| Tue 4 Oct 2011, 15:01 | | KGM - Kagiso Media Limited - Revised announcement |
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KGM
KGM
KGM - Kagiso Media Limited - Revised announcement
KAGISO MEDIA LIMITED
Incorporated in the Republic of South Africa)
Reg. No 1957/000036/06
Share Code: KGM
ISIN:ZAE000014007
("Kagiso Media" or "the Company")
ANNOUNCEMENT RELATING TO THE DISPOSAL OF KAGISO MEDIA`S 50% SHARES AND
CLAIMS IN LEXISNEXIS (PROPRIETARY) LIMITED ("LEXISNEXIS") AND WITHDRAWAL
OF CAUTIONARY
1. INTRODUCTION
Further to the cautionary announcement released by Kagiso Media on
SENS on 22 September 2011, Kagiso Media shareholders are advised
that Kagiso Media has accepted an offer from Reed Elsevier South
Africa ("Reed Elsevier") for its 50% shareholding in and claims
against LexisNexis ("Sale Interest") and is in the process of
negotiating the terms of a sale and purchase agreement in this
respect ("the Disposal"). Kagiso Media holds a 50% interest in the
LexisNexis joint venture.
The purpose of this announcement is to provide Kagiso Media
shareholders with the salient terms of the Disposal, which are set
out below.
2. RATIONALE OF THE DISPOSAL
LexisNexis is a provider of content-enabled workflow solutions for
professionals in the legal, risk management, corporate, government,
law enforcement, accounting and academic markets. It has a unique
combination of Butterworths authoritative content, powerful online
research, and advanced productivity tools, which help companies and
individuals to stay one step ahead in a constantly changing
corporate, political or legal environment.
The evolution of Kagiso Media strategy has led to a change in its
investment criteria as it became apparent that a more proactive
approach to managing its assets would enhance value creation in the
longer term. In terms of this strategy, it was imperative that
Kagiso Media assume majority control of the joint venture. However
Kagiso Media`s partner in the joint venture would not agree to
Kagiso Media buying up. Kagiso Media`s approach is on the back of a
strategic decision to attain a 50+% shareholding in all its
investments. Pursuant to this, Reed Elsevier subsequently offered to
purchase Kagiso Media`s shares in LexisNexis. The company believes
that the agreed price of R565 million represents a good outcome for
Kagiso Media shareholders.
3. TERMS AND DETAILS OF THE DISPOSAL
In terms of the Disposal, the purchase price to be paid for the Sale
Interest will be an amount equal to R565 million (five hundred and
sixty-five million), payable in cash. Kagiso Media will apply the
proceeds from the Disposal to other key projects currently being
pursued by Kagiso Media.
LexisNexis declared and paid a dividend to its current shareholders
of R53.9 million on 30 September 2011.
4. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL ON KAGISO MEDIA
SHAREHOLDERS
The pro forma financial effects below for which the Kagiso Media
board of directors are responsible, illustrate the impact of the
Disposal on the most recently published results of Kagiso Media for
the year ended 30 June 2011. Pro forma financial information is
presented for illustrative purposes only on the assumption that the
Disposal was implemented with effect from 1 July 2010 for purposes
of the statement of comprehensive income and on 30 June 2011 for
purposes of the statement of financial position and, because of its
nature, may not fairly present the financial position, changes in
equity and results of operations or cash flows post the
implementation of the Disposal.
The pro-forma financial effects are as follows:
Before the Post the % change
Disposal Disposal
Basic earnings per share (cents) 1 152.2 423.9 179%
Headline earnings per share (cents) 1 153.1 119.2 -22%
Net asset value per share (cents) 2 519.0 824.6 59%
Tangible net asset value per share (cents) 165.0 491.4 198%
2
Number of ordinary shares in issue (`000) 133,792 133,792
Weighted average number of ordinary shares 133,792 133,792
in issue (`000)
Notes and assumptions:
1. The basic earnings per share have been adjusted for the
following items:
- The de-recognition of the earnings from LexisNexis of R45
million;
- The recognition of the profit on the Disposal of R409 million,
after taking into account estimated Capital Gains Tax ("CGT")
arising from the Disposal; and
- Estimated transaction costs of R2 million.
- Interest income based on the net proceeds after tax and
transaction costs has not been included as the cash proceeds
are expected to be utilised in the normal course of business.
It is anticipated that interest would be earned at
approximately 4% of the net proceeds after deducting capital
gains tax and the relevant tax.
2. The net asset value and tangible net asset value have been
adjusted for the following:
- The de-recognition of the LexisNexis net assets of R82 million
and the LexisNexis tangible net assets of R54 million;
- The increase in the cash balance by R491 million as a result of
the cash proceeds received from the Disposal (net of CGT); and
- Transaction costs based on current estimates of R2 million
which will be paid in cash.
- This includes earnings from LexisNexis of R45 million.
5. SUSPENSIVE CONDITIONS
The Disposal has been approved by the board of directors of Kagiso
Media but remains subject to the fulfillment of the following, inter-
alia, suspensive conditions:
- Finalisation and signature of the sale and purchase agreement;
- Regulatory approvals;
- Completion of a due diligence exercise, and
- Kagiso Media shareholder approval.
All Suspensive Conditions are expected to be fulfilled by November
2011. The Disposal will be effective three business days following
the date upon which the last of the suspensive conditions have been
fulfilled.
6. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY
The Disposal is classified as a Category 1 transaction in terms of
the JSE Listings Requirements and accordingly a circular with the
information in respect of the Disposal and incorporating a notice
convening a general meeting of Kagiso Media shareholders will be
posted to the shareholders in due course.
Kagiso Media shareholders are advised that, as a result of the
publication of this announcement, the relevant cautionary
announcement is now withdrawn and caution is no longer required to
be exercised when dealing in their Kagiso Media shares.
4 October 2011
Sponsor : Investec Bank Limited
Date: 04/10/2011 15:01:10 Produced by the JSE SENS Department.
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