| Thu 31 Jan 2002, 0:00 | | Community Technologies - Company Announcement |
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COMMUNITY TECHNOLOGIES
(Registration number 1988/033352/06)
ISIN Code : ZAE000022323
Share code : CTH
("C-Tech" or "the company")
Announcement regarding:
* The acquisition by C-Tech of the Beget, Eze-Bill and
TM Commerce businesses;
* Specific repurchase of shares by C-Tech;
* A change of control and waiver of a mandatory offer to shareholders;
* A general authority to issue shares for cash;
* A change of name;
* An increase in the authorised share capital; and
* A bonus share issue to existing shareholders.
1. INTRODUCTION
Shareholders are advised that agreement has been reached in terms of which
C-Tech has acquired the following businesses with effect from 1 January
2002:
1.1 The entire business of Beget Group (Proprietary) Limited ("Beget).
1.2 The entire business of Moneyline 654 (Proprietary) Limited ("Eze-Bill").
1.3 The entire business of Orbes Manufacturing (Proprietary) Limited ("TM
Commerce").
2. NATURE OF BUSINESS
The existing main business of C-Tech is Exceptional Business Systems
("EBS"). The computer distribution company presently provides the majority
of turnover and income of C-Tech.
The acquisition of the Beget, Eze-Bill and TM Commerce businesses ("the
Acquisitions") change the nature of the business of the group to that of a
provider of advanced services rendered by way of cellular and internet
technology.
After the Acquisitions C-Tech's core competency will lie in database mining
and exploring the enormous power of combining the technologies of cellular
communications and internet thin client solutions, with desk top
applications and data bases. The vendors collectively have more than 41
years' experience in data base maintenance and update methodology, cellular
communications and desk top software applications. Solutions developed
communicate directly with GSM network applications and real time databases.
With direct links to financial gateways the payment process is part of the
solution on offer.
The Acquisitions include the following businesses:
2.1 Eze-Bill
- Eze-Play: Betting and gambling via cellular phone. Linked to payment
gateways with PIN code authentication. This product provides a way to
utilize the mobile device as a betting and gambling instrument.
- SMS malls: A product allowing customers to link to any database or
cellphone number to distribute information fast and cost effectively via
cellular SMS networks.
- Eze-Tracking: The monitoring of documents movement with transponder
technology linked to cellular networks and the Internet.
2.2 Beget
- Beget-Exchange: An Internet based DVD and/or game exchange providing
subscribers with a platform to exchange, buy or sell DVD discs, and for
computer games.
- Beget-Netsales: A classified database of 1,5 million registered companies
and close corporations, matched with all registered websites on the internet
to allow direct-targeted marketing.
- Agri-spec: A portal which provides agriculturalists with information on
products and services required by the agricultural community via internet
and SMS platforms.
- Beget-Webpromote: An Internet based software solution developed to
register customer websites with the top search engines and listing servers
worldwide.
- Beget-Pay: An Internet salary/wages programme for the employer that wants
a "pay-and-settle" solution at the end of every pay period.
2.3 TM Commerce
- UItilizes the internationally approved Trustmarque payment structure to
support a "plug-and-pay" system, allowing any website instant
e-commerce access from within any hosting platform or lay-out. TM Commerce
operates under licences from Trustmarque International.
The development team joining C-Tech via the Acquisitions include
contractors, project managers and business analysts. They specialise in
business solutions from Business to Business, Business to Consumer and
Business to Employee.
3. RATIONALE FOR ACQUISITIONS
The scope of EBS will be greatly enhanced with new technology and major
databases from which to mine and the investment in the latest wireless
communication technology. The management expertise acquired will ensure a
major contribution to shareholders' wealth creation.
4. PURCHASE CONSIDERATION
The initial total purchase consideration payable in terms of the
Acquisitions amounts to R20 000 000 based on historical earnings and forward
earnings, payable by way of the issue to or on behalf of the vendors of 200
000 000 new ordinary shares of no par value in C-Tech issued at ten cents
per share . The purchase price, allocated between the businesses in relation
to their expected contribution to the profits of the company, has been
allocated as follows:
* Beget - 82 947 579 shares;
* Eze-Bill - 73 557 292 shares; and
* TM Commerce - 43 495 129 shares.
The major assets being acquired consist of intellectual capital in each of
the individual businesses. The purchase price is based on the assumption
that the Acquisitions will earn aggregate profits before tax of not less
than R4 000 000 during the year ending on 31 December 2002.
Should the aggregate profits before tax exceed R4 000 000, additional shares
shall be issued by C-Tech to the vendors of the businesses on the basis of
forty additional shares for every R1,00 additional profit so earned up to a
maximum of 140 000 000 additional shares for an additional profit of at
least R3 500 000 profit before tax. There will not be an adjustment to the
purchase price if the profit warranty of R4 000 000 is not achieved.
No other warranties were provided other than those which are normal to a
transaction of this nature.
The acquisition agreements provide for an additional 23 100 000 shares apart
from the shares issued in terms of the Acquisitions, to be issued at ten
cents per share by way of commission and fees to various creditors and
facilitators. Included in the facilitators are companies owned and
controlled by a previous director of C-Tech, which hold 11,47% of the shares
of the company. This company is a related party and will accordingly be
excluded from voting on the specific resolutions relating to the issue of
shares for cash. The issue of such shares are subject to approval by
shareholders and restrictions of the JSE Securities Exchange South Africa
("JSE") regarding trading therein for a period of two years.
5. Prospects
The businesses acquired specialise in the advanced technological markets, of
which SMS applications are of the fastest growing applications in
telecommunications. E-Commerce is becoming economically viable and creates
opportunities for the company to enhance its services to customers through
integrated products and services. The directors expect the acquisitions to
contribute positively to the business and profits of the company over the
medium to long term as more licenses are sold to customers.
6. RELATED PARTIES
The vendors are controlled by two directors of C-Tech, Messrs A Potgieter
and J Coetzee and the transaction is accordingly classified as a related
party transaction. They collectively hold 11,16% of the shares of C-Tech and
will be excluded from voting at the general meeting. An independent
accounting firm has been appointed to issue a fair and reasonable statement
on the terms of the Acquisitions.
7. REPURCHASE OF SHARES
As set out in the annual report of C-Tech for the year ended 31 December
2000, the company issued on 12 May 2000, 17,05 million
C-Tech shares at R1,00 each as a deposit for the acquisition of Globetrack
(Pty) Ltd and related businesses. In terms of the general settlement
agreement of 17 May 2001 and as amended on 4 September 2001 between the
company and the relevant vendors, these acquisitions were cancelled on 10
October 2001. The directors intend to cancel the 17,05 million shares by way
of a repurchase by the company of its own shares for no consideration, which
are subject to the requirements of the Companies Act, 1973 (Act 61 of 1973),
as amended, the approval of the JSE and the approval of the special
resolution by the members in general meeting.
8. BONUS SHARES ISSUED
C-Tech will have 10 757 429 issued shares of no par value after the
repurchase of shares referred to in paragraph 7 above. It was agreed by the
vendors and the board of directors of C-Tech that, in order to retain a
required spread of public shareholders and to increase the marketability of
C-Tech's shares, the acquisitions will be preceded by an issue of bonus
shares to present shareholders on the basis of one bonus ordinary share of
no par value for every one such share held, subject to the approval of the
special resolution by the shareholders. Such bonus shares would be issued
from existing un-issued shares of C-Tech and would increase the number of
issued shares to 21 514 858.
9. CHANGE OF CONTROL
The Acquisitions will result in a change of control of C-Tech and
accordingly an offer to minority shareholders of C-Tech will be required in
terms of the rules of the Securities Regulation Panel ("SRP"). In order to
avoid an offer to minorities the Acquisitions are inter alia subject to
minority shareholders waiving their rights to an offer in terms of rule 8.7
of the SRP code.
Because the Acquisitions will result in a reverse-takeover, the circular to
shareholders detailing the Acquisitions will contain revised listing
particulars as though the company were a new listing. The Listing division
of the JSE will have to confirm that the listing of C-Tech may continue
following the Acquisitions. The Acquisitions will affect C-Tech's listing on
the Main Board of the JSE and application will need to be made for the
transfer of C-Tech to the Development Capital Market or Venture Capital
Market of the JSE.
10. ISSUE OF SHARES FOR CASH
C-Tech intends to issue shares for cash in terms of a general authority to
issue shares for cash, to selected institutions and investors to provide
working capital, subject to the approval of shareholders and the Listing
Requirements of the JSE.
11. Increase in share capital
In order to give effect to the transactions listed above, the company
intends to increase its authorised share capital from 27 812 623 ordinary
shares of no par value to 1 000 000 000 ordinary shares of no par value by
the creation of 972 187 377 ordinary shares of no par value. This is subject
to shareholders' approval of the special resolution to give effect thereto.
12. CHANGE OF NAME
The company intends to change its name to Beget Holdings Limited, subject to
the approval by the Registrar of Companies, the JSE and shareholders of the
special resolution.
13. OTHER suspensive CONDITIONS
The acquisitions, issue of shares for cash, name change and bonus share
issue are inter alia subject to the fulfilling of the following suspensive
conditions on or before 31 March 2002.
13.1 Approval by the JSE.
13.2 Approval by the SRP.
13.3 Approval by the shareholders of C-Tech at a general meeting.
13.4 The increase of the share capital of C-Tech to enable the
implementation of the Acquisitions.
13.5 Registration of the special resolutions.
14. FINANCIAL EFFECTS OF the ACQUISITIONS
The financial effects on the six-months results to 30 June 2001 as,
summarized below, are based on the assumption that the various transactions
were effective from 1 January 2001:
After After the
Before repurchase issue of After
transactions of shares bonus shares* acquisitions
Net asset value
per share (cents) (0,94) (2,44) (1,22) 8,91
Net tangible asset value
per share (cents) (2,31) (5,98) (2,99) 0,68
Earnings
per share (cents) (0,44) (1,14) (0,57) 0,03
Headline earnings
per share (cents) (0,36) (0,93) (0,47) 0,37
Number of share in issue 27 807 429 10 757 429 21 514 858 221 514 858
Principal assumptions
1. The position "before transactions" is based on the reviewed interim
results of C-Tech for the six months ended 30 June 2001.
2. The position "After the repurchase of shares" is based on the reviewed
interim results of C-Tech for the six months ended 30 June 2001 and the
cancellation of 16 000 000 shares in respect of the Globetrack transaction
and a further 1 050 000 shares cancelled in respect of the Examit
transaction.
3. The position "After the issue of bonus shares" is based on the reviewed
interim results of C-Tech for the six months ended 30 June 2001 and the
bonus issue of 10 757 429 shares.
4. The position "After acquisitions" is based on the on the reviewed interim
results of C-Tech for the six months ended 30 June 2001 and the reviewed
interim results of the acquisitions for the six months ended 30 June 2001,
reflecting a profit after tax of R665 000, and the issue of 200 000 000
consideration shares at 10 cents per share. Goodwill is based on the excess
of the cost of the acquisitions over the fair value of the net assets and
liabilities at the date of the acquisitions. Amortisation of goodwill of
R892 192 has been taken into account in respect of the Acquisitions for the
six months ended 30 June 2001.
15. MANAGEMENT AND DIRECTORS
The board of directors of C-Tech will be reconstituted on the approval of
the acquisitions by the shareholders.
The vendors will appoint four directors, namely Messrs A H Potgieter, J S
Coetzee, Adv. C J van Coller and D J O Sauerbier.
16. CIRCULAR
A detailed circular including revised listing particulars, will be sent to
shareholders within 28 days from the date of this announcement.
Pretoria
31 January 2002
Merchant bank
Marriott Merchant Bank
Sponsor
Exchange sponsors
Reporting accountants and auditors
N. Price & Co.
Chartered Accountants (SA)
