related Party Transaction and Cautionary Announcement

Release Date: 08/01/2019 08:00
Code(s): BEL     PDF:  
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Small Related Party Transaction and Cautionary Announcement

Bell Equipment Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1968/013656/06
Share code: BEL
ISIN: zae000028304
(“BEL” or “the Company”)

SMALL RELATED PARTY TRANSACTION AND CAUTIONARY ANNOUNCEMENT


1. THE TRANSACTION

Shareholders are hereby advised that Bell Equipment Company SA (Pty) Ltd (“BECSA”)
Registration Number: 1966/004606/07, a wholly owned subsidiary of the Company, has
reached agreement in principle to acquire the business (purchase of assets and take-on of
employees) of Matriarch Equipment CC (“Matriarch”) Registration Number: 2009/128755/23,
as a going concern (“the Transaction”).

2. RATIONALE FOR THE TRANSACTION

Matriarch designs and manufactures a range of material handling products used
predominantly in the forestry and sugar industries across local and international territories.

The Intellectual Property (“IP”) of the products designed by Matriarch is aligned to the broader
strategy of the Company to enhance IP ownership and to provide niche product solutions in
the Forestry and Sugar industries.

3. SALIENT FEATURES OF THE BUSINESS ACQUIRED & PURCHASE
   CONSIDERATION

In terms of the Transaction BECSA will, inter alia:
   a) acquire all the assets of Matriarch consisting of:
       -  the inventory, the value whereof will be finalised at an inventory count to be
          conducted on or about 31 January 2019;
      - the operating assets to the value of c. R1.3 million, which approximates the net
          book value in Matriarch’s books of account;
      - the value of the IP which was determined by valuing the business of Matriarch on
          a discounted cash flow basis; and
   b) take-on the employees of Matriarch.


BECSA will pay an initial consideration of R3.8 million for the Matriarch IP plus a Performance
Based Consideration (“PBC”) based on future sales performance of Matriarch Products,
retrospectively per quarter for 5 years. In addition to the 5-year time limit, the PBC has a
monetary cap of R15 million.

4. SMALL RELATED PARTY TRANSACTION

Matriarch is effectively controlled by Ashley Bell, currently a non-executive director of the
Company. Therefore, in terms of the JSE Listings Requirements the Transaction is a small
related party transaction. Ashley Bell will become an executive director of the BEL board post
the Transaction. This change in status and changes to the BEL Board committees will be
advised in a later SENS regarding details and effective date.

Deloitte & Touche, an approved independent professional expert, has been engaged to
provide an opinion on the fairness of the Transaction. The fairness opinion will be completed
when the inventory count has been finalised on or about 31 January 2019, as the inventory
value is a material factor to the purchase consideration.

5. CAUTIONARY: EFFECTIVE DATE OF THE TRANSACTION

Shareholders are advised that if successfully concluded, this Transaction may have a material
effect on the price at which the Company’s securities trade on the JSE. The inventory value,
which is the only remaining element of the purchase consideration that is outstanding, will be
finalised as at the effective date considering a final inventory count is required and the final
fairness opinion will be issued thereafter.

Considering the materiality of these key points, shareholders of BEL are advised to exercise
caution when dealing in the Company’s securities until a further finalisation announcement is
made.

The finalisation announcement and withdrawal of cautionary are expected on or about 1
February 2019.


Richards Bay
7 January 2019


Sponsor and corporate advisor:
Investec Bank Limited

Independent expert:
Deloitte & Touche

Date: 08/01/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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