| Wed 19 Dec 2001, 0:00 | | Exercise By Comparex Of Its Option To Acquire The |
|
Persetel Q Data Africa Holdings Limited ("PQ Africa Holdings") in Comparex
Africa Group (Proprietary) Limited in exchange for Comparex shares, and a
cash alternative
Comparex Holdings Limited
(Registration number 1994/002506/06)
Share code CPX ISIN ZAE000016812
("Comparex")
Exercise by Comparex of its option to acquire the entire shareholding of
Persetel Q Data Africa Holdings Limited ("PQ Africa Holdings") in Comparex
Africa Group (Proprietary) Limited in exchange for Comparex shares, and cash
alternative
1. Introduction
Rand Merchant Bank is authorised to announce that, at the request of Real
Africa Holdings Limited ("RAH"), Comparex has agreed to acquire the entire
shareholding of PQ Africa Holdings in Comparex Africa (Proprietary) Limited
("Comparex Africa") (formerly Persetel QData Africa (Proprietary) Limited),
either:
- by exercising its option to exchange such Comparex Africa shares for
ordinary shares in Comparex ("the exchange option"); or
- for cash ("the cash alternative"); or
- for a combination of the exchange option and the cash alternative.
The background to and terms of the exchange option and the cash alternative
("the transactions") are set out below.
2. Background and rationale
During November 1997, Comparex:
- entered into an agreement with RAH and PQ Africa Holdings in terms of
which a controlling interest in Comparex Africa was acquired by PQ Africa
Holdings, a company controlled by RAH and the National Information
Technology Acquisition Consortium ("NITAC"), a broad base of black economic
empowerment investor groupings; and
- entered into a shareholders' agreement with RAH and PQ Africa Holdings in
terms of which, inter alia, PQ Africa Holdings was granted the exchange
option pursuant to which PQ Africa Holdings had the right to require
Comparex to acquire PQ Africa Holdings' entire interest in Comparex Africa
in exchange for 63 934 426 Comparex shares, on a one-for-one basis.
As advised to Comparex shareholders on 26 February 2001, PQ Africa Holdings
gave an irrevocable undertaking to Comparex to exercise the exchange option
between 1 June 2002 and 31 October 2002 and granted Comparex the right to
exercise the exchange option at any time before 30 November 2002. The
future exercise of the exchange option thus became a certainty.
It is RAH's stated policy to have significant influence at the board of
directors and to hold an interest of at least 20% in all of its underlying
investments. Accordingly, RAH has advised Comparex that it would prefer PQ
Africa Holdings to dispose of RAH's indirect shareholding in Comparex Africa
("the RAH entitlement") for cash, as RAH would hold an interest of only
approximately 9% in Comparex after the exercise of the exchange option.
Comparex has therefore agreed to exercise the exchange option and extend the
cash alternative, provided that PQ Africa Holdings accepts the cash
alternative at least in respect of the RAH entitlement. At the request of
RAH, Comparex has extended the cash alternative on terms which entitle PQ
Africa Holdings to also dispose of those Comparex Africa shares which do not
form part of the RAH entitlement, for cash.
Subsequent to the implementation of the transactions, Comparex will own 100%
of the shares in Comparex Africa.
3. Empowerment and transformation
Comparex and Comparex Africa are fully committed to the furthering of
empowerment and transformation at all levels within Comparex Africa. During
the recent past, Comparex Africa implemented a number of projects and
initiatives in this regard. These include:
- Comparex Africa was the first South African IT company to successfully
submit and introduce an official employment equity plan. It strives to be
an organisation within which equal opportunity is offered to all its
employees for promotion, training, development and advancement.
- Comparex Africa has implemented an Employee Communication Forum nationally
consisting of management and employee representatives. The main purpose of
this forum is to assist Comparex Africa with the implementation of its
transformation interventions in the workplace, for example input regarding
policies like recruitment and selection, employment equity, HIV/AIDS,
performance management, employee relations and training and development. The
input obtained ensures that these policies are fair and equitable to all
employees.
- A representative Transformation Committee was constituted to ensure that
external input to the transformation interventions is obtained. This
committee deals with transformation issues on a regular basis and tracks the
progress made by Comparex Africa with regard to transformation.
- Comparex Africa has retained the Black Management Forum ("BMF") to assist
in training facilitators and managers in Diversity Management Awareness, to
assist in developing a company culture that is tolerant to transformation
interventions. The BMF has also been involved in an advisory capacity to
assist Comparex Africa in transforming its business over the next four
years.
- A new recruitment policy was implemented to ensure that external
recruitment is increasingly from previously disadvantaged groups.
- Involvement in various other Corporate Social Investment programmes
includes an IT internship programme, funding of the Lower Seplan High School
computer project and the Siyabuswa community project to establish an
internet connected computer centre.
- Small and Medium Size Enterprise (SMSE) Development: Comparex Africa
continually strives to outsource or sub-contract business to organisations
owned by previously disadvantaged individuals and/or designated groups,
thereby assisting in the development of these organisations. All of
Comparex Africa's business units are encouraged to facilitate the
procurement of services and products from such organisations. Accordingly,
strong working relationships and partnerships have been established with a
vast collection of SMSE's to support Comparex Africa's core business
activities.
To complement and accelerate the existing empowerment and transformation
initiatives, Comparex and Comparex Africa continue to consult widely with
various parties, including representatives of current and potential future
partners, customers and the South African Government.
4. Terms of the transactions
The salient terms of the cash alternative are as follows:
- PQ Africa Holdings is offered the opportunity to dispose of all or part of
its Comparex Africa shares, for cash at R11,00 per Comparex Africa share;
- the offer was extended to PQ Africa Holdings on Wednesday, 19 December
2001 and closes on Friday, 25 January 2002; and
- the proceeds in respect of each Comparex Africa share for which the cash
alternative is elected, will bear interest from 19 December 2001 until the
date of payment, being 8 February 2002.
PQ Africa Holdings has already accepted the cash alternative in respect of
the RAH entitlement.
PQ Africa Holdings and RAH have undertaken to convene a meeting of all the
shareholders of PQ Africa Holdings by 22 January 2002 and to use all
reasonable endeavours to procure that a meeting of the preference
shareholders that provided funding to NITAC, is held by the said date, to
enable them to consider whether or not to authorise PQ Africa Holdings to
accept the cash alternative in respect of the Comparex Africa shares not
included in the RAH entitlement.
The exchange option will remain in full force and effect in respect of all
PQ Africa Holdings' shares in Comparex Africa for which the cash alternative
is not accepted. Comparex will exercise the exchange option on the first
business day after the closing date for acceptance of the cash alternative,
being Monday 28 January 2002.
5. Financial effects
The minimum amount of cash (excluding interest) to be paid by Comparex in
terms of the cash alternative is approximately R360 million and the maximum
is approximately R703 million. The maximum potential number of new Comparex
shares to be issued in terms of the exchange option is approximately 31,1
million shares, due to the fact that PQ Africa Holdings has already accepted
the cash alternative in respect of the RAH entitlement.
As it is uncertain to what extent the cash alternative will be accepted and
therefore how many new Comparex shares will have to be issued to PQ Africa
Holdings pursuant to the exercise of the exchange option, it is not possible
to accurately determine the financial effects of the transactions at this
stage. The financial effects of the transactions, based on the audited
group results of Comparex for the year ended 31 May 2001, have therefore
been calculated assuming two possible acceptance levels for the cash
alternative:
Scenario 1: Assuming acceptance of the cash alternative in respect of the
RAH entitlement only
Before After Change
(cents) (cents) (%)
Earnings per share 105,2 86,5 (17,8)
Headline earnings per share 85,9 84,0 (2,2)
Net asset value per share 1 065,5 1 010,8 (5,1)
Fully diluted earnings per 96,7 84,0 (13,1)
share
Fully diluted headline 84,6 85,3 0,8
earnings per share
Fully diluted net asset 879,3 963,5 9,6
value per share
Fully diluted net tangible
asset value per share 879,3 859,4 (2,3)
Scenario 2: Assuming acceptance of the cash alternative in respect of ALL
the shares held by PQ Africa Holdings
Before After Change
(cents) (cents) (%)
Earnings per share 105,2 87,4 (16,9)
Headline earnings per share 85,9 88,9 3,5
Net asset value per share 1 065,5 1 002,0 (6,0)
Fully diluted earnings per 96,7 84,6 (12,5)
share
Fully diluted headline 84,6 86,0 1,7
earnings per share
Fully diluted net asset 879,3 950,7 8,1
value per share
Fully diluted net tangible
asset value per share 879,3 836,9 (4,8)
Assumptions:
- For the purposes of calculating the above financial effects on all
earnings related figures, it was assumed that the transactions became
effective on 1 June 2000.
- For the purposes of calculating the above financial effects on all net
asset value related figures, it was assumed that the transactions became
effective on 31 May 2001.
- The financial effects are calculated assuming that payment for the cash
alternative was financed from excess cash resources, on which interest was
received at a net rate of 7% per annum, after deducting tax at a rate of
30%.
- For the purposes of calculating all the figures in the "After" column in
Scenario 1 above, the number of shares taken into account was consistently
adjusted for the maximum potential number of new Comparex shares to be
issued pursuant to the exercise of the exchange option, being approximately
31,1 million Comparex shares.
- For the purposes of calculating the financial effects on the net asset
value figures, the figures in the "Before" column were adjusted to reflect
Comparex's consolidated net asset value before the minority interest in
Comparex Africa.
- Goodwill resulting from the transactions has been amortised over 7 years.
Midrand
19 December 2001
Merchant bank and Attorneys
transactional sponsor Brink Cohen Le Roux &
Rand Merchant Bank Roodt Inc
