| Wed 9 Apr 2003, 17:12 | | Kolosus Holdings Limited - Updated announcement, s |
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Kolosus Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1978/000181/06)
Share code: KOS ISIN: ZAE000008504
("Kolosus" or "the Company")
Updated announcement, settlement agreement and renewal of cautionary
Shareholders are referred to the announcements dated 29 January 2003, 7 February
2003 and 13 March 2003 relating to the Daun & Cie. Aktiengesellenschaft ("Daun")
acquisition ("Daun acquisition") and the ongoing Seton Company USA matter
("Seton claim").
Daun acquisition
The condition precedent for the consent of banks in regard to the acquisition of
the Kolosus shares by Daun has now been fulfilled. However, in compliance with
the Competition Act 89 of 1998, it is also a condition precedent that the
approval of the Competition Authority is obtained. The application for the
Competition Authority approval has been lodged and is pending. The date for the
fulfilment of this condition has been extended to the date upon which the
Competition Authority makes its final ruling.
Seton claim
Daun and Kolosus have agreed with Seton a full and final settlement in respect
of all claims initiated by Seton and the Liquidator of Silveroak Industries
Limited ("Silveroak") (in liquidation) ("the Liquidator").
The settlement comprises a total settlement value of US$ 6 million and will be
settled as follows:
Kolosus will pay to Seton an amount of US$5 million in full and final settlement
of the litigation. In terms of the settlement Daun binds itself as surety and is
co-principal debtor with Kolosus for the payment by Kolosus of the US$5 million.
An interim bridging facility has been agreed, upon with Daun, to pay the
settlement amount.
The transfer of 138 million Kolosus shares, acquired via the Daun acquisition,
from Daun to Seton for no consideration. Further, Daun grants to Seton a put
option for the aforesaid shares, which Seton may exercise at any time, for US$1
million. Seton will be a passive shareholder in Kolosus and will follow Daun"s
vote regarding Kolosus" affairs.
In terms of these arrangements Seton will withdraw its claim in terms of the
Insolvency Act against Silveroak (in liquidation), as well as the action pending
against Kolosus and all claims that it may have against Kolosus and its
subsidiaries. Seton will procure that the Liquidator abandons the judgment
against Kolosus granted by the Transvaal Provincial Division of the High Court
dated 7 February 2003.
Daun and Kolosus will procure the withdrawal of the action instituted by
Standard Bank of South Africa Limited against the liquidator of Silveroak and
all claims, actions or litigation against Seton pending or otherwise on the part
of the banks providing credit facilities to Kolosus. Kolosus will also withdraw
its claim against Silveroak (in liquidation) and further indemnifies the
Liquidator should any of the above institutions institute legal proceedings
against Silveroak.
This agreement is subject inter alia to the following conditions precedent:
The Competition Authority"s approval of the Daun acquisition;
The Master of the High Court"s approval of the withdrawal of claims against
Silveroak, if applicable; and
The Master of the High Court"s approval of the abandonment of the judgment
granted in favour of the Liquidator on 7 February 2003.
Daun acquires banker"s facilities
Daun has entered into an agreement with Absa Corporate and Merchant Bank a
division of Absa Bank Limited, First National Bank Corporate a division of First
Rand Bank Limited, Nedbank a division of Nedcor Bank Limited and Standard
Corporate and Merchant Bank a division of Standard Bank Limited ("the
Consortium") to acquire all the Consortium"s rights and obligations in and to
the direct current facilities afforded to Kolosus, including all the relevant
securities granted to the Consortium under the direct current facilities ("the
facilities acquisition"). The facilities acquisition excludes all the
facilities relating to letters of credit, foreign exchange contracts, guarantees
("the soft facilities"), and medium and long term financial agreements.
The effective date of the facilities acquisition is 11 April 2003. In the
interim the direct facilities remain in place until 11 April 2003, the soft
facilities remain in place until 30 July 2003 and the medium and long term
facilities remain in place until maturity.
Capital Restructuring
The funding of this settlement together with other capital requirements of
Kolosus will require the restructuring of Kolosus" capital structure. The
directors are contemplating a possible rights issue once the Daun acquisition
and the settlement become unconditional.
Prospects Arising From The Above
The effective change of bankers from the Consortium to Daun, the prospective
future majority shareholder, is seen in a positive light. Furthermore, the
withdrawal of the Seton litigation removes the most significant threat to the
ongoing viability of the Group, and allows management to focus its attention on
the commercial aspects of the business. These developments will normalise the
Group"s trading relationships with customers and suppliers, and create positive
results in the medium and long term.
Cautionary update
Shareholders are therefore advised to continue exercising caution when dealing
in the Company"s securities until a further announcement is made, and in
particular until all the conditions precedent referred to herein have been
fulfilled.
9 April 2003
Pretoria
Corporate Advisor and Sponsor
PriceWaterhouseCoopers Corporate Finance (Pty) Ltd
