| Tue 29 Jan 2002, 0:00 | | Netactive - The Specific Repurchase Of 55 421 933 |
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NETACTIVE
(Incorporated in the Republic of South Africa)
(Registration number 1998/006000/06)
Share code: NET ISIN: ZAE000017935
("Netactive" or "the company")
THE SPECIFIC REPURCHASE OF 55 421 933 ORDINARY SHARES IN THE SHARE CAPITAL
OF NETACTIVE FROM SELECTED SHAREHOLDERS AT 25 CENTS PER SHARE AND A
MANDATORY OFFER TO ALL OTHER SHAREHOLDERS
1. Introduction
Benefique Capital is authorised to announce that Netactive has concluded
agreements with Massmart Limited ("Massmart"), Affinity Logic Holdings
(Proprietary) Limited ("Affinity Logic"), Woolworths Computer Services
(Proprietary) Limited ("Woolworths") and Frontrange Limited ("Frontrange")
(collectively, the "Sellers"), to purchase their entire shareholdings of 10
000 000, 21 671 600, 19 167 000 and 4 583 333 ordinary shares, respectively,
in Netactive (representing approximately 38% of the Company's issued share
capital) at 25 cents per share for a collective consideration of R13 855
483, subject to the suspensive conditions set out in paragraph 5 below (the
"Specific Repurchase").
As this transaction is deemed a change of control by the Securities
Regulation Panel (the "SRP") in terms of Rule 18.1, it is classified as an
affected transaction in terms of the Take-over Code ("the Code") of the SRP
and a Mandatory Offer is required to be made to all other shareholders on
the same terms and conditions that are applicable to the Sellers. Therefore,
a similar offer is extended to all other shareholders of Netactive at 25
cents per share in terms of the Code.
2. Rationale
Over the past couple of months it has become evident that due to refocus of
the business of Netactive on providing managed Internet services to the
corporate market, and exiting its consumer-focused business units, the
benefits anticipated from the alliances entered into with Massmart, Affinity
Logic, Woolworths and Frontrange would no longer be derived by Netactive.
Accordingly, it has been agreed that the Sellers' strategic shareholdings
are no longer appropriate and that the Company will purchase their
shareholdings in accordance with the terms and conditions as set out in this
announcement. The effect of this share Specific Repurchase will result in an
increase in net asset value ("NAV") per share for the remaining shareholders
as shown in the financial effects in paragraph 4 below.
3. Terms and funding
It is proposed that Netactive will repurchase 55 421 933 Netactive ordinary
shares from the Sellers at 25 cents per share for a total consideration of
R13 855 483. The said shares will then be cancelled and their listing on the
JSE Securities Exchange South Africa ("JSE") terminated within five business
days of the general meeting at which approval for the Specific Repurchase
has been obtained. No Secondary Tax on Companies will be payable on the
payment consideration as Netactive intends to utilise the share premium
account to effect the Specific Repurchase which transaction will be funded
from internal group cash resources.
The Company has furnished guarantees to the satisfaction of the SRP that it
is able to fulfil its obligations in terms of this Specific Repurchase and
Mandatory Offer.
4. Financial effects
The table below sets out the financial effects of the Specific Repurchase on
the earnings and the NAV per Netactive share for the audited six-month
period ended 31 October 2001 and balance sheet at 31 October 2001 based on
the following assumptions:
- the total cash consideration payable to the Sellers is R13 855 483;
- the repurchase was effective on 1 May 2001;
- no other shareholders will accept the Mandatory Offer which is
extended to them in terms of this announcement at 25 cents per share;
- the Company had foregone interest on R13 855 483 earned at an after-tax
rate of 7% for the six-month period ended 31 October 2001;
- the calculation of the headline earnings per share after the Specific
Repurchase is based on the weighted average ordinary shares of 91 108 400 in
issue for the six months ended 31 October 2001; and
- the calculation of the NAV after the Specific Repurchase is based on 91
108 400 ordinary shares in issue at 31 October 2001.
The table also illustrates the financial effects on the net asset value per
ordinary share at 31 October 2001 on the basis that 25% and 75% of the
minority shareholders accepting the Mandatory Offer on the same day as the
Specific Repurchase.
25% 75%
Before After acceptance acceptance
Specific Specific Change by minority by minority
Details Repurchase Repurchase (%) shareholders shareholders
Earnings per share
(cents per share) (2,07) (3,87) (86,96)
NAV per share
(cents per share) 50,51 65,49 29,65 70,64 86,20
Weighted number of
issued shares ('000) 146 530 91 108 80 831 60 277
5. Suspensive conditions
The Specific Repurchase of shares is subject to the following suspensive
conditions:
- shareholders vote in favour of a special resolution in general meeting
("the general meeting") and that this special resolution is registered with
the Registrar of Companies; and
- the requisite approvals being obtained from the JSE, the SRP and any
other applicable regulatory authority and all their respective requirements
being complied with.
6. Acceptance of Mandatory Offer
Shareholders, holding in excess of 50 000 000 Netactive shares, have
indicated that they will not be accepting the Mandatory Offer and will
therefore remain shareholders of the Company following the Mandatory Offer.
7. Statement by directors
The directors have considered the effect of the Specific Repurchases as well
as the consequences of shareholders accepting the Mandatory Offer and are of
the opinion that:
- the Company and the Netactive group will be able in the ordinary course
of business to pay their debts for a period of 12 months after the
implementation date of the Specific Repurchase and Mandatory Offer;
- the assets of the Company and the Netactive Group will be in excess of
the liabilities of the Company and the Netactive group for a period of 12
months after the implementation date. For this purpose, the assets and
liabilities will be recognised and measured in accordance with the
accounting policies used in the latest audited annual Group financial
statements for the Netactive group;
- the ordinary capital and reserves of the Company and the Netactive group
will be adequate for the Company and the Netactive Group's requirements for
a period of at least 12 months after the implementation date of the Specific
Repurchase and Mandatory Offer; and
- the working capital available to the Company and the Netactive Group will
be sufficient for the Company and the Netactive group's requirements for a
period of at least 12 months after the implementation date of the Specific
Repurchase and Mandatory Offer.
8. Resignation of directors
Upon implementation of the specific repurchase the following directors will
be resigning:
- Stephen Leggatt - Non-executive;
- Richard van Rensburg - Non-executive;
- Ian Dry - Alternate to Richard van Rensburg;
- Richard Inskip - Non-executive; and
- Cherrie Lowe - Alternate to Richard Inskip.
9. Fairness opinion
Fisher Hoffman PKF (Jhb) Inc. has considered the compulsory offer of 25
cents per share to be made to minority shareholders on or about 21 January
2002 and has issued a letter dated 18 January 2002 for the sole use and
benefit of minority shareholders of Netactive, expressing the option that
based only on published financial information in respect of Netactive and
information made available to it by Netactive management, which information
Fisher Hoffman PKF (Jhb) Inc. has not independently verified, and on current
general economic, market and other conditions, the compulsory offer to
minority shareholders of Netactive of 25 cents per share, is fair and
reasonable.
10. Documentation
A circular to shareholders of Netactive, setting out details of the Specific
Repurchase, the Mandatory Offer and including a notice of general meeting
and form of proxy, will be posted to shareholders within 28 days.
Sandton
30 January 2002
Transaction sponsor
Benefique Capital
Reporting accountants and auditors
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration number 1994/001166/21)
