| Wed 15 Aug 2001, 0:00 | | Update On The Proposed Merger Of Escher And M Cube |
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Escher Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/014568/06)
("Escher")
m Cubed Capital Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/010031/06)
("m Cubed")
UPDATE ON THE PROPOSED MERGER OF ESCHER AND m CUBED
Further to the announcement dated 20 April 2001, Escher shareholders and m
Cubed shareholders are advised as follows:
1. PURCHASE CONSIDERATION
1.1 The purchase consideration will be settled by the issue to m Cubed of a
renounceable letter of allotment to 450 million Escher shares, credited as
fully paid at 70 cents per share, equalling 123,145522 Escher shares for
every 100 m Cubed shares in issue.
1.2 m Cubed will distribute the rights to the allotment and issue of 445 814
017 Escher consideration shares pursuant to the letter of allotment as a
distribution in specie in the ratio of 122 Escher consideration shares for
every 100 m Cubed shares held on the record date.
1.3 The rights to the allotment and issue of 4 185 983 Escher consideration
shares will be retained in m Cubed to cover any voluntary winding-up costs
and liabilities that might arise during its winding-up process. Any
remaining cash and/or rights to the allotment and issue of Escher
consideration shares, after the payment of the voluntary winding-up costs
and any potential liabilities, will be distributed to m Cubed
shareholders as a final liquidation distribution.
2. Name change
2.1 Subject to the passing and registration of the requisite resolution,
Escher's name will be changed to m Cubed Holdings Limited ("m3"), which name
will be abbreviated on the JSE Securities Exchange South Africa ("the JSE")
as "MCUBED" (JSE code: "MCU").
3. CONDITIONS PRECEDENT
3.1 The Competition Commission has granted unconditional approval for the
merger of Escher and m Cubed.
3.2 Both companies met their respective profit and net asset value
warranties for the year ended 28 February 2001.
3.3 A combined circular, containing full information of the proposed
transaction and notice convening general meetings of Escher and m Cubed
shareholders at which approvals of the proposed merger will be sought, will
be despatched to shareholders in due course.
4. SALIENT DATES
The salient dates set out in more detail in the combined circular are as
follows:
2001
General meetings Tuesday, 11
September
Record date to participate in the m Cubed distribution Friday, 14
September
Escher consideration shares issued and listed on the JSE Monday, 17
September
Effective date of m Cubed distribution Monday, 17
September
These dates may be changed at the instance of the companies. Any change will
be published in the press.
5. FINANCIAL EFFECTS
5.1 On Escher shareholders
Before 4 After
100 100
Escher m3 Change
shares shares
R R R %
Net asset value 3 25,6 51,2 25,6 100,0
Net tangible asset value 3 21,3 18,5 (2,8) (13,1)
Adjusted basic earnings 5 7,0 4,2 (2,8) (40,0)
Basic earnings 2 7,0 3,3 (3,7) (52,9)
Non-recurring management fee 1 - 0,9
Adjusted headline earnings 7,5 7,6 0,1 1,3
Headline earnings 2 7,5 6,7 (0,8) (10,7)
Non-recurring management fee 1 - 0,9
(1) The non-recurring management fee represents a fee paid to directors and
senior management of m Cubed that will be discontinued after the merger.
(2) The effect on basic earnings per share and headline earnings per share
is based on a weighted average number of ordinary shares in issue during the
year of 288 534 000 (before the merger) and 738 534 000 (after the merger).
(3) Net asset value and net tangible asset value were calculated after
writing-off the costs of implementing the merger estimated at R7,8 million,
against share premium and is based on 300 000 000 shares in issue (before
the merger) and 750 000 000 (after the merger).
(4) Extracted from the published audited financial statements of Escher for
the year ended 28 February 2001.
(5) The significant decrease in basic earnings per share is a result of the
amortisation of goodwill arising from the merger.
5.2 On m Cubed shareholders
Before After
100 123,145522
m Cubed m3 Change
shares shares
R R R %
Net asset value 3 22,7 63,0 40,3 177,5
Net tangible asset value 3 22,7 22,8 0,1 0,4
Adjusted basic earnings 4 9,4 5,2 (4,2) (44,7)
Basic earnings 2 7,6 4,1 (3,5) (46,1)
Non-recurring management fee1 1,8 1,1
Adjusted headline earnings 9,4 9,3 (0,1) (1,1)
Headline earnings 2 7,6 8,2 0,6 7,9
Non-recurring management fee 1 1,8 1,1
(1) The non-recurring management fee represents a fee paid to directors and
senior management of m Cubed that will be discontinued after the merger.
(2) The effect on basic earnings per share and headline earnings per share
is based on a weighted average number of m Cubed ordinary shares in issue
during the year of 365 421 326 (before the merger) and 738 534 000 m3 shares
(after the merger) and taking into account the exchange ratio of 123,145522
m3 shares for every 100 m Cubed shares, of which 122 will immediately be
distributed in terms of the m Cubed distribution.
(3) Net asset value and net tangible asset value were calculated after
writing-off the costs of implementing the merger estimated at R7,8 million,
against share premium and after providing for a dividend of R5 million
proposed by m Cubed Capital Life Limited, and is based on 365 421 326 m
Cubed shares (before the merger) and 750 000 000 m3 shares (after the
merger).
(4) The significant decrease in basic earnings per share is a result of the
amortisation of goodwill arising from the merger (R3,90 per 123,145522 m3
shares).
Johannesburg
15 August 2001
Investment bank and joint sponsor to Escher
PSG Investment Bank
Joint sponsor to Escher
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Investment bank to m Cubed
Gensec Bank Limited
(Registration number 1996/004744/06)
