Tongaat Hulett disposes of its interest in Tongaat Hulett (Namibia) (Proprietary) Limited
Tongaat Hulett Limited
(Registration number 1892/000610/06)
Share code: TON
("Tongaat Hulett" or "the Company")
TONGAAT HULETT DISPOSES OF ITS INTEREST IN TONGAAT HULETT (NAMIBIA)
Shareholders of Tongaat Hulett are referred to the announcements released by the
Company on SENS, in particular the announcement of 31 May 2019 in relation to the
ongoing strategic and financial review ("Strategic Review") of the Tongaat Hulett group.
2. Background and rationale
As part of the Strategic Review, the board of directors of Tongaat Hulett ("Board") is
pleased to announce that it has approved the disposal of the business of Tongaat Hulett
(Namibia) (Proprietary) Limited ("THN" or "the Seller"), in which Tongaat Hulett owns an
effective 51% beneficial interest.
Accordingly, THN has entered into a sale of business agreement ("Sale Agreement") to
sell the entire sugar packaging and distribution business ("Namibian Business") of THN
to Bokomo (Namibia) (Proprietary) Limited ("Bokomo") as a going concern
Notwithstanding that THN is a strong and well-established business in Namibia, the Board
has considered it as non-core and is of the view that its disposal would allow the Namibian
Business to grow into new areas while facilitating Tongaat Hulett's access to the market
via long term sugar and related products supply agreements concluded with Bokomo.
3. Salient terms of the Proposed Transaction
The Proposed Transaction will become effective from the first calendar day following the
calendar month during which the last of the suspensive conditions in the Sale Agreement
is fulfilled or waived ("the Effective Date").
The risk in, and benefit of the Namibian Business will pass to Bokomo on the Effective
The purchase price on a debt free basis for the Namibian Business is N$220 000 000
(R220 000 000) payable in cash on closing, subject to a post-closing adjustment relating
to any variation from the agreed normalised working capital level of N$25 000 000 (R25
000 000). Tongaat Hulett, as 51% beneficial owner of the Seller, will ultimately share in
51% of the proceeds from the sale, and assuming no post-closing adjustments are made
to the purchase price, 51% of the proceeds will equate to N$112 200 000 (R112 200 000)
before deductions for taxes and transaction costs are made. Tongaat Hulett plans to use
its share of the proceeds to reduce its debt levels.
4. Conditions Precedent
The implementation of the Proposed Transaction is conditional upon the fulfilment or
waiver (as applicable) of, amongst others, the following suspensive conditions:
- the Namibian Competition Commission approving the Proposed Transaction and,
in particular, the sale of the Namibian Business; and
- the completion of a due diligence investigation into the Namibian Business to the
satisfaction of Bokomo by no later than 30 November 2019.
Shareholders are advised that the due diligence investigation is largely complete and the
process for filing with the Namibian Competition Commission is underway.
5. Net asset value and Profit attributable to the Seller
The net asset value attributable to the Namibian Business as at 31 March 2019 was N$37
152 135 (R37 152 135). Profit after tax for the year ended 31 March 2019 was N$30 130
633 (R30 130 633), while attributable earnings were N$15 366 623 (R15 366 623). This
information has been extracted from the unpublished management accounts and the
Company confirms that it is satisfied with the quality of such management accounts.
This financial information has however not been reviewed or reported on by Tongaat
Hulett’s external auditors.
The Proposed Transaction is categorized as a category 2 transaction in terms of the
Listings Requirements of the JSE Limited and accordingly no shareholder approval is
19 November 2019
Corporate Advisor and Transaction Sponsor
PricewaterhouseCoopers Corporate Finance Proprietary Limited
Legal Advisors to Tongaat Hulett
Legal Advisors to Bokomo
Engling Stritter & Partners
Investec Bank Limited
Date: 19/11/2019 01:00:00
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