| Fri 18 Jan 2008, 17:02 | | SDH - Securedata Holdings - Proposed Acquisition And Withdrawal Of Cautionary |
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SDH
SDH
SDH - Securedata Holdings - Proposed Acquisition And Withdrawal Of Cautionary
Announcements
SECUREDATA HOLDINGS LIMITED
(Formerly known as ERP.com Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 1998/010017/06)
("SecureData")
Share code: SDH
ISIN number: ZAE000096368
PROPOSED ACQUISITION OF MIS CORPORATE DEFENCE SOLUTIONS LIMITED AND WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENTS
1. Introduction
Shareholders of SecureData are referred to the cautionary announcements dated 27
September 2007, 20 November 2007 and 3 January 2008 ("cautionary announcements")
and are advised that SecureData intends, together with management of MIS
Corporate Defence Solutions Limited (a company incorporated in the United
Kingdom ("UK")) ("MIS") ("MIS management") through a new company to be formed as
explained in paragraph 4 below , to make an offer to the shareholders of MIS to
acquire the entire issued share capital of MIS ("the proposed acquisition"),
subject to the proposed suspensive conditions set out in paragraph 5 below,.
The salient terms and conditions pertaining to the proposed transaction have
been agreed to between SecureData and the controlling shareholder of MIS in a
term sheet letter ("the term sheet").
2. Rationale for the proposed acquisition
SecureData is one of the largest specialist information security and risk
management organisations in Africa. MIS is one of the largest independent
information security solution providers in the UK and the largest independent,
specialised information security managed services provider. SecureData and MIS
have a number of common technology product suppliers and have similar customer
profiles.
The proposed acquisition will provide the group with a significant footprint in
a large and growing market with geographic proximity to opportunities in the
rest of Europe. It is envisaged that in addition to expanding its presence in
the UK and Europe, MIS will be able to offer opportunities for expansion for
SecureData`s specialised skills such as those housed within it`s subsidiary,
SensePost (Pty) Limited.
It is further envisaged that the technologies and processes utilised by MIS in
the delivery of its managed services will be utilised by SecureData to provide
managed information risk services to its customers and business partners in
Africa.
3. Description of the business of MIS
MIS acts as a reseller of market leading information security and risk
management products and as an outsourced provider of security monitoring and
threat mediation services to a range of blue chip customers in the UK. More than
50% of MIS` revenue is services based or recurring in nature.
4. Terms of the proposed acquisition
The term sheet provides for a new UK holding company, SDH UK Limited ("NewCo")
to be formed, which will acquire 100% of the issued share capital of MIS for a
purchase consideration amounting to a maximum of the South African Rand
equivalent of GBP14.2 million, payable in cash ("the proposed purchase
consideration").
This will be achieved in the form of an offer to MIS` approximately 60
shareholders. More than 90% of MIS` shareholders have already been canvassed
and indicated their support for the proposed acquisition.
SecureData will own 76% of the issued ordinary shares in NewCo and MIS
management 24%.
SecureData intends to fund the proposed purchase consideration through the issue
of new SecureData ordinary shares to raise approximately GBP7.1 million and
through senior debt raised in South Africa of approximately GBP5.40 million. The
balance of GBP1.70 million will be paid by MIS management for their stake.
The proposed acquisition will be effective from the date of fulfilment of the
last proposed suspensive condition as detailed in paragraph 5 below, which is
expected to occur by no later than 28 February 2008 ("effective date").
5. Proposed suspensive conditions
The proposed acquisition is subject to the following proposed suspensive
conditions, set out in the term sheet:
MIS management and NewCo entering into an employment agreement to the
satisfaction of SecureData;
- suitable funding arrangements being concluded on terms acceptable to
SecureData;
- signature of a formal shareholders agreement between SecureData, MIS
management and NewCo;
- SecureData completing a due diligence investigation on MIS to its
satisfaction;
- regulatory approvals being obtained in South African and/or the UK, inter
alia, from the JSE Limited and The South African Reserve Bank, to the
extent necessary;
- approval of the proposed acquisition by SecureData shareholders in a
general meeting; and
- share purchase agreements concluded with the existing shareholders of MIS
to the satisfaction of SecureData and such agreements becoming
unconditionally operative upon the acceptance of at least 90% of the MIS
shareholders accepting.
6. Pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the
proposed acquisition on SecureData`s earnings per share, headline earnings per
share, net asset value per share and tangible net asset value per share.
The unaudited pro forma financial effects has been prepared to illustrate the
impact of the proposed acquisition on the reported financial information of
SecureData for the twelve months ended 31 July 2007, had the proposed
acquisition occurred on 1 August 2006 for income statement purposes and on 31
July 2007 for balance sheet purposes.
The unaudited pro forma financial effects has been prepared using accounting
policies that comply with International Financial Reporting Standards and that
are consistent with those applied in the audited results of SecureData for the
twelve months ended 31 July 2007.
The unaudited pro forma financial effects are the responsibility of the
directors and have been prepared for illustrative purposes only and because of
their nature may not fairly present the actual financial effects of the proposed
acquisition.
For the purposes of the unaudited pro forma financial effects, an exchange rate
of GBP1=R13.50 has been assumed.
Notes Before the After the Percentage
proposed proposed change
acquisition acquisition (%)
Basic earnings per share 3.87 3.25 (16.20%)
(cents)
Headline earnings per 16.20 15.36 (5.19%)
share (cents)
Net asset value per share 30.94 70.08 126.50%
(cents)
Tangible net asset value 7.67 (37.33) (586.70%)
per share (cents)
Weighted average number 159.227 209.227 31.40%
of shares in issue
(000`s)
Fully diluted weighted 168.747 218.747 29.63%
average number of shares
in issue (000`s)
Notes:
1. The amounts in the "Before" column are based on the headline earnings and
earnings per SecureData share as reported in the audited financial results
of SecureData for the year ended 31 July 2007. The amounts in the "After"
column represent the headline earnings and earnings that would have accrued
per SecureData share for the year ended 31 July 2007 based on the following
main assumptions:
- the proposed acquisition had been effective 1 August 2006;
- the audited financial results of MIS for the year ended 30 June 2007;
- borrowing cost of 14.5%; and
- the excess of the purchase consideration over the net asset value of
2.MIS at 1 August 2006 resulting from the proposed acquisition, of
approximately GBP13.93 million, is assumed to represent intangibles.
The excess still needs to be allocated to the fair value of the
underlying assets of MIS.
2. The earnings of MIS for the year to 30 June 2007 being adjusted upwards by
the reversal of once off management bonuses and restructuring costs
incurred after an acquisition equal to GBP0.56million.
3. The income statement and balance sheet of MIS was translated at an exchange
rate of GBP13.50 to the Rand.
4. The amounts in the "Before" column are based on the net asset value per
share and net tangible asset value per share as reported in the audited
financial results of SecureData for the year ended 31 July 2007. The
amounts in the "After" column represent the net asset value per share and
tangible net asset value per share based on the following assumptions:
- the proposed acquisition had been effective 31 July 2007;
- the audited financial statements of MIS for the year ended 30 June
2007; and
- the excess of the purchase consideration over the net asset value of
MIS at 31 July 2007 resulting from the proposed acquisition, of
approximately GBP13.93 million, is assumed to represent intangibles.
The amount of the intangibles would be affected by an increase in
equity from 31 July 2007 to the effective date of the proposed
acquisition. The excess still needs to be allocated to the fair value
of the underlying assets of MIS.
7. Circular to shareholders and general meeting
A circular, setting out full details of the proposed acquisition and
including the notice convening the general meeting to consider and, if
deemed fit, pass, with or without modification, the ordinary resolutions
required to implement the proposed acquisition, will be posted to
SecureData shareholders in due course, once the appropriate final legal
agreements have been concluded. An announcement in this regard will be
published.
8. Withdrawal of cautionary
Shareholders are advised that the cautionary announcements are hereby
withdrawn and shareholders no longer need to exercise caution when dealing
in their securities.
Johannesburg
18 January 2008
Sponsor Reporting accountants
Barnard Jacobs Mellet KPMG Inc
Corporate Finance (Pty)
Limited
Date: 18/01/2008 17:02:27 Produced by the JSE SENS Department.
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