Acquisition of forestry businesses

Name of Issuer TWK Investments Limited
Country of Incorporation ZA
Registration Number 1997/012251/06
ISIN Number ZAEZ00000034
Share Code ZXTWI

Acquisition of forestry businesses

Shareholders are referred to the cautionary announcement released on ZAPS on 7 November 2019.

Shareholders are hereby advised that the wholly-owned Eswatini registered subsidiary of TWK Investments Limited, the Shiselweni Forestry Company Limited, has entered into an agreement for the acquisition of some of the forestry assets of Peak Timbers Ltd and Peak Forest Products (Pty) Ltd as a going concern.

The acquisition is structured as a pure asset purchase on a going concern basis and includes inter alia the following assets located in the Piggs Peak area of Eswatini:

  • Total land of 23 422 hectares;
  • Standing timber on 17 800 hectares;
  • All buildings and improvements on the land;
  • A sawmill operation;
  • All movable assets utilised in the forestry operation;
  • Harvesting rights, sale contracts, stock and goodwill;

The total consideration for the assets will be between R500m and R550m subject to an adjustment on the effective date in the case of significant deviation from the Annual Plan of Operation in relation to the planned harvesting and silviculture operations.

Approximately 70% of the acquisition will be financed through new bank debt facilities.

The material suspensive conditions include inter alia approval of the acquisition by the South African and Eswatini Competition Authorities as well as the Eswatini Land Control Board.

TWK Investments Ltd as guarantor to the acquisition has guaranteed the proper and punctual performance of Shiselweni Forestry of all its obligations in terms of the acquisition.

The acquisition is aligned to the company’s strategy to increase its own fiber resources to ensure the sustainable supply of its existing markets. In addition, the increased scale will have cost benefits and provide a basis for potential future value adding opportunities.

Shareholders will be updated with regards to the fulfilment of the suspensive conditions and the implementation of the transaction in due course.

By order of the Board of Directors.

MJ Potgieter

Piet Retief
18 February 2020