| Wed 1 Apr 2009, 12:54 | | CVN - Convergenet - Acquisition of remaining 26% shareholding of Telesto |
|
CVN
CVN
CVN - Convergenet - Acquisition of remaining 26% shareholding of Telesto
Communication (Pty) Limited
CONVERGENET HOLDINGS LIMITED
Incorporated in the Republic of South Africa)
(Registration number 1998/015580/06)
Share code: CVN ISIN: ZAE000102067
("ConvergeNet" or "the company")
ACQUISITION OF REMAINING 26% SHAREHOLDING OF TELESTO COMMUNICATION
(PROPRIETARY) LIMITED ("Telesto")
Introduction
Shareholders are advised that the vendors of Telesto, namely RC Mathey, M van
Biljoen and The Gary Lauryssen Family Trust ("the Vendors") have exercised a
put option for the Company to acquire the remaining 26% shareholding in
Telesto ("the minority acquisition"). The acquisition of Telesto, encompassing
the put option, was approved in general meeting in 27 August 2007 as part of
the terms of the acquisition of Telesto. The transaction is not regarded as a
related party transaction in terms of the JSE Listings Requirements due to the
prior approval.
Background to Telesto and rationale
Telesto focuses exclusively on the AVAYA Predictive Dialler and Agent
Effectiveness Applications from AVAYA, for distribution and sale in Sub-
Saharan Africa and the Middle East. These systems are widely used in outbound
operations for call centres. The most common applications used are for
collections, telemarketing and tele-servicing. Customers comprise, inter
alia, Woolworths, Standard Bank, Nedbank, Dimension Data and Telkom.
The acquisition of the remaining shareholding in Telesto strengthens
ConvergeNet`s position in this field and is earnings enhancing for the group
going forward. The management will remain involved in Telesto going forward.
Terms of the Acquisition
The put option granted allowed the vendors to put the remaining 26% of Telesto
to the Company at a purchase price of R7 800 000-00 to be discharged by the
issue of the Company shares at a 10% discount to the 30 day volume weighted
average share price at the time of exercising of the option, on condition that
Telesto records an aggregate profit before taxation of R10 500 000-00 for the
two years ended 28 February 2009. Furthermore, should Telesto record a profit
before taxation of more or less than R10 500 000-00 for the aggregate of two
financial years ending 28 February 2009, the purchase price would be adjusted
pro-rata by the percentage that the aggregate profit of Telesto exceeds or
falls below R10 500 000-00. Telesto has exceeded the aggregate profit before
tax, achieving R25 216 565-53 profit before tax, and has exercised the put
option on 2 March 2009.
The adjusted purchase consideration of R18 732 305-82 is to be settled through
the issue of 27 641 000 new shares in ConvergeNet at a 10% discount to the 30
day volume weighted average share price, being 67.77 cents per share as at the
date of exercise of the put option.
The shares shall rank pari passu with the issued ordinary shares of the
Company.
Pro forma financial effects of the acquisition
Set out in the table below are the pro forma financial effects of the minority
acquisition, which have been prepared for illustrative purposes only, to
provide information about how the minority acquisition might have affected the
financial information presented. The pro forma financial effects which are the
responsibility of the directors of ConvergeNet, because of their nature, may
not give a true reflection of the financial position, the cash flow position,
the results of operations or the changes in equity of ConvergeNet Holdings
Limited.
Before the After the Percentage
acquisition acquisition change
(cents per (cents per (%)
share) share)
Earnings 6.16 6.29 2.1%
Headline earnings 6.19 6.32 2.1%
Net asset value 33.59 30.41 (9.5%)
Tangible net asset 10.43 10.63 (18.7%)
value
Notes:
i. The "Before" column of the table, is based on the audited financial
results of ConvergeNet Holdings Limited for the twelve months ended
31 August 2008 and 685,855,777 weighted average number of
ConvergeNet Holdings shares in issue.
ii. The "After" column shows the pro forma effects of an increased
shareholding by 26%, up to 100%, of Telesto as though the
acquisition of the additional 26% shareholding had been in effect
from 01 September 2007 and 713 495 777 weighted average number of
ConvergeNet Holding shares in issue.
iii. The shares issued for the consideration are assumed to have been
issued as at 01 September 2007.
Johannesburg
1 April 2009
Designated Advisor
Arcay Moela Sponsors (Pty) Ltd
Date: 01/04/2009 12:54:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
