| Mon 5 Feb 2001, 0:00 | | Cycad Announcement of Strategic Transaction |
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CYCAD FINANCIAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 98/08637/06)
("Cycad" or "the company")
ANNOUNCEMENT OF STRATEGIC TRANSACTIONS
The board of directors of Cycad wish to advise shareholders of the following
transactions ("the transactions"):
1. ADDITIONAL PRIVATE EQUITY FUNDS UNDER MANAGEMENT
Cycad has formed a strategic relationship with Zephyr Management LP ("Zephyr"
www.zmlp.com). Zephyr is a New York based private equity fund manager which
manages funds with over US$500 million of committed capital in the USA, Latin
America and Africa. Cycad will assist in the management of ZM Africa Investment
Fund ("ZMAIF" formerly New Africa Opportunities Fund), a private equity fund
established to invest in South Africa and other countries in the Southern
African Development Community. This brings Cycad's funds under management to
approximately R1 billion, all of which are supported out of its existing
resources.
Zephyr manages ZMAIF which was capitalised with commitments of US$120 million
in August 1997 and is presently close to two thirds invested. The investment
mandate is to provide capital for established businesses, usually in the range
of US$5 - US$18 million.
Cycad's role in ZMAIF is to work with the management teams and to add strategic
value to ZMAIF's existing investments as well as procuring new investment
opportunities for ZMAIF. Cycad will receive a management fee which will
contribute to its operational costs and will participate in any carried
interest accruing to ZMAIF's fund manager.
2. CONVERSION OF INTEREST IN BIRDIE HOLDINGS LIMITED ("Birdie.com") TO SPORTAL
ASIA LIMITED ("Sportal Asia")
Birdie.com has merged with Sportal Asia in a transaction resulting in
Birdie.com becoming a wholly-owned subsidiary of Sportal Asia and former
Birdie.com shareholders holding Sportal Asia shares. The transaction valued the
new Sportal Asia Group at US$57 million. Cycad previously held an effective 25%
interest in Birdie.com which has now been converted into an effective 10%
shareholding in Sportal Asia.
Sportal Asia is an established media business focusing on the production and
exploitation of sporting content through the internet (www.sportalasia.com) and
interactive television platforms directed primarily at Asian communities and
has:
- a unique, developed multi-language technology;
- proprietary media rights to high-profile sporting events through regional
joint ventures;
- an established revenue stream; and
- a product offering which currently covers most sports with key areas, being
football, basketball, golf, badminton and hockey.
Sportal Asia and Birdie's businesses are complementary in that they both
operate in the online sporting arena with Sportal Asia having a broader focus
than Birdie. The common controlling shareholders of Birdie and Sportal Asia
decided that Sportal Asia had a better business model to deliver shareholder
value.
Sportal Asia is associated with Sportal.com the highly rated UK-based sporting
portal which holds a 35% interest. Other shareholders in Sportal Asia are The
Asia Sport Group Limited and Parallel Media (SEA) Limited which are established
international media and sporting businesses. The business has its head office
in Singapore with satellite offices in Hong Kong, Seoul and Kuala Lumpur.
As part of the transaction, Cycad has invested an additional R6,2 million
(US$846 667) in cash to entrench the continuation of its strategic minority
shareholder rights, thereby increasing its total investment cost to R38,6
million. The transaction values Cycad's investment at R44,5 million, an
increase of R5,9 million over cost. Netvest.com plc, an AIM-listed UK
investment company and Birdie.com shareholder, has invested a further US$423
000 as part of the transaction and now holds 5% of Sportal Asia.
Accenture (Singapore) (previously Andersen Consulting) has acquired a small
equity stake in Sportal Asia by commuting part of its technology advisory fee
at values commensurate with the Birdie.com transaction.
The integration of Birdie.com into Sportal Asia provides an opportunity for
Cycad to accelerate its investment along the internet value chain with the
ultimate aim of a speedier and enhanced value realisation. Mr L H Fine, Cycad's
Chief Executive Officer, has joined the board of Sportal Asia.
3. FINANCIAL EFFECTS
The transactions have no material effect on Cycad's net asset value. Cycad's
directors expect the transactions to generate growth in the company's net asset
value in the future.
Sportal Asia will not be classified as an associate company and hence will not
be equity accounted in the Cycad group's annual financial statements. The
transactions have a positive effect on Cycad's earnings largely due to the
management fee arising from increased funds under management. Cycad's undiluted
headline loss per share for the year ended 30 June 2000 of 3,3 cents would have
reduced by 22% to 2,6 cents, had the transactions been effective on 1 July
1999. These calculations have been based on audited results for the year ended
30 June 2000.
4. CIRCULAR TO SHAREHOLDERS
In compliance with the Johannesburg Securities Exchange SA's Listing
Requirements, a circular giving details of the conversion of the effective
interest in Birdie.com to Sportal Asia will be sent to shareholders within 28
days of this announcement.
Johannesburg
5 February 2001
Sponsor
Deutsche Securities
Member of the Deutsche Bank Group
Deutsche Securities SA (Pty) Limited
(Registration number 1995/011798/07)
Corporate advisor
Barnard Jacobs Mellet
Corporate Finance
(Registration number 2000/023249/07)
Attorneys to Cycad
Werksmans Attorneys
