| Mon 19 Jan 2009, 10:00 | | ATR - ACTowers - Subscription For 92 733 301 (25.1%) Ordinary Shares In Actowers |
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ATR
ATR
ATR - ACTowers - Subscription For 92 733 301 (25.1%) Ordinary Shares In Actowers
By Tisogroup (Proprietary) Limited ("TISO") By Way Of A General Issue Of
Ordinary Shares For Cash And Withdrawal Of Cautionary Announcement
AFRICA CELLULAR TOWERS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/027374/06)
JSE code: ATR
ISIN: ZAE000088084
("ACTowers" or "the company")
SUBSCRIPTION FOR 92 733 301 (25.1%) ORDINARY SHARES IN ACTOWERS BY TISOGROUP
(PROPRIETARY) LIMITED ("TISO") BY WAY OF A GENERAL ISSUE OF ORDINARY SHARES FOR
CASH AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the announcement, dated 10 December 2008, shareholders are
advised that ACTowers has entered into a Heads of Agreement ("the
agreement") with Tiso, in terms of which Tiso will subscribe, via a special
purpose investment company, Tiso Telecom (Proprietary) Limited ("Tiso
Telecom"), for 92 733 301 ordinary shares in ACTowers ("the shares") on the
basis set out in paragraph 4 below. The subscription for the shares will
constitute Tiso, via Tiso Telecom, as a 25.1% shareholder in the company
("the transaction").
Tiso Telecom is a newly formed company incorporated by Tiso for the sole
purpose of subscribing for the shares.
2. RATIONALE FOR THE TRANSACTION
ACTowers is a major turnkey manufacturer and supplier of telecommunication
lattice towers and shelters in Africa.
ACTowers identified the power industry as a major growth sector and
complementary to its existing business and, over the past two years, has
positioned itself to become a full turnkey provider of power lines in
southern Africa and has invested in the necessary infrastructure, equipment
and personnel to service this high growth market. ACTowers` strategy has
been validated as is evidenced by the major capital investment programme
undertaken by Eskom to upgrade and expand its power lines network. It is
estimated that the value of Eskom`s expansion programme could be in excess
of R30 billion.
During the 2008/2009 financial year, the company`s strategy was again
affirmed as its Power Lines Division was awarded supplier status by Eskom
in certain regions in South Africa. During this time, ACTowers was awarded
small power line contracts which are currently in progress, as well as
contracts extending into the 2010 financial year.
During 2008, ACTowers resolved to raise additional expansion capital and to
partner with a suitable strategic Black Economic Empowerment ("BEE")
company to ensure compliance with the Department of Trade and Industry`s
Code of Good Practice on BEE and to fully realise the potential of its
Power Lines Division and to be in a position to participate in larger
contracts from Eskom and other organisations.
Over the past seven months, ACTowers embarked on a process of identifying
and selecting a suitable black commercial partner to add value to its
business both in South Africa and on a pan-African basis.
During the selection process, Tiso proved itself as the most suitable
partner with vast experience in the infrastructure and power industries
gained through some of its existing investments. Tiso has demonstrated its
ability to add value to the ACTowers` business through its knowledge and
understanding of the business and the operating environment in sub-Saharan
Africa.
The partnership between ACTowers and Tiso is therefore a mutually
beneficial transaction which is expected to be highly strategic and
synergistic for both parties.
The investment by Tiso will enable ACTowers to accelerate the roll-out of
its Power Lines Division in South Africa, for the following reasons:
- being BEE compliant will better position the company to participate in
larger Eskom projects; and
- the new capital to be injected by Tiso, in terms of the agreement,
will enable it, inter alia, to purchase additional equipment for its
Power Lines Division.
The investment in ACTowers will, in turn, promote Tiso`s expansion of its
own business into the rest of Africa by drawing on the experience and
knowledge of ACTowers, which has been active in more than 30 countries in
Africa and the Middle East for over ten years. This investment will also
add to Tiso`s existing investments in the infrastructure and power
industries.
3. BACKGROUND ON TISO
Tiso is one of South Africa`s leading black-controlled and managed
principal investment companies. Established in 2001, Tiso has evolved into
a business that is as successful in the BEE space as it is in the
mainstream commercial environment, placing it as one of the few black-
controlled companies to have successfully made this transition.
Tiso`s vision is to build a principal investment business that spans the
African continent in partnership with first league players, respected local
entrepreneurs and management teams with exceptional track records. Tiso
has an experienced senior executive team that has developed a reputation
for delivery with the utmost integrity.
Tiso is primarily invested in the infrastructure, resources, industrial and
financial services sectors.
The investment by Tiso in ACTowers will be complementary to its other
investments in the infrastructure and power sectors.
4. SUBSCRIPTION FOR THE SHARES
In terms of the agreement, Tiso will subscribe for the shares in cash,
using its own cash resources and funding facilities, upon the terms set out
in paragraphs 4.1 and 4.2 below. ACTowers is not required to facilitate
the transaction in any way, either by way of guarantees, vendor finance or
by discounting the share price.
4.1 Subscription price
In terms of the agreement, and subject to the fulfilment of the
conditions precedent set out in paragraph 8 below, Tiso Telecom will
subscribe for an aggregate of 92 733 301 newly issued ACTowers`
ordinary shares for an aggregate subscription price of between R115
916 625 and R138 416 625 on the basis set out in paragraph 4.2 below,
depending on ACTowers` performance for the financial years ending 28
February 2009 and 28 February 2010.
4.2 Mechanism:
First tranche subscription
On the effective date, Tiso Telecom will subscribe and pay for 92 733
300 newly issued ACTowers` ordinary shares ("the first tranche") for
an aggregate subscription price of R115 916 625, being R1.25 per
share. The first tranche subscription price equates to the volume
weighted average traded price of ACTowers shares measured over the 30
business days ("30 day VWAP") prior to the date that the issue price
of the shares was agreed between the parties.
The shares comprising the first tranche shall be issued by ACTowers on
the effective date referred to in paragraph 6 below, and application
will be made to the JSE Limited for the listing thereof.
Second tranche subscription
Tiso Telecom will, subject to the terms of the agreement, subscribe
for one additional newly issued ACTowers` ordinary share ("the second
tranche") within seven business days after the company`s financial
results for the year ending 28 February 2010 shall have been finally
agreed or determined by an independent auditor and released. The
subscription price payable for the share comprising the second tranche
is dependent on the achievement of certain agreed financial targets
and will be adjusted downwards on the happening of certain events,
including if the greater of the 30 day VWAP per share and the 60 day
VWAP per share on the day of release by ACTowers of its audited
results for the year ending 28 February 2010 is less than R1.25 or if
the average subscription price payable for the shares exceeds the
greater of the 30 day VWAP per share and the 60 day VWAP per share on
the day of release by ACTowers of its audited results for the year
ending 28 February 2010. The minimum subscription price payable for
the second tranche is the market value per ACTowers` share at close of
trading on the day of release by ACTowers of its audited results for
the year ending 28 February 2010 and the maximum subscription price
payable for the second tranche is R22 500 000.
The share comprising the second tranche shall be issued by ACTowers on
subscription and application will be made to the JSE Limited for the
listing thereof.
5. APPLICATION OF THE FUNDS
The funds raised from the subscription of the shares by Tiso will, inter
alia, be utilised by the company to:
- complete the long-awaited galvanizing manufacturing plant on the
property acquired in the Midvaal area which, once commissioned, is
expected to save the company approximately R2 million per month in
operating expenses;
- acquire stringing and other equipment required by the Power Lines
Division to establish itself as a full turnkey provider; and
- provide the required working capital.
6. EFFECTIVE DATE
The transaction will become effective on the date being the later of 31
January 2009 and 2 (two) business days following the fulfilment of the
conditions set out in paragraph 8 below.
7. APPOINTMENT TO THE ACTOWERS` BOARD
As a consequence of the transaction, the ACTowers` board will be
strengthened by the appointment of Vuyisa Nkonyeni, as a non-executive
director, from the effective date.
8. CONDITIONS PRECEDENT
The agreement is conditional, inter alia, on the fulfilment of the
following conditions precedent by 31 January 2009 or such later date as may
be agreed upon in writing between the parties:
- the conclusion of a written subscription agreement between ACTowers
and Tiso Telecom; and
- the conclusion of relevant funding agreements by Tiso Telecom and its
funders.
9. FINANCIAL EFFECTS
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the effect
of the transaction on earnings, headline earnings, diluted earnings and
diluted headline earnings per share as if the transaction had taken effect
on 1 March 2008 and on net asset value and net tangible asset value per
share as if the transaction had taken effect on 31 August 2008. Because of
their nature, the unaudited pro forma financial effects may not give a fair
presentation of the company`s financial position and performance. The
unaudited pro forma financial effects have been compiled from the reviewed
interim financial statements for the six months ended 31 August 2008 and
are presented in a manner consistent with the format and accounting
policies adopted by ACTowers and have been adjusted as described in the
notes below:
Unaudite Unaudited Change
d
Before After (%)
the the trans-
trans- action
Notes action R`000
R`000
Earnings per share 3
(cents) 14.4 10.6 (26.4)
Headline earnings 3
per share (cents) 14.4 10.6 (26.4)
Diluted earnings 3
per share (cents) 14.1 10.4 (26.2)
Diluted headline 3
earnings per share
(cents) 14.1 10.4 (26.2)
Net asset value 2
per share (cents) 100.0 105.7 5.7
Net tangible asset 2 96.2 10.3
value per share 87.2
(cents)
Weighted average 346 661
number of shares
in issue (000`s) 253 928
Fully diluted 353 788
weighted average
number of shares 261 055
in issue (000`s)
Shares in issue at 369 455
year end (000`s) 276 722
Notes:
1. The "Unaudited Before the transaction" column reflects the reviewed
results of the company for the six months ended 31 August 2008.
2. Earnings, headline earnings, diluted earnings and diluted headline
earnings per share are based on the following assumptions and
information:
- the general issue of shares for cash was effective on 1 March
2008;
- 92 733 300 shares were issued as a general issue of shares for
cash in terms of the first tranche;
- the second tranche subscription is subject to certain performance
criteria as described in paragraph 4.2 above and has therefore
not been taken into account in the above table; and
- except for the additional shares issued, the general issue of
shares for cash has no other effect on earnings.
3. Net asset and net tangible asset value per share effects are based on
the following assumptions and information:
- the general issue of shares for cash was effective on 31 August
2008;
- 92 733 300 shares were issued at R1.25 per share as a general
issue of shares for cash in terms of the first tranche;
- the total share capital will increase by R115 916 625;
- the share premium account will increase by R115 907 352, before -
the estimated transaction costs; and
- the estimated transaction costs of R3 million have been accounted
for against share premium.
10. CLASSIFICATION OF THE TRANSACTION
The transaction is a general issue of shares for cash in terms of the
Listing Requirements of the JSE Limited, a general authority having been
given in regard thereto at the company`s annual general meeting held on 28
August 2008.
11. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement is hereby withdrawn.
Johannesburg
19 January 2009
Designated Adviser and Transaction Adviser to ACTowers
Vunani Corporate Finance
Transaction Adviser to Tiso
Rand Merchant Bank
Legal Advisers to ACTowers
Fluxmans Inc
Legal Advisers to Tiso
DLA Cliffe Dekker Hofmeyr
Date: 19/01/2009 10:00:01 Produced by the JSE SENS Department.
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