| Fri 30 May 2003, 18:02 | | Announcement To The Shareholders Of Dna Supply Cha |
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Announcement To The Shareholders Of Dna Supply Chain Investments Limited (dna)
Release Date: 30/05/2003 17:13:47 Code(s): JSE
ANNOUNCEMENT TO THE SHAREHOLDERS OF DNA SUPPLY CHAIN INVESTMENTS LIMITED ("DNA")
OF AN OFFER BY SAGE WISE 29 (PTY) LIMITED ("SW 29"), A SUBSIDIARY OF METTLE, TO
PROVIDE A TERM LOAN FACILITY OF UP TO R 160 MILLION TO DNA, WHICH IF ACCEPTED
WILL RESULT IN:
* An immediate interim funding facility of R25 million being made available to
DNA;
* A repurchase offer to DNA shareholders at 18 cents per share;
* Repayment of a significant portion of the current banking facilities offered
to DNA by its bankers;
* The delisting of DNA from the JSE Securities Exchange South Africa ("JSE");
and
* The subscription by SW 29 of such number of ordinary shares in DNA
constituting 51% of the shares in DNA after the repurchase offer.
INTRODUCTION
Mettle is authorised to announce that SW 29 has delivered an offer to the
Chairman of the board of directors of DNA to provide DNA with a term loan of up
to R 160 million on certain terms and conditions ("the Loan Offer"). If the Loan
Offer is accepted it will result in:
* an immediate interim funding facility of R25 million being made available to
DNA ;
* a repurchase offer to DNA shareholders at 18 cents per share;
* repayment of a significant portion of the current banking facilities offered
to DNA by its bankers;
* the delisting of DNA from the JSE; and
* the subscription by SW 29 of such number of ordinary shares in DNA
constituting 51% of the shares in DNA after the repurchase offer.
Mettle has undertaken to underwrite the obligations which SW 29 has in respect
of the Loan Offer.
2. BACKGROUND TO THE LOAN OFFER
The shareholders of DNA are referred to the announcement published on 5 March
2003 and the further announcement published on 30 April 2003 in which it was
announced that Super Group Limited ("Super Group") has made an offer to purchase
DNA"s core business operations including Micor, Automotive, Sherwood,
Streamworks and Jumpoint and that Super Group has made certain funding
facilities available to DNA while negotiations between the parties continue.
It appears from the published announcements, that nature of the Super Group
offer is such that DNA shareholders will be precluded from choosing whether to
sell their DNA shares at a given value or remain as shareholders in an unlisted
DNA. The SW 29 Loan Offer, on the other hand, gives the flexibility to
shareholders to accept 18 cents per DNA share now or to remain invested in DNA,
with the potential of realising additional value in the future.
The repurchase offer of 18 cents per DNA share is a substantial premium over the
tangible net asset of 8,1 cents per share based on the published unaudited
results of DNA for the 6 months ended 31 December 2002.
3. THE DETAILS OF THE LOAN OFFER
3.1 The use of the Loan
In terms of the Loan Offer the loan must be utilised by DNA as follows, in the
order of priority as set out:
* Firstly, to make an offer to all DNA shareholders to repurchase their ordinary
shares in DNA at 18 cents per DNA share. The repurchase offer will be subject to
acceptance by DNA shareholders, in respect of shares comprising not less than
45% of the total issued share capital in DNA. If acceptances are received in
respect of more than 60% of the DNA shares, each acceptance of the offer will be
prorated in such a way that the maximum take up of the repurchase offer will not
exceed 60%;
* Secondly, to repay the amount owing to Super Group by DNA which, based on
statements in the press, is estimated at approximately R 22,5 million;
* Thirdly, to pay SW 29 certain transaction costs in terms of the loan agreement
of between R 2 million to R 3,2 million; and
* Finally, to use the remaining balance (estimated to be a minimum of R 60
million) to discharge so much of the amounts owing to DNA"s bankers in respect
of current banking facilities as possible.
3.2 The terms of the loan
The loan will bear interest at the prime overdraft rate of Nedbank Limited. The
interest on the loan will be paid quarterly in arrear, on 31 March, 30 June, 30
September and 31 December each year. The loan capital is repayable on the third
anniversary of the date on which the funds are advanced to DNA unless
alternative funding is raised on better terms.
3.3 Interim Loan Facility
SW 29 will make an Interim Loan Facility, of up to R 25 million, available to
DNA on certain terms and conditions, until the conditions for the Loan Offer
have been fulfilled. The Interim Loan Facility will be firstly used to settle
Super Group loan and thereafter for working capital requirements for DNA.
3.4 Security given for the Loan
As security for the loan SW 29 requires certain DNA subsidiaries to bind
themselves as surety for and co principal debtor with DNA in favour of SW 29 to
secure its rights against DNA and, to cede as security to SW 29 the book debts
owed to them.
3.5 Delisting of DNA from JSE
As part of the Loan Offer the shareholders of DNA will be required to approve
the delisting of DNA from the JSE ("the delisting").
3.6 Change of Board of directors of DNA
After receipt of shareholder approval for the share repurchase offer and the
delisting, the board of directors of DNA will be replaced with a board of
directors appointed by SW 29.
3.7 Change of control of DNA by subscription of shares by SW 29
Following acceptance and implementation of the Loan Offer, DNA will be obliged
to issue and allot to SW 29, against payment of the agreed subscription price,
so many ordinary DNA shares that would, after the implementation of the share
repurchase offer, constitute 51% of the total issued share capital of DNA ("the
share subscription"). The subscription price would be the par value of R0,0001
per ordinary DNA share.
3.8 Put Option to remaining DNA shareholders
The shareholders that remain in the unlisted DNA will be given a right to put
their DNA shares to DNA at 14 cents per share (less any interim dividend
distributed) on 30 September 2004.
4. RATIONALE FOR OFFER AND FUTURE STRATEGY FOR DNA
The rationale for the Loan Offer by SW 29 is to provide DNA shareholders with an
alternative to the current offer under discussion, which should realise better
value for shareholders.
Following the delisting of DNA it is intended that certain of the subsidiaries
of DNA will be disposed of over an 18 month period in an orderly and planned
fashion, either for cash or a combination of cash and debt in the target
subsidiary. After the various subsidiaries have been disposed of, a decision
will be made whether to continue operating the remaining businesses profitably
or to wind up DNA in an orderly fashion and to distribute the proceeds to
shareholders.
5. ACCEPTANCE OF THE OFFER
The loan Offer shall remain open for acceptance by DNA until 12h00 on Tuesday, 3
June 2003.
6. SHARES HELD IN DNA
Neither SW 29, Mettle or any subsidiary of Mettle hold any shares in DNA.
7. CONDITIONS PRECEDENT GOVERNING THE LOAN OFFER
The implementation of the Loan Offer is subject in its entirety to the
fulfillment of various conditions precedent, including the following:
* the approval by the DNA shareholders in a general meeting of the repurchase
offer, the waiving of a mandatory offer to DNA shareholders, the delisting of
DNA and, if necessary the allotment and issue of shares to SW 29;
* the acceptance of the repurchase offer by DNA shareholders in respect of not
less than 45% of the total issued share capital of DNA;
* the obtaining of all necessary regulatory approvals from the JSE, Securities
Regulation Panel and Competition Commission to the extend required;
* the execution of security documents by DNA and certain of its subsidiaries in
favour of SW 29; and
* a rating agency appointed by SW 29 confirming in writing that the loan against
security of the ceded debtors" books would sustain an AA credit rating.
8. RESPONSE BY DNA BOARD TO LOAN OFFER
Representitives of SW 29 have met with representatives of DNA to discuss the
details of the Loan Offer.
It is the expectation of SW 29 that the board of directors of DNA will make an
announcement to the shareholders of DNA in due course, detailing the response of
the board to the SW 29 Loan Offer, as well as the further actions required by
the shareholders of DNA.
9. FURTHER ANNOUNCEMENT
A further announcement detailing the acceptance or decline of the Loan Offer by
DNA will be announced on SENS and be published in the press in due course.
Johannesburg
30 May 2003
Corporate Advisor Sponsor
-Mettle Limited -Exchange Sponsors-
Attorneys
-Prinsloo, Tindle & Andropoulos Inc-
