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DIMENSION DATA HOLDINGS PLC - PROPOSED SUBSCRIPTION FOR A NEW CONVERTIBLE BOND
BY VENFIN LIMITED
DIMENSION DATA HOLDINGS plc
Incorporated in the United Kingdom
Registration number 3704278
Share Code DDT
ISIN Code GB0008435475
("Dimension Data" or, together with its subsidiaries, "the Group")
Proposed subscription for a new convertible bond by VenFin Limited ("VenFin")
Introduction
Dimension Data announces that it has today agreed terms in principle for the
subscription by VenFin to a new US$100 million 7 year convertible bond to be
issued by the Group. If converted, the bond would provide VenFin with an equity
holding equivalent to about 12.3 percent of the enlarged fully diluted share
capital of Dimension Data.
VenFin is a quoted investment holding company incorporated in the Republic of
South Africa and listed on the Johannesburg Stock Exchange. The company was
formed in 2000 following the restructuring of Rembrandt Group Limited into
VenFin and Remgro Limited. VenFin`s interests include Rembrandt`s original
telecommunications and technology investments. VenFin operates as a global
investment holding company focusing on technology-driven businesses.
Subject to the approval of shareholders at an Extraordinary General Meeting of
Dimension Data, VenFin will subscribe for the issue of a 7 year $100 million
convertible bond at par. VenFin approved the transaction in principle at its
board meeting held on 30 October 2002. It has been agreed that the basis for
the convertible bond terms will be the share price as at close of business on
Friday 1 November 2002 which was 23.50 pence per share. Based on the terms
agreed, the bond will carry a coupon of 5.375% and will be convertible at 53.17
US cents per share (34.075 pence at a fixed exchange rate of US Dollars 1.56)
representing a conversion premium of 45% to the closing share price on Friday 1
November 2002. The conversion price represents a premium of 24% over the
weighted average share price of 27.45 pence on 4 November 2002 and a 95% premium
on the 20 trading days volume weighted average share price of 17.49 pence.
The bond will be unlisted and, if not previously redeemed or converted into
ordinary shares of Dimension Data in accordance with its terms, will be redeemed
at 103.12% of its principal amount in 2009.
In addition to Dimension Data shareholder approval, the issue is subject to the
signing of a subscription agreement with VenFin. The detailed terms of the
agreement are expected to include an undertaking by VenFin not to transfer the
bond to an unaffiliated third party prior to conversion and other "standstill"
undertakings.
It is expected that a circular convening the Extraordinary General Meeting and
containing particulars of the convertible bond and the subscription agreement
will be sent to shareholders shortly, with a view to completing the subscription
prior to the end of the year.
Dimension Data is being advised by Merrill Lynch International and Cazenove.
Rand Merchant Bank is advising VenFin.
Reasons for the issue
The Group currently has sufficient cash resources to meet its existing
commitments. However, taking into account seasonal cash requirements and
restrictions on cash in South Africa and Asia as well as current uncertain
market conditions and a lack of operating visibility in key geographic markets,
the Board believes that it is prudent to take advantage of the current low
interest rate environment to secure funding of ongoing operations while meeting
Group obligations. The subscription by VenFin will provide the Group with
greater flexibility in the management of its cash resources post the repayment
of the existing convertible debentures at the year-end.
At 30 September 2002 the Group had gross cash of $373 million, and free cash of
$200 million after accounting for existing commitments, calculated as follows:
$ millions
Gross cash 30 September 2002 373
7.75% convertible debentures 2002 (101)
Deferred acquisition consideration (45)
Plessey put option (27)
Total free cash 200
Current trading
The Group`s business plan and projected cash flows indicate that it will remain
cash flow positive in the years ahead.
Dimension Data expects to release its preliminary results for the year ended 30
September 2002 on 21 November 2002. Dimension Data confirms that there has been
no material change to the market update and guidance issued on 20 August 2002.
Other undertakings by VenFin
VenFin has indicated to Dimension Data that it may purchase ordinary shares of
Dimension Data in the market. The timing of any purchases will be at VenFin`s
discretion but in any case it will not purchase any shares before the circular
to shareholders has been posted. VenFin will undertake that it and any party
acting in concert with it will not acquire shares exceeding the equivalent of
25% of the enlarged share capital of Dimension Data assuming full conversion of
the bond for which it is subscribing. VenFin does not currently hold any shares
in Dimension Data.
The subscription agreement will also contain a commitment not to transfer the
convertible bond to an unaffiliated third party prior to conversion, and not to
deal in the convertible bond or any instrument related to it for a period of 5
years after subscription.
Terms of the new convertible bond
The financial terms of the convertible bond which have been agreed in principle
with VenFin are as follows:
Issue size $100 million
Maturity 7 years
Conversion price: 53.17 US cents (34.075 pence)*
Coupon: 5.375% per annum payable annually
Yield to maturity 5.750%
Issue price 100%
Redemption price: 103.12%
Issuer call option: 3 year no call and thereafter subject to the share
price exceeding 150% of the conversion price for 20 out
of 30 consecutive trading days
Investor put option: On the 5th anniversary and quarterly thereafter at
accreted value
Status The bond will constitute subordinated and unsecured
obligations of the issuer
* based on a Sterling/US Dollar fixed exchange rate of US Dollars 1.56
Conclusion
The Board of Dimension Data believes that the subscription for a $100 million
convertible bond by VenFin on the terms and conditions referred to above,
provides both funding for the Group on attractive financial terms in the current
market and enhanced financial flexibility. The Board believes that the
subscription also provides the company with additional resources to withstand
the continuing uncertainty in the market while at the same time introducing a
significant and supportive long-term investor.
Enquiries: Malcolm Rutherford, Patrick Quarmby,
Bronwyn Goeller (+27 11 709 1000)
Karen Cramer (+44 207 651 7000)
Sponsor in South Africa: Merrill Lynch South Africa (Pty) Limited
Date: 05/11/2002 08:00:00 AM Produced by the JSE SENS Department
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