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CYCAD FINANCIAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/008637/06)
("Cycad")
RENAISSANCE RETAIL GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1997/006790/06
("Renaissance")
CYCAD ACQUISITION OF SHARES IN eCOMPANY HOLDINGS LIMITED ("the
transaction")
1.The Transaction
Cycad and Renaissance shareholders are advised that agreement has
been reached in terms of which Cycad will purchase up to 32 686
000 shares in eCompany Holdings Limited ("eCompany") as to 25 686
000 from Renaissance and the balance of up to
7 000 000 from other eCompany shareholders ("Others"). Cycad will
settle the total purchase consideration of R27 783 100 through the
issue of 23 152 583 Cycad shares at an issue price of R1,20 per
share.
2.Cycad
2.1 Rationale
Cycad currently holds 40 million shares in eCompany (a 17,8%
equity stake). It wishes to utilise the transaction to increase
its stake in eCompany to a more significant level.
Cycad believes that there is sound potential for eCompany to
progressively deliver value over time, subject to reasonable
market conditions. eCompany's products are well positioned in
growth niches and the company has adequate cash resources for its
foreseeable requirements and is close to being cashflow positive
and profitable.
The transaction will result in Cycad holding 72 686 000 eCompany
shares (32,3%) which consolidates its position in an existing
investment considered to be sound. The issue of Cycad shares to
Renaissance and Others may result in increasing liquidity in Cycad
shares and will add to Cycad's institutional shareholder base. It
will also increase Cycad's critical mass. The directors are of the
opinion that the transaction will generate growth in Cycad's net
asset value in the future.
Technology investments will comprise approximately 74% of Cycad's
net asset value after the transaction. Its two largest investments
will be eCompany and Sportal Asia Limited which account for 42%
and 26% respectively of total assets.
2.2 Purchase consideration
The purchase price for a maximum of 32 686 000 eCompany shares at
85 cents per share amounts to R27 783 100 and will be settled as
to R 21,833,100 to Renaissance by the issue of 18 194 250 Cycad
shares and as to R5,950.000 to the others by way of 4 958 333
Cycad shares both at an issue price of R1,20 each.
The transaction values eCompany at R190 million which is
commensurate with values placed on the business during a
successful R35 million capital raising exercise in June 2000.
Since then, the company has made further progress in developing
its domestic and international businesses.
2.3 Information relating to eCompany
eCompany (www.ecompany.co.za) develops, delivers and operates e-
commerce platforms in carefully selected markets with a specific
focus on gaming and payment technologies. In these markets its
technology is internationally competitive and comprises:
Livebet (www.livebet.co.za) in betting and gaming; and
iVeri (www.iveri.co.za) in secure payment technologies
eCompany has sold Livebet software in South Africa and iVeri which
is exclusively distributed by Nedbank in South Africa. Both
products are fully developed and are now penetrating international
markets.
2.4 Financial effects
The pro forma financial effects of the transaction based on the
assumptions given below, are as follows:
As published
31 December Pro-forma Pro-forma Movement
2000 Before After
(cents) (%)
Loss per ordinary
share for the six
months ended 31
December 2000
(cents) (1) (4) (5) (1) (25)
Shares in
issue (000's) 70 060 70 060 93 213 33%
Assumptions:
the transaction took effect on 1 July 2000;
eCompany was treated as a Cycad associate company and its results
were equity accounted in accordance with statement of Generally
Accepted Accounting Practice, AC 110, with effect from 1 July 2000
to 31 December 2000;
The "Pro-forma Before" column shows what the effect would have
been had Cycad treated eCompany as an associate company and not as
an investment at 31 December 2000.
As published
31 December Pro-forma After Movement
2000 (cents) (%)
Net asset value
per share (cents) 172 159 (13) (7,6)
Given the volatility in domestic and international technology
markets since 31 December 2000 when Cycad's net asset value was
last calculated, the Board of Directors of Cycad will be
reassessing investment values in the light of these and other
pertinent developments specific to each investment at Cycad's year
ending 30 June 2001. In light of the above the Board of Directors
of Cycad are of the opinion that the transaction will have no
material impact on Cycad's net asset value.
2.5 Adjustment for Future Transactions
The transaction is subject to an adjustment through the issue of
further Cycad shares if the Cycad value per share used as the
basis of the share exchange ratio in this transaction is adversely
impacted by any further transaction prior to 30 June 2001. At the
date of this announcement, the Cycad board has not been presented
with any transaction or has knowledge of any circumstance which
could result in this happening.
Circular to Cycad shareholders
In compliance with the Listing Requirements of JSE Securities
Exchange, a circular giving details of the transaction and giving
notice of a general meeting, will be sent to Cycad shareholders
within 28 days of this announcement.
Renaissance Rationale
Renaissance Retail Group Limited has recently disposed of the bulk
of its trading operations with a view to realising the balance of
its remaining assets.
eCompany represented a residual asset to Renaissance and as it was
unlisted it was therefore not an appropriate instrument to
distribute to the Renaissance shareholders.
After this disposal, Renaissance will hold approximately 20% of
Cycad. Renaissance shareholders will thereby still participate in
the potential upside of eCompany, as well as being invested in the
balance of the Cycad portfolio of other investments in IT and
service sector businesses.
This transaction forms part of Renaissance's strategy to realise
its assets and proceed with an unbundling and distribution to its
shareholders which event will take place during the second half of
this year. Renaissance shareholders will therefore receive Cycad
shares as part of the proceeds of the proposed unbundling.
4 Conditions precedent
The transaction is subject to the following conditions precedent:
other eCompany shareholders not exercising pre-emptive rights to
the eCompany shares being sold;
the approval of Cycad shareholders in general meeting; and
the necessary regulatory approvals being obtained.
Johannesburg
5 June 2001
Sponsor to Cycad Sponsors to Renaissance
DEUTSCHE SECURITIES APPLETON SECURITIES / BOE SECURITIES
(PTY) LTD
Corporate adviser to Cycad Corporate and Legal advisors to
Renaissance
BJM CORPORATE FINANCE (PTY) LTD NUCLEUS CORPORATE FINANCE (PTY)
LTD
Attorneys to Cycad
WERKSMANS
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