Barloworld Limited Acquisition Update (7285Z)
September 22 2020 - 4:30AM
UK Regulatory
TIDMBWO
RNS Number : 7285Z
Barloworld Limited
22 September 2020
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Income Tax Registration number 9000/051/71/5)
(Share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(Bond issuer code: BIBAW)
(JSE ISIN: ZAE000026647)
(Namibian Stock Exchange share code: BWL)
("Barloworld" or the "Company")
Update on the Acquisition of Tongaat Hulett Starch and
withdrawal of cautionary announcement
Shareholders are referred to the announcements dated 12 May, 28
May, 4 June, 7 July and 14 August 2020 regarding the proposed
acquisition of Tongaat Hulett Starch (the "Sale Business") and the
two material adverse change ("MAC") notices delivered by KLL Group
Proprietary Limited, a wholly owned subsidiary of Barloworld ("KLL"
or "Barloworld"), to Tongaat Hulett Limited ("THL") in terms of the
sale and purchase agreement pertaining to the proposed acquisition
of the Sale Business concluded between THL and KLL on 28 February
2020, as amended (the "SPA") (the "Transaction").
Shortly after the signing of the SPA the COVID-19 pandemic
reached South Africa, leading to the introduction of a series of
lockdowns and restrictions in order to manage infection rates in
the country.
In light of these measures, the Barloworld Board reached the
conclusion that the business impact of COVID-19 related regulations
constituted an event that was reasonably likely to cause the EBITDA
of the Sale Business for the financial year ending 31 March 2021 to
be 82.5% or less of its EBITDA for the financial year ended on 31
March 2020.
The Barloworld Board determined that it had a fiduciary duty to
exercise its transaction protections negotiated as part of the SPA
and that a MAC (as described in the SPA) had occurred. As detailed
in the announcements made by Barloworld since 12 May, there has
been a process pursuant to which both KLL and THL made various
submissions to the independent expert, Rothschild & Co South
Africa Proprietary Limited ( the "Independent Expert").
Shareholders are now advised that based upon, and subject to,
the terms of their determination letter, and as at the date hereof,
the Independent Expert has determined that it is not reasonably
likely that the EBITDA of the Sale Business for the financial year
ending 31 March 2021 will be 82.5% or less than the EBITDA of the
Sale Business for the financial year ended on 31 March 2020 and
that a MAC has therefore not occurred.
During the MAC determination period, Barloworld continued to
perform its obligations in terms of the SPA and to monitor the
performance of the Sale Business. In this regard Barloworld
received monthly management accounts which demonstrated the
resilience of the Sale Business following the move to Level III
lockdown and the subsequent opening up of the economy.
Barloworld is pleased that the Sale Business has shown such
resilience in the face of the economic challenges posed by the
COVID-19 pandemic. The business is a highly cash generative,
relatively asset light and defensive investment with a leading
market position and a strong client base of highly regarded and
well established multi-national companies. These characteristics
have underpinned the resilience of the Sale Business through the
current economic challenges, validating Barloworld's stated
strategy of entering into the defensive consumer foods sector and
serving industrial customers as a long term strategic pivot of its
portfolio. With the Government confirming that the country will
move to Lockdown Level I, it is anticipated that the Sale Business
will continue to show positive momentum into the financial year
end.
As the MAC process has now ended and the Transaction is
anticipated to complete once the remaining outstanding suspensive
conditions are fulfilled (or waived if applicable), shareholders
are no longer required to exercise caution when dealing in the
Company's securities and the cautionary announcement is withdrawn.
Shareholders will be advised once the suspensive conditions are
fulfilled or waived.
Sandton
22 September 2020
Financial Advisor and Transaction Sponsor
Absa Corporate and Investment Banking, a division of Absa Bank
Limited
Legal Advisor
DLA Piper Advisory Services Proprietary Limited
JSE Equity and Debt Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank
Limited
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END
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