Dorbyl management contract announcement
Posted Mon, 02 Apr 2012
Shareholders are referred to the SENS announcement released on 24 February 2012 in terms of which it was announced that Metkor Group Ltd., a wholly owned subsidiary of Remgro Ltd., had disposed of 14.9% and 20% of its shareholding in Dorbyl to RECM and Calibre Ltd. and The Reef Group (Pty) Ltd. respectively. RECM and Calibre Ltd. and The Reef Group (Pty) Ltd. ("the Consortium") therefore collectively holds 34.9% of the total shareholding in Dorbyl.
Shareholders are advised that following the above change in shareholding, Dorbyl is to enter into a management agreement with Reef Switchboard Manufacturers (Pty) Ltd. ("Reef Switchboards"), an affiliate company of the consortium ("the management agreement"). Pursuant to discussions initiated by the consortium with management, the Consortium have indicated that they, through the skills and expertise within Reef Switchboards, can assist in implementing the turnaround strategy at the Guestro Castings and Machining operation of Dorbyl ("Guestro" or "the business"), having been successful in implementing similar strategies elsewhere. Whilst the internal management of Guestro have re- aligned the business by substantially increasing its customer base, and have started to improve production and operational efficiencies, the limited available management resources, have to date not translated into satisfactory results and performance. The Dorbyl board is fully supportive of the Reef Switchboards initiative. In regard to the above initiative, a Non-Disclosure Agreement ("the NDA") has been signed by Dorbyl with both the Consortium and Reef Switchboards as parties to the agreement. Further, a Management Agreement is to be signed shortly with Reef Switchboards.
Shareholders are further advised, for prudency purposes, that Dorbyl was approached by the Consortium, to provide certain information pertaining to Dorbyl for an advance application by the Consortium to the Competition Commission in the event that the Consortium wishes to acquire a further stake in Dorbyl that may trigger certain regulatory thresholds as set out below. The Consortium is of the opinion that it is the correct procedure to apply beforehand for such Competition Commission approval. Dorbyl have provided the Consortium with the information. The information provided is not price sensitive and some of it is of a historical nature and is already in the public domain. Dorbyl has, however, not received any firm intention to make of an offer to shareholders, as well as any possible price to be paid through the acquisition of shares in the market or in the form of an offer. It should be noted that should the Consortium or any party acting in concert with the Consortium acquire a further stake in Dorbyl (beyond the 35% threshold) , they will be obliged to make a mandatory offer to all other shareholders in terms of the provisions of the Companies Act 71 of 2008, unless same is waived by shareholders. This will necessitate a circular to all shareholders which will contain all the pertinent information pertaining to the offer.
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