| Wed 23 May 2007, 17:15 | | MST-Mustek - Acquisition By Mustek Of 39 179 700 R |
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MST
MST
MST-Mustek - Acquisition By Mustek Of 39 179 700 Rectron Holdings Limited Shares
MUSTEK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/070161/06)
Share Code: MST & ISIN Code: ZAE000012373
("Mustek" or "the company")
ACQUISITION BY MUSTEK OF 39 179 700 RECTRON HOLDINGS LIMITED SHARES
1. Introduction
Mustek shareholders are referred to the announcement dated 12 March 2007
and are advised that in terms of an agreement between Mustek, Rectron
Holdings Limited ("Rectron"), the Lu Chang Trust and Mr H Lu dated 7 March
2007 and the addendum thereto dated 14 May 2007, Mustek will acquire 19 045
890 Rectron shares from Mr H Lu and 20 133 810 Rectron shares from the Lu
Chang Trust ("the transaction").
Mr H Lu is a director of Rectron and the transaction is therefore deemed as
a related party transaction in terms of Section 10 of the Listings
Requirements of the JSE Limited ("JSE"). Accordingly, an independent
expert opinion is required regarding the fairness and reasonableness of the
transaction.
2. Purchase consideration
Subsequent to the announcement referred to above, the details of the
purchase consideration have been amended as follows:
There will be an initial purchase consideration of R49 751 277,81 and a
potential further consideration of R 75 248 722,19 over a five year period,
subject to certain defined milestones being reached, of which details are
set out in the circular to shareholders to be issued to Mustek shareholders
on Thursday, 24 May 2007.
The total purchase consideration in terms of this transaction will not
exceed R125 000 000,00.
3. Method of payment
The initial and the potential further consideration will be settled in
cash.
The initial consideration of R 49 751 277,81 might be settled through the
issue of shares for cash under the general authority granted to the
directors of Mustek at Mustek`s annual general meeting held on 23 November
2006.
In terms of the general authority granted at this meeting, the issue of
shares for cash will be subject to the following requirements in terms of
the Listings Requirements of the JSE:
- That the shares will be of a class already in issue;
- In determining the price at which the issue can be made in terms of
this authority, the maximum discount at which the ordinary shares may
be issued is 10% of the weighted average traded price over the 30-day
period prior to the date that the price of the issue is determined or
agreed by the directors of the company; and
- That any such issue will only be made to public shareholders,
excluding related parties as defined by the JSE.
4. Revised pro forma financial effects of the transaction
The table below sets out the unaudited pro forma financial effects of the
transaction for the six month period ended 31 December 2006. The unaudited
pro forma financial effects are presented for illustrative purposes only
and because of their nature may not give a fair reflection of the company`s
results, financial position and changes in equity after the transaction.
It has been assumed for purposes of the unaudited pro forma financial
effects that the transaction took place with effect from 1 July 2006 for
income statement purposes and 31 December 2006 for balance sheet purposes.
The directors of the company are responsible for the preparation of the
unaudited pro forma financial effects.
As the purchase price is dependent on certain profit targets, three
scenarios are presented:
Scenario 1 - Rectron`s profit before tax for the five years to 30 June 2011
is R100 million.
Scenario 2 - Rectron`s profit before tax for the five years to 30 June 2011
is R260 million.
Scenario 3 - Rectron`s profit before tax for the five years to 30 June 2011
is R437,805 million.
Scenario 1 Scenario 2 Scenario 3
Per ordinary Notes Before After Change After Change After Change
share
(cents) (cents) (%) (cents) (%) (cents) (%)
Earnings 1 40,8 45,8 12,3 42,8 4,9 52,3 28,2
Headline 1 41,1 34,8 (15,3) 43,1 4,9 52,5 27,7
earnings
Net asset 2 483,1 519,9 7,6 521,0 7,8 531,0 9,9
value
Net tangible 2 472,4 509,7 7,9 488,0 3,3 475,7 0,7
asset value
Diluted 3 40,2 45,2 12.4 42,3 5,2 51,6 28,4
earnings
Diluted 3 40,6 34,4 (15,3) 42,6 4,9 51,9 27,8
headline
earnings
Notes:
1. The amounts in the "Before" column represent the unaudited headline
earnings and earnings per share disclosed in the financial results for
the six months ended 31 December 2006. The amounts in the "After"
column represent the unaudited headline earnings and earnings per
share after the transaction based on the assumption that the
transaction was effective 1 July 2006.
2. The amounts in the "Before" column represent the unaudited net asset
value and net tangible asset value per share as disclosed in the
financial results for the six months ended 31 December 2006. The
amounts in the "After" column represent the unaudited net asset value
and net tangible asset value based on the financial results for the
six months ended 31 December 2006 adjusted for the transaction, had it
been effected on 31 December 2006.
3. The closing share price of 1 025 cents per share at 1 July 2006 and
917 cents per share at 31 December 2006 was used to determine the
number of shares to be issued in order to settle the purchase price
for income statement and balance sheet purposes respectively.
4. A corporate tax rate of 29% was assumed.
5. Opinions and recommendations
Merchant Sponsors (Proprietary) Limited, acting as independent expert to
the board of directors of Mustek, has considered the terms and conditions
of the transaction and is of the opinion that, at the date of issue of its
opinion, the terms and conditions are fair and reasonable to the
shareholders of Mustek.
6. Salient dates and times
The salient dates and times for the general meeting of shareholders are as
follows:
2007
Last day to lodge forms of proxy for the Wednesday, 6 June
general meeting by 11h00 on
General meeting of shareholders to be held Friday, 8 June
at 11h00 on
Results of general meeting published on Friday, 8 June
SENS on
Results of general meeting published in the Monday, 11 June
press on
Notes:
The abovementioned dates and times are South African dates and times and
are subject to amendment. Any such amendment will be announced on SENS.
Should they wish to attend or vote at the above general meeting,
dematerialised shareholders are required to advise their CSDP or broker by
the cut-off time stipulated by their CSDP or broker.
Midrand
23 May 2007
Corporate advisor and sponsor Reporting accountants and
Deloitte & Touche Sponsor auditors
Services (Pty) Limited Deloitte
Legal Advisor Independent expert
Kramer & Villion Attorneys Merchant Sponsors (Pty) Limited
Date: 23/05/2007 17:15:01 Produced by the JSE SENS Department.
