| Tue 8 May 2012, 7:05 | | TKG - Telkom SA Limited - Announcement regarding the potential strategic |
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TKG
TKG
TKG - Telkom SA Limited - Announcement regarding the potential strategic
venture with KT Corporation ("KT") and further cautionary announcement
Telkom SA Limited
(Registration number 1991/005476/06)
JSE share code: TKG
ISIN: ZAE000044897
("Telkom" or the "Company")
ANNOUNCEMENT REGARDING THE POTENTIAL STRATEGIC VENTURE WITH KT CORPORATION
("KT") AND FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcements dated 14 October
2011, 21 November 2011, 12 December 2011, 27 January 2012, 9 March 2012 and 25
April 2012 regarding a potential strategic venture ("Potential Strategic
Venture") between Telkom and KT (collectively "the Companies"), that would, if
implemented, result in:
i. KT acquiring a strategic equity shareholding of 20% in the post-issue
ordinary share capital of Telkom by way of a specific issue of shares for
cash ("Potential Equity Investment"); and
ii. the Companies entering into a 5-year co-source management services
agreement to formalise the relationship and identified areas of mutual
strategic and business cooperation.
Following an extensive investigation period into the merits of the Proposed
Strategic Venture, Telkom is pleased to advise shareholders that the Companies
have reached in principle agreement regarding the terms of the Potential
Strategic Venture, including a revised cash issue price for the new Telkom
ordinary shares to be issued to KT (described in more detail below).
The Proposed Strategic Venture remains subject to the fulfilment of the
following pre-conditions before the final terms can be finalised:
i. finalisation of the transaction agreements. The transaction agreements
comprise a subscription and relationship agreement and a co-source
management services agreement;
ii. final resolution of the current investigation by the Competition
Authorities into the competition complaints against Telkom to the
satisfaction of KT;
iii. receipt of in principle support for the Proposed Strategic Venture by the
Government of South Africa; and
iv. receipt of in principle support for the Proposed Strategic Venture by
Allan Gray and the Public Investment Corporation.
On fulfilment of the pre-conditions set out above the boards of directors of
Telkom and KT will consider the final terms of the Proposed Strategic Venture
and, following approval by the Companies, sign the transaction agreements.
Telkom will subsequently present the Proposed Strategic Venture to Telkom
shareholders for approval.
Potential Equity Investment
Since the first cautionary announcement on 14 October 2011, there have been a
number of developments concerning Telkom that have materially impacted the
Telkom share price. As a consequence, Telkom and KT have agreed to revisit the
terms of the Potential Equity Investment. Shareholders are advised that Telkom
and KT have agreed to a revised cash issue price for the new Telkom ordinary
shares to be issued to KT under the Potential Equity Investment of ZAR25.60
per new Telkom ordinary share ("Proposed Issue Price"). The Proposed Issue
Price represents a 9.9% premium to the closing price of Telkom ordinary shares
of ZAR23.30 on the securities exchange operated by JSE Limited on 4 May 2012
and a 7.1% premium to the volume weighted average price of Telkom ordinary
shares for the 30 trading days up to and including 4 May 2012. In the event
that Telkom declares and/or pays any distribution to Telkom shareholders prior
to the implementation of the Proposed Strategic Venture, the aggregate
subscription price payable by KT will be reduced by 20% of the total gross
distribution declared and/or paid by Telkom.
Further cautionary announcement
Shareholders are advised that discussions regarding the Potential Strategic
Venture are ongoing.
Accordingly, shareholders are advised to continue exercising caution when
trading in the Company`s securities until a further announcement is made.
For enquiries:
Telkom
Robin Coode (Investor Relations)
Tel: +27 (0)12 311 6081
Pynee Chetty (Media)
Tel: +27 (0)12 311 5247
Pretoria
08 May 2012
Lead financial advisor and transaction sponsor to Telkom
Deutsche Bank
Sponsor to Telkom
UBS South Africa (Pty) Ltd
Date: 08/05/2012 07:05:06 Produced by the JSE SENS Department.
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