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SQE
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SQE - Square One Solutions Group Limited - Detailed cautionary announcement
SQUARE ONE SOLUTIONS GROUP LIMITED
(Incorporated in the Republic if South Africa)
Registration number 1999/026822/06
Share Code: SQE & ISIN: ZAE000023768
("Square One" or "the company")
DETAILED CAUTIONARY ANNOUNCEMENT
Introduction
With reference to the cautionary announcement released on SENS on 11 January
2008. The directors wish to inform shareholders that Square One has entered into
an agreement with Structured Infrastructure Solutions (Pty) Ltd ("SIS") formerly
(H Investments 4 (Pty) Limited ("HI4") )to acquire the entire issued share
capital of SIS("the transaction").
SIS`s comprises of -:
- a cabling, communications (wireless and landbased), Wi- Fi, 3G and
consultancy business;and
- an industrial coding and marking solutions business conducted through a
wholly owned subsidiary.
The transaction is classified as a related party transaction in terms Section 10
of the JSE Listing Requirements as Proudafrique Trading 66 (Pty) Limited a
material shareholder in Square One is a also a material shareholder in SIS.
Consideration
The purchase consideration is R12,535,000 to be settled by way of issue of 10
900 000 (25% of the shares in issue after the issue) new Square One shares to
the individual shareholders of SIS, at an issue price of 115 cents per share as
consideration for the shares in SIS.
The vendors of SIS all of whom are listed below will be receiving Square One
shares proportionate to their shareholding in SIS as follows:
Vendor No of shares
Proudafrique (Pty) Limited 4 360 000
Clinton Cowley 4 830 000
GAC Investment Holdings (Pty) Limited 1 150 000
Rishen Mathura 460 000
S Ueckermann 100 000
Rationale for the acquisition
Square One has for some time now been implementing a strategy of reducing its
dependence on its traditional channel business and growing into higher margin
and higher value areas including:
- Industrial & Manufacturing - predominately, The Coding & Marking sector;
- Infrastructure, Electrical and Power solutions;
- Unified Communication Solutions;and
- Rental finance solutions.
The transaction is a major step in furthering this strategy.
SIS is a respected player in the infrastructure, electrical and power solutions
space, predominantly focused on the Kwa-Zulu Natal region. SIS has been in
business for more than 10 years and holds major contracts with leading
enterprise and blue chip clients. The integration with Square One enables the
SIS team to expand their national reach, whilst Square One gains a dedicated and
focused management team that will increase its delivery capacity and meet
growing client requirements.
The acquisition of SIS enables Square One to enhance its capacity to meet the
abovementioned needs:
The combination of the two businesses will unlock significant synergies which
neither business could achieve on its own and Square One expects to see
significant growth from the combined businesses following the conclusion of the
transaction. The parties have had a working relationship for 5 years and this
will also assist in a smooth transition process and quicker realisation of
integration benefits.
The effective date of the transaction is 1 December 2007.
Additional Transaction
In addition, in a separate and unrelated transaction, Square One has also
acquired the remaining 49% in Square One (Pty) Ltd that it does not already own.
Square One (Pty) Ltd was established in 2004 to accommodate the software
integration and networking solutions business that was at that point acquired
from Latitude.
Due to market developments and operational requirements, it has become
imperative that this business be integrated into other areas of the Group to
achieve maximum synergistic benefits and cost savings. Accordingly the Group has
approached the minority shareholders and offered to acquire the remaining
shareholding in Square One (Pty) Ltd for a consideration of R575,000, to be
settled by the issue of 500,000 new Square One shares at an issue price of
115cents per share.
We believe that this restructuring completes an important component of Square
One achieving its goals.
Conditions Precedent
The transactions will be subject to, inter alia:
- obtaining the necessary regulatory approval;
- the necessary approvals of the transaction by the requisite majority of
Square One`s shareholders in general meeting;
- the JSE agreeing to the listing of the shares to be issued in terms of the
transaction.
Documentation
A circular including a fairness opinion by an independent expert and revised
listing particulars will be sent to shareholders in due course giving full
detail of the transaction and incorporating a notice convening a general
meeting.
Cautionary
A further announcement would be sent out in due course detailing the financial
effects of the transaction, until such time shareholders should exercise caution
when dealing in Square One shares.
Sandton
28 February 2008
DESIGNATED ADVISER:
EXCHANGE SPONSORS (PTY) LIMITED
Date: 28/02/2008 16:01:02 Produced by the JSE SENS Department.
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