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 and the announcement released on ZAPS on 18 February 2020.

In terms of the transaction, the wholly-owned eSwatini registered subsidiary of TWK Investments Limited, the Shiselweni Forestry Company Limited is acquiring some of the forestry assets of Peak Timbers Ltd and Peak Forest Products (Pty) Ltd in the Piggs Peak area of Eswatini as a going concern.

The final acquisition includes inter alia the following:

  • Total land of 26 752 hectares;
  • Standing timber on 17 338 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 final total consideration for the assets is between R570m and R600m and is subject to an adjustment based on deviation from the Annual Plan of Operation in relation to the planned harvesting and silviculture operations up to the effective date.

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.

Shareholders are hereby advised that all suspensive conditions have been met on 9 March 2021 and that the transaction is being implemented with effective date 11 March 2021.

The Competition Tribunal of South Africa approved the transaction with a number of conditions relating to the continued supply of existing Peak customers as per pre-existing contracts and/or for a further period of at least three years on commercial terms and industry norms. A non-confidential version of these conditions will be published on TWK’s website at .

The last suspensive condition was met when the Eswatini Competition Commission approved the transaction on 9 March 2021. Conditions of the approval include inter alia the supply of hardwood products to other customers on similar terms as provided to subsidiaries or the holding company (taking into account all market and price factors such as quantity, quality and availability), as well as three-year supply agreements with the existing and/or active Eswatini hardwood product customers.

The Company is comfortable to comply with all conditions set by the respective Competition Authorities.

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.

Further information in relation to the final transaction value, the financial impact and the financing arrangements will be communicated in due course.

By order of the Board of Directors.

MJ Potgieter

Piet Retief
10 March 2021