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Lyons Financial Solutions Holdings Limited - Formation Of A Strategic
Relationship And A Proposed Issue Of Redeemable, Convertible Debentures
Lyons Financial Solutions Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/022117/06)
Share code: LYS ISIN: ZAE000024709
("Lyons" or "the company")
FORMATION OF A STRATEGIC RELATIONSHIP AND A PROPOSED ISSUE OF REDEEMABLE,
CONVERTIBLE DEBENTURES
Introduction
Further to the cautionary announcement dated 13 May 2002, shareholders are
advised that subject to the fulfilment of the conditions precedent detailed
below, Lyons will issue R9 million convertible, redeemable debentures to
Nedcor Investment Bank Limited ("NIB") ("the issue").
Rationale
The primary rationale for the issue is the formation of a strategic
relationship with NIB to explore mutually beneficial opportunities. In this
manner both parties will draw on the intellectual capital of the other,
thereby increasing the ability of each company to provide a comprehensive
range of business solutions to its existing and future clients.
In addition to the strategic relationship, the issue will result in a cash
injection of R9 million to Lyons. These additional cash resources will
substantially increase Lyons` ability to actively pursue and expand both
existing and new profitable avenues of operations.
Salient terms of the issue
- The value of the debentures amount to R9 million.
- The debentures are secured and convertible into 60 million ordinary shares
in Lyons within three years from the effective date, being the date when all
conditions precedent are fulfilled, at the instance of NIB. This amounts to
a fixed issue price of 15 cents per ordinary share in Lyons.
- Interest is payable at the prime overdraft rate on the capital balance
outstanding.
- NIB will have the right to appoint a non-executive director to the board
of directors of Lyons.
Conditions precedent
The issue is subject to the following conditions precedent:
- approval by shareholders eligible to vote, in general meeting, of the
issue;
- approval by the JSE insofar as may be required; and
- independent advisors appointed by Lyons issuing an opinion that the issue
is fair and reasonable in regard to the shareholders in Lyons.
Financial effects
The table below details the pro forma effects of the issue on the unaudited
results of Lyons for the six months ended 30 November 2001, based on the
following assumptions:
- scenario one is based on the premise that the debentures are not converted
into Lyons ordinary shares, and are therefore treated as non-current
liabilities;
- scenario two is based on the premise that the debentures are converted
into 60 million Lyons ordinary shares on 1 June 2001;
- for the purposes of scenario one, interest has been calculated at an
annual rate of 13,45%, being the average prime overdraft rate during the six
month period ended 30 November 2001; and
- the cash received of R9 million being re-invested in the business and
earning an after tax return of 17,01%, being Lyons` return on total assets
for the six month period ended 30 November 2001.
Per Lyons share Before After Change
(cents) (cents) (%)
Scenario 1
Earnings per share 1.68 1.97 17.3
Headline earnings per share 1.72 2.01 16.9
Net asset value per share 6.89 6.89 -
Tangible net asset value per share 6.51 6.51 -
Scenario 2
Earnings per share 1.68 1.79 6.5
Headline earnings per share 1.72 1.83 6.4
Net asset value per share 6.89 7.99 16.0
Tangible net asset value per share 6.51 7.67 17.8
Withdrawal of cautionary announcement
The cautionary announcement dated 13 May 2002 is hereby withdrawn.
Circular to shareholders
A circular, including a notice of general meeting, will, subject to JSE
approval, be distributed to shareholders in due course, in respect of the
issue.
Sandton
14 June 2002
Corporate financial
Sponsor and law advisors Investment bank
Deloitte & Touche Lyons Corporate Nedcor Investment
Sponsor Services Services Bank Limited
Independent advisors
Fisher Hoffman PKF
(Jhb) Inc.
Date: 13/06/2002 05:15:00 PM Produced by the SENS Department
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