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Announcement regarding the sale of the Letting Enterprise by the Group
Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number 1984/007758/06
Share Code: BSR ISIN: ZAE000029781
("Basil Read" or "the Company")
ANNOUNCEMENT REGARDING THE SALE OF LETTING ENTERPRISE BY THE GROUP
1 INTRODUCTION
Shareholders are advised that Thunderstruck Investments 136 (Pty) Ltd (“Thunderstruck”), a joint
venture of Basil Read Limited (in Business Rescue) (“BRL”), which, in turn, is a wholly owned
subsidiary of Basil Read Holdings Limited (“the Company”), has entered into an agreement to sell
immovable properties in Ekurhuleni Metropolitan Municipality (the “Disposal”).
2 BACKGROUND AND RATIONALE FOR THE DISPOSAL
BRL is the main operating entity of the Basil Read group of companies (“the Group”).
The Company is the ultimate Holding Company and houses the construction and roads
divisions, and the mining and development subsidiaries. Because of the business rescue
proceedings, the Company applied to the JSE to suspend trading, and such suspension
occurred on Wednesday, 20 June 2018.
The business rescue plan as published (“Business Rescue Plan”), refers to and
contemplates the disposal of certain non-core assets in the Group.
The immovable properties in Ekurhuleni Metropolitan Municipality represent such non-
core assets as contemplated in the Business Rescue Plan.
Thunderstruck, in which the Company holds an effective 50% interest, has entered into
a sale of letting enterprise agreement with Susand Investments (Pty) Ltd (“the Sale
Agreement”). The Group’s registered office and corporate offices were based on the
properties being sold. Susand Investments (Pty) Ltd (“the Purchaser”) is not a related
party to the Company or the Group in terms of the JSE Listings Requirements.
3 KEY TERMS OF THE TRANSACTION
3.1 Sale and purchase
Thunderstruck is selling immovable properties (“Property”) described as the following:
1. Erf 541 Hughes Extension 75 Ekurhuleni Metropolitan Municipality, in extent 8,875 (eight
thousand eight hundred and seventy five) square meters, together with all improvements
thereto;
2. Erf 542 Hughes Extension 75, Ekurhuleni Metropolitan Municipality, in extent 8972 (eight
thousand nine hundred and seventy two) square meters, together with all improvements
thereto;
3. Erf 543 Hughes Extension 75, Ekurhuleni Metropolitan Municipality, in extent 8972;
4. Erf 544 Hughes Extension 75, Ekurhuleni Metropolitan Municipality, in extent 8,853; and
5. All fixtures and fittings of a permanent nature in the improvements upon and to the
Property, specifically including the generator/s, water tanks and pumps, computer
cabling and installations
(collectively: “the Sale Property”).
3.2 The sale consideration
The total sale price is R136,000,000.00 (one hundred and thirty-six million rand), payable
in accordance with the following terms, which include, but are not limited to:
1. The Purchaser paying a deposit by the Purchaser of 5% (five percent) of the total
purchase price;
2. The Purchaser providing a guarantee from a registered commercial bank for the
balance of the purchase price.
3.3 Possession and Risk, Occupation and Improvements
The parties agreed that the Purchaser would take vacant occupation of the Property on 1 June
2019, subject to the purchaser paying occupational rent in the amount of R1,000,000.00 (one
million rands) excluding VAT, payable monthly and in advance until the Property is registered
in the name of the Purchaser. On the date of the registration of the transfer of the Property into
the name of the Purchaser, the rent will be calculated and payable pro-rata to the actual date
of transfer.
3.4 Payment Breach
If either of the Seller or the Purchaser breaches its respective obligations under the Sale
Agreement, upon written notice from the aggrieved party, the defaulting party may remedy the
breach within 15 (fifteen) business days; failing which, the aggrieved party may sue for
performance or cancel the agreement without prejudice to its legal rights to claim damages.
3.5 Application of the proceeds
The proceeds from the Disposal will be first applied in the settling the liabilities commitments of
Thunderstruck and then the balance distributed to the respective shareholders. BRL intends to
applied it share towards repayment of the Post Commencement Funding (“PCF”) in order to
improve the outcome of the Business Rescue Plan.
3.6 Suspensive Conditions
The conclusion of the Disposal is subject to the fulfilment or waiver of certain suspensive
conditions, which include:
• The Purchasers paying the deposit and delivering guarantees for the balance of the
purchase price;
• The Competition Commission approving the transaction, evidenced by the issuing of a
merger clearance certificate within 8 (eight) weeks of submission of the application for
approval, which time period will automatically extend until the Competition Commission
provides its approval;
• The acceptance/confirmation/approval/endorsement of the transaction by the Business
Rescue Practitioners.
3.7 Other provisions
The transaction agreement contains legal warranties and indemnities which are considered
normal in respect of a transaction of this nature.
The Closing date of the transaction will be one business day after the fulfillment of the
suspensive conditions and is still to be determined.
4 PROFIT AND NET ASSET VALUE ATTRIBUTABLE TO BRL
The total sale price is R136,000,000.00 (one hundred and thirty-six million rand), of which
the subsidiary represents the Company share is R78,000,000 (50% shareholding). The
Company’s share closed 4 (four) cents per share on 20 June 2018, before the share was
suspended. This translated to a market capitalization of R59,813,226 (fifty nine million
eight hundred and thirteen thousand two hundred and twenty six rands). The
categorization calculations based on the above values are set out in the attached
calculation spreadsheet.
The sale price, however, only represents 2.5% (two-point five percent) of total assets of
the Company as at 31 December 2017. The sale, therefore, does not represent a
substantial asset at Company level and shareholder approval is not required in terms of
the Companies Act, 71 of 2008.
5 DIRECTORS CONFIRMATION
The Board of Directors of the Company confirms the following in terms of Schedule 11.5(a) of the
JSE Listings Requirements:
• Basil Read and its subsidiaries (the "Group") are in severe financial difficulty, which is
evidenced by the fact that the operating subsidiary, Basil Read Limited was placed in
business rescue on Friday, 15 June 2018;
• the decision to apply for voluntary business rescue proceedings in Basil Read Limited was
taken in the best interest of the Group as a whole. The sale of non-core assets is set out
as part of the business rescue plan of Basil Read Limited (the "Business Rescue Plan"),
as approved by the creditors of Basil Read Limited, and is accordingly required in order to
implement the Business Rescue Plan successfully and improve the financial position of the
Group;
• all alternative methods of financing Basil Read Limited have been exhausted and PCF in
Basil Read Limited was secured subject to a successful business rescue process including,
specifically, the sale on non-core assets, as it is contemplated that the PCF will be repaid
rom, inter alia, these proceeds; and
• the Purchasers in respect of the Disposal are not related parties of Basil Read or the other
members of the Group.
The Company’s sponsor is of the opinion, based on the information available to it, that as evidenced
by the business rescue proceedings, the Company is in severe financial difficulty and that the
Disposal and further disposals of non-core assets is key to the implementation of the Business
Rescue Plan,
The Disposal of the Sale Property is not to a related party of the listed entity and the Takeover
Regulation Panel has not been consulted, as the Disposal does not constitute all or the greater part
of the Basil Read group assets or undertaking, in terms of section 112 of the Companies Act.
6 WORKING CAPITAL STATEMENT
The Board of Directors are of the opinion the that BSR Group does not have sufficient working capital
available to meet its present requirements for at least the next 12 months. The auditors of the group
articulated this in their emphasis of matter opinion with respect to the 2017 audited financial
statements. Furthermore, the placing of a major subsidiary, Basil Read Limited, in business rescue
further evidence that the Group requires further working capital to meet it requirement. The business
rescue plan seeks to achieve sufficient working capital for the group through the PCF, disposal of
the non-core assets, resolution of claims and completion of loss-making construction contracts. The
Disposal is critical building block to the improvement of the working capital of the Group.
7. CATEGORISATION AND SCHEDULE 11 DISPENSATION
The transaction is categorised as a category one transaction in terms of the JSE Listings
Requirements, due to the current circumstances of the Company. The Company has applied for and
the JSE has granted the Company dispensation from the requirements of Category one transactions,
pursuant to Schedule 11 of the JSE Listings Requirements.
Bedfordview
6 September 2019
Sponsor
Grindrod Bank Limited
Date: 06/09/2019 04:45:00
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