| Fri 18 Oct 2002, 16:44 | | African Media Entertainment Limited - Disposal Of |
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AFRICAN MEDIA ENTERTAINMENT LIMITED - DISPOSAL OF THE BUSINESS CONDUCTED BY
GOLDEN GLOVES (PROPRIETARY) LIMITED AND FURTHER CAUTIONARY ANNOUNCEMENT
AFRICAN MEDIA ENTERTAINMENT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1926/008797/06)
Share code: AME ISIN: ZAE000014106
("AME")
DISPOSAL OF THE BUSINESS CONDUCTED BY GOLDEN GLOVES (PROPRIETARY) LIMITED AND
FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 13 September 2002, Lanark
Financial Services (Proprietary) Limited is authorised to announce that AME, AME
Sport (Proprietary) Limited ("AME Sport"), Golden Gloves (Proprietary) Limited
("Golden Gloves") and Rodney Berman ("Berman") have entered into an agreement
("the agreement") in terms of which Golden Gloves, subject, inter alia, to the
suspensive conditions set out in paragraph 4 below, will dispose ("the
disposal") of the business ("the business") conducted by it to Tuffsan 92
Trading (Proprietary) Limited ("the purchaser").
Golden Gloves is a subsidiary of AME Sport, which is a wholly-owned
subsidiary of AME. The purchaser is a wholly-owned subsidiary of Lion Promotions
Limited which is a wholly-owned subsidiary of The Sport Entertainment & Media
Group PLC ("SEMG"), which is listed on the Alternative Investment Market of the
London Stock Exchange. The interest of AME Sport in Golden Gloves amounts to
82,5%. The interest of Berman in Golden Gloves is 17,5%.
2. RATIONALE FOR THE DISPOSAL
AME is continuing its programme of reducing its debt and its cost of gearing
through the repayment of debt by way of positive cash flows generated from
operations, as well as the proceeds from the disposal of non-core assets, such
as the investment in Golden Gloves.
3. THE DISPOSAL
3.1 Terms of the disposal
Subject to the fulfilment of the suspensive conditions, the business has been
sold to the purchaser with effect from 1 September 2002 for a total
consideration of:
3.1.1 the Rand equivalent of GBP 2 050 000,00;
3.1.2 an additional payment ("the contingent payment") of a maximum of GBP
500 000,00, payable partly in cash and partly in SEMG shares, depending on the
business achieving pre-determined aggregate profit targets over the three-year
period to 31 August 2005; and
3.1.3 the assumption by the purchaser of certain stipulated liabilities
amounting to approximately R450 000,00. The stipulated liabilities are in
respect of unpaid leave pay, bonuses and severance pay to employees of the
business.
3.2 Payment and dividend
3.2.1 A dividend will be declared by Golden Gloves in anticipation of its
liquidation or deregistration. As a result AME will receive a cash amount of
approximately R25 000 000,00, based upon:
- no value being attributed to the contingent payment; and
- an exchange rate of R16,00 to GBP 1,00. The exchange rate to be used in
determining the actual consideration will be the spot rate ruling on the tenth
business day after fulfilment of the conditions set out in paragraph 4 below
("the closing date").
3.2.2 The first tranche of the consideration is payable as to the Rand
equivalent of GBP 1 950 000,00 (together with accrued interest) on the closing
date and the balance (GBP 100 000,00, together with accrued interest) on 31
August 2003, to be held in trust subject to the provisions of the agreement
until 31 August 2004.
3.2.3 The agreement contains limited warranties which are usually found in
agreements regarding transactions of this nature.
3.3 Utilisation of the proceeds
The proceeds of the disposal will be applied primarily in repaying two
shareholders` loans (which fall due for repayment on 31 October 2002 and which
have been extended by agreement between the shareholders and AME) and further
debt reduction and will reduce AME`s gearing to approximately 40%, which is
within the parameters of acceptable gearing in terms of the board`s strategic
planning.
4. SUSPENSIVE CONDITIONS
The suspensive conditions to which the agreement is subject are, inter alia:
4.1 approval of the disposal by the shareholders of AME in general meeting;
4.2 approval of the documentation required to implement the disposal by the
necessary regulatory authorities, including the JSE Securities Exchange South
Africa ("the JSE");
4.3 cession and assignment of current agreements between Golden Gloves and Sun
International (South Africa) Limited and between Golden Gloves and Supersport
International (Proprietary) Limited; and
4.4 the conclusion of employment contracts with Berman, the current managing
director of Golden Gloves, and other key employees of the business.
5. FINANCIAL EFFECTS OF THE DISPOSAL
The table below sets out the financial effects of the disposal based on the
unaudited interim financial statements of AME for the six-month period ended on
30 April 2002, after adjusting for the Moonlighting disposal effective from 1
November 2001, assuming the issue of shares for cash in May 2002 was effective
on 1 November 2001, after the specific repurchases of ordinary shares (details
of which were contained in a circular to shareholders dated 31 July 2002) and
after a goodwill impairment adjustment of R12 125 900,00.
Before the After the
disposal disposal
(cents) (cents)
and other and other
referred to referred to Change
Notes above above (%)
Loss per share 1 (2,11) (1,46) (30,8)
Headline loss per share from
continuing operations 1 (1,77) (1,14) (35,6)
Tangible net liability/asset
value per share 2 (4,05) 0,30 NA
Net asset value per share 2 1,01 3,54 250,5
Number of shares in issue (000`s) 779 524 842 686 8,1
Notes:
1. On the assumption that the disposal was effective throughout the six-month
period ended on 30 April 2002 and that the consideration was received on 1
November 2001, thereby reducing the annual finance charges.
2. On the assumption that the disposal was effective on 30 April 2002.
6. CIRCULAR TO SHAREHOLDERS
A circular containing details of the disposal and a notice convening a
general meeting of AME will be posted to the shareholders of AME in due course.
In view of the considerable cost involved in the preparation of circulars,
the JSE has been requested, and has agreed, to allow AME to issue one circular
in respect of the disposal and the disposal of Big Concerts (Proprietary)
Limited announced on 13 September 2002.
7. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the negotiations regarding United Stations
(Proprietary) Limited referred to in the cautionary announcement published on 13
September 2002 are continuing and shareholders are accordingly requested to
exercise caution in dealing in their shares until a further announcement in this
regard is made.
By order of the board
North Riding
18 October 2002
Corporate adviser
Lanark Financial Services (Proprietary) Limited
(Registration number 1999/021799/07)
Attorneys to AME, AME Sport, Golden Gloves and Berman
Zenwill Lacob
Attorneys
Solicitors to the purchaser and SEMG
Howard Kennedy
Solicitors, London
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
Reporting accountants, auditors and independent
advisors to AME shareholders
Charles Orbach & Company
Chartered Accountants (SA) Registered Accountants & Auditors
Date: 18/10/2002 04:00:00 PM Produced by the JSE SENS Department
