Johannesburg – Lonrho plc the UK-based industrial group with interests in Africa, announced Tuesday that it is to increase its holding in the issued share capital of Rollex from 51% to 100%.
Rollex, which was established in 1989, sources, packs and delivers fresh fruit, vegetables and fish produce from across Africa to its network of high profile retail clients in Africa, Europe, Scandinavia and the Middle East.
In April 2008 Lonrho acquired a 51% stake in Rollex from the De Robillard Family Trust for an initial cash payment of R40m, or around £2.6m, and the commitment to make two further payments linked to the EBITDA performance of Rollex. The first of these deferred consideration payments - a sum of R33.6m - was paid in August 2009.
All the remaining shares in Rollex have been acquired on terms which include the second tranche of the original sale price, Lonrho said.
Lonrho will acquire from the trustees of the De Robillard Family Trust the remaining 49% of Rollex that Lonrho did not previously own. The consideration payable has been translated into sterling and a fixed number of Lonrho shares determined by the formula approved by shareholders at the Lonrho AGM in March.
The consideration for the remaining Rollex shares will be satisfied by the issue of 42 119 258 new ordinary shares of one pence in Lonrho at an agreed price of R51.45m, or around £4.623m, being 10.98p per share.
At the closing mid market price, of 10p per Lonrho share on May 17 2010, the value of the remaining Rollex shares was therefore £4.212m.
Application has been made for the consideration shares to be admitted to trading on AIM and dealings are expected to commence on or about May 28 2010.
The Rollex profits for the period ended September 2009 were R16.6m, approximately £1.1m, while net assets at that date amounted to R38.9m, around £3.47m.
The beneficiary of the De Robillard Family Trust is Paul de Robillard, the managing director of Rollex and as such this transaction will constitute a related party transaction for the purposes of the AIM Rules for companies. He will remain as managing director of Rollex, post the transaction.
The Lonrho board is of the opinion that the agreed price of R51.5m, R4.62m, is a discount to the current value of the shares being acquired and therefore represents a fair and reasonable price for the shareholders of Lonrho.
The Lonrho board has therefore consulted with the company's nominated advisor and has determined that the terms of the transaction are fair and reasonable insofar as the shareholders of Lonrho are concerned. Prior to this transaction de Robillard did not own any shares in Lonrho but, immediately following completion, he will own 42.119 million ordinary shares, representing 3.86% of the enlarged issued share capital of the company.
The consideration shares will be subject to a lock-in for a period of 12 months from the date of completion of the transaction and thereafter will be subject to orderly market provisions. It has been agreed that such number of consideration shares as is equal in value to R19m may be sold in a manner so as to maintain an orderly market to satisfy certain liabilities arising for the vendor from the
transaction.
David Lenigas, Lonrho's executive chairperson stated: "Rollex is one of the cornerstones of the Lonrho Agriculture division. Since Lonrho bought a controlling stake in April 2008, it has proven its value.
"Given the growth opportunities and new projects being initiated by the company in this specialised niche sector, the board believed that 100 per cent ownership was important and very beneficial to shareholders. The fact that Paul de Robillard has agreed to subscribe for Lonrho stock with appropriate lock-ins demonstrates his belief in the business and what it can achieve."
- I-Net Bridge