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Cape Empowerment Trust Limited Dynamic Cables RSA (Proprietary) Ltd
(Incorporated in the Republic of SA) (Incorporated in the Republic of SA)
(Registration number 1998/014606/06) (Registration number 1987/001807/06)
("CET") ("Dynamic")
Share Code: CAE Share Code: DYM
ISIN: ZAE000016952 ISIN: ZAE000028270
JOINT ANNOUNCEMENT CONCERNING AN AMENDMENT OF THE DYNAMIC CABLES TRANSACTION
1. INTRODUCTION
Further to the announcement dated 18 December 2000 by CET and dated 5 March
2001 by Dynamic, PSG Investment Bank Limited is authorised to announce that
CET and Dynamic, formerly Conlog Holdings Limited, have agreed to amend
("the amendments") the terms of their agreement dated 16 December 2000 ("the
existing agreement"), in respect of the existing sale by CET of the shares
in the capital of and all claims on loan account against Dynamic Cables SA
(Proprietary) Limited ("Dynamic Cables") to Dynamic ("the existing
transaction").
2. BACKGROUND
The necessary regulatory approvals were obtained and the shareholders of
both CET and Dynamic approved the transaction, and the transaction has been
implemented. In terms of the existing agreement the purchase price is based
on a formula, subject to a minimum purchase price of R16 000 000, to be
finally determined after 31 December 2002 once the profit achieved by
Dynamic Cables for the period 1 January 2001 to 31 December 2002 has been
determined. The boards of directors of both companies now propose that the
purchase price be fixed and that the date for payment of the purchase price
be accelerated for the reasons set out below.
3. RATIONALE FOR THE AMENDMENT OF THE DISPOSAL AGREEMENT
The amendments to the existing agreement are limited to the fixing of the
amount of the purchase price and acceleration of the date for payment of the
purchase price, for the following reasons:
3.1 the acceleration will create certainty for Dynamic and its stakeholders
as to the share capital structure of Dynamic and identity of the major
shareholders of Dynamic;
3.2 the fixing of the purchase price will eliminate any exposure which
Dynamic may have, in view of the fact that the purchase price is potentially
unlimited, arising from the achievement of profit in excess of the profit
anticipated by the parties when they entered into the existing agreement;
3.3 the establishment of CET as the controlling shareholder of Dynamic will
further enhance the existing status of Dynamic and its operating
subsidiaries as black economic entities in order to procure further tenders
/ contracts; and
3.4 the aforesaid will benefit CET as major shareholder of Dynamic.
4. TERMS OF THE AMENDED DISPOSAL AGREEMENT
4.1 Consideration and payment terms
The terms of the existing agreement are amended as follows:
4.1.1 the purchase price shall be a fixed amount of R54 000 000;
4.1.2 R16 000 000 has already been paid to CET;
4.1.3 the balance of the purchase price, being the amount of R38 000 000,
shall be paid by Dynamic at any time or times before 31 December 2001, in
the same manner provided for the existing agreement, namely by way of -
4.1.3.1 the allotment and issue to CET of ordinary shares in the capital of
Dynamic at an issue price of 60 (sixty) cents per share; or
4.1.3.2 a cash payment; or
4.1.3.3 a combination of the aforegoing.
4.2 Conditions
The implementation of the amendments is subject to the following conditions:
4.2.1 the JSE Securities Exchange South Africa furnishing such approvals as
may be required;
4.2.2 the shareholders of CET approving the amendments; and
4.2.3 the shareholders of Dynamic approving the amendments.
4.3 Change of control
The Securities Regulation Panel has previously granted a dispensation that
the possible change of control of Dynamic resulting from the transaction
will not require the making of a mandatory offer to Dynamic shareholders by
CET, provided that independent shareholders of Dynamic approve thereof in
general meeting. Such independent shareholder approval was granted at the
general meeting of Dynamic shareholders held on 30 January 2001. CET may
hold up to a maximum 57.5% of Dynamic shares if Dynamic elects to exercise
the option in 4.1.3.1 above in respect of the full outstanding balance of
the purchase price.
4.4 Irrevocable Undertakings
Dynamic has already received irrevocable undertakings from the holders of
more than 50% of the independently held shares of Dynamic to approve the
amendments at the general meeting of Dynamic shareholders to be convened for
this purpose.
The holders of more than 50% of the shares in the capital of CET have
indicated that they will approve the amendments at the general meeting of
CET shareholders to be convened for this purpose.
5. FINANCIAL EFFECTS OF THE AMENDED TERMS
The latest audited financial statements for CET and the unaudited interim
results for Dynamic have been drafted on a basis which mirrors the amended
disposal agreement. Consequently, the financial effects of this transaction
has already been reported on and will be disclosed in the circular to
shareholders referred to in point 7.
6. CAUTIONARY ANNOUNCEMENT
Shareholders of CET are referred to the cautionary announcement dated 12
November 2001 and are requested to continue exercising caution in dealing
with their shares until a further announcement is made.
7. DOCUMENTATION
Circulars giving further details of the amended terms and conditions and
containing notices convening meetings of CET and Dynamic shareholders at
which resolutions to approve and implement the amendments, will be sent to
CET and Dynamic shareholders within 28 days.
CAPE TOWN
15 November 2001
Investment Bank and Sponsor Attorneys
to CET
PSG INVESTMENT BANK HOFMEYR HERBSTEIN & GIHWALA
Sponsor to Dynamic Advisors to Dynamic
Appleton Limited Kessel Feinstein Corporate Finance
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