| Thu 25 Apr 2002, 0:00 | | Brainware Limited - Detailed Announcement And Furt |
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ANNOUNCEMENT.
Brainware Limited
Registration number 1997/006894/06
Share code: BRW
ISIN code: ZAE000018289
("Brainware")
FURTHER CAUTIONARY ANNOUNCEMENT AND ANNOUNCEMENT REGARDING THE PROPOSED:
* acquisition by Brainware of Southern Electricity Company (Proprietary)
Limited ("Selco");
* change of control;
and ancillary matters incidental thereto.
1. Introduction
Quaestor Capital (Proprietary) Limited is authorized to announce that a
memorandum of understanding has been entered into between, inter alia,
Resource Management Integration Group (Proprietary) Limited, RMMS Consulting
(Proprietary) Limited (collectively "the vendors"), Selco and Brainware in
terms of which Brainware will acquire, with effect from 1 July 2002, the
entire issued share capital of Selco, subject to certain conditions
precedent ("the transaction"), in exchange for the purchase consideration
set out in paragraph 2 below.
2. Change of Control
The purchase consideration for the transaction will comprise the allotment
of such number of new ordinary Brainware shares that will constitute 50.01%
of the issued share capital, as well as 2 532 916 still to be created
variable rate convertible Class A preference shares ("the preference
shares") (jointly "the consideration shares") to the vendors, who will
consequently control 50.01% of the issued ordinary share capital of
Brainware ("the change of control"). If the profit warranties referred to in
paragraph 5.1 below are achieved or exceeded, the vendors, on the basis that
no further ordinary shares will be issued prior to the envisaged conversion
of the preference shares, will hold approximately 72,5% of the then issued
ordinary share capital of Brainware.
3. Nature of Business of Selco
Selco manages, operates, administers and maintains electricity and water
networks of various local authorities in Namibia. Selco is the first
private electricity distributor operating in Southern Africa to have been
awarded fifteen-year mandates to distribute electricity to end consumers in
Namibia.
4. Proposed consolidation of the share capital of Brainware
It is proposed that Brainware's ordinary share capital with a par value of
0,1 cent per share be consolidated on a 1-for-50 basis into ordinary share
capital with a par value of R0.05 per share ("the consolidation") in order
to, inter alia, facilitate the change of control. After the consolidation
and prior to the transaction, the number of Brainware shares in issue will
be reduced from 386 475 905 to 7 729 518. Further details regarding, inter
alia, the surrender of existing share certificates will be contained in the
circular referred to in paragraph 8.
Terms and Conditions Precedent Relating to the Transaction
5.1 Terms
The vendors warrant aggregate net headline profit before tax of
R15 204 000.00 for the 3 financial years ending 30 June 2005. Both Brainware
and the vendors will provide such other reciprocal warranties as are
customary in a transaction of this nature. Following the implementation of
the transaction, the board of directors of Brainware will be reconstituted
and controlled by the vendors. One member of the existing Brainware board of
directors will continue to serve as a director representing the existing
Brainware shareholders.
5.2 Conditions Precedent
The transaction is subject to, inter alia, the following conditions
precedent (all of which must be fulfilled by 31 May 2002 unless otherwise
stated):
the satisfactory completion of reciprocal due diligence investigations
pertaining to Brainware and Selco ("the due diligence investigations");
the obtaining of statutory and regulatory approvals, including shareholders
approval (of both Brainware and Selco), approvals by the JSE Securities
Exchange South Africa ("the JSE") and the Securities Regulation Panel ("the
SRP");
the JSE granting approval for the continued listing of Brainware, the
transfer of the listing from the "Cash Companies" sector to the Venture
Capital Market of the JSE List ("the specific approvals") and the listing of
the consideration ordinary shares (shareholders are advised, in terms of
rule 9.28 of the JSE Listings Requirements, that there is uncertainty as to
whether Brainware will obtain the specific approvals, as the transaction has
to comply with the listings criteria applicable to a new listing);
the SRP granting a dispensation in terms of rule 8.7 of the Securities
Regulation Code on Takeovers and Mergers, in terms of which the vendors will
not be required to make a mandatory offer to Brainware shareholders provided
independent shareholders waive the making of such mandatory offer in general
meeting; and
the conclusion of a formal agreement between Brainware and the vendors
following the completion of the due diligence investigations.
6. Change of Name
Following the implementation of the transaction, Brainware will change its
name in order to appropriately reflect its new identity.
7. Financial Effects
The pro forma financial effects of the transaction on a Brainware
shareholder (for illustrative purposes only) based on the unaudited
annualised results of Brainware for the 6 months ended 31 December 2001 and
the unaudited results of Selco for the 12 months ended 28 February 2002, are
set out below. Shareholders' attention is drawn to the fact that the
historical results of Selco are not comparable to the warranted results
referred to in paragraph 5.1 above as the historical results do not include
the full effects of the long-term electricity distribution agreements that
have recently been concluded and upon which the warranted earnings of Selco
are based.
A B C D
After the After the
consolidation, consolidation
before the and the
Before transaction transaction %
(cents) (cents) (cents) Change7
Earnings
per share1 0.1 2.53 -12,45 596,0
Headline
earnings
per share1 0.1 3.23 -12,25 -481.3
Net asset
value per
share2 1.2 59.34 16, 46 -72,3
Net
tangible
asset value 1.2 59.34 14,6 -75,4
per share2
Notes:
1: The effect on earnings and headline earnings per share was calculated
on the assumption that the consolidation and transaction were effected on 1
July 2001.
2: The effect on net asset value and net tangible asset value per share
was calculated on the assumption that the consolidation and transaction were
effected on 31 December 2001.
3: Based on 7 729 518 ordinary shares in issue during the period 1 July
2001 to 31 December 2001.
4: Based on 7 729 518 ordinary shares in issue at 31 December 2001.
5: Based on 28 076 709 fully diluted ordinary shares in issue during the
period 1 July 2001 to 31 December 2001 and assuming the transaction costs
have been written off against share premium and goodwill arising from the
transaction is being amortised over 10 years.
6: Based on 28 076 709 fully diluted ordinary shares in issue at 31
December 2001 and assuming the transactions costs have been written off
against share premium.
7: Column D compares column C with column B.
8. Circular to Brainware shareholders
A circular, subject to the approvals of the JSE and SRP, in terms of which
shareholder approval will be sought in respect of, inter alia, the
transaction and the consolidation, will be dispatched to shareholders within
30 days of this announcement, subject to the completion of the due diligence
investigations.
9. Further cautionary announcement
Brainware shareholders are advised to exercise caution in their
dealings in Brainware shares until such time as a further announcement
regarding the transaction is made.
Pretoria
25 April 2002
Corporate Advisor and Sponsor
Quaestor Capital (PTY) LTD
Registration number 1991/007330/07
