| Wed 24 Oct 2007, 14:54 | | ATN/ATNP/BTG - Altron/Bytes - Firm intention by al |
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ATN BTG ATNP
ATN BTG
ATN/ATNP/BTG - Altron/Bytes - Firm intention by altron to make an offer to
acquire the issued ordinary share capital and
withdrawal of cautionary announcements
ALLIED ELECTRONICS CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06
Share code: ATN & ISIN: ZAE000029658
Share code: ATNP & ISIN: ZAE000029666
("Altron")
BYTES TECHNOLOGY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1911/003874/06)
Share code: BTG & ISIN: ZAE000029526
("Bytes")
FIRM INTENTION BY ALTRON TO MAKE AN OFFER TO ACQUIRE THE ISSUED ORDINARY SHARE
CAPITAL OF BYTES THAT ALTRON AND ITS SUBSIDIARIES DO NOT ALREADY OWN AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS
1. INTRODUCTION
Shareholders of Altron and Bytes are referred to the cautionary announcements
and renewals thereof released by Altron and Bytes on the Securities Exchange
News Service ("SENS") of the JSE Limited ("the JSE") on 8 August 2007 and 25
September 2007 respectively. The boards of directors of Altron and Bytes are
authorised to announce that Altron has now expressed a firm intention to the
board of directors of Bytes to make an offer to acquire the 42.3% of the
issued ordinary share capital of Bytes that Altron and its subsidiaries (the
"Altron Group") do not already own ("the Bytes Minority Shares") from all
shareholders of Bytes other than the Altron Group (the "Bytes Minority
Shareholders") in accordance with and as contemplated by the Securities
Regulation Code on Takeovers and Mergers ("the Proposed Bytes Acquisition").
The implementation of the Proposed Bytes Acquisition is subject to the
fulfillment of the conditions precedent as set out in paragraph 4 below.
2. RATIONALE AND BENEFITS
Pursuant to Altron`s ongoing assessment of the Altron Group structure, its
various investments and operations and in accordance with its stated objective
of unlocking shareholder value, the Altron Group has proposed the following
independent transactions:
- the acquisition of the Bytes Minority Shares by way of a scheme of
arrangement and thereafter the delisting of the Bytes ordinary shares
("Bytes Shares") from the JSE; and
- the acquisition of the Allied Technologies Limited ("Altech") issued
ordinary shares ("Altech Shares") which the Altron Group, including
Altron One Nominees (Proprietary) Limited, (collectively the "Excluded
Members") do not already own (the "Altech Minority Shares") from all the
Altech shareholders other than the Excluded Members (the "Altech Minority
Shareholders") by way of a scheme of arrangement and thereafter the
delisting of the Altech Shares from the JSE (the "Altech Scheme").
The Altron board of directors believes that the Proposed Bytes Acquisition and
the Altech Scheme will inter alia:
- further simplify the corporate and operating structure of the Altron
Group;
- improve the free float and liquidity of the Altron participating
preference shares and the Altron ordinary shares (collectively "Altron
Shares") on the JSE;
- create a single point of entry into the Altron Group whilst
simultaneously increasing Altron`s exposure to its core activities;
- limit the potential strategic conflicts of interest that presently exist
between Bytes and Altech in relation to corporate opportunities whilst
preserving the strong brands and market strength of Altech and Bytes
respectively;
- maximise synergies between Bytes and Altech as the telecoms and
information technology markets undergo increasing convergence enabling
the Altron Group to offer more effective tailored customer solutions;
- improve operational and cost efficiencies and leverage off improved
Altron Group procurement opportunities and standardised internal control
systems;
- improve service delivery to customers through a more cohesive approach
whilst maintaining the respective corporate cultures of Bytes, Altech and
Altron;
- improve the enlarged Altron Group`s financial leverage, financial
capability and critical mass; and
- allow Altron greater control over its cash flows and to gear its
operations and allocate its capital more effectively.
The Bytes board of directors believes that the Proposed Bytes Acquisition
inter alia:
- represents an attractive opportunity for the Bytes Minority Shareholders
to become part of a larger more diversified group, with a strong balance
sheet to support value enhancing acquisitions by Bytes; and
- provides the Bytes Minority Shareholders with a significant premium on
their shareholding in Bytes.
3.THE PROPOSED BYTES ACQUISITION
3.1 Introduction
Altron intends implementing the Proposed Bytes Acquisition by way of a scheme
of arrangement in terms of section 311 of the Companies Act, 1973 (Act 61 of
1973), as amended ("the Act"), to be proposed by Altron between Bytes and its
shareholders, other than the Altron Group, in terms of which Altron will
acquire all of the Bytes Minority Shares held by the Bytes Minority
Shareholders ("the Bytes Scheme").
Pursuant to the successful implementation of the Proposed Bytes Acquisition,
it is anticipated that the Bytes Shares will be delisted from the "Technology"
sector and the "Computer Services" sub-sector of the JSE.
3.2 The Proposed Bytes Acquisition consideration
3.2.1 Participating preference share consideration
In the event of the conditions precedent to the Proposed Bytes
Acquisition being fulfilled and the Bytes Scheme becoming operative, a
Bytes Minority Shareholder will receive a scheme consideration of 0.43565
Altron participating preference shares for every 1 Bytes Share held on
the record date of the Bytes Scheme credited as fully paid-up (the
"Participating Preference Share Consideration").
3.2.2 Ordinary share consideration alternative
The minimum Altron ordinary shares receivable
As an alternative to the Participating Preference Share Consideration, a
Bytes Minority Shareholder may elect to receive a scheme consideration
comprising of so many Altron ordinary shares (the "Minimum Ordinary
Shares") as equals 15% of his aggregate holding of Bytes Shares
multiplied by 0.40715. In such event, the balance of the scheme
consideration due to a Bytes Minority Shareholder will be discharged by
way of the issue of so many Altron participating preference shares as
equals 85% of his aggregate holding of Bytes Shares multiplied by 0.43565
(the "Ordinary Share Consideration").
Additional Altron ordinary shares receivable
If the Ordinary Share Consideration is not elected by all Bytes Minority
Shareholders and/or all Altech Minority Shareholders in their respective
schemes of arrangement, there will be excess Altron ordinary shares
("Excess Altron Ordinary Shares") available to be issued to each Bytes
Minority Shareholder who elects the Ordinary Share Consideration
("Ordinary Share Electee"). In that event, each Ordinary Share Electee
will, in addition to the Minimum Ordinary Shares, receive a percentage
of the Excess Altron Ordinary Shares on a pro rata basis equal to the
percentage of Bytes Shares held by that Ordinary Share Electee relative
to the aggregate Bytes Shares held by all Ordinary Share Electees,
provided that:
- no Ordinary Share Electee will receive a number of Altron ordinary shares
greater than 100% of his aggregate holding of Bytes Shares multiplied by
0.40715 (the "Ordinary Share Limit"); and
- if any Ordinary Share Electee receives fewer Altron ordinary shares than
the Ordinary Share Limit, the balance of his scheme consideration will be
discharged by way of the issue of so many Altron participating preference
shares as equals his aggregate holding of Bytes Shares (other than those
Bytes Shares which were used to calculate the Altron ordinary shares due
to such Ordinary Share Electee) multiplied by 0.43565.
3.2.3 No fractions
No fractions will be issued and any fraction of Altron Shares to which
any Bytes Minority Shareholder is entitled after the conversion of all of
the Bytes Shares held by such Bytes Minority Shareholder will, if it
comprises 0,5 or more of an Altron Share be rounded up, otherwise will be
rounded down to the nearest whole Altron Share.
3.2.4 Deemed election
In the event that a Bytes Minority Shareholder does not make a valid
election, that Bytes Minority Shareholder will be deemed to have elected
the Participating Preference Share Consideration.
3.3 Irrevocable undertakings
Altron shareholders collectively representing approximately 63% of the
voting rights of the entire issued share capital of Altron have
irrevocably undertaken to vote in favour of the Altron Resolutions as
defined in paragraph 4 below.
3.4 Pro forma financial effects of the Proposed Bytes Acquisition on the
Altron shareholders
3.4.1 Pro forma financial effects for the 6 month period ended 31 August 2007
The tables below illustrate the unaudited pro forma financial effects of
the transaction based on the published unaudited unreviewed interim
results for the six months ended 31 August 2007 and the audited financial
results for the 12 months ended 28 February 2007. The preparation of the
unaudited pro forma financial effects is the responsibility of the
directors of Altron. The unaudited pro forma financial effects have been
prepared for illustrative purposes only to provide information on how the
transaction may have impacted on Altron`s results and financial position
and due to the nature thereof may not give a fair reflection of Altron`s
results and financial position.
All Bytes and Altech Minority Shareholders elect the Participating Preference
Share Consideration
Before After the Change After Change After Change
the Bytes 3 the 3 the 3
Schemes Scheme Altech Bytes
onlySquared Scheme and
only4 Altech
Schemes
5
(R) (R) (%) (R) (%) (R) %
Headline 1.71 1.66 6 (2.6) 1.61 6 (5.8) (7.4)
earnings 1.58
per share
Earnings 1.61 1.56 6 (2.7) 1.47 6 (8.4) (9.9)
per share 1.45
Net asset 12.76 12.38 7 (3.0) 12.19 7 (4.5) (6.5)
value per 11.93
share
Net 9.82 9.75 7 (0.7) 9.84 7 0.1 (0.5)
tangible 9.78
asset
value per
share
All Bytes and Altech Minority Shareholders elect the Ordinary Share
Consideration
Before After the Change After Change After Change
the Bytes 3 the 3 the 3
Schemes Scheme Altech Bytes
onlySquared Scheme and
only4 Altech
Schemes
5
(R) (R) (%) (R) (%) (R) %
Headline 1.71 1.66 8 (2.5) 1.61 8 (5.6) (7.2)
earnings 1.58
per share
Earnings 1.61 1.56 8 (2.6) 1.47 8 (8.2) (9.7)
per share 1.45
Net asset 12.76 12.40 9 (2.9) 12.21 9 (4.3) (6.3)
value per 11.96
share
Net 9.82 9.76 9 (0.6) 9.86 9 0.3 (0.2)
tangible 9.80
asset
value per
share
Notes:
The financial effects are indicative only and have been based on the
assumptions set out below:
1. The "Before the Schemes" column reflects the published Altron unaudited
and unreviewed financial results for the six months ended 31 August 2007.
2. The "After the Bytes Scheme only" column has been adjusted for the
effects of the transaction on Altron if only the Bytes Minority Shares
were acquired.
3. The percentage change is calculated on unrounded amounts.
4. The "After the Altech Scheme only" column has been adjusted for the
effects of the transaction on Altron if only the Altech Minority Shares
were acquired.
5. The "After the Bytes and Altech Schemes" column has been adjusted for the
effects of the transaction on Altron if both the Bytes and Altech
Minority Shares were acquired.
6. For the purposes of calculating headline earnings per share and basic
earnings per share "after the schemes" for the six months ended 31 August
2007 if all of the Bytes and Altech Minority Shareholders elect the
Participating Preference Share Consideration, it was assumed that:
- The Bytes and Altech Schemes became operational and were implemented in
full with effect from 1 March 2007;
- the Altech Scheme consideration is settled through the issue of
69,817,234 Altron participating preference shares with effect from 1
March 2007 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of 32,665,228
Altron participating preference shares with effect from 1 March 2007 to
the Bytes Minority Shareholders;
- the portion of Altech earnings that was previously attributable to the
Altech Minority Shareholders has been earned by Altron for the six months
ended 31 August 2007;
- the portion of Bytes earnings that was previously attributable to the
Bytes Minority Shareholders has been earned by Altron for the six months
ended 31 August 2007;
- the proposed treatment of Altech share options and share appreciation
rights occurred with effect from 1 March 2007. The acceleration of the
vesting periods resulted in an additional after tax expense of R5.5
million in the six months ended 31 August 2007; and
- the proposed treatment of Bytes share options and share appreciation
rights occurred with effect from 1 March 2007. The acceleration of the
vesting periods resulted in an additional after tax expense of R5.7
million in the six months ended 31 August 2007.
7. For the purposes of calculating the net asset value per share and net
tangible asset value per share "after the schemes" at 31 August 2007 if
all of the Bytes and Altech Minority Shareholders elect the Participating
Preference Share Consideration, it was assumed that:
- the Bytes and Altech Schemes became operational and were implemented in -
full with effect from 31 August 2007;
- the number of Altron participating preference shares in issue "after the
scheme" has been increased by 69,817,234 with effect from 31 August 2007,
with regards to the Altech Scheme;
- the number of Altron participating preference shares in issue "after the
scheme" has been increased by 32,665,228 with effect from 31 August 2007,
with regards to the Bytes Scheme;
- the premium of R2,596 million arising on the implementation of the Altech
Scheme has been recognised directly in Altron`s equity in accordance with
Altron`s accounting policy on premiums arising on subsequent purchases
from minority interests in subsidiaries;
- transaction costs of R8 million relating to the Altech Scheme have been
included in the premium arising on the proposed Altech Scheme;
- the premium of R1,237 million arising on the implementation of the Bytes
Scheme has been recognised directly in Altron`s equity in accordance with
Altron`s accounting policy on premiums arising on subsequent purchases
from minority interests in subsidiaries;
- transaction costs of R8 million relating to the Bytes Scheme have been
included in the premium arising on the Proposed Bytes Acquisition;
- Altron`s minority shareholders` interests in relation to Altech "after
the scheme" has been reduced by R701 million with effect from 31 August
2007, to reflect Altron`s increase in shareholding in Altech following
the implementation of the Altech Scheme (these minority interests
represent the value of the net assets acquired in terms of the Altech
Scheme);
- Altron`s minority shareholders` interests in relation to Bytes "after the
scheme" has been reduced by R310 million with effect from 31 August 2007,
to reflect Altron`s increase in shareholding in Bytes following the
implementation of the Bytes Scheme (these minority interests represent
the value of the net assets acquired in terms of the Bytes Scheme);
- Altron`s net asset value "after the scheme" has been reduced by R2.3
million at 31 August 2007 as a result of the acceleration of the vesting
period on the Altech Share appreciation rights;
- Altron`s net asset value "after the scheme" has been reduced by R3.6
million at 31 August 2007 as a result of the acceleration of the vesting
period on the Bytes Share appreciation rights; and
- Altron participating preference shares have been issued with effect from
31 August 2007, to the Altech and Bytes Minority Shareholders at R47.11
per Altron participating preference share, being the 30 day Volume
Weighted Average Price ("VWAP") on 7 August 2007 the day prior to the
Altron cautionary announcement.
8. For the purposes of calculating headline earnings per share and basic
earnings per share "after the schemes" for the six months ended 31 August
2007 if all of the Bytes and Altech Minority Shareholders elect the
Ordinary Share Consideration, the assumptions were the same as under note
6, except that:
- the Altech Scheme consideration is settled through the issue of 9,788,958
Altron ordinary shares and 59,344,649 Altron participating preference
shares with effect from 1 March 2007 to the Altech Minority Shareholders;
and
- the Bytes Scheme consideration is settled through the issue of 4,579,937
Altron ordinary shares and 27,765,444 Altron participating preference
shares with effect from 1 March 2007 to the Bytes Minority Shareholders.
9. For the purposes of calculating the net asset value per share and net
tangible asset value per share "after the schemes" at 31 August 2007 if
all of the Bytes and Altech Minority Shareholders elect the Ordinary
Share Consideration, the assumptions were the same as under note 7,
except that:
- the number of Altron ordinary shares in issue "after the scheme" has been
increased by 9,788,958 and the number of Altron participating preference
shares in issue "after the scheme" has been increased by 59,344,649 with
effect from 31 August 2007, with regards to the Altech Scheme;
- the number of Altron ordinary shares in issue "after the scheme" has been
increased by 4,579,937 and the number of Altron participating preference
shares in issue "after the scheme" has been increased by 27,765,444 with
effect from 31 August 2007, with regards to the Bytes Scheme; and
- Altron ordinary shares have been issued with effect from 31 August 2007,
to the Altech and Bytes Minority Shareholders at R50.40 per Altron
ordinary share, being a 7% premium to the Altron participating preference
share 30 day VWAP on 7 August 2007 the day prior to the Altron cautionary
announcement.
3.4.2 Pro forma financial effects for the 12 month period ended 28 February
2007.
All Bytes and Altech Minority Shareholders elect the Participating Preference
Share Consideration
Before After the Change After Change After Change
the Bytes 3 the 3 the 3
Schemes Scheme Altech Bytes
onlySquared Scheme and
only4 Altech
Schemes
5
(R) (R) (%) (R) (%) (R) %
Headline 2.83 2.80 6 (1.2) 2.74 6 (3.1) (3.9)
earnings 2.72
per share
Earnings 2.87 2.75 6 (4.1) 2.77 6 (3.6) (6.8)
per share 2.67
All Bytes and Altech Minority Shareholders elect the Ordinary Share
Consideration
Before After the Change After Change After Change
the Bytes 3 the 3 the 3
Schemes Scheme Altech Bytes
onlySquared Scheme and
only4 Altech
Schemes
5
(R) (R) (%) (R) (%) (R) %
Headline 2.83 2.80 7 (1.1) 2.75 7 (2.9) (3.7)
earnings 2.73
per share
Earnings 2.87 2.76 7 (4.0) 2.77 7 (3.4) (6.6)
per share 2.68
Notes:
There is no change in the net asset value and net tangible asset value
calculations from those set out above. The financial effects are indicative
only and have been based on the assumptions set out below:
1. The "Before the Schemes" column reflects the published Altron audited
financial results for the year ended 28 February 2007.
2. The "After the Bytes Scheme only" column has been adjusted for the
effects of the transaction on Altron if only the Bytes minority shares
were acquired.
3. The percentage change is calculated on unrounded amounts.
4. The "After the Altech Scheme only" column has been adjusted for the
effects of the transaction on Altron if only the Altech Minority Shares
were acquired.
5. The "After the Bytes and Altech Schemes" column has been adjusted for the
effects of the transaction on Altron if both the Bytes and Altech
Minority Shares were acquired.
6. For the purposes of calculating headline earnings per share and basic
earnings per share "after the schemes" for the year ended 28 February if
all of the Bytes and Altech Minority Shareholders elect the Participating
Preference Share Consideration, it was assumed that:
- the Bytes and Altech Schemes became operational and were implemented
in full with effect from 1 March 2006;
- the Altech Scheme consideration is settled through the issue of
69,817,234 Altron participating preference shares with effect from 1
March 2006 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of
32,665,228 Altron participating preference shares with effect from 1
March 2006 to the Bytes Minority Shareholders;
- the portion of Altech earnings that was previously attributable to
the Altech Minority Shareholders has been earned by Altron for the
year ended 28 February 2007;
- the portion of Bytes earnings that was previously attributable to
the Bytes Minority Shareholders has been earned by Altron for the
year ended 28 February 2007;
- the proposed treatment of Altech share options and share
appreciation rights occurred with effect from 1 March 2006. The
acceleration of the vesting periods resulted in an additional after
tax expense of R6.2 million in the year to 28 February 2007.
- the proposed treatment of Bytes share options and share appreciation
rights occurred with effect from 1 March 2006. The acceleration of
the vesting periods resulted in an additional after tax expense of
R6.4 million in the year to 28 February 2007.
7. For the purposes of calculating headline earnings per share and basic
earnings per share "after the schemes" for the year ended 28 February
2007 if all of the Bytes and Altech Minority Shareholders elect the
Ordinary Share Consideration, the assumptions were the same as under note
6, except that:
- the Altech Scheme consideration is settled through the issue of
9,788,958 Altron ordinary shares and 59,344,649 Altron participating
preference shares with effect from 1 March 2006 to the Altech
Minority Shareholders; and
- the Bytes Scheme consideration is settled through the issue of
4,579,937 Altron ordinary shares and 27,765,444 Altron participating
preference shares with effect from 1 March 2006 to the Bytes
Minority Shareholders.
3.5 Pro forma financial effects of the Proposed Bytes Acquisition on the
Bytes shareholders
3.5.1 Pro forma financial effects for the 6 month period ended 31 August
2007
The tables below illustrate the unaudited pro forma financial effects of
the transaction based on the published unaudited unreviewed interim
results for the six months ended 31 August 2007 and the audited financial
results for the 12 months ended 28 February 2007. The preparation of the
unaudited pro forma financial effects is the responsibility of the
directors of Bytes. The unaudited pro forma financial effects have been
prepared for illustrative purposes only to provide information on how the
transaction may have impacted on Altron`s results and financial position
and due to the nature thereof may not give a fair reflection of Bytes`s
results and financial position.
A Bytes Minority Shareholder receives the Participating Preference
Share Consideration
Financial Before After the Change After Change
information the Bytes 3 the 3
Schemes Scheme Bytes
onlySquared and
Altech
Schemes
4
(R) (R) (%) (R) %
Headline earnings 0.65 0.72 5 11.3 5.8
per share 0.69
Earnings per 0.61 0.68 5 11.5 3.3
share 0.63
Net asset value 4.35 5.39 6 24.0 19.5
per share 5.20
Net tangible 1.62 4.25 6 162.3 162.9
asset value per 4.26
share
A Bytes Minority Shareholder receives the Ordinary Share Limit
Financial Before After the Change After Change
information the Bytes 3 the 3
Schemes Scheme Bytes
onlySquared and
Altech
Schemes
4
(R) (R) (%) (R) %
Headline earnings 0.65 0.68 7 4.1 (0.9)
per share 0.64
Earnings per 0.61 0.64 7 4.4 (3.2)
share 0.59
Net asset value 4.35 5.05 8 16.0 12.0
per share 4.87
Net tangible 1.62 3.97 8 145.3 146.4
asset value per 3.99
share
Notes:
The financial effects are indicative only and have been based on the
assumptions set out below:
1. The "Before the Scheme" column reflects the published Bytes unaudited and
unreviewed interim financial results for the six months ended 31 August
2007.
2. The "After the Bytes Scheme only" column has been adjusted for the
effects of the transaction on Bytes shareholders if only the Bytes
Minority Shares were acquired.
3. The percentage change is calculated on unrounded amounts.
4. The "After the Bytes and Altech Schemes" column has been adjusted for the
effects of the transaction on Bytes shareholders if both the Bytes and
Altech Minority Shares were acquired.
4. For the purposes of calculating headline earnings per share and basic
earnings per share "after the scheme" for the six months ended 31 August
2007 if the applicable scheme is settled entirely with Altron
participating preference shares, it was assumed that:
5. the Bytes and Altech Schemes became operational and were implemented in
full with effect from 1 March 2007;
- the Altech Scheme consideration is settled through the issue of
69,817,234 Altron participating preference shares with effect from 1
March 2007 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of
32,665,228 Altron participating preference shares with effect from 1
March 2007 to the Bytes Minority Shareholders;
- the portion of Altech earnings that was previously attributable to
the Altech Minority Shareholders has been earned by Altron for the
six months ended 31 August 2007;
- the portion of Bytes earnings that was previously attributable to
the Bytes Minority Shareholders has been earned by Altron for the
six months ended 31 August 2007;
- the proposed treatment of Altech share options and share
appreciation rights occurred with effect from 1 March 2007. The
acceleration of the vesting periods resulted in an additional after
tax expense of R5.5 million in the six months to 31 August 2007; and
- the proposed treatment of Bytes share options and share appreciation
rights occurred with effect from 1 March 2007. The acceleration of
the vesting periods resulted in an additional after tax expense of
R5.7 million in the six months to 31 August 2007.
6. For the purposes of calculating the net asset value per share and net
tangible asset value per share "after the scheme" at 31 August 2007 if
the applicable schemes are settled entirely with Altron participating
preference shares, it was assumed that:
- the Altech and Bytes Schemes became operational and were implemented
in full with effect from 31 August 2007;
- the number of Altron participating preference shares in issue "after
the scheme" has been increased by 69,817,234 with effect from 31
August 2007, with regards to the Altech Scheme;
- the number of Altron participating preference shares in issue "after
the scheme" has been increased by 32,665,228 with effect from 31
August 2007, with regards to the Bytes Scheme;
- the premium of R2,596 million arising on the implementation of the
Altech Scheme has been recognised directly in Altron`s equity in
accordance with Altron`s accounting policy on premiums arising on
subsequent purchases from minority interests in subsidiaries;
- transaction costs of R8 million relating to the Altech Scheme have
been included in the premium arising on the proposed Altech Scheme;
- the premium of R1,237 million arising on the implementation of the
Bytes Scheme has been recognised directly in Altron`s equity in
accordance with Altron`s accounting policy on premiums arising on
subsequent purchases from minority interests in subsidiaries;
- transaction costs of R8 million relating to the Bytes Scheme have
been included in the premium arising on the Proposed Bytes
Acquisition;
- Altron`s minority shareholders` interests in relation to Altech
"after the scheme" has been reduced by R701 million with effect from
31 August 2007, to reflect Altron`s increase in shareholding in
Altech following the implementation of the Altech Scheme (these
minority interests represent the value of the net assets acquired in
terms of the scheme);
- Altron`s minority shareholders` interests in relation to Bytes
"after the scheme" has been reduced by R310 million with effect from
31 August 2007, to reflect Altron`s increase in shareholding in
Bytes following the implementation of the Bytes Scheme (these
minority interests represent the value of the net assets acquired in
terms of the scheme);
- Altron`s net asset value "after the scheme" has been reduced by R2.3
million at 31 August 2007 as a result of the acceleration of the
vesting period on the Altech share appreciation rights;
- Altron`s net asset value "after the scheme" has been reduced by R3.6
million at 31 August 2007 as a result of the acceleration of the
vesting period on the Bytes share appreciation rights; and
- Altron participating preference shares have been issued with effect
from 31 August 2007, to the Altech and Bytes Minority Shareholders
at R47.11 per Altron participating preference share being the 30 day
VWAP on 7 August 2007, the day prior to the Altron cautionary
announcement.
7. For the purposes of calculating headline earnings per share and basic
earnings per share "after the scheme" for the six months ended 31 August
2007 if the schemes are settled 15% with Altron ordinary shares and 85%
with Altron participating preference shares, the assumptions were the
same as under note 5, except that:
- the Altech Scheme consideration is settled through the issue of a
maximum of 9,788,958 Altron ordinary shares which would result in
59,344,649 Altron participating preference shares being issued with
effect from 1 March 2007 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of a
maximum of 4,579,937 Altron ordinary shares which would result in
27,765,444 Altron participating preference shares being issued with
effect from 1 March 2007 to the Bytes Minority Shareholders; and
- the financial effects shown are for a Bytes Minority Shareholder
that receives the Ordinary Share Limit.
8. For the purposes of calculating the net asset value per share and net
tangible asset value per share "after the scheme" at 31 August 2007 if
the schemes are settled 15% with Altron ordinary shares and 85% with
Altron participating preference shares, the assumptions were the same as
under note 6, except that:
- the Altech Scheme consideration is settled through the issue of a
maximum of 9,788,958 Altron ordinary shares which would result in
59,344,649 Altron participating preference shares being issued with
effect from 31 August 2007 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of a
maximum of 4,579,937 Altron ordinary shares which would result in
27,765,444 Altron participating preference shares being issued with
effect from 31 August 2007 to the Bytes Minority Shareholders;
- the financial effects shown are for a Bytes Minority Shareholder
that receives the Ordinary Share Limit; and
8. Altron ordinary shares have been issued with effect from 31 August 2007,
to the Altech and Bytes Minority Shareholders at R50.40 per Altron
ordinary share being a 7% premium to the Altron participating preference
share 30 day VWAP on 7 August 2007, the day prior to the Altron
cautionary announcement.
3.5.2 Pro forma financial effects for the 12 month period ended 28
February 2007
A Bytes Minority Shareholder receives the Participating Preference
Share Consideration
Financial Before After the Change After Change
information the Bytes 3 the 3
Scheme Scheme Bytes
onlySquared and
Altech
Schemes
4
(R) (R) (%) (R) %
Headline earnings 1.21 1.22 5 0.6%
per share 1.18 (2.1%)
Earnings per 0.86 1.20 5 39.5% 35.5%
share 1.17
A Bytes Minority Shareholder receives the Ordinary Share Limit
Financial Before After the Change After Change
information the Bytes 3 the 3
Scheme Scheme Bytes
onlySquared and
Altech
Schemes
4
(R) (R) (%) (R) %
Headline earnings 1.21 1.14 6 (5.9) (8.3)
per share 1.11
Earnings per 0.86 1.12 6 30.5 26.9
share 1.09
Notes:
1. There is no change in the net asset value and net tangible asset value
calculations from those set out above. The financial effects are
indicative only and have been based on the assumptions set out below:
2. The "Before the Scheme" column reflects the published Bytes audited
financial results for the year ended 28 February 2007.
3. The "After the Bytes Scheme only" column reflects the published Altron
audited financial results for the year ended 28 February 2007 and has
been adjusted for the effects of the transaction on Altron if only the
Bytes Minority Shares were acquired.
4. The percentage change is calculated on unrounded amounts.
The "After the Bytes and Altech Schemes" column has been adjusted for the
effects of the transaction on Altron if both the Bytes and Altech
Minority Shares were acquired.
5. For the purposes of calculating headline earnings per share and basic
earnings per share "after the scheme" for the year ended 28 February 2007
if the applicable scheme is settled entirely with Altron participating
preference shares, it was assumed that:
- the Altech and Bytes Schemes became operational and were implemented
in full with effect from 1 March 2006;
- the Altech Scheme consideration is settled through the issue of
69,817,234 Altron participating preference shares with effect from 1
March 2006 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of
32,665,228 Altron participating preference shares with effect from 1
March 2006 to the Bytes Minority Shareholders;
- the portion of Altech earnings that was previously attributable to
the Altech Minority Shareholders has been earned by Altron for the
year ended 28 February 2007;
- the portion of Bytes earnings that was previously attributable to
the Bytes Minority Shareholders has been earned by Altron for the
year ended 28 February 2007;
- the proposed treatment of Altech share options and share
appreciation rights occurred with effect from 1 March 2006. The
acceleration of the vesting periods resulted in an additional after
tax expense of R6.2 million in the year to 28 February 2007; and
- the proposed treatment of Bytes share options and share appreciation
rights occurred with effect from 1 March 2006. The acceleration of
the vesting periods resulted in an additional after tax expense of
R6.4 million in the year to 28 February 2007.
6. For the purposes of calculating headline earnings per share and basic
earnings per share "after the scheme" for the year ended 28 February 2007
if the applicable scheme is settled 15% with Altron ordinary shares and
85% with Altron participating preference shares, the assumptions were the
same as under note 5, except that:
- the Altech Scheme consideration is settled through the issue of a
maximum of 9,788,958 Altron ordinary shares which would result in
59,344,649 Altron participating preference shares being issued with
effect from 1 March 2006 to the Altech Minority Shareholders;
- the Bytes Scheme consideration is settled through the issue of a
maximum of 4,579,937 Altron ordinary shares which would result in
27,765,444 Altron participating preference shares being issued with
effect from 1 March 2006 to the Bytes Minority Shareholders; and
- the financial effects shown are for a Bytes Minority Shareholder
that receives the Ordinary Share Limit.
3.5.3 Market information with respect to the Bytes Scheme
A Bytes A Bytes Minority
Minority Shareholder
Shareholder receives the
receives the Ordinary Share
Participating Limit
Preference
Share
Consideration
Market Before After Premium After Premium
information the the the
Bytes Bytes Bytes
Scheme Scheme Scheme
1 2
(R) (R) % (R) %
Market value 15.18 19.76 30.1 18.46 21.6
per Share
pre-
cautionary
30 day VWAP 15.91 20.52 29.0 19.18 20.6
pre-
cautionary
60 day VWAP 15.81 20.72 31.1 19.36 22.5
pre-
cautionary
Notes:
The financial effects are indicative only and have been based on the
assumptions set out below:
1. On the assumption that a Bytes Minority Shareholder receives the
Participating Preference Share Consideration, the market value in the
"After the Bytes Scheme" column is calculated by multiplying the switch
ratio of 0.43565 by the Altron participating preference share price at
that time.
2. On the assumption that a Bytes Minority Shareholder receives the Ordinary
Share Limit, the market value in the "After the Bytes Scheme" column is
calculated by multiplying the switch ratio of 0.40715 by the Altron
participating preference share price at that time. This switch ratio
results from the ordinary shares being issued at a 7% premium to the
Altron participating preference share 30 day VWAP on 7 August 2007.
3. The Altron participating preference shares rank pari passu to the Altron
ordinary shares in terms of both earnings and dividends as well as on
residual assets on a winding-up and have no vote except in certain
restricted and defined circumstances where they are entitled to one two
hundredth of a vote.
Historically the Altron ordinary shares have traded at an approximate 7%
premium to the Altron participating preference shares.
4. In addition it was assumed that there will be no changes to the Altron
participating preference share price as a result of the Bytes Scheme.
4. CONDITIONS PRECEDENT
The Proposed Bytes Acquisition is subject to the fulfillment of the following
conditions precedent:
- the Bytes Scheme being approved at the scheme meeting by a majority
representing not less than three-fourths of the votes exercisable by the
Bytes Minority Shareholders present and voting, either in person or by
proxy, or by representative, at the scheme meeting.
- the Bytes Scheme being sanctioned by the High Court of South Africa
(Witwatersrand Local Division) ("the Court");
- a certified copy of the order of Court sanctioning the Bytes Scheme being
lodged with, and registered by the Companies and Intellectual Property
Registration Office of South Africa;
- the listing of the Altron Shares to be issued in terms of Proposed Bytes
Acquisition being approved by the JSE; and
- the Altron ordinary resolutions approving the issue of Altron Shares to
satisfy the consideration due to Bytes Minority Shareholders as well as
to the Bytes share incentive scheme to enable it to participate in the
Bytes Scheme as required in terms of the Act, being duly passed at the
Altron general meeting in accordance with the Act (the "Altron
Resolutions").
5. BYTES` INDEPENDENT ADVISOR`S OPINION
Rand Merchant Bank, a division of FirstRand Bank Limited (registration
number 1929/001225/06) ("RMB") has been appointed by the Bytes board of
directors ("the Bytes Board") to consider whether or not the terms of the
Proposed Bytes Acquisition are fair to the Bytes Minority Shareholders.
RMB has completed a preliminary evaluation of the Proposed Bytes
Acquisition and as at 22 October 2007 has advised the Bytes Board that
the offer is fair to Bytes Minority Shareholders as at that date. RMB`s
opinion will however be formalised and finalised at the last practicable
date prior to the publication of the relevant circular to Bytes
shareholders and will be based on financial, regulatory, securities,
market and other conditions prevailing at that time.
Based on RMB`s preliminary advice but subject to receipt of a final
opinion from RMB, a sub-committee of the Bytes Board, set up for the
purposes of considering RMB`s opinion and advising the Bytes Board
regarding whether or not to recommend the Proposed Bytes Acquisition to
the Bytes Minority Shareholders, is of the view that the Proposed Bytes
Acquisition is fair to the Bytes Minority Shareholders.
The formal opinion of RMB will be included in the circular to be posted
to the Bytes shareholders as referred to in paragraph 6 below.
6. DOCUMENTATION AND SALIENT DATES
A circular, containing full details of the Altron Resolutions, will be
posted to Altron shareholders within approximately 28 days.
A circular, containing full details of the Bytes Scheme, will be posted
to Bytes shareholders within approximately 30 days.
A further announcement setting out salient dates of the Proposed Bytes
Acquisition will be made in due course.
7. WITHDRAWAL OF ALTRON AND BYTES CAUTIONARY ANNOUNCEMENTS
Altron and Bytes shareholders are advised that the cautionary
announcements referred to in paragraph 1 above are hereby withdrawn.
Sandton
24 October 2007
Investment Bank to the transaction
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsor to Altron and transactional sponsor to Bytes
Investec Bank Limited
(Registration number 1969/004763/06)
Legal advisor to Altron and attorneys to the Schemes
Edward Nathan & Sonnenbergs Inc.
(Registration number 2006/018200/21)
Legal advisor to Bytes
Bowman Gilfillan Inc.
(Registration number 1998/021409/21)
Independent advisor to Bytes
Rand Merchant Bank Limited, a division of FirstRand Bank Limited
(Registration number 1929/001225/06)
Reporting accountants to Altron and Bytes
KPMG Inc.
(Registration number 1999/21543/21)
Date: 24/10/2007 14:54:35 Produced by the JSE SENS Department.
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