| Wed 6 Mar 2002, 0:00 | | Altech - Further Cautionary Announcement |
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ALLIED TECHNOLOGIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
JSE Share code: ALT ISIN: ZAE000015251
("Altech")
Further cautionary announcement - disposal of Altech's 40% shareholding in
Alcatel Altech Telecoms (Pty) Limited ("AAT")
Introduction
Shareholders are referred to the cautionary announcement published on SENS
on Friday 22 February 2002 and in the press on Monday 25 February 2002.
The above announcements relate to Altech's 40%, shareholding in AAT, the
balance of the share capital of which is held, as to 40% by Alcatel CIT
("Alcatel") and, as to 20%, by Rethabile Telecoms Investments (Pty) Limited.
Exercise of put option by Altech
In terms of the AAT shareholders' agreement, Altech has an option to "put"
all of its shares in AAT to Alcatel in certain circumstances ("the put
option").
Shareholders are advised, that on Thursday 21 February 2002, Altech
exercised the put option referred to above.
Background and rationale
Altech's relationship with Alcatel arose through the supply by Altech of
local adaptation, marketing and manufacturing skills for the exploitation of
Alcatel's technology and products in Southern Africa. Altech's partnership
with Alcatel for over two decades in the telecommunications infrastructure
equipment supply field constituted, for several years, Altech's single most
important area of activity.
However, the Altech group's overall profile has changed substantially
over the past five years, with the development of its own internationally-
competitive advanced technologies and products, outside of AAT's scope of
business, which it is successfully exploiting on a global basis. These
activities are carried out through wholly-owned Altech subsidiaries, whose
relative contribution to Altech has increased greatly.
Consequently, AAT's contribution to Altech has reduced significantly in
recent years. AAT's contribution to Altech's revenue for the financial year
ended February 1999 amounted to approximately 50%, but this had reduced to
approximately 18% in the financial year ended February 2001 and there has
been a further reduction since then.
Geographical restraints
In the current arrangements with Alcatel, AAT's activities have
traditionally been limited to operating only within the Southern African
Customs Union ("SACU"), which is not in line with the rapid development of
the Altech group's globalisation objectives.
Following the implementation of the put option, Altech and its listed
holding company, Allied Electronics Corporation Limited ("Altron"), and
Altron's other subsidiaries, will be restrained for a period of five years
from conducting or acquiring any telecommunications infrastructure equipment
supply or related services activities which may compete with AAT in South
Africa, Lesotho, Namibia, Swaziland and Bostwana. However, they will not be
restrained in respect of any other telecommunications activities.
There is no restraint on the Altech or Altron groups' developing or
acquiring any telecommunications-related business activities outside of the
SACU region.
Disposal proceeds
In terms of the AAT shareholders' agreement the price payable by Alcatel for
Altech's shares in AAT will be calculated based on R39 238 000 (being the
figure arrived at as per a formula set out in the shareholders' agreement),
multiplied by the average of the PE multiple of companies carrying on
business in South Africa which are as similar as possible to that of AAT and
which have been listed on the JSE Securities Exchange South Africa during
the six months prior to February 2002.
Financial effects
AAT's net tangible asset value as at 28 February 2001 amounted to
approximately R216 million, with 40% thereof (being Altech's attributable
portion), equivalent to approximately R86 million. AAT's attributable
earnings for the same period amounted to approximately R11,2 million, with
Altech's attributable portion thereof being approximately R4,5 million.
A detailed announcement incorporating the pro forma financial effects of
the transaction on the headline earnings per share ("HEPS") and net tangible
asset value per share ("NTAV") of Altech will be published as soon as
possible after the disposal price determination referred to above.
Preliminary indications are that the transaction will be enhancing in terms
of both Altech's 2001 pro forma HEPS and its NTAV per share.
Further cautionary announcement
Pending the disclosure of the disposal proceeds and the detailed financial
effects of the transaction, shareholders of Altech are advised to continue
to exercise caution in their dealings in Altech shares.
Johannesburg
7 March 2002
Sponsor
HSBC
Investment bank
Nedcor Investment Bank
