| Fri 13 Dec 2002, 16:49 | | Tigon Limited - Announcement |
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TIGON LIMITED - ANNOUNCEMENT
(Incorporated in the Republic of South Africa)
(Registration number 1995/001651/06)
Share Code: TGN ISIN: ZAE 000022240
("Tigon" or "the Company")
ANNOUNCEMENT REGARDING THE DISPOSAL BY TIGON OF ITS INTERESTS IN DUTY FREE
WHOLESALERS (PTY) LTD AND
ASIA PACIFIC SOURCING LTD
INTRODUCTION AND SALIENT FEATURES OF THE DISPOSAL
Tigon has reached agreement for the disposal, with effect from 1 February 2002,
of its shares in and loan account claims against Duty Free Wholesalers (Pty) Ltd
("DFW"), an investment holding company with investments in financial services
operations including Synergy Management (Pty) Ltd, and its shares in Asia
Pacific Sourcing Limited ("APS"), a product sourcing and investment holding
company with investments in financial services operations, to Queenwick Group
Limited ("Queenwick"), an unrelated investment company based in Hong Kong, for
R2 000 payable in cash ("the disposal"). The disposal, which excludes loan
accounts with group companies, (other than DFW), of R946 million and 50% of the
net proceeds which are anticipated to result from the litigation instituted by
Tigon in the EuroPoint Communications SA (Pty) Ltd ("Europoint")/Varejes/Strike
and Saambou/Saampro matters ("collectively the matters), will leave Tigon almost
completely debt-free with net assets worth approximately double the Company`s
current market capitalisation.
After the disposal Tigon`s assets will essentially comprise the claim of R946
million against its former subsidiaries acquired by Queenwick, and 50% of the
net proceeds realised in respect of the matters,
The disposal is subject to the fulfillment of conditions precedent referred to
in paragraph 3 below.
RATIONALE FOR THE DISPOSAL
Since February 2001, the Tigon group has been involved in protracted and bitter
litigation with the former owners and vendors of EuroPoint, namely GH Varejes
and TM Strike ("Varejes and Strike") on the basis of fraudulent
misrepresentations and breaches of warranties made by them in respect of the
sale of EuroPoint. Varejes and Strike sold the majority of their shares and, if
Tigon succeeds in its action (and is confident that it will), Varejes and
Strike will have to buy back some 21 million Tigon shares in the open market
which they had already sold. They accordingly in the view of the board of
directors of the Company ("the Board"), have a material interest in the value of
the Tigon share price.
This has resulted in the instigation of an intense negative media campaign and
other questionable actions against Tigon and the Board, which has harmed the
Company and its share price. In addition, the unrelenting demands on executive
time in dealing with these issues and the negativity linked to the
disinformation campaign have been hugely destructive of value in Tigon`s
underlying businesses.
It is essential that further value in Tigon is not lost and, whilst the Board
believes that considerably greater value resides within the group, the Board is
of the opinion that, in order to preserve value, the businesses held by it
should be disposed of forthwith. This will enable Tigon to consolidate its
position before even further value is lost. The disposal will also enable
management to focus on finalising the litigation and related issues free of
operational demands.
CONDITIONS PRECEDENT
The disposal is conditional inter alia upon
the completion of a due diligence to the satisfaction of Queenwick;
the conclusion of consultancy agreements with G Porritt and S Bennett;
the approval of the disposal by Tigon shareholders in general meeting in terms
of section 228 of the Companies Act (Act 61 of 1973), as amended; and
approvals, to the extent required, from other regulatory authorities.
The conditions precedent must be fulfilled by no later than 31 January 2003.
SHAREHOLDER SUPPORT
Shareholders in Tigon holding approximately 78,8% of the current issued share
capital of the Company have given their binding and irrevocable undertaking to
vote in favour of the disposal.
FINANCIAL EFFECTS OF THE DISPOSAL
Set out below for illustrative purposes only are the financial effects of the
disposal:
Before Pro-forma Percentage
(cents)1 After change
(cents)
Headline earnings 8.2 (0.0)4 (100%)
(loss) per share
Earnings (loss) per 8.2 (31.8)4 (488.6%)
share
Net tangible asset
value per share 100.4 84.12 (16.2%)
Net asset value per 115.9 84.1*2 (27.4%)
share
* excluding 50% of the litigation proceeds referred to above3
Notes:
The "Before" column has been extracted from the unaudited interim financial
statements in respect of the six months ended 31 July 2002, calculated using
the weighted average (and closing) number of shares in issue throughout the six-
month period, being 1 124 547 670 shares.
The "Pro-forma After" Net asset value per share column assumes that the disposal
took place on 31 July 2002.
No value has been allocated for the anticipated litigation proceeds as these
cannot be quantified, but are anticipated to amount to an additional 20 cents
per share.
The calculation of pro forma headline earnings per share is based on the
assumption that the disposal took place on 1 February 2002 and accordingly the
entire earnings in respect of the 6 months ended 31 July 2002 have been
excluded.
The loss on the disposal of R357 million (equating to 31.8 cents per share) has
been calculated by deducting the net assets disposed of at 31 July 2002, (which
includes the profit made in respect of the 6 month period to 31 July 2002), of
R1.303 billion and the value of the loan accounts retained of R946 million.The
result would be the same on a relative basis if it was assumed to have taken
place on 1 February 2002.
6. CIRCULAR TO SHAREHOLDERS
A circular to shareholders, containing full details of the disposal and
incorporating a notice convening a general meeting of Tigon shareholders, is
being prepared in compliance with the requirements of the JSE Securities
Exchange South Africa and the Securities Regulation Panel and will be dispatched
to Tigon shareholders, within 28 days of this announcement.
By order of the Board
GP Porritt SH Bennett TVM Matooane LK Taylor
Pietermaritzburg
13 December 2002
Registered office: Transactional Sponsor: Transfer secretaries:
LPC Manhattan Ultra Registrars (Pty) Ltd
218 Boom Street,
3 West Street,
11 Diagonal Street,
Pietermaritzburg, 3201
(PO Box 1129,
Pietermaritzburg, 3200)
Date: 13/12/2002 03:16:03 PM Produced by the JSE SENS Department
