Super Group sees earnings loss

The group said that compared with earnings of 50.7 cents per share and headline earnings of 67.1 cents per share for the financial year ended 30 June 2008.

The net profit from continuing operations was expected to be a profit of between R1 million and R5 million, equivalent to a profit per share of 1 cent.

Super Group said its continuing operations were however expected to generate positive headline earnings per share of between 11 cents and 14 cents.

The group said the costs of disposal and closure of non-core businesses were the principal factors in the anticipated loss for the year.

The announcement provided confirmation of agreements reached to dispose of several of the group's non-core businesses, including the Emerald Insurance business, the Hermans truck accident repair business, the Mica hardware retail business and the AutoZone retail and wholesale business.

Further announcements concerning the disposal of the remaining non-core businesses are expected.

The group also announced the appointment of a new chief executive as well as a possible takeover by a global logistics company.

The take over will recapitalise the JSE-listed group through a cash injection of more than R1 billion and the provision of a new long-term loan facility of R350 million.

The group said if an agreement was reached, the takeover proposal would be implemented instead of the current rights offer proposal through which the broad-based supply chain management group planned to raise R1 billion.

The new group chief executive is Peter Mountford, who has headed the group's core supply chain operations.

He succeeds the Super Group founder, Larry Lipschitz, who resigned as CEO in April this year.

The appointment is effective from 29 July 2009.

According to Mountford, "Whichever option eventuates, the future of the Group is assured".

Super Group said the possible takeover would involve the company issuing new shares with a value of R700 million to the investor at 70 cents a share.

The investor, who would then become the controlling shareholder, would also underwrite a R300 million rights offer to existing shareholders, and advance Super Group a new R350 million long-term loan.

The proceeds of these transactions would be applied to repay, in full, all the current unsecured lenders to Super Group, including corporate bondholders and provides a long-term liquidity facility.

The group said the takeover was a possible alternative recapitalisation to an existing rights offer proposal, which would enable the group to pay off debt by raising more than R1 billion through the issue of new shares to existing shareholders at approximately 45 cents a share.

This rights offer has already been agreed, signed and is underwritten, it said, noting that discussions with the proposer had not yet been concluded.

"If agreement is reached, the alternative recapitalisation proposal will supersede the existing rights offer proposal," said Super Group.

Super Group's results for the year to June 2009 are expected to be announced in September.

The group is trading under a cautionary notice, which has been renewed.

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