| Fri 30 Aug 2002, 0:00 | | MB Technologies - Proposed Management Buy-Out Of M |
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MB Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/008964/06)
Share code: MBT ISIN: ZAE000015996
("MB Technologies" or "the Company")
1. Introduction
1.1 It was announced in the press on 17 July 2002 that MB Technologies had
received a letter from Clidet No 408 (Proprietary) Limited ("Clidet"), a special
purpose vehicle backed by a consortium (comprising founder shareholders, namely
Messrs L C Baxter and M J McGrath, and Central Holdings Limited) ("the
Consortium") and Absa Bank Limited ("Absa"), expressing its, or its nominees`
firm intention to, either:
1.1.1 acquire all of the MB Technologies shares not already owned by the
Consortium, for a cash consideration equivalent to 140 cents per MB Technologies
share, to be implemented by Clidet proposing a scheme of arrangement in terms of
section 311 of the Companies Act, 1973 (Act 61 of 1973) ("the Act") between MB
Technologies and its shareholders other than the Consortium. In the event of the
scheme not being implemented, Clidet would make an offer to all MB Technologies
shareholders other than the Consortium in terms of section 440 of the Act to
acquire their MB Technologies shares; or
1.1.2 acquire all the assets and liabilities of MB Technologies in terms of
section 228 of the Act, pursuant to which a dividend of 140 cents per MB
Technologies share will be paid to shareholders as an advance distribution in a
members` voluntary winding-up of MB Technologies;
(collectively referred to as "the original proposal").
1.2 The proposal was announced subject to various conditions precedent
including a due diligence to be conducted by Clidet.
1.3 On 17 July 2002 the board again advised shareholders to exercise caution in
dealing in their MB Technologies shares.
2. RESULTS OF DUE DILIGENCE
2.1 Immediately following the press announcement of 17 July 2002, Clidet
commenced a detailed and thorough due diligence of the business operations of
the group which has now been completed. Certain key findings of the due
diligence identify that the initial risk assessment of certain of the growth
opportunities in the business were optimistic. Whilst the business operations
remain fundamentally sound, the findings of the due diligence resulted in an
adjustment of the forecast growth rates, particularly in the offshore
businesses, and a consequent reduction in the valuation of the business.
2.2 As a result, and in terms of the stated conditions precedent, Clidet has
withdrawn the original proposal and has submitted a new proposal to acquire the
assets and liabilities of MB Technologies, as a going concern, for the aggregate
purchase consideration of R513,3 million, equivalent to 110 cents per share
("the disposal").
3. MEMBERS` VOLUNTARY WINDING-UP AND DE-LISTING
3.1 Subject to the approval by MB Technologies shareholders in general meeting
and the fulfilment or waiver of the other conditions precedent set out in
paragraph 6 below, MB Technologies will thereafter be liquidated by way of
members` voluntary winding-up ("the winding-up") and the liquidation dividend
will be paid on Friday, 4 October 2002 to MB Technologies shareholders
registered as such on Thursday, 3 October 2002. Upon the implementation of the
disposal agreement and subject to no unforeseen circumstances arising, MB
Technologies shareholders will receive 110 cents per ordinary share held.
Pursuant to the voluntary winding-up and the payment of the liquidation
dividend, MB Technologies will be de-listed from the JSE Securities Exchange
South Africa ("JSE") ("the de-listing").
Collectively, the disposal, the winding-up and the de-listing are referred to as
"the proposal".
4. RATIONALE FOR THE PROPOSAL
Sustained adverse market conditions have created an environment which has
severely limited MB Technologies` ability to raise funds in the capital markets,
one of the key reasons for listing in 1998.
The continued low levels of MB Technologies` share price has rendered the share
incentive schemes, designed specifically to incentivise the key skills resident
within the group`s operating divisions, ineffective.
The costs of maintaining a JSE listing, both in terms of Rand value and
executive time, are relatively high and taking into account the abovementioned
issues, can no longer be justified.
Finally, as a private company, MB Technologies will be in a position to
strengthen cash resources and to create a more stable capital base.
5. CONFLICTED/RELATED PARTIES
The disposal is a disposal in terms of section 228 of the Act and as such is an
affected transaction subject to the Securities Regulation Code on Takeovers and
Mergers ("the Code"). The disposal has been categorised as a "related party"
transaction in terms of the Listings Requirements of the JSE, as the members of
the Consortium are members and/or directors of MB Technologies. In terms of both
the Code and the JSE Listings Requirements, the MB Technologies shareholders who
are members of the Consortium and their associates will not be taken into
account in determining a quorum and will be precluded from voting in respect of
the resolutions to approve the disposal which resolutions will be proposed at
the general meeting to be held on Wednesday, 25 September 2002. The Consortium
has voluntarily imposed a voting threshold of 60% plus one share for all those
present and voting, other than the Consortium members, in respect of the
resolution to approve the disposal. The Consortium members hold in aggregate
approximately 56,2% of the issued ordinary shares of MB Technologies.
6. PRO FORMA FINANCIAL EFFECTS
The following table, which has been prepared for illustrative purposes only,
sets out the pro forma financial effects of the proposal on a MB Technologies
share:
Notes Before After Percentage
(cents increase/
per (cents (decrease)
share) per
share)
Market value 1 110,0 110,0 -
Market value 2 124,0 110,0 (11,3)
Basic earnings 3 12,8 3,5 (72,7)
Headline earnings 4 15,3 3,5 (77,1)
Net asset value 5 85,2 110,0 29,1
Net tangible asset 6 51,0 110,0 115,7
value
Notes:
1. The "Before" column is the closing market price per MB Technologies share
on the JSE on Friday, 1 March 2002, being the day immediately preceding the
publication of the first cautionary announcement. The "After" column shows the
expected amount of the distributions per MB Technologies share.
2. The "Before" column is the closing market price per MB Technologies share
on the JSE on Tuesday, 16 July 2002, being the day immediately preceding
publication of the announcement referred to in paragraph 0. The "After" column
shows the expected amount of the distributions per MB Technologies share.
3. The "Before" column is the basic earnings per MB Technologies share for the
six months ended 28 February 2002, extracted from the reviewed interim results,
calculated on the weighted average number of 412 018 856 MB Technologies shares
in issue throughout the six months ended 28 February 2002. The "After" column
reflects the after tax interest income, at an average tax rate of 30%, that a
shareholder would have earned had the expected amount of the distributions per
MB Technologies share to be received by a shareholder been invested for six
months at an interest rate of 9,0% per annum, being the average rate of interest
earned before tax on a six month fixed deposit for the six months ended 28
February 2002.
4. The "Before" column is the headline earnings per MB Technologies share for
the six months ended 28 February 2002, extracted from the reviewed interim
results, calculated on the weighted average number of 412 018 856 MB
Technologies shares in issue throughout the six months ended 28 February 2002.
The "After" column reflects the after tax interest income, at an average tax
rate of 30%, that a shareholder would have earned had the expected amount of the
distributions per MB Technologies share to be received by a shareholder been
invested for six months at an interest rate of 9,0% per annum, being the average
rate of interest earned before tax on a six months fixed deposit for the six
months ended 28 February 2002.
5. The "Before" column is the net asset value per MB Technologies share at 28
February 2002, extracted from the reviewed interim results, calculated on 438
961 664 shares in issue at 28 February 2002. The "After" column shows the
expected amount of the distributions per MB Technologies share to be received by
each shareholder.
6. The "Before" column is the net tangible asset value per MB Technologies
share at 28 February 2002, calculated on 438 961 664 shares in issue at 28
February 2002. The "After" column shows the expected amount of the distributions
per MB Technologies share to be received by each shareholder.
7. CONDITIONS PRECEDENT
The proposal is subject to and conditional upon the fulfilment or waiver of,
inter alia, the following conditions precedent:
7.1 formal approval of the JSE and Securities Regulation Panel ("SRP");
7.2 the passing and, where applicable, registration of all ordinary and special
resolutions required to approve and implement the proposal, in accordance with
the requirements of the Companies Act (Act 61 of 1973) (the "Act"), the Code and
the Listings Requirements of the JSE;
7.3 the approval of the proposal by the Competition Authorities, in terms of
the Competition Act, either unconditionally or subject to such conditions as may
be acceptable to Clidet; and
7.4 Clidet entering into shareholder and loan agreements with the Consortium
and Absa.
8. OPINIONS AND RECOMMENDATIONS
8.1 The board of MB Technologies has appointed Deloitte & Touche to provide it
with advice as to the fairness of the proposal, specifically as to the minority
shareholders, and to state their opinion and make recommendations to
shareholders in the circular that will be mailed to shareholders in due course.
9. SALIENT DATES AND TIMES
THE SALIENT DATES AND TIMES OF THE PROPOSAL ARE AS FOLLOWS:
2002
Last day for receipt of forms of proxy
for the general meeting by not later Friday, 20 September
than 10h00 on
General meeting to be held at 10h00 on Wednesday, 25 September
Announcement in respect of fulfilment
or waiver of the conditions precedent Wednesday, 25 September*
and results of general meeting
published on SENS on
Announcement in respect of fulfilment
or waiver of the conditions precedent Thursday, 26 September*
and results of general meeting
published in the press on
Special resolutions lodged for
registration with the Registrar of Thursday, 26 September*
Companies
Last day to trade to be eligible to
participate in the distributions on Thursday, 26 September*
Suspension of the listing of MB
Technologies shares on the JSE from Friday, 27 September*
commencement of business on
Record date to be recorded in the
register as a shareholder in order to Thursday, 3 October*
receive the distributions at the close
of business on
Cheques due in respect of the
liquidation dividend posted to Friday, 4 October*
certificated shareholders on
Dematerialised shareholders` accounts
credited by a CSDP or broker in Friday, 4 October*
respect of the liquidation dividend on
Termination of the listing of MB
Technologies shares on the JSE from Monday, 7 October*
commencement of business on
Note:
The above dates and times are subject to amendment. Any amendment to the dates
and times will be published in the press and on SENS. The dates marked with an
asterisk are dependent on the fulfillment or waiver of the conditions precedent
set out in paragraph 7 above. Share certificates may not be rematerialised or
dematerialised after Thursday, 26 September 2002.
10. SUSPENSION OF TRADING
MB Technologies shares were suspended on Thursday, 29 August 2002, following a
significant price movement in a short period of time. Simultaneous to the
publication of this announcement, the suspension of trading in the share will be
lifted.
As the proposal is still subject to the approval of both the JSE and the SRP,
shareholders are advised to continue exercising caution when dealing in their MB
Technologies shares. A further announcement regarding the above approvals will
be published on 2 September 2002.
11. DOCUMENTATION
A circular, which is subject to JSE and SRP approval, containing full details of
the proposal, and convening the required general meeting of MB Technologies,
will be mailed to shareholders on or about 31 August 2002.
Sandton
30 August 2002
Merchant Bank to Clidet Sponsor Attorneys to Clidet
ACMB Merrill Lynch Cliffe Dekker
Reporting accountants Independent advisor to the
minorities
Deloitte & Touche
Deloitte & Touche
Date: 30/08/2002 09:04:00 AM Produced by the JSE SENS Department
