| Wed 9 Apr 2003, 14:13 | | THE FORMATION BY AVASA HOLDINGS OF A CONSORTIUM TO |
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AVASA - Announce Consortium to invest in Sage
AVASA HOLDINGS LIMITED
(Formerly Dectronic Limited)
Incorporated in the Republic of South Africa
(Registration number 1998/013637/06)
Share Code: AVA ISIN: ZAE000040622
("AVASA Holdings or the Company")
ANNOUNCEMENT REGARDING
THE PARTICIPATION BY AVASA HOLDINGS IN THE CONSORTIUM
1. Introduction
AVASA Holdings has formed a R123 million consortium of investors consisting of
several well-known South African investors ("the AVASA Consortium"), for the
purpose of participating in the R350 million capital raising announced today on
SENS by Sage Group Limited ("Sage"). This capital raising will take the form of
a specific issue of ordinary Sage shares, ranking parri passu with the current
issued ordinary shares of Sage, for cash, at R1,65 to the AVASA Consortium in
order to raise R115 million ("the specific issue") and a renounceable rights
offer to all Sage shareholders, also at R1,65 per share, to raise an additional
R235 million ("the rights offer"). AVASA Holdings is investing R10 million,
acting as principal, as part of the AVASA Consortium.
2. The investments
The AVASA Consortium will, pursuant to the specific issue, subscribe for new
ordinary Sage shares at a price of R1,65 per share at a total cost of R115
million and will underwrite a further R8 million of the rights offer. AVASA
Holdings will co-ordinate and manage this investment on behalf of the AVASA
Consortium, and will receive an estimated net capital raising fee after costs of
R1,1 million from Sage and a carried interest participation in any gains
realised by the other members of the AVASA Consortium.
As part of the AVASA Consortium, AVASA Holdings will subscribe for 6,060,060 new
ordinary Sage shares at a price of R1,65 per share for a total cost of R10
million ("Investment in Sage"), which will be financed from AVASA Holdings"
current cash resources.
3. Background to Sage and rationale for investments
Sage is a South African life assurance and investment organisation controlling
and managing assets of approximately R13,1 billion. Sage is listed on the JSE
Securities Exchange South Africa ("the JSE") and currently has a market
capitalisation of R214 million. Sage is one of South Africa"s mid tier assurance
companies, which focuses predominantly on the upper income market.
This strategic investment in Sage provides AVASA Holdings with an opportunity to
realise shareholder value by participating in the recapitalisation and involving
itself in the strategic direction of Sage with the aim of facilitating a re-
rating by the market.
4. Financial effects
The financial effects of the Investment in Sage and the capital raising fee on
the AVASA Holdings" Pro forma financial results for the twelve months ended 31
August 2002 are set out in the table below.
Audited Pro After Change
results forma the
as at results Investme
31 as at nt in
August 31 Sage and
20021 August the
2002(2) capital (%)
(cents) raising
(cents) fee
(cents)
Earnings per 3,20 0,71 0,73 (3) 1,95
ordinary share
Headline (0,35) 0.16 0,18 (3) 8,47
(Loss)/Earning
s per ordinary
share
Net asset (0,24) 3,11 3,27 (4) 4,90
value per
ordinary share
Tangible net (0,24) 3,11 3,27 (4) 4,90
asset value
per ordinary
share
Number of 78 020 505 000 505 000 -
ordinary
shares used to
calculate
tangible net
asset value
per share
(`000)
The table has been prepared on the following basis:
1. Extracted from the published audited results of AVASA Holdings for the
year ended 31 August 2002.
2. The "Pro forma" results take into account the issue of 275 million shares
in AVASA Holdings on 14 October 2002 and the issue of a further 150 million
shares in AVASA Holdings on 15 January 2003
3. The "After the Investment in Sage and capital raising fee" column takes
into account the investment of R10 million into Sage and the net capital raising
fee of R1, 1 million to be received and adjusts the Earnings and Headline
earnings to take into account the loss of interest on this amount for 12 months
at an after tax interest rate of 7% for the period ended 31 August 2002.
4. The "After the Investment in Sage and capital raising fee" column takes
into account the investment of R10 million into Sage and adjusts the Pro forma
Tangible and Net asset value as at 31 August 2002 for the effects of the
Investment in Sage and capital raising fee.
5. The potential effects on AVASA Holdings of the carried interest that it
has received from the AVASA Consortium have not been included as these are
dependent on future events and therefore difficult to forecast.
5. Conditions Precedent
This investment into Sage is conditional upon Sage obtaining the following
approvals, inter alia:
* the approval of the JSE;
* the requisite approvals for the increase in authorised share capital of
Sage, the rights after and the specific issue being granted by Sage shareholders
at a general meeting;
* the JSE granting a listing for both the Sage renounceable (nil paid)
letters of allocation and for the Sage ordinary shares to be issued pursuant to
the rights offer and the specific issue;
* the registration by the Registrar of Companies of all requisite documents
and special resolutions;
* the requisite regulatory approvals having been granted; and
* the underwriting agreement entered into between Sage, the Consortium, FSL
and ABSA becoming unconditional in all respects.
6. Further announcements
AVASA Holdings will make an announcement to advise its shareholders once the
conditions precedent have been fulfilled.
Hyde Park
9 April 2003
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