| Thu 20 Jun 2002, 0:00 | | Wooltru Limited - Sale Of Affinity Logic And Updat |
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WOOLTRU LIMITED - SALE OF AFFINITY LOGIC AND UPDATE ON AMOUNTS DUE RELATING
TO CONSOLIDATED NEWS AGENCIES HOLDINGS (PTY) LTD ("CNA")
Wooltru Limited
(Incorporated in the Republic of South Africa)
(Registration number 1936/008278/06)
("WOOLTRU")
Share Code: WLO ISIN Code: ZAE000007993
Share Code: WLN ISIN Code: ZAE000008744
Share Code: WLOP ISIN Code: ZAE000008009
Share Code: WLP1 ISIN Code: ZAE000008017
Sale of Affinity Logic and update on amounts due relating to Consolidated
News Agencies Holdings (Pty) Ltd ("CNA")
Affinity Logic
Wooltru is pleased to announce that, further to the previous announcements
regarding the sale of Affinity Logic, it has successfully concluded the sale
of its 33.2% stake in Affinity Logic to a consortium comprising the
management of Affinity Logic backed by Datatec Ltd.
Agreement in principle for the sale was reached in the latter part of 2001
and the terms of the transaction have been under negotiation since then. As
a result of these negotiations, the consideration due to Wooltru has been
revised downwards, and Wooltru has accordingly received R41.7 million, and
not R45.0 million as previously stated.
The sale brings to a conclusion a period of uncertainty for both Wooltru and
Affinity Logic.
Further update on amounts due to Wooltru from Gordon Kay & Associates (Pty)
Ltd ("G&K")
On the 3 June 2002, Wooltru announced that it had agreed to co-operate in
the restructuring process taking place within CNA, whilst G&K remained
indebted to Wooltru in respect of amounts due in terms of the agreement for
the sale of CNA to G&K (the "sale agreement"). These amounts, which were
due for payment on 31 May 2002, remain outstanding.
The restructuring process has resulted in CNA being managed through various
operating companies (the "operating companies") held through Consolidated
News Agencies Holdings (Pty) Ltd (the "holding company"). The first
operating company holds 61 of the largest, primarily city-based stores (the
"first operating company"). A further 150 stores are held in a second
operating company (the "second operating company") whilst the balance of the
stores were transferred to a third company (the "entertainment company"), of
which 70% has been sold to a media and entertainment investor. The central
administration and other group functions are operated through a service
centre housed in the second operating company. Foreign stores are held in
individual companies.
On 3 June 2002, Wooltru gave notice to G&K that they were in breach of the
sale agreement. The notice provided for a 14 day period within which to
remedy such breach. G&K have failed to remedy the breach, and as a result
Wooltru is entitled, but not obliged, to exercise its rights of security for
the amounts due.
Having paid R115 million of the total R165 million owed to Wooltru in terms
of the sale agreement and after taking into account adjustments, G&K are
currently indebted to Wooltru for the balance of R50 million and to Affinity
Logic in the amount of R20 million. As stated in the Wooltru`s circular to
shareholders, dated 10 May 2002, Wooltru has guaranteed the R20 million due
to Affinity Logic, and therefore remains exposed to this amount. As security
for the amounts owing by G&K, Wooltru holds a pledge of shares in various
CNA group companies (as described below), in addition to personal sureties
from Messrs. Gordon and Kay in the amount of R20 million.
Consequences of the breach
As a result of G&K`s failure to remedy the breach of payment, Wooltru is
entitled, at its choice, to exercise its rights over a pledge of shares
constituting a 45% interest in any or each of the holding company, the first
operating company and the second operating company. In addition, Wooltru
has a pledge of shares constituting a 15% interest in the entertainment
company. If the breach is not remedied by the 3 July, Wooltru will in
addition, be entitled to exercise a further pledge over an additional 6% of
each of the operating companies other than the entertainment company,
bringing Wooltru`s total rights to 51%.
These rights are in addition to the personal sureties provided by Messrs.
Gordon and Kay for the R20 million relating specifically to the amount due
to Affinity Logic.
Wooltru has embarked upon a due diligence process to identify the most
suitable course of action, as it is of the opinion that there is value in
the sureties provided.
Shareholders will be kept informed of all material events in connection with
the above issues.
Cape Town
20 June 2002
Financial Adviser and Sponsor
Cazenove
Date: 20/06/2002 08:52:02 AM Produced by the SENS Department
