AFX
AFX
AFX - African Oxygen Limited - Announcement relating to the acquisition and
installation of a 200 ton per day GOX 6000 air separation plant by Afrox
African Oxygen Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1927/000089/06)
ISIN: ZAE000067120
Share Code: AFX
NSX Code: AOX
("Afrox" or "the Company")
ANNOUNCEMENT RELATING TO THE ACQUISITION AND INSTALLATION OF A 200 TON PER
DAY GOX 6000 AIR SEPARATION PLANT BY AFROX
1. INTRODUCTION
Shareholders are advised that Afrox has entered into an agreement dated 22
December 2010 with Linde AG ("Linde"), its controlling shareholder, to
acquire proprietary technology and equipment for a new GOX 6000 Air
Separation plant ("the GOX 6000 Plant") for a cash purchase consideration of
approximately Euro 10.9 million (or c.R97 million) ("the GOX 6000
Acquisition"). The GOX 6000 Acquisition represents the first phase of the
project.
Following the GOX 6000 Acquisition, Afrox will commence with the second phase
of the project which will entail the installation and integration of the GOX
6000 Plant at its Pretoria West Air Separation Plant ("the GOX 6000
Installation"). Afrox is currently in the process of considering contractual
obligations relating to the GOX 6000 Installation and once contractual
obligations have been entered into, a further announcement will be made. The
cash cost of the GOX 6000 Installation is expected to be approximately Euro
10.4 million (or c.R93 million).
The total capital expenditure relating to the GOX 6000 Acquisition and the
GOX 6000 Installation (collectively "the Transaction") is expected to be
approximately Euro 21.3 million (or c.R190 million).
2. TERMS OF THE TRANSACTION
The GOX 6000 Acquisition
Linde Engineering (a division of Linde) will provide the full lump sum
turnkey ("LSTK") plant consisting of a 200 ton per day GOX 6000 Air
Separation Unit incorporating an Argon rectification column and associated
equipment.
It is anticipated that risk and ownership of the GOX 6000 Plant will pass to
Afrox within 24 months of placing the order with Linde. The payment structure
for the GOX 6000 Acquisition is based on various milestones throughout the
ensuing 24 months.
The GOX 6000 Installation
The GOX 6000 Installation will take place between 2011 and 2013.
The integration into product and service lines as well as the civil
infrastructure will be undertaken internally by Afrox Technical and
Engineering.
It is estimated that the GOX 6000 Plant will be fully integrated within the
existing Afrox operations in January 2013.
3. RATIONALE
Afrox`s Merchant Gases business supports a well developed industrial packaged
gases and extended product offering. This business contributes substantially
to the overall profitability of the Company.
The Transaction will enable Afrox to substantially enhance its production
facilities. This will ensure that the Company is well positioned to defend
and grow Afrox`s market share and brand reputation in the merchant gases
market.
4. SMALL RELATED PARTY TRANSACTION
Linde currently owns 173,046,413 Afrox shares, comprising 50.47% of the share
capital of Afrox including treasury shares (or 56.08% excluding treasury
shares), and is thus the controlling shareholder of Afrox. Linde is therefore
regarded as a related party to Afrox in terms of the Listings Requirements of
the JSE Limited and accordingly written confirmation is required from an
independent professional expert, confirming that the GOX 6000 Acquisition is
fair to Afrox`s shareholders.
Rand Merchant Bank (a division of FirstRand Bank Limited) and Bateman
Engineering N.V. have been appointed as the joint independent experts
("Experts"). The Experts have confirmed that the terms of the GOX 6000
Acquisition are fair to the Afrox shareholders. The report of the Experts
will be available for inspection at the registered office of Afrox up until 1
February 2011.
5. PRO FORMA FINANCIAL EFFECTS OF THE GOX 6000 ACQUISITION
The pro forma financial effects of the GOX 6000 Acquisition on Afrox`s
earnings per share, headline earnings per share, net asset value per share
and net tangible asset value per share for the six month period ended 30 June
2010 are not significant (i.e. are less than 3%), and have therefore not been
disclosed.
Johannesburg
4 January 2011
Joint independent expert and Transaction sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Joint independent expert
Bateman Engineering N.V.
Sponsor
Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited
Date: 04/01/2011 15:47:01 Produced by the JSE SENS Department.
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