| Thu 26 Jul 2007, 16:24 | | PPE - Purple Capital - Acquisition by Purple Capit |
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PPE
PPE
PPE - Purple Capital - Acquisition by Purple Capital of Global Trader and
Withdrawal of Cautionary Announcement
Purple Capital Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE & ISIN: ZAE000071411
("Purple Capital" or "the company")
ACQUISITION BY PURPLE CAPITAL OF GLOBAL TRADER AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1 Introduction
Further to the cautionary announcement dated 20 July 2007, shareholders
are advised that Purple Capital has entered into an agreement dated 25
July 2007, with the current shareholders of New World Trader Limited (t/a
"Global Trader"), ("the vendors") to acquire the entire issued share
capital of Global Trader at a valuation of Euro 36 million on a fully-
diluted basis ("acquisition consideration") ("the Offer") with effect from
1 July 2007 ("the effective date").
2 Global Trader
Global Trader, a company registered in Ireland, is a pioneering
international financial institution offering a Spread Trading and a
Contract for Difference (CFD) execution and advisory service to both
institutional and private clients investing in international and domestic
markets.
Global Trader was founded in Europe in 2000. Since then it has grown its
global reach into South Africa, North America and Asia, with a physical
presence on the ground in the United Kingdom, South Africa, Thailand,
Canada and Russia.
Global Trader conducts in excess of a million transactions per year, worth
over US$10 billion per annum, for clients in 29 countries.
Worldwide, Global Trader is authorised and regulated by the Financial
Services Authority in the United Kingdom. It is an authorised Financial
Services Provider by the Financial Services Board in South Africa and
registered as a derivatives dealer with the Securities and Exchange
Commission of Thailand.
3 Rationale for the acquisition
Global Trader is a high growth, proven concept trading business within the
financial markets with a relatively mature, highly profitable and cash
generating business in South Africa and established, regulated operations
in a number of jurisdictions and geographies internationally. The
economics of this mix of future growth and current stability presents an
attractive investment opportunity within Purple Capital`s strategic
mandate.
4 Details of the acquisition
4.1 Acquisition consideration
The acquisition consideration will be payable after the fulfilment of the
conditions precedent which is expected to be no later than 31 October
2007. The acquisition consideration will be settled as follows:
- R159.4 million will be settled through a specific issue of shares for
cash ("specific issue") comprising 88 555 556 ordinary shares at a
price of R1.80 per share. Irrevocable undertakings to subscribe for
the specific issue are in place. As the number of shares to be issued
in terms of the specific issue comprises more than 30% of Purple
Capital`s current number of shares in issue, the circular to Purple
Capital`s shareholders will include revised listing particulars;
- Certain of the vendors will be given the opportunity to re-invest up
to Euro 3,6 million (R34.2 million at an exchange rate of R9,5:Euro
1) - representing a 10% interest into Global Trader ("the re-
investment"); and
- the balance will be funded out of current cash resources and funding
acilities available to Purple Capital.
Proof of funding has been provided to the satisfaction of the vendors.
4.2 Approvals obtained and conditions fulfilled
- The Exchange Control department ("Excon") of the South African
Reserve Bank ("SARB") has approved the acquisition of 100% of Global
Trader and given authority for the transfer of funds. Purple Capital
has agreed to implement the structure of the transaction required in
terms of this approval and, at the request of Excon, to confirm the
approval of SARB Banking Supervision Department, if it is required.
- Irrevocable acceptances of the offer have been received in writing
from vendors in respect of more than 80% of shares in Global Trader
which enables Purple Capital to invoke the provisions of Section 204
of the Irish Companies Act to compulsorily acquire the balance of the
shares.
4.3 Conditions precedent
Purple Capital will acquire the entire issued share capital of Global
Trader, subject to the fulfilment of the following conditions precedent:
- Competition Commission approval of the acquisition;
- approval by the Financial Services Board of South Africa;
- approval by the Financial Services Authority in the United Kingdom;
- approval by the JSE Limited;
- obtaining of the requisite number of votes of Purple Capital
shareholders to approve the acquisition of Global Trader, the
increase in authorised share capital of Purple Capital required to
facilitate the specific issue and the specific issue itself.
5 Pro forma financial effects of the acquisition and the specific issue
Set out in the table below are the unaudited pro forma financial effects
of the specific issue and the acquisition on Purple Capital`s unaudited
interim results for the six months ended 28 February 2007. The unaudited
pro forma financial effects are presented for illustrative purposes only,
to provide information on the impact of the specific issue and
acquisition. The unaudited pro forma financial effects are the
responsibility of the company`s directors. Due to the nature of the
unaudited pro forma financial effects, they may not give a fair
presentation of the company`s financial position and the results of its
operations after the acquisition and the specific issue.
Before After the After the Percentage
general general acquisition change
issue and issue and and the (%)
rights rights specific
offer (1) offer/ issue
Before the
acquisition
and specific
issue (2)
Earnings per
share (cents) 6,52 4,57 6,73 (3) 47,3
Headline
earnings per
share (cents) 6,52 4,57 6,73 (3) 47,3
Net asset value 37,3
per share
(cents) 57,45 76,25 104,69 (4)
Net tangible
asset value per
share (cents) 57,45 76,25 31,02 (4) (59,3)
Notes:
1 Extracted from the published reviewed results of Purple Capital for the
six months ended 28 February 2007.
2 Extracted from the circular to Purple Capital shareholders dated 11 June
2007.
3 Earnings and headline earnings per share in the "After the acquisition and
the specific issue" column have been based on the following assumptions:
a. The acquisition was effective 1 September 2006;
b. Purple Capital holds 90% of the issued share capital of Global
Trader, hence 10% minorities have been taken into account in terms of
the re-investment;
c. Global Trader`s results used in the preparation of the pro forma
financial effects were extracted from the unaudited management
accounts for the six months ended 30 June 2007. Purple Capital is
satisfied with the quality of these management accounts;
d. The weighted average number of Purple Capital shares in issue is 222
325 235 and 307 880 791, before and after the acquisition and
specific issue respectively; and
e. Debt facilities of R57,25 million will be utilised to finance a
portion of the acquisition consideration at an average interest cost
of 12,78%.
4 Net asset value and net tangible asset value per share in the "After the
acquisition and specific issue" column have been based on the following
assumptions:
a. In respect of the specific issue, share capital and share premium
have been adjusted to include the issue of 85 555 556 ordinary shares
at 180 cents per share and cash and cash equivalents increased by the
same amount;
b. The acquisition was effective 28 February 2007;
c. 10% of pre-acquisition reserves were transferred to minorities in
terms of the re-investment;
d. The balance sheet of Global Trader used in the preparation of the pro
forma financial effects was extracted from the unaudited management
accounts at 30 June 2007. Purple Capital is satisfied with the
quality of these management accounts; and
e. The total number of Purple Capital shares in issue is 226 887 551 and
312 443 107 before and after the acquisition and specific issue
respectively.
6 Circular to shareholders
A circular to shareholders setting out full details of inter alia, the
acquisition and the specific issue as well as revised listing particulars
and incorporating a notice convening a general meeting will be circulated
to shareholders within 28 days following the date of this announcement.
7 Withdrawal of cautionary announcement
The cautionary announcement published by Purple Capital on 20 July 2007 is
hereby withdrawn.
Johannesburg
26 July 2007
Sponsor: Bridge Capital Advisors (Pty) Limited
Date: 26/07/2007 16:24:11 Produced by the JSE SENS Department.
