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RAH Of Its Indirect Interest In Comparex Africa Group (Proprietary) Limited
Real Africa Holdings Limited/ Real Africa Investments Limited
Real Africa Holdings Limited
(Registration number 1994/003919/06)
Share code: RAH
ISIN code: ZAE000008702 ("RAH")
REAL AFRICA INVESTMENTS LIMITED
(Registration number 1994/000398/06)
Share code: RAI
ISIN code: ZAE000008710 ("RAI")
(collectively, "the Real Africa Group")
DISPOSAL BY RAH OF ITS INDIRECT INTEREST IN COMPAREX AFRICA GROUP
(PROPRIETARY) LIMITED
BACKGROUND
In November 1997, significant black economic empowerment was introduced into
Persetel Q Data Africa Holdings Limited ("PQAH") when Comparex Holdings
Limited ("Comparex") disposed to PQAH a controlling interest in Comparex
Africa Group (Proprietary) Limited ("Comparex Africa") (formerly Persetel Q
Data Africa (Proprietary) Limited). PQAH acquired the right to convert its
shareholding of 63 934 426 Comparex Africa shares into 63 934 426 Comparex
shares on a one-for-one basis ("the exchange option"). PQAH effectively
exercised the exchange option in May 2001 when it gave an irrevocable
undertaking to Comparex to exercise the exchange option between 1 June and
31 October 2002. At the same time, Comparex acquired the right from PQAH to
effect the exchange option at any time before 30 November 2002.
TERMS
At the request of RAH which holds 51,3% of PQAH ("the PQAH shareholding"),
Comparex has agreed to implement the exchange option with effect from 28
January 2002. Comparex, at the request of RAH, has also extended an offer
to PQAH to purchase for cash its shareholding in Comparex Africa at R11.00
per share ("the cash offer"). RAH will thus receive cash of R360 655 757
for disposing its entitlement to 32 786 887 Comparex Africa shares ("the RAH
entitlement") ("the transaction"). PQAH has already notified Comparex of
its acceptance of the cash offer in respect of the RAH entitlement.
PQAH and RAH have undertaken to convene a meeting of all PQAH shareholders
by 22 January 2002 and to use all reasonable endeavours to procure a meeting
of the preference shareholders that provided funding to PQAH shareholders,
to enable them to consider whether or not to authorise PQAH to accept the
cash offer in respect of the Comparex Africa shares not included in the RAH
entitlement.
RATIONALE
The transaction will facilitate the unlocking of shareholders' value within
the Real Africa Group. The effective unwinding of RAH from the PQAH
shareholding also negates the possible negative cascading effect of capital
gains tax with the PQAH shareholding. The unwinding of the PQAH
shareholding would have resulted in RAH holding an interest of approximately
9% in Comparex. In terms of RAH's investment criteria, RAH does not
normally hold an interest of less than 20% in a company without significant
influence on the operations of that company. As a result, the 9% Comparex
shareholding would not have been consistent with RAH's investment criteria.
The transaction will result in an increase in RAH's cash resources to over
R850 million.
FINANCIAL EFFECTS
The Real Africa Group has been accounting for its shareholding in Comparex
Africa on an investment accounting basis. The financial effects of the
transaction on the unaudited published interim results of RAH and RAI for
the six months ended 30 September 2001 had the transaction been effected on
1 April 2001 for earnings purposes and 30 September 2001 for net asset value
purposes are set out below:
the transaction has no material impact on the net asset and net tangible
asset values of RAH and RAI;
on the basis that the transaction proceeds of R360 655 757 had been received
on 1 April 2001 and invested at an average after-tax interest rate of 6.25%
per annum, the earnings per share for RAH and RAI would increase by
10.67cents(15.3%) and 12.94cents(15.4%) respectively; and
on the basis that the transaction proceeds of R360 655 757 had been received
on 1 April 2001 and invested at an average after-tax interest rate of 6.25%
per annum, the headline earnings per share for RAH and RAI would increase by
3.00cents(31.5%) and 3.63cents(30.8%) respectively.
DOCUMENTATION
A circular detailing the salient terms of the transaction will be sent to
all shareholders of the Real Africa Group in due course for information
purposes only.
Houghton
19 December 2001
Merchant Bank and Sponsor
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Corporate Law Advisers and Consultants
Edward Nathan & Friedland (Pty) Ltd
(Registration number 1999/026464/07)
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