| Mon 22 Apr 2002, 0:00 | | Crux: Disposal Of The Contracting Business Of Cru |
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Crux Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/012784/06)
JSE Share Code: CRX ISIN: ZAE000015855
("Crux" or "the company")
Disposal of the contracting business of Crux Information Technologies
(Proprietary) Limited ("CruxInfoTech")
1. Introduction
With reference to the further cautionary announcement published in the press
on Thursday, 28 March 2002, shareholders are advised that CruxInfoTech, a
wholly-owned subsidiary of Crux, has entered into an agreement to dispose of
certain of its assets to a Consortium comprising Mr Zafiris ("Jeff")
Zafiropoulos, Ms Wilma Cloete and Mantis Projects (Proprietary) Limited, or
its nominee ("the Mantis Consortium") ("the disposal").
In terms of this agreement, subject to the fulfillment of the conditions
precedent set out in paragraph 5 below ("the conditions precedent"),
CruxInfoTech will dispose of its contracting business as a going concern to
the Mantis Consortium, including all current client contracts and the
assignment (or sub-lease) of the current lease over the premises situated at
Crux House, Midrand ("the premises").
The effective date of the disposal is 1 March 2002.
2. Rationale for the proposed disposal
In the interim results of Crux published in the press on 15 March 2002,
shareholders were advised of the occurrence of certain events which have
necessitated a process of rationalisation within Crux ("the
rationalisation"). Pursuant to the rationalisation and in light of certain
funding requirements, the board of directors has resolved, in order to
optimise value for shareholders, to proceed with the disposal.
3. Disposal consideration
The disposal consideration is a maximum amount of R15 million cash plus an
amount of not more than R1 million for the sale of selected office and
computer equipment ("office equipment"), which shall be acquired at book
value ("the disposal consideration").
The purchase consideration is to be settled as follows:
* R10 million cash plus an amount of up to R1 million for the office
equipment, to be paid on fulfillment of the last of the conditions precedent
("the closing date"). R6 million of this amount is payable against repayment
of the interim loan in full (see paragraph 4 below);
* R5 million cash being paid within six months of the closing date with
the Mantis Consortium using its reasonable endeavours to effect such payment
from free cash flows in the acquired business, commencing from the closing
date.
In the event that, for whatever reason, the parties are unable to procure
the assignment of any of the client contracts and/or maintenance contracts
forming the subject matter of the disposal, the purchase consideration
(excluding the amount paid for the office equipment) shall be reduced by an
amount pro rata to the decrease (calculated in percentage terms) in gross
revenue from those contracts not assigned. The amount shall be determined by
the parties, failing which, by an independent auditor.
The disposal consideration will be utilised to settle the current net
liabilities of Crux. The remaining balance would be distributed to
shareholders upon the delisting and winding up of Crux. The current net
asset value of the disposal assets, other then the fixed assets, is nil. The
fixed assets are being sold at net book value up to maximum of R1 million.
4. The interim loan
The Mantis Consortium has advanced R6 million to CruxInfoTech by way of a
short-term loan ("the interim loan"). The interim loan bears interest at the
rate of prime plus 2%. This loan has been put in place as a bridging
facility to facilitate the company's short-term working capital requirements
pursuant to the disposal. Subject to the terms of the loan, CruxInfoTech
shall repay the R6 million interim loan plus interest thereon to the Mantis
Consortium on the closing date; and the Mantis Consortium will, in turn,
simultaneously apply such repayment to CruxInfoTech as part payment of the
purchase consideration.
5. Conditions precedent
The disposal is subject, inter alia, to the fulfillment of the following
conditions precedent:
* the conclusion of mutually acceptable comprehensive sale, loan and
security agreements in respect of the disposal and interim loan;
* the advertisement of the disposal as contemplated under section 34 of
the Insolvency Act No 24 of 1936 (as amended);
* the completion of service and restraint agreements with key management
and staff for a fixed employment period of two years and a restraint period
of one year;
* the lawful assignment of the existing client contracts, consultant
contracts and maintenance contracts to the Mantis Consortium. If client and
maintenance contracts comprising, in gross revenue terms, not less than 75%
of current gross revenue from such contracts are not assigned to the Mantis
Consortium, the Mantis Consortium may cancel the sale in its sole
discretion;
* the assignment of the lease over the premises or the sub-letting of the
premises as detailed in paragraph 1;
* where necessary, the approval of the JSE Securities Exchange South
Africa ("the JSE"), the Securities Regulation Panel ("the SRP") and the
Competition authorities;
* the approval of the board of directors of Crux and CruxInfoTech; and
* the approval of the disposal by Crux shareholders in general meeting.
6. Pro forma financial effects of the disposal per Crux ordinary share:
After
Before disposal Change
(cents)1 (cents)2 %
Loss per share (11,0) (9,9) (9,5)
Headline loss per share (11,0) (9,9) (9,5)
Net asset value per share 9,8 11,0 12,3
Tangible net asset value per share 9,2 11,0 19,5
Notes:
1. The amounts in the "Before" column are based on the published interim
results of Crux for the six months ended 30 November 2001.
2. The amounts in the "After disposal" column have been calculated as
follows:
Loss per share and headline loss per share on the assumption that the
disposal had been effected on 1 June 2001 and the proceeds had been invested
at 8% per annum less taxation thereon.
Net asset value and tangible net asset value on the assumption that the
disposal had been effected on 30 November 2001 and based on proceeds of R16
million
7. Transfer of sector
As Crux will be a cash shell after the disposal is completed, an application
will be made to transfer to the cash companies sector of the JSE lists. The
disposal could lead to the delisting and winding-up of Crux. Further
announcements will be published in the press in this regard. The estimated
distribution to shareholders upon such delisting and winding-up and after
providing for associated costs could amount to approximately 4,13 cents per
share. This is lower than the net asset value per share referred to in the
pro forma financials in paragraph 6 above. Certain adjustments have been
made in arriving at this amount, which include, inter alia, a bad debt
provision of R6,12 million which had not been provided for at 30 November
2001, retrenchment costs of R1,2 million related to the closure of the other
divisions of Crux prior to the disposal and estimated transaction costs of
R1,2 million.
8. Related party
Mr Zafiris ("Jeff") Zafiropoulos and Ms Wilma Cloete, both being directors
of Crux and members of the Mantis Consortium, are considered to be related
parties in terms of the Listings Requirements of the JSE as well as the
rules of the SRP. Accordingly, they may not vote on the disposal at the Crux
general meeting. An opinion by an independent professional expert as to
whether the disposal is fair and reasonable will be included in the circular
to be posted to Crux shareholders.
9. Opinions, recommendations and undertakings
The independent directors of Crux have considered the terms and conditions
of the disposal and unanimously recommend that Crux shareholders vote in
favour of the disposal at the general meeting. Those directors that are
entitled to vote, intend voting the shares under their control in favour of
the resolution necessary to implement the disposal.
Irrevocable undertakings, to vote in favour of the disposal, have been
obtained from more than 51% of those Crux shareholders entitled to vote.
10. Important dates and times
The salient dates for the proposed disposal are expected to be as follows:
2002
Posting of circular to Crux shareholders on or about Monday, 20 May
Last day to lodge forms of proxy for the general meeting on Friday, 31 May
Crux general meeting of shareholders at 10:00 on Tuesday, 4 June
Results of the general meeting announced on Wednesday, 5 June
The dates are subject to change and, if required, a further announcement
amending the dates will be published on SENS and in the press.
Midrand
19 April 2002
Corporate advisors to Crux
Brait
Sponsors to Crux
Grant Thornton Kessel Feinstein
Corporate Sponsors (Pty) Ltd
(Registration number 2000/003541/07)
Legal advisers to Crux
Webber Wentzel Bowens
Reporting accountants and auditors
Grant Thornton Kessel Feinstein
Chartered Accountants (SA)
Accountants, Auditors & Business Advisers
Corporate advisers to Mantis Consortium
Wipcapital (Proprietary) Ltd
(Registration number 1997/021195/07)
Attorneys to Mantis Consortium
Mallinicks Attorneys
