AFX
AFX
AFX - African Oxygen Limited - Announcement relating to the 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 INSTALLATION OF A 200 TON PER DAY GOX 6000 AIR
SEPARATION PLANT BY AFROX
1. INTRODUCTION
Shareholders are referred to the announcement by Afrox released on SENS on
4 January 2011 and published in the press on 5 January 2011, wherein the
Company announced that it had 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 represented the first phase of the
project.
Afrox has now commenced with the second phase of the project which entails
the installation and integration of the GOX 6000 Plant at its Pretoria West
facility ("the GOX 6000 Installation"). Afrox has concluded agreements with
Linde, its controlling shareholder, in respect of the GOX 6000
Installation. The cash cost of the agreements concluded with Linde is
approximately Euro 3.9 million (or c.R42.5 million).
2. TERMS OF 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 combined transaction, entailing the GOX 6000 Acquisition and the GOX
6000 Installation, 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 Installation 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
Installation are fair to the Afrox shareholders. The report of the Experts
will be available for inspection at the registered office of Afrox for a
period of 28 days from the date of this announcement.
5. PRO FORMA FINANCIAL EFFECTS OF THE GOX 6000 INSTALLATION
The pro forma financial effects of the GOX 6000 Installation 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 2011 are not significant (i.e. are less than 3%), and have therefore
not been disclosed.
Johannesburg
4 November 2011
Joint independent expert and transaction sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Joint independent expert
Bateman Engineering N.V.
Sponsor
One Capital
Date: 04/11/2011 13:28:03 Produced by the JSE SENS Department.
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