| Wed 1 Aug 2001, 0:00 | | Y2ktec / Cci - Acquisition And Cautionary Anouncem |
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Y2KTEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration No 1999/02149/06)
("Y2KTec")
Coetser Craddock International (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration No 1994/009631/07)
("CCI")
1.INTRODUCTION
In an announcement published in the press on 15 May 2001, shareholders were
informed that Y2KTec had entered into an agreement whereby the entire
shareholding of the wholly-owned subsidiary company, Y2KTec (SA) (Pty) Ltd
would be disposed of to Nomalanga Trading Enterprises CC ("the disposal
agreement") for a consideration of R500 000 cash. On 30 June 2001, the
disposal agreement was cancelled due to non compliance with conditions
precedent.
2. THE ACQUISITION
The Janus Corporation (Pty) Ltd is authorised to announce that Y2KTec has
entered into an agreement with the shareholders of CCI. In terms of this
agreement Y2KTec will acquire the entire issued share capital of CCI on the
terms and conditions as set out below. CCI transacts in the broader
financial services market. The vendors of CCI are collectively Andre
Jacques De Beer, Michael Keith Hill, GAC Investments Holdings (Pty) Ltd, The
Kusasa Investment Trust, The LL Compton Family Trust and Johannes Gerhardus
Booysen for The Progenitor Trust.
3.PURCHASE CONSIDERATION.
The consideration payable by Y2KTec for the shares in CCI is R4 500 000
which will be payable by the issue of 225 000 000 new ordinary shares in
Y2KTec at an issue price of 2 cents per share. The new shares will be
issued 7 days after the completion of all suspensive conditions.
4. CONDITIONS PRECEDENT
The acquisition of CCI is subject to the following conditions precedent:
Y2Ktec concluding a due diligence on CCI and being satisfied that the
results thereof will substantiate after tax earnings for CCI of not less
than R1 500 000 for its first year of operations after the acquisition.
Shareholders of Y2Ktec approving the acquisition in general meeting.
Shareholders of Y2Ktec waiving their rights to a mandatory offer in terms of
Rule 8.7 of the Securities Regulation Panel ("SRP").
A ruling being obtained from the SRP dispensing with a mandatory offer in
terms of Rule 8.7 of the SRP.
All necessary regulatory approval including those of the JSE and SRP being
obtained.
Notwithstanding the date of completion of the conditions precedent, the
effective date of the transaction will be 1 July 2001.
5.CHANGE IN DIRECTORATE
Following the cancellation of the disposal agreement, Mr Vince Collins
acquired 18 500 000 shares at 2,75 cents per share, representing 27,4% of
the existing issued shares in Y2KTec.
On 16 July 2001, Ms Nadia Solomon and Ms Afifa Adams resigned as directors.
On the same date, Messrs Vince Collins and Craig Field were appointed to the
board of directors in order to comply with the Articles of Association of
Y2KTec.
With effect from 30 July 2001 Messrs Mike Purves and Deon Bothma were
appointed as directors with Mr Craig Field resigning as a director.
6.NATURE OF BUSINESS OF CCI
CCI is a provider of professional advisory services as more fully set out
below, primarily to the small and medium enterprise market ("SME").
7.RATIONALE FOR THE ACQUISITION
The proposed transaction presents both Y2KTec and CCI with the opportunity
to achieve a number of strategic objectives as the combination of each
company's business activities will establish the merged entity with
specialised products and services in the following areas:
Payroll software and outsourcing;
Employee benefit consulting and administration;
Human resources consulting;
Company secretarial compliance and services
Taxation consulting and compliance services
Accounting and book keeping services, compliance and advice;
Budgeting, business planning and valuations; and
An internet service provider
Furthermore the strengthened capital and product base, management capability
and extensive IT infrastructure will substantially enhance the viability and
growth prospects of Y2Ktec.
8.PROSPECTS
The stated objective of CCI is to become the largest supplier of
professional business advisory services to the SME market by utilising the
combined and substantial experience of management.
The focus of the merged entity in the year ahead will be directed primarily
to consolidating and growing its position in the SME market.
The merger will allow the combined entity to enhance the following:
8.1 Capital base
The combined balance sheet and larger capital base allows for greater
utilisation by the group of the extensive investment in management, product
base and IT infrastructure.
8.2 Products
Because each business division has a unique set of products, the merger
allows for the cross-selling of products and services into a broader client
base.
9. FINANCIAL EFFECTS
Had the transaction been effective at the beginning of Y2KTec's last
financial period, i.e. 28 February 2001, the effect on the Y2KTec headline
earnings and net asset value per share as at 28 February 2001 would have
been as follows:
Y2KTec Y2KTec
Before the After the
Transaction Transaction Change
(cents) (cents) (%)
Loss per share
Headline loss per share (20,2) (4,8) 76
Net asset value per
share (2,7) (0,6) 78
Net tangible asset 0,8 2,5 112
value per share 0,8 0,9 12
The financial effects as calculated have been based on Y2Ktec's unaudited
reviewed financial results as at 28 February 2001and the management accounts
for the twelve months ended 30 June 2001 for CCI and on the assumptions that
the shares in issue will increase from 67 487 632 to 292 487 632 and that
shareholders' loans are include in shareholders' funds.
Should there be any material change in the audited accounts of Y2Ktec and
CCI, an announcement of the change in financial effects will be published.
10.REVERSE LISTING AND MAJOR SHAREHOLDER
The implementation of the acquisition will result in the reverse listing of
CCI. Accordingly the circular to shareholders detailing the transaction will
contain revised listing particulars as though Y2KTec were a new listing. The
Listings Committee of the JSE will have to confirm that the listing of
Y2KTec may continue following the transaction. It is expected however that
CCI will meet all the conditions for a Venture Capital Market listing on the
JSE.
11.CHANGE OF NAME
It is proposed that Y2KTec's name will be changed.
12.DOCUMENTATION
A circular giving further details of the acquisition of CCI, proposed change
of name and containing a notice convening a general meeting of Y2KTec
shareholders to approve and implement the transaction will, subject to JSE
and SRP approval, be posted to Y2KTec shareholders within 28 days of this
notice, or on such extended date as agreed to by the JSE and SRP.
13.CAUTIONARY ANNOUNCEMENT
Shareholders are advised to exercise caution when dealing in Y2KTec's shares
on the JSE until the detailed circular is mailed to shareholders.
Johannesburg
1 August 2001
Corporate adviser and sponsor to the transaction
The Janus Corporation (Pty) Ltd
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