| Wed 29 May 2002, 0:00 | | Johnnic Unwinds M-cell Spvs |
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Johnnic unwinds M-Cell SPVs
Johnnic Holdings Limited
Code: JNC
Registration: 1889/000429/06
"ISIN" Number: ZAE 000024352
Press Release
Date: 29 May 2002
Unwinding of M-Cell SPVs
JOHNNIC SUCCESSFULLY UNWINDS M-CELL SPVs - R 400 MILLION CONTINGENT
LIABILITY AND M-CELL OVERHANG ELIMINATED
Johnnic Holdings Limited ("Johnnic"), South Africa`s leading
telecommunications, media and entertainment black empowerment group, today
announced that it has successfully unwound the Special Purpose Vehicles
("SPVs") created to house 5% of the 18,5% interest in Mobile Telephone
Networks Holdings (Proprietary) Limited ("MTN Holdings") it acquired from
Cable and Wireless (South Africa) (Proprietary) Limited ("C&WSA") on 20
August 1998.
As part of the agreement with C&WSA, Johnnic was required to sell 5% of the
MTN Holdings shares acquired to black empowerment groups including the
National Empowerment Fund.
The MTN Holdings shares were subsequently exchanged for M-Cell Limited ("M-
Cell") shares when M-Cell acquired the MTN Holdings shares from the various
empowerment groupings on 6 April 1999.
Funding to the empowerment groups was obtained from various financial
institutions and was undertaken through SPVs. Johnnic agreed to guarantee
the return to certain of the financial institutions in respect of 36 846 051
M-Cell shares in return for participation in the upside at the date of the
unwinding of the SPVs. As a result, a contingent liability was carried in
the books of Johnnic, which was valued at R 400,9 million at the half year
(30 September 2001).
As part of the unwinding of the SPVs, more than R 600 million worth of M-
Cell shares were sold primarily to offshore buyers.
"We were pleasantly surprised by the level of foreign interest in M-Cell in
the last few weeks," says Jacob Modise, Johnnic Chief Operating Officer.
"We were also delighted to add to the inflows of foreign currency in the
country," adds Modise.
Johnnic had entered into an arrangement with the financial institutions to
manage the disposal of the shares arising out of the unwinding of the SPVs.
"The success we have had with the unwinding of the SPVs emphasizes the
orderly manner in which Johnnic handles transactions of this nature and also
removes the overhang of M-Cell shares that existed in the market prior to
the unwinding, " says Modise.
Johnnic was able to participate in the upside and received over R 200
million as a result. The proceeds were used to clear part of the holding
company debt.
"The debt at the centre has reduced substantially since publication of the
half-year results. The borrowings at the holding company had increased to
over R700 million at the half year following, amongst others, the
acquisition of additional interests in M-Cell. This debt has now been
reduced to under R150 million with the continued disposal of non-core assets
including the current unwinding of the SPVs," explains Modise.
The black empowerment groupings that participated in the SPVs were able to
walk away with a return at the end of the unwinding.
"It is a pity the financing structures of the SPVs expired at the time when
the telecommunications market worldwide is depressed. One would have liked
to see the empowerment groupings walk away with much more shares in M-Cell.
Johnnic, however, remains proud of its continued endeavors to enhance black
economic empowerment within the M-Cell/MTN group, " concludes Modise
ENDS
Issued by Busi Pilane, Johnnic PRO, tel: 011 373-7210, fax: 834-5063
For further information, please contact:
Jacob Modise, Johnnic Chief Operating Officer, tel: 011 373-7100, cell:
083 287-3385
