CWT acquires majority stake in Aquarius Shipping

Founded in 1997, Aquarius Shipping provides shipping, warehousing, customs clearance and forwarding services globally, serving most of the world’s major tobacco companies. It also works with a select group of commodity brokers and suppliers.

Headquartered in Johannesburg, South Africa, Aquarius Shipping has offices in Lilongwe (Malawi), Harare (Zimbabwe), Lusaka (Zambia), Beira and Tete (Mozambique), Durban (South Africa), London (UK) and Antwerp (Belgium).

The acquisition of Aquarius Shipping will enable CWT to further expand and strengthen its commodity logistics business in Southern and Eastern Africa. It will also help to escalate business growth in Turkey as well as facilitate the expansion of its commodity related value added services into the African continent.

Aquarius will also contribute business volume to optimise the CWT’s existing resources in Antwerp – the world’s leading tobacco harbour where Aquarius actively operates forwarding and shipping cross trades.

In return, Aquarius will have access to CWT’s network of clients as wll as LME- and LIFFE-approved warehouse services and other commodity related services to further develop and expand its metals business.

The transaction terms involve:

• An upfront consideration of ZAR22.5 milllion (approx. S$4.35m).

• An earn-out consideration of up to ZAR7 million (S$1.32m), payable in five equal instalments between 2011 and 2015, on achievement of an agreed earnings target for the financial year ending December 31st, 2010.

• Incentive payment payable to the existing management shareholders for the initial five post-acquisition years for 10% of profit after tax in excess of an agreed minimum return on investment for the respective years.

• A proportionate contribution to the existing shareholders loan.

• An agreed exit provision for the existing shareholders after the fifth year post acquisition.

• The existing management shareholders to sign a five-year management contract with Aquarius Shipping.

The valuation of Aquarius Shipping has taken into account the current net assets value of ZAR 6.9 million, as well as current and potential earnings. The valuation has also taken into account the time and money required to set up similar operations in Africa organically and the fact that the platform is strategic to CWT’s business plan for Africa and its commodity logistics as a whole.

After the acquisition, Aquarius Shipping will be owned by CWT Europe (60%), The Red Star Trust, Robert John Poverello (14%), The Seth Family Trust, Roderque Maurice Gonzalez (12%), The Jason/Kerri Trust, Darryl Grant Goodwin (12%), and The Lombard Trust, Brian Fernandez (2%).