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ACT ACTP
ACT
ACT / ACTP - AfroCentric / Lethimvula - Proposed acquisition by AfroCentric of
a 63.2% interest in Lethimvula and withdrawal of joint cautionary announcement
AFROCENTRIC INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/000570/06)
Share code: ACT/ ACTP & ISIN: ZAE000078416 / ZAE000082269
("AfroCentric" or "the Company")
LETHIMVULA INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/005087/06)
("Lethimvula")
Proposed acquisition by AfroCentric of a 63.2% interest in Lethimvula and
withdrawal of joint cautionary announcement
1. INTRODUCTION
Shareholders of both AfroCentric and Lethimvula are referred to the joint
AfroCentric and Lethimvula announcements released on the Securities
Exchange News Service of the JSE Limited ("JSE") on 23 September ("the 23
September Announcement") and 15 October 2008 in which they were advised
that:
- AfroCentric had entered into a share purchase agreement to
acquire 63.2% of the entire issued share capital of Lethimvula (the
"Acquisition") from certain Lethimvula shareholders (the "Sellers");
and
- should the Acquisition become unconditional, it will be an
"affected transaction" as defined in the Securities Regulation Panel
("SRP") Code on Take-Overs and Mergers ("SRP Code") and accordingly,
AfroCentric shall be obliged to make an offer to the shareholders of
Lethimvula (other than the Sellers) (the "Offeree Shareholders") on
the same terms and conditions as those on which the Lethimvula shares
are purchased from the Sellers ("Obligatory Offer").
2. PURCHASE PRICE
The Purchase Price payable to the Sellers is a maximum amount of R568 920
120.60 plus such additional amount to be determined in accordance with
paragraph 2.2.2 below. The Purchase Price will be discharged in two
tranches, namely R341 352 070.80 in respect of the first tranche (the
"First Tranche") and R227 568 049.80 plus an additional amount to be
determined in accordance with paragraph 2.2.2 below in respect of the
second tranche (the "Second Tranche").
2.1 The First Tranche
The First Tranche of the Purchase Price, being R341 352 070.80, will
be settled by AfroCentric on the closing date, being 9 business days
after the date upon which the last of the Conditions Precedent is
fulfilled or waived ("Closing Date") by:
2.1.1paying the Sellers an amount of R126 223 435.00 in cash, which
alternative was made available to and elected by the Sellers
(the "Cash Election") in lieu of receiving the entire First
Tranche in AfroCentric ordinary shares (the "Share Election");
plus
2.1.2R215 128 635.80 by the issue of 82 741 783 AfroCentric ordinary
shares to the Sellers at an issue price of R2.60 per
AfroCentric ordinary share.
2.2 The Second Tranche
The Second Tranche of the Purchase Price, being a maximum amount of
R227 568 049.80 plus such additional amount to be determined in
accordance with paragraph 2.2.2 below will be settled by AfroCentric
on the Second Tranche payment date, being within 20 days of
finalising the Lethimvula audited financial statements for the
period ending 30 June 2013 (the "Second Tranche Payment Date") as
follows:
2.2.1 a maximum of R227 568 049.80 by the issue of a maximum of
87 526 173 AfroCentric ordinary shares or such lesser number as
will be determined based on the after tax profits of Lethimvula
as more fully set out in paragraph 4.3.2 of the 23 September
Announcement at an issue price of R2.60 per AfroCentric ordinary
share; and
2.2.2 by paying an amount in cash to the Sellers on the Second
Tranche Payment Date equal to the dividends which would have
been paid had the Second Tranche AfroCentric ordinary shares
been in issue during the period commencing on the Closing Date
and ending on the Second Tranche Payment Date plus any
Secondary Tax on Companies which AfroCentric would have paid in
respect of such dividends.
3. PRO FORMA FINANCIAL EFFECTS ON AFROCENTRIC SHAREHOLDERS
The unaudited pro forma financial effects of the Acquisition and
resulting Obligatory Offer set out in the table below have been prepared
to assist the shareholders of AfroCentric to assess the impact of the
Acquisition and resulting Obligatory Offer on the audited earnings per
share ("EPS"), headline earnings per share ("HEPS"), fully diluted EPS,
fully diluted HEPS, the net asset value ("NAV") and tangible net asset
value ("TNAV") per AfroCentric share for the year ended 30 June 2008. The
unaudited pro forma financial effects have been prepared for illustrative
purposes only and because of their nature may not give a fair reflection
of AfroCentric`s financial position and results of operations, nor of the
effect and impact of the Acquisition and Obligatory Offer on AfroCentric.
The preparation of the pro forma financial effects is the responsibility
of the directors of AfroCentric.
3.1 After the First Tranche
Before After the After the
the Acquisition Obligatory
Acquisiti (2) Offer
on (1) (Share
Election)
% (5)
EPS (cents) 11.04 46.24 319% 52.27
Fully (cents) 8.76 40.54 363% 47.57
diluted EPS
HEPS (cents) 11.04 47.15 327% 53.26
Fully (cents) 8.76 41.34 372% 48.47
diluted HEPS
NAV (cents) 147.51 201.18 36% 222.10
TNAV (cents) 147.51 (17.41) (112%) 58.62
Number of (`000) 143,955 226,697 303,109
shares in
issue
Weighted (`000) 97,958 180,700 257,113
shares in
issue
Diluted (`000) 123,362 206,104 282,517
shares in
issue
After the
Obligatory
Offer (Cash
Election) (6)
% %
EPS 374% 55.68 405%
Fully 443% 50.12 472%
diluted EPS
HEPS 383% 56.79 425%
Fully 453% 51.11 483%
diluted HEPS
NAV 51% 218.20 48%
TNAV (60%) 37.92 (74%)
Number of 274,854
shares in
issue
Weighted 228,857
shares in
issue
Diluted 254,261
shares in
issue
1 The figures in the "Before the Acquisition" column are extracted
from the audited financial results of AfroCentric for the year
ended 30 June 2008.
2 The figures in the "After the Acquisition" column assume that the
Acquisition occurred on 1 July 2007 for EPS, HEPS, fully diluted
EPS and fully diluted HEPS purposes and on 30 June 2008 for NAV
and TNAV purposes.
3 Transaction costs amounting to R3 418 983 have been included in
the above calculations.
4 The above calculations have been performed taking into account a
tax rate of 28% and a funding rate of 85% of the prime lending
rate.
5 After the Obligatory Offer assuming that all Offeree Shareholders
elect to receive the entire First Tranche in AfroCentric ordinary
shares. This will result in an additional 76 412 869 AfroCentric
ordinary shares being issued at an issue price of R2.60 per
share.
6 After the Obligatory Offer assuming all Offeree Shareholders
elect to receive the First Tranche by way of a combination of
cash and AfroCentric ordinary shares. This will result in an
additional 48 157 306 AfroCentric ordinary shares being issued at
an issue price of R2.60 per share. The cash portion of the
payment equates to R73 464 462.
3.2 After the First and Second Tranche
Before the After the
Acquisition Acquisition
(1) (2)
%
EPS (cents) 11,04 19.38 76%
Fully (cents) 8,76 17.70 102%
diluted EPS
HEPS (cents) 11,04 31.77 188%
Fully (cents) 8,76 29.02 231%
diluted HEPS
NAV (cents) 147,51 207.52 41%
TNAV (cents) 147,51 (12.56) (109%)
Number of (`000) 143,955 314,223
shares in
issue
Weighted (`000) 97,958 268,226
shares in
issue
Diluted (`000) 123,362 293,630
shares in
issue
After the After the
Obligatory Obligatory
Offer (Share Offer (Cash
Election) Election)
(5+7) (6+7)
% %
EPS (cents) 21.33 93% 21.07 91%
Fully (cents) 20.04 129% 19.71 125%
diluted
EPS
HEPS (cents) 34.61 214% 35.38 221%
Fully (cents) 32.53 271% 33.09 278%
diluted
HEPS
NAV (cents) 222.65 51% 220.10 49%
TNAV (cents) 40.24 (73%) 25.21 (83%)
Number (`000) 441,577 413,322
of
shares
in issue
Weighted (`000) 395,581 367,325
shares
in issue
Diluted (`000) 420,985 392,729
shares
in issue
1 Refer to note 1 above.
2 Refer to note 2 above.
3 Refer to note 3 above.
4 Refer to note 4 above.
5 After the Obligatory Offer assuming that all Offeree Shareholders
elect to receive the entire First and Second Tranche in
AfroCentric ordinary shares. This will result in an additional
127 354 782 AfroCentric ordinary shares being issued at an issue
price of R2.60 per share.
6 After the Obligatory Offer assuming all Offeree Shareholders
elect to receive the First Tranche by way of a combination of
cash and AfroCentric ordinary shares and the entire Second
Tranche in AfroCentric ordinary shares. This will result in an
additional 99 099 219 AfroCentric ordinary shares issued at an
issue price of R2.60 per share. The cash portion of the payment
equates to R73 464 462.
7 The above calculations assume the issue of the maximum number of
Second Tranche AfroCentric ordinary shares to both the Sellers
and the Offeree Shareholders assuming the profit warranties in
paragraph 2.2.2 above have been met, without taking into account
the warranted earnings or the additional amount to be determined
in accordance with paragraph 2.2.2 above.
4. CONDITIONS PRECEDENT
Shareholders of both AfroCentric and Lethimvula are advised that the
following conditions precedent have been fulfilled:
- approval of the Acquisition and Obligatory Offer by the board of
directors of AfroCentric;
- conclusion of a due diligence of Lethimvula to the satisfaction of
AfroCentric; and
- Nedbank Limited ("Nedbank") agreeing to the delivery of the Lethimvula
shares held by the Sellers to AfroCentric. This approval is subject to the
Acquisition becoming unconditional (save for any condition relating to the
release by Nedbank of the Lethimvula shares) and to the fulfilment of
conditions by certain of the Sellers, as are standard in agreements of this
nature.
With regard to the condition precedent relating to AfroCentric raising
such funding to enable it to discharge the upfront cash portion payable
in terms of the Acquisition and the Obligatory Offer, if any, a term
sheet has been signed subject to, inter alia, the signature of final
legal agreements. Accordingly, Shareholders of both AfroCentric and
Lethimvula are advised that the date for fulfilment of this condition
precedent has been extended by AfroCentric to 30 November 2008.
5. WITHDRAWAL OF JOINT CAUTIONARY ANNOUNCEMENT
Shareholders of both AfroCentric and Lethimvula are hereby advised that
they are no longer required to exercise caution in trading their shares.
For and on behalf of the board of AfroCentric For and on behalf of the
board of Lethimvula
Sandton Sandton
31 October 2008 31 October 2008
Advisors to AfroCentric Advisors to the Sellers and
Lethimvula
Investment Bank and sponsor Legal advisors to the Sellers
to the transaction Rothbart Inc
Investec Bank Limited (Registration number
(Registration number 1995/001105/21)
1969/004763/06)
Sponsor to AfroCentric Lead corporate advisors to the
Sasfin Capital Sellers
(Registration number Sinergi Corporate Advisors
1951/002280/06) (Proprietary) Limited
(Registration number
2004/011875/07)
Legal advisor to AfroCentric Corporate advisors to the Sellers
HR Levin Attorneys, Notaries Base Capital (Pty) Ltd
& Conveyancers (Registration number
(Practice number M2841) 2002/008290/07)
Corporate advisor to Joint Legal Advisors to
AfroCentric Lethimvula
Centric Capital Ventures LLC Edward Nathan Sonnenbergs
New York (Registration number
2006/018200/21)
Rothbart Inc
(Registration number
1995/001105/21)
Date: 31/10/2008 15:46:01 Produced by the JSE SENS Department.
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