| Tue 29 Jan 2008, 8:30 | | CEL - Celcom Group - Acquisition |
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CEL
CEL
CEL - Celcom Group - Acquisition
Celcom Group Limited
Registration No. 1998/021219/06)
Share Code: CEL ISIN Code: ZAE000087490
("Celcom Group" or the "company")
ACQUISITION BY CELCOM GROUP OF 50,5% INTEREST IN BUSINESS OF NILE COM LIMITED OF
UGANDA
1. Introduction
Shareholders of Celcom Group are advised that in terms of an agreement entered
into as of 25 January 2008 and subject to fulfilment of the conditions set out
below, Celcom Group has, with effect from 1 January 2008, acquired a 50,5%
interest in the business of Nile Com Limited (the "acquisition").
2. The Nile Com business and rationale for the acquisition
Nile Com is an exclusive MTN dealer in Uganda, MTN being Uganda`s largest mobile
network operator. Specifically, Nile Com operates seven MTN branded retail
outlets selling mobile telecoms products and controls 1 200 sub-dealers.
As such, the Nile Com business is complementary to the company`s business in
South Africa and the acquisition presents Celcom Group with the opportunity to
secure a significant distribution footprint in Uganda. Uganda is expected to
present significant growth opportunities in the next few years as at present
there is only very limited mobile telephone penetration within the population
and a limited service offering (primarily voice and SMS on a "pre-paid" rather
than contract basis).
3. Mechanics of the acquisition, purchase price and payment
Under the terms of the acquisition the Nile Com business will be transferred to
a newly incorporated company in Uganda, to be named "Celcom Uganda". Celcom
Group will subscribe for 50.5% of the share capital in Celcom Uganda, the
remaining share capital to be held by Mr Charles Mbire, the chairman of MTN
Uganda, through family investment vehicles. The Mbire family are the current
shareholders of Nile Com and will remain as Celcom Group`s strategic partners in
the business.
The subscription price payable by Celcom Group for the Celcom Uganda share
capital will be equal to 5 times the Celcom Uganda profit after tax for the
period ending 31 December 2008 multiplied by 50.5%, subject to a maximum
subscription price of 2 196 750 000 Ugandan Shillings and a minimum subscription
price of 1 647 562 500 Ugandan Shillings.
The subscription price is payable in cash in two instalments, as follows:
- On implementation, an amount equal to the greater of (i) 823 781 250
Ugandan Shillings and (ii) 5 times the profit after tax of the Nile Com business
for the period ended 31 December 2007 multiplied by 25%; and
- The balance payable on determination of the profit after tax of Celcom
Uganda for the period ending 31 December 2008.
In addition, Celcom Group has an option to acquire an additional 15% of the
share capital in Celcom Uganda until any time up to the 60th day following the
determination of the profit after tax of Celcom Uganda for the period ending 31
December 2008. The purchase price in this regard would be an amount equal to 5
times the Celcom Uganda profit after tax for the period ending 31 December 2008
multiplied by 15%, to be settled in cash.
4. Conditions Precedent
Implementation of the acquisition remains subject to fulfilment of, inter alia,
the following conditions precedent on or before 31 March 2008 -
- the receipt of consent from the relevant cellular network(s) in Uganda for
the implementation of the transaction;
- the receipt of all necessary regulatory approvals in respect of the
transaction including the approval of the Exchange Control Department of the
South African Reserve Bank;
- the signature by key executives of the Nile Com business of new service and
restraint of trade agreements
- the signature of a shareholders agreement in respect of Celcom Uganda
between Celcom Group and its strategic partners.
5. Pro forma financial effects
The pro forma financial effects of the acquisition set out in the table below
are the responsibility of the Celcom Group directors and have been prepared for
illustrative purposes only, to show how the acquisition may have effected the
company`s published results for the 15 month period ended 30 June 2007 (the
"financial results"). Due to their nature the pro forma financial effects may
not fairly represent the company`s financial position, changes in equity,
results of operations or cash flows following implementation of the acquisition.
Before After Change
Earnings per share (cents) 1.38 1.62 17%
Headline earnings per share (cents) 4.58 4.82 5%
Net tangible asset value per share(cents) 7.12 2.95 (59%)
Weighted average shares in issue (`000) 172,486 172,486
Shares in issue (`000) 204,609 204,609
Notes:
The "Before" column reflects the earnings per share ("EPS"), headline earnings
per share("HEPS") and net tangible asset value ("NTAV") per share as published
in the financial results.
The "After" column reflects what the EPS and HEPS would have been had the
acquisition been implemented from 1 April 2006 and reflects what NTAV per share
would have been had the acquisition been implemented on 30 June 2007.
EPS and HEPS in the "After" column are based on the following:
- unaudited management accounts for the Nile Com business for the 15 month
period 1 April 2006 to 30 June 2007;
- the cash purchase price being paid from existing cash resources;
the reduction in interest income was calculated on money market facilities in
existence during the period; and
- intangible assets acquired will be subject to annual impairment tests.
NTAV per share in the "After" column is based on the following:
- intangible assets raised of approximately R8,5 million relate to the excess
of the purchase consideration over the fair value of the assets acquired and the
fair value of the MTN dealer agreement entered into by Nile Com; and
- the purchase consideration will be settled out of existing cash resources.
The acquisition has no effect on net asset value per share.
6. Amendment of articles
The board of Celcom Group confirms that the articles of association of Celcom
Uganda will be amended to comply with the JSE`s Listings Requirements.
7. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 14 January 2008,
and are advised that caution is no longer required to be exercised when dealing
in the company`s securities.
Rosebank
29 January 2008
Designated advisor
Java Capital (Proprietary) Limited
Date: 29/01/2008 08:30:01 Produced by the JSE SENS Department.
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