| Fri 26 Jul 2002, 0:00 | | Rebserve Holdings Limited - Settlement Agreement I |
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Rebserve Holdings Limited - Settlement Agreement In Respect Of The Discharge By
Rebserve Of The Balance Of The Molope Purchase Consideration
REBSERVE HOLDINGS LIMITED
(formerly Rebhold Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
("Rebserve")
(ISIN: ZAE000034484)
(Share code:"RBV")
SETTLEMENT AGREEMENT IN RESPECT OF THE DISCHARGE BY REBSERVE OF THE BALANCE OF
THE MOLOPE PURCHASE CONSIDERATION.
1. Introduction
1.1 In terms of the agreement dated 25 November 1999 ("the acquisition
agreement") under which Rebserve and its subsidiaries ("the group") acquired
certain of the profitable services and facilities management businesses and
related assets ("the acquired businesses") of Molope Group Limited ("Molope")
for a purchase consideration of R300 million, the group was obliged to discharge
certain liabilities attaching to the acquired businesses, which amounted to
approximately R90 million, and to pay to the shareholders of Molope directly
(after the valid declaration by Molope of a liquidation dividend, the balance of
the purchase consideration amounting to approximately R210 million. The group
also assumed certain specified liabilities of the acquired businesses to their
trade creditors amounting to approximately R183 million, which liabilities have
been discharged.
1.2 Molope declared a liquidation dividend to its shareholders on or about 9
June 2000, as contemplated in the acquisition agreement, which would have
enabled the group to pay the balance of the purchase consideration directly to
Molope shareholders as contemplated in the acquisition agreement. However, on 10
July 2000, Molope was obliged to cancel such liquidation dividend after the
Industrial Development Corporation of South Africa Limited ("IDC") had given
notice of claims ("the IDC claims") against Molope, amounting to approximately
R54 million.
1.3 As a result inter alia of the IDC claims, Rebserve took the view, based on
legal opinion obtained, that it was not obliged to pay the balance of the
purchase consideration to Molope or its liquidator, in circumstances where a
dispute existed between Molope and the IDC (to which dispute the group was never
a party), and furthermore in circumstances where Molope was unable to declare a
liquidation dividend. This was in the context that the mechanism agreed upon in
the acquisition agreement was for shareholders of Molope to acquire claims
against Rebserve only after Molope had awarded such claims in specie as a
liquidation dividend, with Rebserve thereafter having the obligation to pay
these claims to Molope shareholders directly. Rebserve`s liability to discharge
such claims (effectively representing payment by Rebserve of the balance of the
Molope purchase consideration) would accordingly only crystalise after the valid
declaration by Molope of a liquidation dividend, which to date has not yet
occurred.
1.4 In Rebserve`s interim report for the six months ended 31 December 2001, it
was recorded that the liquid funds reflected on the group`s balance sheet
included an amount of R230 million earmarked for payment of the balance of the
Molope purchase consideration and related liabilities.
1.5 In Rebserve`s annual report for the year ended 30 June 2001, it was
recorded that the unpaid balance of the Molope purchase consideration, would
become due for payment by the group following the final conclusion of the
litigation between Molope and, inter alia, the IDC, and that the group was not a
party to any such litigation. The group has been informed that such litigation
has now been concluded.
2. Full and Final Settlement
Shareholders are advised that the group has concluded an agreement dated July
2002 (`the settlement agreement") with, inter alia, Nedcor Bank Limited, FBC
Fidelity Investment Bank Limited, Capitec Bank Limited (formerly The Business
Bank Limited), Mercantile Lisbon Bank Limited, PSG Investment Bank Limited,
Molope (in voluntary liquidation) and the liquidator of Molope, in terms whereof
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2.1 Molope will propose, subject to certain conditions, a scheme of arrangement
("the scheme") in terms of section 311 of the Companies Act (Act 61 of 1973),as
amended (`the Act") between Molope and its creditors and shareholders;
2.2 the purpose of the scheme, in so far as it affects or relates to the group,
will be to propose that Molope agrees to accept the net settlement amount (as
referred to and defined in 2.3 below) in full and final settlement of all claims
of any nature whatsoever against any company forming part of the group arising
from or pursuant to the acquisition agreement, and that payment by the group
pursuant to the scheme to Molope will constitute a complete, proper and lawful
payment and discharge by the group of all of the liabilities and obligations of
whatsoever nature arising out of or pursuant to the acquisition agreement or any
related agreements;
2.3 the net settlement amount payable by the group in terms of the settlement
agreement is R188 801 653, calculated as follows:
2.3.1 the group will discharge the capital amount due under the acquisition
agreement, being R300 million, in full. Of this, an amount of R89 384 029 has
already been paid by the group by discharging certain liabilities of Molope on
behalf of Molope as referred to in 1.1 above;
2.3.2 while an amount of R210 615 971 of the purchase price remains payable
by the group, in terms of the settlement agreement there shall be deducted
therefrom the amount of R31 814 318, being the agreed amount which will accrue
to Rebserve by virtue of the group being the beneficial owner of the right to
receive the consideration payable to certain shareholders of Molope who were
employed by the Molope group as at the date of signature of the acquisition
agreement and who were subsequently employed by the group;
2.3.3 the group will in addition pay an amount of R10 million in lieu of
having to pay interest on the net settlement amount. While the acquisition
agreement did not specifically provide for the payment of interest by the group
on the purchase consideration owing to Molope from time to time, the acquisition
agreement provided that any overdue amount payable under the acquisition
agreement would bear interest from time to time. A dispute arose between the
parties as to whether the balance of the purchase consideration due by the group
was interest-bearing or not, and this dispute has been settled on the basis that
the aforesaid sum of R10 million will be paid in lieu of interest and in
settlement of all amounts owing by the group to Molope from causes other than
the net settlement amount;
2.4 the group will make payment of the net settlement amount out of existing
cash resources, one business day after the sanction of the scheme, which is
expected to be during or about August 2002.
3.Conditions
The settlement is subject to certain conditions, including, inter alia, all
regulatory approvals, the group approving the final terms of the scheme, and a
court of competent jurisdiction granting an order sanctioning the scheme and
including in such order, an order to the effect that payment by Rebserve of the
net settlement amount will constitute a complete, lawful and proper manner of
payment and discharge by the group of all amounts owing under or pursuant to the
acquisition agreement or any related agreements, failing which, at the election
of Rebserve, Rebserve shall not be obliged to pay any amount under the
settlement agreement which will then be deemed to have been cancelled and shall
be of no further force or effect.
4. Financial effects
Save for the fact that Rebserve will cease to earn interest on the cash paid by
Rebserv to discharge the balance of the Molope purchase consideration and
related liabilities, from the dates upon which such amounts are paid, as
referred to in 2.4 above, the settlement will have no material effect on the
earnings or net asset value of the group, on the basis that the liability for
amounts payable under the settlement had been provided for and disclosed in
prior accounting periods.
5. Further Announcement
A further announcement will be made upon fulfilment of the conditions.
SANDTON
25 July 2002
Sponsor: Deutsche Securities S.A. (Proprietary) Limited
Attorneys: Werksmens
Date: 26/07/2002 08:03:43 AM Produced by the JSE SENS Department
