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YORK TIMBER HOLDINGS LIMITED - Acquisition of a new business

Release Date: 15/12/2020 14:51
Code(s): YRK     PDF:  
Wrap Text
Acquisition of a new business

York Timber Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1916/004890/06
JSE share code: YRK
ISIN: ZAE000133450
(“York” or the “Company”)


1. Introduction

    York shareholders (“Shareholders”) are referred to the trading and operational update
    announcement published on SENS on 16 October 2020, advising Shareholders that, inter alia,
    pursuant to York’s strategy to diversify earnings, York will establish its first high yield soft citrus
    crop during the ensuing quarter and that it envisages concluding the acquisition of an adjacent
    farm to support its strategy in this regard.

    Accordingly, Shareholders are advised that today, 15 December 2020, York Agri Proprietary
    Limited (“York Agri” or the “Purchaser”), a wholly owned subsidiary of the Company, entered
    into a sale of business agreement with PVT Timber Products Proprietary Limited, Twycross
    Farms Proprietary Limited and Twycross Packers Proprietary Limited (collectively referred to as
    the “Sellers”), (collectively, the “Parties”), in terms of which York Agri agreed to acquire the
    integrated business activities conducted by the Sellers, as a going concern (the “Business”), with
    effect from 1 February 2021 (the “Effective Date”), as more fully set out below (the

2. Overview of the Business and rationale for the Acquisition

    The Sellers are in the business of sawmilling and pallet making, farming of avocados and
    macadamias and the fruit packing facility.

    The acquisition of the Business encompasses the purchase and assumption by the Purchaser of
    certain assets (“Sale Assets”) and liabilities (“Sale Liabilities”), respectively. The Sale Assets
    comprise of, inter alia, certain immovable property and fixed assets, water rights, contracts,
    irrigation systems, goodwill, vehicles and stock. The Sale Liabilities consist of leave pay and
    certain other payments that have accrued to the employees of the Sellers (“Employee

    The net value and profit attributable to the net assets of the Business for the year ended
    29 February 2020, as per the reviewed annual financial statements of the Sellers, is R35 743 364
    and R2 942 181, respectively, which were prepared in terms of International Financial Reporting
    Standards for Small and Medium-sized Entities.

    The Acquisition supports York’s strategy to diversify earnings and to utilise York’s assets to return
    value to Shareholders.

3. Purchase Consideration

    The purchase consideration payable amounts to a total cash consideration of R62,181,600, less
    an amount of R54,667 in respect of the Employee Liabilities, plus a maximum amount of
    R8,000,000 in respect of the stock of the Business as at the Effective Date (“Purchase

    The Purchase Consideration will be settled, by way of a loan obtained by the Purchaser (“Loan”),
    which shall be paid on the Effective Date and against transfer of the Business.

4. Conditions precedent

    The implementation of the Acquisition is subject to the fulfilment of, inter alia, the following
    conditions precedent:

    -   by 20 December 2020, the receipt of all approvals from shareholders of each of the Sellers
        to such Sellers to sell the Business in accordance with the requirements of section 112 read
        with section 115 of the Companies Act, No. 71 of 2008;
    -   by 27 January 2021:
        o      the Purchaser entering into a written agreement with certain third parties granting the
               Purchaser the licence to grow and harvest the specific variety of avocado trees that
               form part of the Sale Assets;
        o      the issuance of guarantees to the conveyancers by the commercial bank providing
               the Loan, against registration of transfer;
        o      the issuance of various findings letters in respect of the supply of water and storage of
               the water to certain of the Sale Assets;
        o      the Parties, as well as all affected persons, entering into an agreement of access,
               continued use, supply of water, and storage of the water in respect of certain of the
               Sale Assets; and
        o      the receipt of certain confirmations from the regional land claims commissioner, in
               respect of the immoveable property forming part of the Sale Assets.

    The Parties may, by agreement in writing, extend the date for fulfilment of any of the conditions
    precedent before the date of fulfilment of the relevant conditions precedent.

5. Categorisation

    The Acquisition is categorised as a Category 2 transaction as contemplated in the JSE Limited
    Listings Requirements.

Sabie, Mpumalanga
15 December 2020

One Capital

Date: 15-12-2020 02:51:00
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