| Thu 26 Apr 2001, 0:00 | | Lyons - Sale Of Business And Specific Repurchase O |
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Lyons Financial Solutions Holdings Limited
(Formerly The Learning Corporation Limited)
(Registration number 1997/022117/06)
("Lyons")
SALE OF BUSINESS AND SPECIFIC REPURCHASE OF SHARES
1. INTRODUCTION
Further to the cautionary announcement dated 27 February 2001, Lyons has
reviewed recent changes in the real estate asset and investment management
industry and has decided to grow profitable divisions within the Lyons group
whilst outsourcing low margin businesses such as property broking.
Consequently, Lyons has wound down its investments in these operations
nationally.
Accordingly, on 20 April 2001 and subject to certain suspensive conditions,
Lyons Asset Management (Proprietary) Limited ("LAM"), a wholly-owned subsidiary
of Lyons, entered into an agreement and an amending agreement (collectively
referred to as "disposal agreement") to:
* dispose of its Western Cape property broking business ("business") as a going
concern to Baker Street Associates (Cape Town) (Proprietary) Limited ("Baker
Street") ("disposal"); and
* cancel certain outstanding obligations in terms of the agreement regulating
the acquisition by Lyons of the business from Baker Street prior to Lyons'
listing on the JSE Securities Exchange South Africa ("JSE") on 5 June 2000
("previous acquisition").
The disposal is made in accordance with terms similar to that of the previous
acquisition and is effective from the close of business on 31 December 2000
("effective date"). Accordingly, the disposal effectively represents a reversal
of the previous acquisition.
2. PURCHASE CONSIDERATION
The purchase consideration payable by Baker Street is R4 539 456. It will be
settled as follows:
* R2 200 000, of which R858 000 has already been paid, in cash on the
completion date of the disposal (the "completion date");
* R339 456 on the completion date or within seven days of confirmation by LAM's
auditors of taxation payable in respect of the business's earnings, whichever
date is the latter. This figure is also subject to adjustment by LAM's
auditors, having regard to the audited financial statements in respect of the
business for the year 1 January 2000 to 31 December 2000;
* R1,2 million as a set-off for unpaid instalments due to Baker Street in terms
of the previous acquisition; and
* the return of 10 million shares of Lyons which were allotted, issued and
delivered to Baker Street in terms of the previous acquisition. The return of
these shares constitute a specific repurchase of shares, further details of
which are set out in paragraph 3 below.
3. SPECIFIC REPURCHASE OF SHARES
3.1 Specific authority
It is proposed that, subject to the approval of Lyons' shareholders in general
meeting in compliance with the Companies Act, 1973 (Act 61 of 1973), as amended
("Companies Act") and the Listings Requirements of the JSE, specific authority
be granted to Lyons' directors to repurchase, on behalf of Lyons, the 10
million shares referred to in 2 above. These shares represent 4,93% of the
issued share capital of Lyons.
3.2 Terms
These shares will be repurchased at an effective price of 8 cents per Lyons
share. The repurchase will be made by LAM. Subject to the achievement of profit
warranties, these shares will be issued to vendors who had sold their
businesses into Lyons prior to its listing on the JSE.
The effective date of the repurchase will be 31 December 2000 and the shares
will be delivered to LAM on the completion date.
The premium to be paid by Lyons in repurchasing these shares is more than 10%
of the weighted average of the market value for the Lyons shares for the five
business days immediately preceding the date of signature of the disposal
agreements ("premium"). Accordingly, Lyons will appoint an independent
professional expert to confirm whether the premium to be paid is fair and
reasonable.
3.3 Financial effects of the repurchase
As the disposal and the specific share repurchase forms part of an indivisible
transaction, the financial effects of the share repurchase have been taken into
account in the calculations contained in 4 below.
3.4 Circular
Full details of the specific share repurchase, including the date of the
general meeting where shareholders will be requested to approve the specific
repurchase, will be included in a circular containing details of the disposal
(referred to in 8 below).
4. FINANCIAL EFFECTS
The financial effects of the disposal and the specific share repurchase on the
earnings per share ("EPS"), headline earnings per share ("HEPS") net asset
value ("NAV") and tangible net asset value ("TNAV") are illustrated in the
table below:
Before After Change
Per Lyons share (cents) (cents) (%)
EPS 2,99 2,88 (3)
HEPS 2,99 2,88 (3)
NAV 2,77 3,56 24
TNAV 2,77 3,56 24
The financial effects were calculated having had regard to the following:
* the latest published second set of unaudited interim accounts for the 12
months ended 31 December 2000;
* the disposal being effective from 1 January 2000;
* the "After" column assumes that the specific share repurchase was effective
from 1 January 2000 and is based on 192 933 844 Lyons shares in issue; and
* interest received on the cash component of the purchase consideration was
calculated at a rate of 14,5% and taxed at a tax rate of 30%.
5. SUSPENSIVE CONDITIONS
The disposal is subject to the fulfilment by 15 July 2001, or such later date
as may be agreed on by the parties, of the following suspensive conditions:
* compliance with the provisions of the Companies Act;
* compliance with the requirements of the JSE and obtaining the necessary
approvals from the JSE;
* approval by shareholders, in general meeting, of any amendments required to
the articles of association of Lyons to authorise the specific repurchase of
shares; and
* approval by shareholders who are eligible to vote, in general meeting, of the
disposal and the specific repurchase of shares.
6. CHANGE IN YEAR-END
Lyons has lodged an application with the Registrar of Companies to change its
year-end from 31 December to 31 May. This application was approved. As more
than 12 months have expired since its last year-end Lyons, on 31 March 2001,
issued a second set of interim results.
7. RELATED PARTIES
G J Mackie ("Mackie") and D M Russell ("Russell") were members of the Lyons'
and/or LAM's board of directors in the 12 months preceding the disposal and are
also parties to the amending agreement referred to in 1 above. Accordingly, the
JSE has ruled that the disposal is a related party transaction requiring a
simple majority of votes of shareholders, other than related parties and their
associates. Mackie and Russell are related parties in terms of the Listings
Requirements of the JSE and may not vote on the disposal at the general meeting
of Lyons' shareholders. Full details of the related party transaction will be
disclosed in the circular.
8. CIRCULAR
A circular containing full details on the disposal and the specific repurchase
of shares containing, inter alia, the date of the general meeting will be
forwarded to shareholders within 28 days of the publication of this
announcement.
Johannesburg
25 April 2001
Corporate advisor and sponsor
Brait
