| Tue 16 Jul 2002, 0:00 | | Netactive Limited - Announcement Regarding The Dis |
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NetActive Limited - Announcement Regarding The Disposal Of The Internet Services
Provider Division Of Netactive To Tiscali World Online
NetActive Limited
(Registration number 1998/006000/06)
ISIN: ZAE 000017935 Share Code: NET
ANNOUNCEMENT REGARDING THE DISPOSAL OF THE INTERNET SERVICES PROVIDER DIVISION
OF NETACTIVE TO TISCALI WORLD ONLINE
1. Introduction
Further to the cautionary announcement published on 2 July 2002, Benefique
Capital is authorised to announce that NetActive has disposed of its Internet
Services Provider ("ISP") division (`the Business") to Tiscali World Online,
subject to the fulfilment of certain conditions precedent as set out in
paragraph 3 below ("the Disposal").
2. Background and rationale for the Disposal
The corporate ISP market in South Africa has matured rapidly over the past two
years with a high percentage of penetration in the target market. This industry
requires a significant upfront investment in infrastructure. Furthermore the
business model requires a critical mass of customers operating over this
infrastructure to achieve profitability. Once critical mass is achieved the
business model is highly profitable with annuity-like revenues. However, in
order to achieve this critical mass the market is undergoing a phase of
consolidation through various mergers and acquisitions. In view of this, the
board of directors of NetActive feels that the Disposal will realise value for
NetActive shareholders.
NetActive has also been exploring opportunities for exporting services in order
to earn foreign currency. With this objective in mind, NetActive is disposing
of the Business to Tiscali World Online, and has positioned itself in the
outsourced call centre environment.
3. The Disposal
NetActive, will in terms of the Disposal, sell the Business as a going concern
from the effective date (which is expected to be on or about 1 September 2002)
for a total cash consideration of R32 million (which consideration was based on
amongst others, the number of corporate Internet subscribers in the Business).
R15 million of the Disposal consideration will be payable immediately and the
remaining R17 million (plus interest calculated monthly in arrears at the prime
interest overdraft rate) will be paid by way of eighteen monthly instalments of
R0,94 million. Specifically excluded from the Disposal are the debtors,
liabilities, the fixed assets utilised in operating the call centre and
NetFlorist which had an approximate net book value of R2,5 million (`the
Excluded Assets") as at 30 April 2002.
The net cash proceeds of the Disposal will be retained in the Company and no
dividend will be paid as a result of this transaction.
The Disposal is conditional upon the following significant conditions precedent:
* the approval of NetActive shareholders in general meeting on or before 31
August 2002; and
* Messrs. PH Bacher, L Brick and JA Hackner (all directors of the Company)
signing three year restraint-of-trade and confidentiality agreements in their
personal capacities with the Company and Tiscali World Online and voting their
entire shareholdings in the Company (owned directly or indirectly) in favour of
the Disposal.
4. Financial effects of the Disposal
The table below (before and after the Disposal) sets out the financial effects
of the Disposal on the net asset value, net tangible asset value and the
earnings per share, based on the published audited results of NetActive for the
year ended 30 April 2002 and after taking into account the following
assumptions:
* The total purchase consideration payable by Tiscali World Online is R32
million inclusive of restraint of trade and confidentiality payments as referred
to above;
* the Disposal was effective on 1 May 2001 for revenue purposes and 30 April
2002 for purposes of calculating the net asset and net tangible asset values;
* the calculation of the headline loss per share, is based on the weighted
average of 146 530 million shares in issue for the year ended 30 April 2002;
* the calculations of the net asset value and net tangible value per share
are based on 71,959 million shares in issue at 30 April 2002;
* the net proceeds of approximately R30 million on the Disposal after
settlement of the restraint of trade and confidentiality payments and the
realisation of the net book value of the Excluded Assets, all of which have been
referred to above, had been invested at an after tax interest rate of 7%.
Before After Change (%)
(Loss)/profit per share (cents) (0,42) 0,90 314,30
Headline (loss)/profit per share (cents) (0,42) 0,90 314,30
Net asset value per share (cents) 80,07 109,49 36,75
Tangible net asset value per share (cents) 79,77 109,49 37,26
5. Documentation
A circular, subject to JSE and SRP approval, containing details of the Disposal
and convening a general meeting of NetActive shareholders will be posted to
shareholders within 28 days from the date of this announcement.
Sandton
16 July 2002
Corporate advisor
BENEFIQUE CAPITAL
Sponsor
WIP CAPITAL
Date: 16/07/2002 07:26:12 AM Produced by the JSE SENS Department
