| Wed 27 Oct 2010, 12:33 | | DLG - Dialogue Group Holdings Limited - Disposal by Dialogue of its 51% interest |
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DLG
DLG
DLG - Dialogue Group Holdings Limited - Disposal by Dialogue of its 51% interest
in the ordinary share capital of Continuitysa (Proprietary) Limited
("Continuitysa")
DIALOGUE GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2005/039219/06)
Share Code: DLG ISIN: ZAE000083820
("Dialogue" or "the Company")
DISPOSAL BY DIALOGUE OF ITS 51% INTEREST IN THE ORDINARY SHARE CAPITAL OF
CONTINUITYSA (PROPRIETARY) LIMITED ("CONTINUITYSA")
1. THE DISPOSAL
1.1 Further to the renewal of the cautionary announcements released on
SENS, the last of which was dated 6 October 2010, shareholders are
hereby advised that Dialogue has entered into an agreement dated 22
October 2010 ("the signature date") whereby subject to the terms and
conditions of that agreement it will dispose of its 51% interest in
the ordinary share capital of ContinuitySA, a subsidiary of Dialogue,
to CoroCapital Limited ("the Purchaser") ("the Disposal"). The
effective date of the Disposal will be date upon which it becomes
unconditional.
1.2 ContinuitySA provides business continuity and disaster management
services with operations in South Africa, Botswana, Mauritius and
Mozambique.
1.3 The Disposal, which is supported by the senior management of
ContinuitySA, and the implementation thereof is subject to the
fulfilment of certain conditions precedent as detailed below.
2. RATIONALE FOR THE DISPOSAL
The board of directors of Dialogue having received this unsolicited bid,
considered the Purchase Consideration to be reasonable in the current
market. Consequently the board of directors believes the Disposal to be
the correct action to take in achieving its objective of maximising value
for shareholders.
3. CONSIDERATION AND APPLICATION OF CONSIDERATION
3.1 The consideration payable in respect of the Disposal will amount to
R35 million ("the Purchase Consideration"), which will be settled in
cash in full upon the Disposal becoming unconditional and being
implemented.
3.2 In addition, contingent on the conditions precedent, as detailed in 5
below, being fulfilled, the directors of ContinuitySA have agreed to
declare and pay a special dividend to its current registered
shareholders in the amount of R4 million. Of this amount of R4
million, R2.04 million ("the Special Dividend") will accrue to
Dialogue, based on its 51% ordinary shareholding in ContinuitySA.
3.3 The Purchase Consideration and the Special Dividend will only be
received by Dialogue once all the conditions precedent, as detailed in
5 below, have been fulfilled. The board of directors of Dialogue will
at that time determine, depending on the needs of the Company, the
optimum utilisation of the proceeds of the Disposal.
4. FINANCIAL EFFECTS
4.1 The table below sets out the unaudited pro forma financial effects on
Dialogue before and after the Disposal and are the responsibility of
the Company`s directors and have been prepared for illustrative
purposes only to show how the Disposal may have affected Dialogue`s
results for the six months ended 30 June 2010, based on the
assumptions that:
4.1.1 for purposes of the earnings and headline earnings per share
calculations, the Disposal was effective from 1 January 2010; and
4.1.2 for purposes of the net asset value and net tangible asset value
per share calculations, the Disposal was effected on 30 June
2010.
4.2 It should be noted that the unaudited pro forma financial effects have
been prepared on Dialogue`s latest unaudited results for the six
months ended 30 June 2010 taking into consideration the Disposal, and
because of their nature, may not fairly reflect Dialogue`s financial
performance and position after the Disposal.
Unaudited(1) Pro forma Change
Before the After the
Disposal Disposal
(cents) (cents)
Earnings per share 12.4 6.6 (46.8%)
Headline earnings per 1.1 0.7 (36.4%)
share
Net asset value per 26.3 20.9 (20.5%)
share(3)
Net tangible asset value 10.4 20.3 95.2%
per share(4)
Notes
1. Extracted from the published unaudited interim financial statements of
Dialogue for the six months ended 30 June 2010.
2. Adjustments to reflect the once-off effects of the Disposal, namely:
R37.04 million (comprising the Purchase Consideration and the Special
Dividend), the redemption of the preference share previously issued to
Dialogue by ContinuitySA for the value of R7.0 million, interest
earned at a before-tax return of 5.6% totalling R1.2 million for the
six months ended 30 June 2010 and transaction costs of R0.75million.
3. Calculation based on a weighted average of 299 074 619 shares in issue
during the six months ended 30 June 2010.
4. Calculation based on 299 074 619 shares in issue at 30 June 2010.
5. No taxation was provided for on the Disposal due to an assessed loss
in Dialogue.
5. CONDITIONS PRECEDENT
5.1 The Disposal is subject to conditions precedent, of which the
following remain outstanding:
5.1.1 the Purchaser being able to conduct a high level due diligence of
ContinuitySA and it being satisfied in its sole discretion with
the results thereof, such indication to be communicated to
Dialogue by no later than 15 business days from receipt of the
irrevocable undertakings referred to in 5.1.4 below;
5.1.2 the approval of the Disposal by the Purchaser`s investment
committee and its board of directors by no later than 15 business
days from receipt of the irrevocable undertakings referred to in
5.1.4 below;
5.1.3 formal support for the Disposal by the ContinuitySA Investment
Trust(49% shareholder in ContinuitySA) and its agreement in
principle to the key terms of a shareholders` agreement with the
Purchaser by no later than 15 business days from receipt of the
irrevocable undertakings referred to in 5.1.4 below;
5.1.4 the signing and delivery of copies thereof to the Purchaser, by
no later than 17h00 on 29 October 2010, of irrevocable
undertakings by the shareholders of Dialogue, representing 60% of
Dialogue`s issued share capital to vote in favour of the
resolutions to give effect to the Disposal;
5.1.5 the signing of formal written agreements on terms acceptable to
all relevant parties (including the Purchaser, Dialogue and
executive directors of ContinuitySA) in respect of the Disposal,
which agreements will include, inter alia, a sale and purchase
agreement and a shareholders` agreement; and
5.1.6 receipt of regulatory approval from the JSE Limited ("JSE"), the
Securities Regulation Panel ("SRP") (if applicable) and, to the
extent required, the Competition Authorities.
5.2 With reference to the resolutions referred to in 5.1.4, these are to
be proposed at a shareholders meeting of Dialogue, which shall be held
within 90 days of the signature date. A special resolution by the
shareholders of Dialogue approving the Disposal will also be required
in terms of section 228 of the Companies Act, No 61 of 1973, as
amended ("the Companies Act").
6. DOCUMENTATION AND CATEGORISATION
In terms of the Listings Requirements of the JSE, the Disposal is deemed to
be a Category 1 transaction and a disposal in terms of section 228 of the
Companies Act, requiring shareholder approval. Accordingly, a circular to
shareholders detailing the terms of the Disposal and convening a general
meeting will be posted to Dialogue shareholders in due course.
7. CONTINUATION OF CAUTIONARY
Shareholders of Dialogue are advised to continue exercising caution when
dealing in the Company`s shares on the JSE.
Johannesburg
26 October 2010
Designated Adviser: PSG Capital (Proprietary) Limited
Date: 27/10/2010 12:33:01 Produced by the JSE SENS Department.
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