| Wed 22 Aug 2001, 0:00 | | National Sporting Index Limited Disposal Of Nsi's |
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National Sporting Index Limited
(Registration No:1998/020418/06)
("NSI")
JSE CODE: NSI
ISIN CODE: ZAE000018172
1. INTRODUCTION
Further to the cautionary announcements published in the press on 9 May 2001
and 6 July 2001, The Janus Corporation (Pty) Limited is authorised to
announce that NSI and Phumelela Gaming and Leisure Limited ("Phumelela")
have entered into an agreement ("the agreement") whereby they intend to
maximize the potential benefits to be gained from a repositioning of NSI's
bookmaking rights at three casinos. To facilitate this transaction,
Phumelela has agreed to acquire the rights from NSI against payment of a
minimum purchase consideration.
2. RATIONALE FOR THE TRANSACTION
The directors of NSI have previously stated that it is their intention to
withdraw from the bookmaking industry in an orderly manner.
Phumelela's main business is aligned to the horse racing industry. The
acquisition of the bookmaking rights owned by NSI is in line with its
strategic decision to secure further bookmaking rights that can directly and
indirectly be of benefit to stakeholders thereby expanding its base.
The agreement between NSI and Phumelela encompasses the initial sale of the
bookmaking operations to Phumelela. This agreement will facilitate the
immediate stabilization of the operations, which will be to the benefit of
Phumelela. In turn, the cash injection from the initial payment will enable
NSI to settle outstanding debts and thereafter to concentrate its efforts on
the development of new business activities.
Once the transaction is approved by shareholders, Phumelela intend to
explore ways to derive increased value from the possible on-sale of the
bookmaking operations.
3. TERMS AND CONDITIONS OF THE TRANSACTION
Phumelela will acquire the bookmaking licences and specified movable assets
owned by NSI at each of three Gauteng casinos, viz. Gold Reef City, Caesars
and Carnival City on terms and conditions set out below. The effective date
of the transactions will be the dates on which the suspensive conditions are
fulfilled.
The purchase price for the bookmaking rights and movable assets is R1 000
000 ("minimum purchase consideration"), with a payment of R500 000 ("initial
payment") on the effective date plus a further amount of R500 000 after 12
months.
The agreement relates to a 12 month assessment period from the effective
date. If during this assessment period or within 12 months thereafter,
Phumelela on-sells any or all of the bookmaking licences to a bona fide
third party for more than the initial payment or the minimum purchase
consideration, 50% of such excess will be paid to NSI. Alternatively, NSI
may purchase back any or all of the bookmaking licences before the end of
the 12 month assessment period at the initial payment price.
4. FINANCIAL EFFECTS OF THE DISPOSAL ON NSI'S SHAREHOLDERS
4.1 Had the disposal been effective at the beginning of NSI's last financial
year ended 31 March 2001, the effect on the NSI headline earnings per share
for the year and the net asset per share as at 31 March 2001 would have been
as follows:
NSI NSI
Before the After the
disposal disposal Change
(cents) (cents) (%)
Earnings per share (7.6) (7.5) 0.9
Headline earnings per
share (5.2) (5.1) 1.3
Net asset value per
share 3.3 3.3 0
Net tangible asset
value per share 3.0 3.3 10.7
4.2 The financial effects as calculated have been based on the following
assumptions:
that the NSI disposal would have been made on 1 April 2000;
that the net cash proceeds of R1 000 000 would have been invested at an
average interest rate of 10,0% per annum before and after taxation; and
that NSI's published results had already anticipated the proposed disposal
of the casino licences in terms of the accounting values for assets.
4.3 At the conclusion of the disposal, NSI will own a 30% interest in
Innovate Gaming Systems (Pty) Ltd ("Innovate") and continue to collect the
outstanding accounts receivables book. Following the conclusion of the
disposal, the directors intend to investigate the acquisition of further
assets to meet the requirements of the JSE Securities Exchange SA ("JSE") in
relation to maintaining a listing.
5. CONDITIONS PRECEDENT
The implementation of the disposal is subject to, inter alia, the fulfilment
of the following conditions precedent:
* All necessary regulatory approvals having been obtained including the
approvals of the JSE and the Securities Regulation Panel ("SRP);
* The holding of a general meeting in terms of Section 228 of The Companies
Act (Act 71 of 1973 as amended) of NSI shareholders to approve the passing
of the requisite resolutions for the implementation of the disposal;
* The bookmaking licences held by NSI is transferred to Phumelela on terms
and conditions reasonably acceptable to Phumelela;
* Phumelela completes a satisfactory due diligence in respect of each of the
licences.
6. FUTURE PROSPECTS
Following the disposal of the bookmaking operation, NSI will concentrate on
disposing of the Innovate investment and in due course collecting the
accounts receivable book.
NSI has already rationalised its business operations, retrenched staff and
reduced overheads.
It is the board's intention to explore a number of business opportunities
with a view to refocusing NSI and utilising its cash shell.
7. DOCUMENTATION
A circular giving further details of the disposal and containing a notice
convening a general meeting of NSI shareholders to approve and implement the
disposal will, subject to the approval of the JSE and the SRP, be sent to
NSI shareholders within 28 days of this announcement, or such later date, as
agreed to by the JSE.
8. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement published in the
press on 9 May 2001.
As a fully detailed circular is to be mailed to shareholders, the need to
exercise caution when in dealing in NSI shares on the JSE no longer applies.
Johannesburg
17 August 2001
Corporate financial adviser and Sponsor
The Janus Corporation (Pty) Limited
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