| Thu 4 Oct 2007, 10:34 | | DLG - Dialogue - Introduction of the MSG consortiu |
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DLG
DLG
DLG - Dialogue - Introduction of the MSG consortium as a 25.1% BEE
shareholder and withdrawal of cautionary announcement
Dialogue Group Holdings Limited
(formerly Africa`s Best 364 Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/039219/06)
Share code: DLG & ISIN: ZAE000083820
("Dialogue" or "the group")
INTRODUCTION OF THE MSG CONSORTIUM AS A 25.1% BEE SHAREHOLDER AND WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENT
1 Introduction
Further to the cautionary announcement dated 7 September 2007, shareholders
are advised that Dialogue has entered into an agreement dated 2 October 2007
with the MSG Consortium ("the Consortium") in terms of which the Consortium
will subscribe for 70 373 832 new ordinary shares representing 25.1% of the
enlarged Dialogue share capital for a total consideration of R 113 301 870
("subscription consideration"), ("the transaction").
2 Rationale for the transaction
The group has, since its inception, sought to be an outstanding contributor
to empowerment in South Africa. With Dialogue`s already very strong
employment equity credentials, the transaction will further ensure that
Dialogue meets its BEE ("Black Economic Empowerment") aspirations at all
levels including black share ownership. The Consortium members have already
and will continue to make a significant contribution to the development of
Dialogue.
The Dialogue board is further confident that the transaction, which will
result in the group`s total BEE ownership exceeding 30%, will further
underpin the strong relationships that exist between Dialogue, its corporate
clients and Government.
The funds raised will be used to finance the acquisition of controlling
interests in each of Continuity SA (Pty) Limited and CallForce Direct (Pty)
Limited as previously announced and to provide additional capital for further
strategic growth and expansion of the group`s operating capabilities.
3 Overview of the transaction
3.1 The MSG Consortium
The Consortium is a black owned investment company which is led by MSG Afrika
Investment Holdings (Pty) Limited ("MSG Afrika"), an 80% shareholder in the
Consortium and Tlhalefang Investments (Pty) Limited ("Tlhalefang
Investments"), a 20% shareholder in the Consortium.
MSG Afrika
MSG Afrika is a black owned investment company with interests in The Jupiter
Drawing Room (Advertising), Telkom Media (Pay Television), Capricorn FM
(Radio), Clear Channel Merafe (Outdoor) and the Quarto Press (Printing),
amongst others. Given Mkhari, Simphiwe Mdlalose and Andile Khumalo comprise
the executive team and along with Investec Bank Limited are the shareholders
of MSG Afrika.
Tlhalefang Investments
Tlhalefang Investments is a black owned human resources consulting group
focused on the call centre market. Tlhalefang Investments is jointly owned
and managed by Kopano Mangena and Don Seokane. It also owns 40% in
Interaction Call Centres (Pty) Limited, a subsidiary of Dialogue.
3.2 The transaction
On implementation of the transaction, the Consortium will subscribe for 70
373 832 new Dialogue shares at a subscription consideration of 161 cents per
share. The subscription consideration represents a 7.5% discount to the
volume weighted average traded price for the 30 trading days prior to the
date of the agreement.
In recognition of the level of discount granted to the Consortium and the
potential funding guarantee referred to in paragraph 3.4 below, a lock-in and
restraint period of a maximum of 3 years will apply to the shares acquired by
the Consortium.
3.3. Payment of the subscription consideration
In terms of the transaction, the subscription consideration which amounts to
R113 301 870 will be payable by the Consortium to Dialogue in cash after all
conditions precedent have been fulfilled and against delivery of the shares.
3.4. Funding guarantee
The Industrial Development Corporation has formally approved the funding
required by the Consortium to effect the transaction.
In order to facilitate the transaction, the Dialogue board has agreed,
subject to statutory and regulatory requirements, to the provision of a
guarantee to the Consortium`s funders in respect of a maximum amount of
R4 532 075, representing 4% of the subscription consideration.
3.5. Conditions precedent
The implementation of the transaction will be subject to, inter alia, the
fulfilment of the following conditions precedent:
* all statutory and regulatory requirements and approvals including but
not limited to the JSE and the Companies Act, 61 of 1973 as amended;
* approval of the transaction by Dialogue shareholders in general meeting.
As the transaction is classified as a related party transaction in terms
of the JSE Listings Requirements, MSG Afrika and Tlhalefang Investments
will be precluded from voting their existing Dialogue shares; and
* the Dialogue Board being satisfied with the terms of the guarantee to be
furnished.
4 Pro forma financial effects of the transaction
Set out in the table below are the unaudited pro forma financial effects of
the transaction on Dialogue`s unaudited interim results for the six months
ended 30 June 2007. The unaudited pro forma financial effects are presented
for illustrative purposes only, to provide information on how the transaction
may have impacted on the results and financial position of Dialogue. The
unaudited pro forma financial effects are the responsibility of Dialogue`s
directors. Due to the nature of the unaudited pro forma financial effects,
they may not fairly present Dialogue`s financial position and the results of
its operations after the transaction.
Before the After the Percentage
transaction transaction change
(1) (%)
Earnings per share (cents) 2.8 3.2(2) +14.3
Headline earnings per share (cents) 2.8 3.2(2) +14.3
Net asset value per share (cents) 25.1 58.5(3) +133.1
Net tangible asset value per share 25.1 58.5(3) +133.1
(cents)
Notes:
1 Extracted from the published unaudited interim results of Dialogue for
the six months ended 30 June 2007.
2 Earnings and headline earnings per share in the "After the transaction"
column have been based on the following assumptions:
A. The transaction was effective 1 January 2007;
B. The weighted average number of Dialogue shares in issue is 210 000
000 before and 280 373 832 after the transaction;
C. Interest earned on the subscription amount less transaction costs
at an effective after-tax rate of 5.68% per annum was taken into
account.
3. Net asset value and net tangible asset value per share in the "After the
transaction" column have been based on the following assumptions:
A. The transaction was effective 30 June 2007;
B. The total number of Dialogue shares in issue is 210 000 000 before
and 280 373 832 after the transaction.
5 Related party
As Given Mkhari and Kopano Mangena are non-executive directors of Dialogue
and MSG Afrika and Tlhalefang Investments already own shares in Dialogue, the
transaction is classified as a related party transaction in terms of the JSE
Listings Requirements.
Dialogue is in the process of appointing an independent professional expert
to evaluate whether the terms of the transaction are fair. The fairness
opinion will be announced in due course and will lie for inspection at the
company`s registered office for a period of 28 days from the date of posting
the circular referred to in paragraph 6 below.
6 Circular to shareholders
A circular to shareholders setting out full details of the transaction and
incorporating a notice convening a general meeting to consider and, if deemed
appropriate, to approve the transaction will be circulated to shareholders
within 28 days following the date of this announcement.
7 Withdrawal of cautionary announcement
The cautionary announcement published by Dialogue on 7 September 2007 is
hereby withdrawn.
Johannesburg
4 October 2007
Corporate Advisor and Designated Advisor:
Bridge Capital Advisors (Pty) Limited
Date: 04/10/2007 10:34:31 Produced by the JSE SENS Department.
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