| Fri 6 Dec 2002, 10:03 | | Aqua Online Holdings Limited - Announcement |
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Aqua Online Holdings Limited - Announcement
Release Date: 06/12/2002 07:37:28 Code(s): AQU
Aqua Online Holdings Limited - Announcement
AQUA ONLINE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1971/005628/06)
Share code: AQU ISIN: ZAE000024360
("AOH")
Announcement regarding
- the disposal by AOH of its Gaming subsidiaries and Enablement business;
- the distribution to shareholders of AOH of the proceeds of the disposals in
anticipation of winding-up; and
- termination of listing
1. INTRODUCTION
Further to the cautionary announcements published by AOH on 29 August 2002, 3
October 2002 and 25 November 2002, shareholders of AOH are advised that
agreement has been reached, subject to the conditions precedent in paragraph 4
below, whereby:
- Aqua Online (Proprietary) Limited ("Aqua Online"), a wholly owned subsidiary
of AOH, will dispose of its Enablement business to the original owners of the
Enablement business and existing management (collectively the "Enablement
purchasers");
- AOH will, in separate transactions, dispose of each of its Gaming subsidiaries
being all of the issued share capital in and claims against the following wholly
owned subsidiaries (the "Gaming subsidiaries") to the original owners of the
Gaming business (the "Gaming purchasers") and Cyber Finance Investments Limited:
- Aqua Online,
- Interactive Online Limited, and
- Aqua Online (Int.) Limited, (collectively, "the disposals").
On the implementation of the disposals AOH will make a distribution to
shareholders of at least 14 cents per share in anticipation of winding-up (the
"initial distribution"), whereafter AOH will apply to the JSE Securities
Exchange South Africa ("JSE") for the termination of its listing.
2. THE DISPOSALS
The effective date of the disposals is 1 November 2002 (the "effective date").
The Enablement purchasers and the Gaming purchasers collectively own 176 061 000
AOH shares (the "vendor shares") and will utilise their initial distribution
proceeds to settle their payment obligations in terms of the disposals.
The total net disposal consideration is $1 375 102 plus the aggregate initial
distribution received in respect of the vendor shares. The total disposal
consideration is approximately R37,3 million, after converting the dollar
consideration at R9,2, comprising the disposal of:
- the Enablement business for approximately R14,2 million, a premium of R4,7
million to the net tangible asset value of the Enablement business at the
effective date; and
- the Gaming subsidiaries for an aggregate consideration of approximately R23,1
million, a premium of R9,5 million to the net tangible asset value of the Gaming
subsidiaries at the effective date.
3. RATIONALE FOR THE DISPOSALS
The Gaming business provides back-office processing services to online casino
operators and distributes internet casino software. The Enablement business
consults on and develops e-business solutions.
Unforeseen and fundamental developments in the online gaming industry over the
last few months have severely weakened prospects for this market going forward.
Worldwide consulting and e-service opportunities have been depressed for some
time.
The AOH board of directors (the "board") does not expect short to medium term
conditions to improve materially. AOH has continued to make operational losses
subsequent to the 2002 financial year-end primarily as a result of lower
revenues in the Gaming business.
The board reviewed strategic alternatives to maximize and protect shareholder
value. In light of poor medium to long term prospects and the decline in
investor appetite for small capitalisation shares particularly in the
information technology industry, the board concluded that there is no benefit to
a continued listing.
Accordingly the board believes that the disposals and consequent distributions
afford shareholders an opportunity to realise their investment in AOH at a
significant premium to recent market prices and net tangible asset value.
4. CONDITIONS PRECEDENT
Implementation of the disposals and the initial distribution are subject to the
fulfilment of the following conditions precedent:
- each of the disposals becoming unconditional in accordance with its terms;
- the passing by the AOH shareholders, other than related parties, in general
meeting of an ordinary resolution approving the terms and conditions of the
disposals in accordance with the provisions of section 228 of the Companies Act,
1973 (Act 61 of 1973), as amended;
- the approval of the necessary regulatory authorities, including the JSE, the
Securities Regulation Panel ("SRP"), the South African Reserve Bank and the
Competition Commission; and
- the passing by the shareholders of AOH of the resolutions necessary to effect
payment of the initial distribution, the delisting and voluntary winding up.
5. THE DELISTING, THE FINAL DISTRIBUTION AND VOLUNTARY WINDING UP
Subject to the successful conclusion of the conditions precedent in paragraph 4
above, AOH will apply to the JSE for the termination of its listing and will be
voluntarily wound up thereafter. Subsequent to the winding-up, a final
liquidation distribution, which is not expected to be material, may be payable.
6. RELATED PARTIES
The Enablement purchasers and the Gaming purchasers are related parties in terms
of the JSE Listings Requirements.
7. FINANCIAL EFFECTS
The table below sets out the financial effects of the disposals and the
voluntary winding up on the shareholders of AOH, assuming a distribution to
shareholders of 14 cents per share:
Pro forma
Pro forma after the
after the initial
Before disposals distribution
(cents) (cents) % change (cents) % change
Market value (1) 8,00 14,00 75,0 14,00 75,0
Market value (2) 9,50 14,00 47,4 14,00 47,4
(Loss) earnings
per share (7,73) 0,88 - 1,08 -
Headline (loss)
earnings per
share (4,20) 0,88 - 1,08 -
Net asset value
per share 14,24 13,60 (4,5) 14,00 (1,7)
Net tangible
asset value per
share 11,01 13,60 23,5 14,00 27,2
The calculation of the financial effects was based on the following:
- The "Before" column is based on the audited results of AOH for the financial
year ended 30 June 2002.
- Market value (1) in the "Before" column is the closing market price per AOH
share on the JSE on Wednesday, 28 August 2002, being the day immediately
preceding the publication of the first cautionary announcement.
- Market value (2) in the "Before" column is the weighted average trading price
for September, October and November 2002.
- The "Pro forma after the disposals" column assumes that the disposals were
effective from 1 July 2001. For purposes of calculating the earnings per share
and the headline earnings per share, the free cash in the business and the net
cash proceeds of the disposals are treated as having been invested at a notional
after tax rate of 7,7% from 1 July 2001 to 30 June 2002.
The "Pro forma after the disposals" column illustrates the net asset value and
the net tangible asset value of AOH having assumed that the disposals were
implemented on 30 June 2002.
- In the "Pro forma after the initial distribution" column, earnings per share
and headline earnings per share represent interest had the initial distribution
been invested at a notional after tax rate if 7,7% from 1 July 2001 to 30June
2002. The net asset value and net tangible asset value are based on an initial
distribution of 14 cents per share.
- For purposes of calculating the effect on the "Pro forma after the disposals"
column, earnings and headline earnings per share, net asset value, and net
tangible asset value per share, a total of 230 779 000 AOH ordinary shares were
used.
8. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
The board appointed a sub-committee comprising Mr Troels Henriksen, who is an
executive director of AOH but not an AOH shareholder, and Ms Dionne Ellerine,
who is a non-executive director of AOH and an AOH shareholder, to consider,
assess, negotiate and carry out any obligations that may be required of them on
behalf of AOH in regard to implementing the disposals. Neither is a related
party in respect of the disposals.
KPMG Services (Pty) Limited, acting as independent adviser to the board, has
considered the terms and conditions of the disposals and is of the opinion that
they are fair and reasonable to the shareholders of AOH and has advised the
board accordingly.
Shareholders holding approximately 40% of the issued shares eligible to be voted
on, have irrevocably undertaken to vote in favour of all resolutions to be
passed in respect of the disposals, the distributions, the termination of
listing and the voluntary winding up of AOH.
9. CONFIRMATION OF FINANCIAL RESOURCES
The SRP has been provided with the appropriate confirmation that the purchasers
have sufficient financial resources available to them to settle their
obligations.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement is hereby withdrawn.
11. DOCUMENTATION
A circular containing further information will be posted to the shareholders of
AOH in January 2003.
Rosebank 5 December 2002
Corporate advisor and transactional sponsor to AOH
DELOITTE&TOUCHE
Legal advisors
DELOITTE&TOUCHE
Reporting Accountants
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors
(Registration number 1994/001166/21)
Independent Advisor
KMPG
Date: 06/12/2002 07:37:20 AM Produced by the JSE SENS Department
