| Tue 26 Mar 2002, 0:00 | | Abacus - Announcement |
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ABACUS TECHNOLOGY
(Incorporated in the Republic of South Africa)
(Registration number 1991/004163/06)
JSE Share code: ABC ISIN code: ZAE000011714
("Abacus" or "the company")
Announcement relating to:
- a specific approval to issue shares for cash in AAV Australia
Proprietary Limited ("AAV"), a wholly-owned subsidiary of Abacus Ventures
Proprietary Limited ("Abacus Ventures"); and
- the proposed delisting of Abacus from the JSE Securities Exchange South
Africa ("JSE") lists accompanied by an offer by Investec Bank Limited
("Investec") of 10 cents per share to Abacus shareholders.
1. INTRODUCTION
Further to the cautionary announcement published on 8 March 2002, the board
of directors of Abacus has resolved to:
- propose a delisting of the company by way of an ordinary resolution
("the delisting") accompanied by an offer of 10 cents per share to Abacus
shareholders ("the offer"); and
- recapitalise AAV by way of an issue of AU$8 million convertible notes in
AAV ("the AAV convertible notes") to MGB Equity Growth Proprietary Limited
("MGB") and Abacus Ventures, a wholly-owned subsidiary of Abacus, in equal
proportions of AU$4 million each ("the recapitalisation").
The portion of the recapitalisation attributable to MGB is regarded as a
specific issue of shares for cash by a subsidiary company in terms of the
JSE Listings Requirements ("the specific issue of shares for cash"). The
delisting, the offer and the specific issue of shares for cash are,
collectively, referred to as "the transactions".
2. THE SPECIFIC ISSUE OF SHARES FOR CASH
2.1 The specific issue of shares for cash
The directors intend to issue convertible notes in AAV to MGB for cash in
terms of the specific issue of shares for cash, subject to the approval of
at least 75% of Abacus shareholders, excluding controlling shareholders, its
associates or concert parties. The proceeds of the issue of the AAV
convertible notes will be utilised to settle a guarantee due and payable by
Abacus to John Fairfax Holdings Limited ("Fairfax") in terms of an existing
vendor guarantee ("the Fairfax guarantee") and to add an additional DVD
line.
2.2 Rationale
Abacus wishes to reduce the gearing of AAV and improve shareholder prospects
for realising the value of its investment in the company.
MGB, an offshore investor, is prepared to provide capital to AAV in terms of
the subscription for 50% of the AAV convertible notes.
MGB also brings along considerable expertise on the ground in Australia,
relevant to this industry, which Abacus believes will unlock value and
capital for its shareholders.
2.3 Condition precedent
The specific issue of shares for cash is subject to the passing of the
ordinary resolution by the requisite majority of Abacus shareholders in
general meeting excluding Investec.
3. THE DELISTING
3.1 Suspension and termination of listing
Subject to the fulfilment of the condition precedent below, the listing of
Abacus shares will be suspended with effect from the commencement of trade
on Wednesday, 8 May 2002 and the listing of Abacus shares will terminate
with effect from the commencement of trade on Wednesday, 15 May 2002.
3.2 Rationale
Abacus' only operating assets are those in Australia. In these
circumstances, the directors have concluded that the benefits of retaining
the listing are outweighed by the disadvantages as set out below:
- As a result of the assets of Abacus all being held offshore and it
becoming difficult to motivate the continued benefits to South Africa, the
Exchange Control Department of the South African Reserve Bank ("SARB") has
requested Abacus to dispose of these assets. Abacus has committed to SARB
that it will realise its Australian assets as and when conditions permit.
The SARB has also stipulated that it will not allow any further flow of
funds from Abacus to Australia, other than to settle the Fairfax guarantee.
- Abacus will, whilst it is listed, be obliged to incur costs associated
with a listing while not receiving any benefit from such listing given its
intention to realise its underlying assets and also that it is extremely
unlikely it will raise capital in the future beyond the proposed rights
offer referred to in paragraph 5.
- Abacus does not currently meet the JSE Listings minimum spread
Requirements and Abacus will not be able to rectify this spread requirement.
It is likely that this will be exacerbated by the proposed rights offer
referred to in paragraph 5.
3.3 Condition precedent
The delisting is conditional upon the passing of the ordinary resolution by
the requisite majority of Abacus shareholders, excluding Investec, Bernard
Seeff, Stanley Seeff and Shimon Teperson.
4. THE OFFER
4.1 Subject to the passing of the delisting resolution by the Abacus
shareholders, other than Investec, Bernard Seeff, Stanley Seeff, Shimon
Teperson and their associates, Investec shall offer to purchase from all the
Abacus shareholders, other than Investec, who accept the offer, all the
Abacus shares held by them, or such lesser number of Abacus shares as such
Abacus shareholders wish to sell at a price of 10 cents per Abacus share.
4.2 The aggregate cash cost in respect of the offer price payable to
Abacus shareholders who accept the offer will be a maximum of approximately
R3,0 million, on the assumption that 30 656 234 Abacus shares, other than
Investec, Bernard Seeff, Stanley Seeff and Shimon Teperson, are purchased at
a price of 10 cents per Abacus share.
4.3 Investec has given written confirmation to the Securities Regulation
Panel that it has the necessary resources required to meet its payment
obligations to Abacus shareholders who have accepted the offer.
4.4 Shareholders are advised that the offer is conditional upon the
successful passing of the delisting resolution, whereafter it will become
unconditional.
5. THE PROPOSED RIGHTS OFFER
It is the intention of Abacus, subsequent to the transactions, to have a
rights offer for approximately R40 million in order to settle all South
African debt. The proposed rights offer is not conditional upon the
successful completion of the transactions and will take place irrespective
of their outcome. A separate rights offer circular will be posted to Abacus
shareholders in this regard. The proposed rights offer will take place at a
price of 8 cents per Abacus share.
6. FINANCIAL EFFECTS
The financial effects below are based on the unaudited balance sheet and
income statement of Abacus in respect of the six-month period ended 31
December 2001. The pro forma financial effects are provided for illustrative
purposes only to show the effect of the transactions and the proposed rights
offer on Abacus. The pro forma effects on the balance sheet have been
computed as if the transactions and the proposed rights offer occurred on 31
December 2001, and on the income statement as if the transactions and
proposed rights offer occurred on 1 July 2001.
Column B
After the
specific
issue
Column A of shares
Before for cash %
Per Abacus share (cents) (cents) change
Earnings (14,3) (14,6) (2)
Headline earnings 2,1 1,5 (29)
Net asset value 17,6 17,6 -
Net tangible asset value 5,3 5,3 -
Column C Column D
After the After
proposed acceptance
rights of the
offer % offer %
Per Abacus share (cents) change (cents) change
Earnings (6,5) 55 0,3 NA
Headline earnings 0,9 (40) 0,3 (86)
Net asset value 10,8 (39) 10,0 (43)
Net tangible asset value 5,9 11 10,0 89
The financial effects are also based on the following assumptions:
Column A
the figures were extracted from the unaudited interim results of Abacus
for the six months ended 31 December 2001.
Column B
based on 331 151 650 ordinary shares in issue at 31 December 2001; and
AU$8 million was invested into AAV in terms of the subscription for the
AAV convertible notes, of which AU$4 million pertains to the specific issue
of shares for cash, and the balance of AU$4 million from Abacus Ventures
which has, in turn, been funded by a loan bearing interest at the South
African prime overdraft rate. The AU$8 million has been utilised to repay
Australian denominated interest bearing debt.
Column C
Calculated after the specific issue of shares for cash and the proposed
rights offer;
based on 881 151 650 ordinary shares in issue, including 500 000 000
shares issued at 8 cents per share in terms of the proposed rights offer;
and
the R40 million proposed rights offer by Abacus results in all South
African debt being repaid. The costs of implementing the transactions and
the proposed rights offer of approximately R1,5 million have been expensed
in the pro forma income statement as well as being reflected in net asset
and net tangible asset value per share.
Column D
earnings and headline earnings per share are based on the offer
consideration of 10 cents per share invested at an after tax interest rate
of 6,5% for a period of six months.
7. OPINIONS, RECOMMENDATIONS AND VOTING
7.1 The directors are of the opinion that the delisting and the specific
issue of shares for cash will be to the benefit of all Abacus shareholders.
Accordingly, the directors recommend that Abacus shareholders vote in favour
of the ordinary resolutions proposed at the general meeting of Abacus
shareholders in respect of the delisting and the specific issue of shares
for cash.
7.2 The directors, with interests in the issued share capital of Abacus,
intend to vote in favour of the ordinary resolutions in respect of all the
shares to which such interests pertain. In terms of the JSE Listings
Requirements, any controlling shareholder, its associates and any party
acting in concert, are not allowed to vote on the specific issue of shares
for cash. In respect of the delisting resolution, the JSE has requested that
Bernard Seeff, Stanley Seeff, Shimon Teperson and their associates, in
addition to Investec, do not vote.
7.3 The directors are of the opinion that the terms of the offer are fair
and reasonable to all the Abacus shareholders. Bernard Seeff and Stanley
Seeff, in respect of their interests in Abacus shares, have undertaken not
to accept the offer in respect of the Abacus shares to which such interests
pertain.
7.4 JH Smilg & Company, the reporting accountants and independent adviser,
has considered the terms and conditions of the offer and is of the opinion
that they are fair and reasonable to Abacus shareholders.
8. DOCUMENTATION
Shareholders are referred to the Abacus interim results published elsewhere
in this publication. A circular detailing the transactions will be posted to
Abacus shareholders today.
Johannesburg
26 March 2002
- Merchant bank
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Corporate adviser
Global Capital (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/022057/07)
Lead sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
Reporting accountants and independent adviser
JH Smilg & Company
Joint sponsor
Investec Securities Limited
Member of the JSE
(Registration number. 1972/008905/06)
