| Thu 23 Dec 2010, 9:00 | | CMA - Command Holdings Limited - Announcement relating to the acquistion of |
|
CMA
CMA
CMA - Command Holdings Limited - Announcement relating to the acquistion of
Comwezi Security Services (Pty) Limited and further cautionary announcement
Command Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/014759/06)
Share Code: CMA
ISIN Code: ZAE0000023131
("Command")
ANNOUNCEMENT RELATING TO THE ACQUISTION OF COMWEZI SECURITY SERVICES (PTY)
LIMITED AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction and rationale
Further to the cautionary announcement dated 23 November 2010, Command
shareholders are advised that Command entered into an agreement on 21
December 2010 with the trustees of the Grapsy Trust ("the seller") to
acquire 60% of the issued shares ("sale shares") in Comwezi Security
Services (Pty) Limited ("Comwezi"), and any claims the seller has against
Comwezi ("sale claims"), subject to the conditions precedent below ("the
transaction"). The effective date will be the first business day after the
date on which the last of the conditions precedent is fulfilled or waived
("the effective date").
Comwezi conducts business as a national guarding security services business
to government, parastatals and large corporates.
As Comwezi has better BEE credentials than Command it has historically been
better placed to secure government contracts.
Although Command owns 30% of Comwezi before acquiring the sale shares,
Command and Comwezi compete for business and it has therefore been agreed
that Comwezi should become a subsidiary of Command.
2. Terms of the acquisition
Subject to a possible adjustment as set out below, the purchase price
attributable to the sale shares and the sale claims is R35 million which is
based on the profits attained by Comwezi for the financial year ended 31
December 2009, multiplied by an agreed price earnings multiple of 3 (three)
(`the purchase price"). The seller has warranted to Command that Comwezi
will attain a profit of not less than R9 000 000 (nine million rand) for
the financial year ending 31 December 2010 and if such profit is not
attained, the purchase price will decrease and will be calculated as
follows:
actual profit attained by Comwezi for the financial period in question (if
less than R9 000 000) multiplied by 3 (three) multiplied by 60% (sixty
percent). Profit will be determined with reference to the audited financial
statements of Comwezi for the year ending 31 December 2010.
The purchase price shall be discharged by Command issuing to the seller,
from Command`s existing authorised but unissued share capital and on the
effective date,
116666667 (one hundred and sixteen million six hundred and sixty six
thousand six hundred and sixty seven) ordinary shares in the share capital
of Command, to be issued at a price of 30c (thirty cents) per share in
Command, all of which shares shall be issued and credited as fully paid, or
such lesser number of shares pursuant to a price reduction as contemplated
above.
The purchase price shall be apportioned as follows:
- the sale claims shall be taken over at their face value, as at the
effective date; and
- the sale shares shall be taken over at the purchase price less the
amount attributable to the sale claims.
The seller has provided warranties to Command in relation to the
transaction which are standard for transactions of this nature, including
warranties that the book debts will be fully recovered by not later than 90
(ninety) days after the effective date.
3. Conditions precedent
The transaction is subject to the fulfilment or waiver (insofar as is
legally permitted) of the following conditions precedent:
3.1. an employment agreement between Command and MS Mowzer being concluded
and becoming unconditional (save for any condition therein making such
agreement conditional upon the transaction agreement being concluded
and becoming unconditional), including a restraint of trade for a
period of 3 (three) years from the effective date;
3.2. the obtaining of all necessary regulatory approvals required for the
transaction, including but not limited to the relevant competition
authorities approving the transaction (if legally required) and
complying with the requirements of the JSE Listings Requirements and
the Securities Regulation Panel ("SRP") Code;
3.3. obtaining any approval of the shareholders of Command as required in
terms of the JSE Listings Requirements; and
3.4. the SRP providing a ruling that the seller (and any party acting in
concert with it) is not obliged to extend a mandatory offer as
contemplated by Rule 8.1 of the SRP Code after the issue of the shares
in Command.
4. Pro forma financial effects
The pro forma financial effects of the transaction are in a process of
being prepared and will be published once completed.
5. Classification of the transaction
This is a category 1 transaction in terms of the JSE Listings Requirements
which requires approval of Command shareholders. It is also a related party
transaction as MS Mowzer, a trustee of the seller is also a material
shareholder in Command, owning approximately 16.5% of the issued shares of
Command before this transaction and a director of Command; and the seller
also owns approximately 16.3% of the issued shares in Command.
Command will appoint an independent expert to provide a fairness opinion on
the terms and conditions of the transaction. This opinion will be included
in the circular to shareholders as per paragraph 7 below.
6. Further cautionary announcement
Shareholders are advised to continue to exercise caution in dealing in
Command securities until the pro forma financial effects are published.
7. Documentation
A circular containing full details of the transaction and revised listing
particulars of Command as well as a notice of general meeting to approve
the transaction will be issued to shareholders in due course.
Cape Town
23 December 2010
Corporate adviser and sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Legal Advisor
Edward Nathan Sonnenberg Inc.
Date: 23/12/2010 09:00:03 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.
