1999/07/16
ACQUISITION OF BEAVER CANOE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT [JSE Securities Exchange - SENS]
 
16/07/1999 - 20:35:36

FASHION AFRICA
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/17149/06)
("FASHAF" OR "THE COMPANY")
ACQUISITION OF BEAVER CANOE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
VESTACOR CORPORATE FINANCE IS AUTHORISED TO ANNOUNCE THAT, SUBJECT TO THE
FULFILMENT OF CERTAIN CONDITIONS INCLUDING A DUE-DILIGENCE, FASHAF HAS REACHED
AN AGREEMENT IN TERMS OF WHICH IT HAS ACQUIRED THE BUSINESS AND NET ASSETS OF
BEAVER CANOE.
1. BEAVER CANOE
BEAVER CANOE IS A MENSWEAR CASH CHAIN SPECIALISING IN LEADING EDGE FASHION FOR
THE EMERGING MARKET. THE CHAIN COMPRISES 16 STORES WITH AN ACCELERATED STORE
ROLL OUT PLANNED FOR THE FINANCIAL YEAR ENDING 2000. THESE STORES ARE LOCATED
PREDOMINANTLY IN THE HIGH TRAFFIC METROPOLITAN AREAS WITHIN GAUTENG.
2. THE ACQUISITION
THE ACQUISITION WAS EFFECTIVE 1 JULY 1999. THE PURCHASE CONSIDERATION IS R12
960 000, AND CAN BE ADJUSTED HAVING REGARD TO THE PROFIT BEFORE INTEREST AND
TAXATION ("PBIT") GENERATED TO THE YEAR 30 JUNE 2000. WHERE THE PBIT EXCEEDS R1
800 000, THE PURCHASE CONSIDERATION WILL BE INCREASED BY A MULTIPLE OF 7.2
TIMES LIMITED HOWEVER TO A TOTAL PRICE PAYABLE OF
R20 160 000. IN THE EVENT THAT THE PBIT FALLS BELOW R1 800 000, THE PURCHASE
CONSIDERATION WILL BE REDUCED BY A MULTIPLE OF 7.2 TIMES SUBJECT TO A MAXIMUM
REDUCTION OF R5 760 000.
THE CONSIDERATION OF R12 960 000 WILL BE SETTLED THROUGH AN ISSUE OF
11 895 756 FASHAF SHARES AND A CASH PAYMENT OF R5 760 000. 4 292 308 FASHAF
SHARES WILL BE ISSUED AT 65 CENTS PER SHARE AND 7 603 448 FASHAF SHARES WILL BE
VENDOR PLACED AT 58 CENTS PER SHARE. BOTH THESE ISSUES WILL BE BY MEANS OF AN
ISSUE OF SHARES FOR THE ACQUISITION OF ASSETS.
IT HAS BEEN AGREED THAT CERTAIN OF THE BEAVER CANOE MANAGEMENT TEAM WILL BE
RETAINED TO PROVIDE CONTINUITY FOR RETAIL OPERATIONAL ACTIVITIES. IN ADDITION
MIKE FORSYTHE WHO HAS EXTENSIVE EXPERIENCE IN MENSWEAR RETAIL AND SPECIALISED
RETAIL FORMATS IN THE EMERGING MARKET, HAS BEEN APPOINTED AS MANAGING DIRECTOR
OF THE CHAIN.
3. RATIONALE FOR THE ACQUISITION
THE ACQUISITION STRATEGICALLY FITS TO THE FASHAF VISION OF BECOMING THE PREMIER
CASH RETAILER IN THE EMERGING MARKETS OF SOUTHERN AND CENTRAL AFRICA.
IN ACCORDANCE WITH FASHAF'S STRATEGIC OBJECTIVE TO BE PRE-EMINENT IN THE CASH
RETAIL APPAREL MARKETS BEAVER CANOE CREATES THE IDEAL PLATFORM FOR FASHAF TO
SPRINGBOARD ITS RETAIL OPERATIONS FROM A PREDOMINANTLY RURAL BASE INTO THE
MAJOR URBAN AREAS WITH A HIGH TURNOVER DENSITY MENSWEAR FASHION BRAND.
THE BEAVER CANOE BRAND PROVIDES A COMPLIMENTARY URBAN RETAIL FORMAT TO THE
EXISTING FASHAF BRAND PORTFOLIO COMPRISING THE CASH BASED BERGERS CHAIN (171
STORES) AND DUNNS CHAIN (52 STORES).
4. FINANCIAL EFFECTS
THE TABLE BELOW SETS OUT THE FINANCIAL EFFECTS OF THE ACQUISITION ON THE
FOLLOWING ASSUMPTIONS:
THE BEAVER CANOE EARNINGS FOR THE 6 MONTHS ENDED 31 DECEMBER 1998 HAVE BEEN
ADJUSTED TO MAKE THEM CONSISTENT WITH THE INTERIM RESULTS OF FASHAF FOR THE SIX
MONTHS TO 31 DECEMBER 1998.
THE WEIGHTED NUMBER OF FASHAF SHARES IN ISSUE PRIOR TO THE ACQUISITION AND THE
ISSUE OF 16 MILLION IN FEBRUARY 1999 WAS 203 MILLION.
THE WEIGHTED NUMBER OF FASHAF SHARES IN ISSUE POST THE ACQUISITION (BUT
EXCLUDING THE ISSUE IN FEBRUARY 1999) WOULD BE 215 MILLION.
THE TOTAL NUMBER OF SHARES IN ISSUE POST THE ACQUISITION (BUT EXCLUDING THE
ISSUE IN FEBRUARY 1999) WOULD BE 222 MILLION.
BEAVER CANOE'S NET ASSET VALUE WAS 2,4 MILLION AT 31 DECEMBER 1998.
ALL FINANCIAL EFFECTS ARE EXPRESSED IN CENTS PER SHARE UNLESS OTHERWISE
INDICATED.
PER FASHAF              STATUS QUO           POST ACQUISITION       % CHANGE
ORDINARY SHARE          (31 DECEMBER 1998)   (31 DECEMBER 1998)
EARNINGS PER SHARE      4,5                  5,0                    11,1
NET ASSET VALUE         33,4                 32,9                   (1,5)
5. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
FASHAF SHAREHOLDERS ARE ADVISED THAT THE CAUTIONARY ANNOUNCEMENT DATED 29 JUNE
1999 HAS BEEN WITHDRAWN.
BY ORDER OF THE BOARD
CAPE TOWN
16 JULY 1999
CORPORATE ADVISER                SPONSORING BROKER
VESTACOR CORPORATE FINANCE       HSBC SIMPSON MCKIE (PTY) LIMITED
(A DIVISION OF VESTACOR          MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
 HOLDINGS (PTY) LIMITED)         REG.NO. 84/01736/07
REG.NO. 97/05072/07
AUDITORS                         ATTORNEYS
CHARLES ORBACH & COMPANY         FLUXMAN RABINOWITZ RAPHAELY WEINER
CHARTERED ACCOUNTANTS (SA)
REGISTERED ACCOUNTANTS & AUDITORS
PRIVATE EQUITY PARTNER TO BEAVER CANOE
PRIVATE EQUITY PARTNERS
PRODUCED BY: ELIZE BLOM 16-07-1999 17:10 SENS

PUBLISHER : JSE SENS Feed
Source: JSE Securities Exchange - SENS
 
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