| Thu 5 Jun 2003, 9:42 | | DNA - Announcement |
|
DNA Supply Chain Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004875/06)
Share code: DNA ISIN: ZAE000022794
("DNA")
Announcement regarding:
- a trading update;
- a revised offer by Super Group Trading (Proprietary) Limited ("Super Group"),
- a wholly owned subsidiary of Super Group Limited, to purchase the core
business operations of DNA ("the Super Group Offer");
- a revised offer by Sage Wise 29 (Proprietary) Limited ("Sage Wise"), a
subsidiary of Mettle Limited, to provide a term loan to DNA which would, if
accepted, result, inter alia, in Sage Wise, acquiring a controlling interest in
DNA ("the Mettle Offer");
- recommendations by the Board of Directors of DNA ("the DNA Board") in respect
of the Super Group Offer and the Mettle Offer; and
- a further announcement and cautionary.
Trading Update
Further to the announcements on 5 March 2003 and 30 April 2003, DNA has
continued to experience poor trading in certain of its business operations,
which has been exacerbated by further foreign exchange losses. Furthermore,
increased working capital needs have resulted in severe cash flow constraints on
DNA.
The Super Group Offer
Further to the announcement made on 5 March 2003 and following a curtailed due
diligence investigation of DNA"s core businesses by Super Group and further
contractual negotiations, Super Group has revised its offer to DNA. The revised
offer contemplates the following salient terms and conditions:
- Super Group will purchase the core operations of DNA conducted through the
subsidiaries known as Micor, Sherwood (including Mining and Beverages), Auto,
Streamworks and Jumpoint;
- Super Group will procure that one of its subsidiaries acquires the operations
("the international operations") conducted through the auspices of DNA"s
subsidiaries outside the Republic of South Africa;
- the local and international operations of DNA ("the subject businesses") will
be acquired on a going concern basis with effect from 1 April 2003;
- the purchase consideration stipulated in the Super Group Offer, which will be
paid in cash, is R220 000 000 ("the purchase consideration");
- the purchase consideration will be applied as follows:
- DNA will repay to Emerald Insurance Company Limited the working capital loan
previously procured by Super Group, the capital amount of which loan (together
with raising fees) is currently outstanding in the amount of R21 410 000;
- DNA will ensure the settlement of intra-group loans owing to the subject
businesses, limited to an amount currently estimated as R66 000 000;
- Super Group will repay an amount of R60 000 000 in partial reduction of DNA"s
bank overdrafts and will assume liability to repay the outstanding overdraft
balance of R67 500 000;
- Super Group will retain an amount of R8 000 000 ("the management bonuses") and
pay out of the management bonuses such amounts, over a three year period, to
such members of the senior management, as Super Group may determine; and
- the balance will be placed on "escrow", with approved escrow agents, to settle
the anticipated costs of winding-up DNA ("the wind-up costs"). It is currently
estimated that the wind-up costs would be in the region of R40 000 000 and
accordingly an amount of R24 590 000 less STC should ultimately be capable of
distribution to shareholders.
The offer is subject to the following conditions precedent:
- a cession of book debts as covering security in favour of Super Group as
security for all new loans as may be advanced to DNA to meet its on-going
requirements as more fully explained below;
- irrevocable undertakings being given by shareholders beneficially holding not
less than 51% of the total issued share capital of DNA to vote in favour of the
Super Group Offer;
- approval by Super Group of the agreement reached with certain key management
in Jumpoint in respect of certain claims arising out of the original sale of
Jumpoint to DNA;
- the relevant shareholder approvals within the DNA Group approving the sale at
a general meeting of shareholders; and
- approval being obtained, to the extent necessary, of the relevant regulatory
authorities, including the competition authorities;
- DNA is not required to give Super Group any warranties other than warranties
relating to the compliance by the members of the DNA group with their statutory
obligations and in respect of the free and unencumbered ownership by the
relevant members of the DNA group of the subject businesses.
If the sale is approved by shareholders and all other conditions precedent
fulfilled, then it is proposed that DNA be de-listed, the remaining non-core
operations wound-up and DNA voluntarily liquidated. From information provided by
management of DNA in respect of the wind-up costs, it is anticipated that
shareholders will receive a dividend upon the final winding up of the business
in the order of 3,5 cents per share. This amount would be adjusted accordingly
in the event of the wind-up costs being greater or lesser than that amount of
the wind-up costs currently anticipated by management as aforesaid.
Super Group has agreed, subject to the security referred to above, to procure
and make available to DNA adequate working capital loan facilities to meet the
working capital needs of the subject businesses until such time as the sale
agreement has been unconditionally completed. This working capital loan, to the
extent utilised by DNA to fund the subject businesses, will not be applied in
reduction of the purchase consideration.
Super Group will provide the Securities Regulation Panel with appropriate
confirmation that it has sufficient financial resources to settle the purchase
consideration.
As previously announced, EY Corporate Finance (Proprietary) Limited have been
appointed as independent advisers to the Board of Directors of DNA and will, in
due course, issue an opinion as to whether the conditions of the Super Group
Offer are fair and reasonable to the shareholders of DNA.
The Mettle Offer
Following the offer made by Mettle Limited as announced on SENS on Friday, 30
May 2003, Mettle submitted a revised offer to the Board of DNA on 3 June 2003.
After carefully considering the Mettle Offer, the Board of DNA has determined
that the Mettle Offer is not capable of implementation and that the financial
risks associated with implementing the Mettle Offer are unacceptable.
The DNA Board"s Recommendation
In view of DNA"s cash flow constraints, the DNA Board has overwhelmingly
determined that the continued financial integrity of DNA needs to be urgently
secured, especially given that it may take several months before all regulatory
approvals may be obtained. After taking into account the best interests of DNA
and all its stakeholders, the DNA Board has accepted the Super Group Offer,
subject to shareholders" approval, and recommends to DNA shareholders that they
approve the Super Group Offer.
Further Announcement and Further Cautionary
Once a formal written agreement has been concluded with Super Group in respect
of the sale of the subject businesses, a full announcement will be made
containing full terms of the Super Group Offer and the financial implications
thereof.
Shareholders of DNA are accordingly advised to continue to exercise caution
while dealing in DNA"s shares.
Woodmead
5 June 2003
Corporate adviser
Chartwell Capital Group
Attorneys
Brink Cohen Le Roux Roodt
Sponsor
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Date: 05/06/2003 09:24:24 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
