| Wed 23 Mar 2011, 15:15 | | VUN - Vunani Limited - Sale of Vunani`s investment in Edge Holding Company |
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VUN
VUN
VUN - Vunani Limited - Sale of Vunani`s investment in Edge Holding Company
(Proprietary) Limited ("EDGE") and Vunani private equity partners
(Proprietary) Limited ("VPEP")
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000110359
("Vunani" or "the Group")
SALE OF VUNANI`S INVESTMENT IN EDGE HOLDING COMPANY (PROPRIETARY) LIMITED
("EDGE") AND VUNANI PRIVATE EQUITY PARTNERS (PROPRIETARY) LIMITED ("VPEP")
1. INTRODUCTION
Shareholders are referred to the announcement published by Vunani on SENS on
10 June 2008 wherein they were advised that Vunani had acquired an additional
35% shareholding in Edge using a special purpose vehicle, Northern Ocean
Investments 48 (Proprietary) Limited ("NOI"). As detailed in the
aforementioned announcement, a potential additional amount was payable to the
Edge acquisition vendors comprising a purchase price adjustment (as disclosed
in the announcement) in cash or Vunani shares or a combination thereof at
Vunani`s election ("the agterskot payment").
Shareholders were advised on 27 July 2009 that the agterskot payment would be
settled by the allotment and issue of 114 367 925 shares in Vunani ("the
Vunani shares") to the Edge acquisition vendors. The Vunani shares were
registered in the name of the Edge acquisition vendors and duly listed on the
JSE Limited ("JSE").
Notwithstanding the aforegoing the Edge acquisition vendors did not accept
delivery of the Vunani shares as settlement of the agterskot payment and
accordingly Vunani instructed its legal advisors to hold the Vunani shares in
escrow pending agreement with the Edge acquisition vendors.
Vunani has reached an agreement with the Edge acquisition vendors to dispose
of its entire investment in Edge comprising 45% of the issued share capital in
Edge and 25% of the issued share capital in VPEP to the Edge vendors or their
nominees and consequently cancel the issue of the Vunani shares on terms and
conditions as detailed in this announcement ("the settlement agreement").
2. DETAILS OF THE SETTLEMENT AGREEMENT
The settlement agreement unwinds the relationship between the Edge acquisition
vendors and Vunani thereby settling the agterskot payment on the following
terms and conditions:
- Vunani shall dispose of its entire shareholding and loan claims in NOI
for a purchase consideration of R6,524,900 in terms of a share sale
agreement (the "NOI share sale agreement").;
- Vunani shall dispose of its entire shareholding in Southern Palace
Investments 359 (Pty) Ltd. ("SPI") comprising 10% of the share capital in
Edge for a purchase consideration of R100 in terms of a share sale
agreement ("the SPI share sale agreement"). ;
- Vunani shall dispose of its entire shareholding in VPEP for a purchase
consideration of R6,800,000 and shall receive a dividend from VPEP of
R750,000 in terms of a share sale agreement ("the VPEP sale agreement");
- The Vunani shares shall be cancelled, the Edge acquisition vendors
removed from the share register of Vunani and the agterskot payment of
R27,751,034 shall be reversed in the accounting records of the group
("the Vunani shares cancellation")bullet point 1,2 and 4 together
constituting the effective unwinding of Vunani`s investment in Edge
thereby restoring the parties to the status quo ante as closely as
possible to the circumstances which would have existed had Vunani`s
investment in Edge not occurred; and
- Vunani shall have no further obligations to either the Edge acquisition
vendors and/ or to the third party funders to NOI and SPI and, inter
alia, shall be released from a guarantee of R15,000,000 provided to one
of the third party funders in terms of the NOI funding agreements.
Vunani`s release from all obligations under the funding agreements has
been agreed between all parties in terms of an addendum to the NOI share
sale and the SPI share sale agreements ("the addenda").
The Edge Vendors are, the Trustees for the time being of The Kirsten Family
Trust, The SWP Trust, The Hyde Park Trust and Herman Johan Viljoen.
The consideration in respect of each of the NOI sale agreement, the SPI sale
agreement and the VPEP sale agreement will be settled in cash on the effective
date.
3. RATIONALE FOR THE SETTLEMENT AGREEMENT
The settlement agreement has given Vunani an opportunity to make certain
strategic decisions as well as release the group of debt obligations. The
strategic decisions include the disposal of non-controlling interests in two
of its asset management investments (being Edge and VPEP) and shall ensure
Vunani`s asset management business is exclusively focused on Vunani Fund
Managers (Proprietary) Limited ("VFM") (formerly Peregrine iQ (Proprietary)
Limited), an institutional fund manager, and Integrated Managed Investments
(Proprietary) Limited ("IMI"), a private client fund manager. Vunani owns 51%
of the issued share capital in VFM and IMI respectively.
4. EFFECTIVE DATE AND CONDITION PRECEDENT
The settlement agreement will come into effect on the successful fulfilment of
the outstanding condition precedent, which is the registration of relevant
special resolutions to give effect thereto.
5. FINANCIAL EFFECTS OF THE SETTLEMENT AGREEMENT
Set out below are the pro forma financial effects of the settlement agreement
on the unaudited interim results published by Vunani in respect of the six
months ended 30 June 2010. The pro forma financial effects are the
responsibility of the directors of Vunani and have been prepared for
illustrative purposes only, to provide information on how the settlement
agreement would have affected the previously published interim financial
results and because of their nature may not fairly present Vunani`s financial
position, changes in equity and results of operations.
Before After Change
Cents Cents %
Loss and diluted loss (2.5) (3.1) 24%
per share
Headline and diluted (2.5) (3.1) 24%
headline loss per
share
Net asset value per 5.2 4.3 (17%)
share
Net tangible asset 3.7 2.8 (24%)
value per share
Weight average number 3 775 620 189 3 661 252 264 (3%)
of shares in issue
Shares in issue at 4 763 502 216 4 649 134 291 (2%)
period end
Notes:
1. The "Before" column presents Vunani`s unaudited interim results for
the 6 month period ended 30 June 2010 prior to the settlement
agreement.
2. The "After" column indicates the pro forma results for Vunani for
the 6 month period ended 30 June 2010 after the settlement
agreement.
3. For the purpose of calculating earnings per share (basic and
diluted) and headline earnings per share (basic and diluted), the
transactions took place on 1 January 2010.
4. For the purpose of calculating net asset value and net tangible
asset value per share, the settlement agreement took place on 30
June 2010.
5. Net assets subject to the settlement amount to R45.262m. The effect
on total comprehensive loss for the six months ended 30 June 2010
amounted to R5.775m.
6. It has been assumed that cash of (R14,075,000) to be received as a
result of the settlement agreement will be used to reduce Vunani`s
overdraft facilities. The pre-tax interest rate applicable to these
facilities for the six months ended 30 June 2010 was the prime
lending rate then prevailing.
6. CLASSIFICATION OF THE TRANSACTION
The settlement agreement is classified as a Category 2 transaction in terms of
the Listings Requirements of the JSE Limited.
Sandton
23 March 2011
Independent Designated Adviser
Grindrod Bank Limited
Joint Designated Adviser
Vunani Corporate Finance
Date: 23/03/2011 15:15:01 Produced by the JSE SENS Department.
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