| Mon 15 Jul 2002, 0:00 | | Dna Supply Chain: Proposed Investment In Dna Micor |
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DNA Supply Chain: PROPOSED INVESTMENT IN DNA MICOR
DNA Supply Chain Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004875/06)
JSE Share code: DNA ISIN: ZAE000022794
("DNA")
PROPOSED INVESTMENT IN DNA MICOR BY A BLACK EMPOWERMENT COMPANY
1. Introduction
Further to the cautionary announcement dated 12 June 2002, Standard Corporate
and Merchant Bank is authorised to announce that DNA and Letsema Holdings
(Proprietary) Limited ("Letsema") have signed heads of agreement, pursuant to
which a Black Empowerment Company ("BEC") may ultimately become the controlling
shareholder (owning in excess of 50% of the ordinary shares in issue) of Cadre
Management Services (Proprietary) Limited ("Cadre") ("the proposed
transaction"). Cadre is a wholly owned subsidiary of DNA and houses DNA Micor
(which previously traded as the Micor Group), the freight logistics and bulk
materials handling specialist of DNA.
As DNA`s black economic empowerment ("BEE") partner since 1998, Letsema has
been responsible for ensuring that transformation takes place across all levels
within DNA and has facilitated the development of key strategic partnerships.
2. Rationale for the proposed transaction
DNA acknowledges the need to empower historically disadvantaged individuals
and to remain abreast of the dynamic business climate in South Africa. By
introducing value adding empowerment shareholders, DNA Micor will not only be
positioned to access strategic new business opportunities, but will also be
assuming a leadership position in an industry where customers and strategic
partners are becoming increasingly sensitive to the empowerment profile of their
business associates.
3. The proposed transaction
In terms of the proposed transaction, a Black Empowerment Trust ("BET"),
which is to be formed, will be the sole shareholder of the BEC. The
beneficiaries of the BET will include Letsema and other BEE partners who will be
selected based on the strategic relevance and value they are able to add to DNA
Micor. In the first stage of the proposed transaction, the BEC will subscribe
for nil coupon redeemable preference shares ("the preference shares") in DNA
Micor`s operating subsidiaries. The preference shares will provide the BEC with
51% of the voting rights but none of the economic rights in DNA Micor`s
operating subsidiaries. DNA Micor will retain all the existing ordinary shares
in its operating subsidiaries, which will carry 49% of the voting rights and
100% of the economic rights in these subsidiaries.
In the second stage of the proposed transaction, the preference shares will be
redeemed and exchanged for new ordinary shares in Cadre by no later than 1 July
2006 in accordance with a formula agreed between the BEC, DNA and Cadre ("the
share exchange"). The formula to be used in the share exchange determines the
number of ordinary shares to be received by the BEC with reference to its
contribution towards enhancing the earnings of DNA Micor`s operating
subsidiaries. In terms of the share exchange, the BEC will receive no more than
51% of the ordinary shares in Cadre, with DNA holding the remainder of the
ordinary shares in Cadre.
4. Financial effects of the proposed transaction on DNA
The table below illustrates the pro forma effects of the proposed transaction
on the headline earnings per share ("HEPS") and earnings per share ("EPS") of
DNA. The effect on net asset value ("NAV") per share and tangible NAV per share
will not be material.
Before the After the
proposed proposed
transaction transaction Increase
Description Note (%)
HEPS (cents) 2 5.5 5.8 5.5
EPS (cents) 2 4.2 4.5 7.1
Notes:
1. The HEPS and EPS "Before the proposed
transaction" have been extracted from the financial results for the six
months
ended 31 December 2001.
2. HEPS and EPS "After the proposed transaction" were calculated as if the
proposed transaction had been in effect for the 6 months ended 31 December 2001,
on the assumption that 51% of the ordinary shares in Cadre were issued to the
BEC in accordance with the share exchange and the earnings required to effect
such issue were achieved. The earnings exclude the effects of the proposed
transaction costs.
5. Related party transaction
Isaac Shongwe, the chairman and a significant shareholder of Letsema, is a
director of DNA. In terms of the proposed transaction, Letsema may ultimately
become one of the shareholders in Cadre. Consequently, the proposed transaction
is considered as a related party transaction in terms of the Listings
Requirements of the JSE Securities Exchange South Africa ("JSE").
6. Independent adviser`s opinion
The board of directors of DNA ("the board") will appoint an independent
adviser to advise the board on whether the terms of the proposed transaction are
fair and reasonable. The full details of the independent adviser`s opinion will
be included in a circular to DNA shareholders.
7. Conditions precedent
The proposed transaction is subject to, inter alia, the fulfilment of the
following conditions precedent:
* the conclusion of an agreement governing the subscription by the BEC for the
preference shares and the share exchange;
* the conclusion of a shareholders` agreement between DNA and the BEC;
* the approval of the proposed transaction by the board;
* the approval of the proposed transaction by a requisite majority of DNA
shareholders in general meeting;
* the unconditional approval (or subject to such conditions as are reasonably
acceptable to DNA, the BEC and Cadre) of the proposed transaction by the South
African competition authorities insofar as this approval is necessary; and
* approval of the proposed transaction by the JSE.
8. General meeting
A general meeting of DNA shareholders will be held for the purposes of
considering and, if deemed fit, approving with or without modification the
resolutions necessary to give effect to the proposed transaction.
9. Documentation
A circular containing full details of the proposed transaction and the general
meeting will be posted to shareholders in due course.
Sandton
15 July 2002
Merchant bank and sponsor
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Attorneys
Fluxmans Inc.
(Registration number 2000/024775/21)
Reporting accountants
Deloitte & Touche
Date: 15/07/2002 07:07:35 AM Produced by the JSE SENS Department
