| Fri 1 Aug 2003, 8:41 | | Dna - Announcement |
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Dna - Announcement
Release Date: 01/08/2003 07:05:03 Code(s): DNA
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" or "the Company")
ANNOUNCEMENT REGARDING THE SALE BY DNA FOR CASH OF ITS CORE BUSINESS OPERATIONS
TO SUPER GROUP TRADING (PROPRIETARY) LIMITED ("SGT"), A WHOLLY OWNED SUBSIDIARY
OF SUPER GROUP LIMITED ("THE SALE")
1. Introduction
Further to the announcement dated 5 June 2003, in which DNA shareholders were
informed of the revised offer by SGT for the core business operations of DNA,
shareholders are advised that an agreement has now been concluded between DNA
and SGT in terms of which, subject to the fulfillment of the conditions
precedent set out in paragraph 4 below ("the Sale Conditions"), DNA will dispose
of its core businesses as described below to SGT, in accordance with section 228
of the Companies Act, 1973 (Act 61 of 1973), as amended
The directors of DNA intend to propose that, subsequent to the implementation
of the Sale, DNA be delisted, the remaining operations wound-up and DNA
voluntarily liquidated.
2. Rationale for the Sale and the liquidation of DNA
DNA has, subsequent to the release of its interim results for the 6 months
ended 31 December 2002, continued to suffer foreign exchange and trading losses
in subsidiaries which do not form part of the Sale Businesses. This, coupled
with the ongoing working capital requirements of the core businesses, has
resulted in severe cash flow constraints. Accordingly, the board of DNA had
decided to dispose of the core businesses to ensure the ongoing viability of
such businesses.
Subsequent to the Sale, the assets of DNA will consist primarily of cash and,
accordingly, the directors of DNA intend to propose the delisting, winding-up of
the remaining operations, and voluntarily liquidation of DNA, and the
distribution of the net cash resources of DNA to shareholders.
3. The Sale
Subject to the fulfilment of the Sale Conditions SGT will acquire from DNA
the core business operations conducted through the subsidiaries of DNA known as
Micor, Sherwood (including Mining and Beverages), Auto, Streamworks and
Jumpoint. In addition, SGT will acquire all of the DNA businesses conducted
outside of South Africa including those conducted in the United Kingdom, Isle of
Man, Australia, Hong Kong and the Philippines ("the Sale Businesses").
The purchase consideration is an amount in cash of R220 million ("the
Purchase Consideration") which will be settled as follows:
* repayment of the working capital made available to DNA by SGT, the amount of
which, inclusive of accrued interest is currently approximately
R21.7 million. In addition to the aforesaid amount a raising fee of
R1 million (excluding VAT) is payable in respect of the funds advanced;
* settlement of the net inter-group liabilities of R66 million, representing
amounts owed by DNA to the Sale Businesses as at the effective date of the
Sale;
* settlement of all amounts lent and advanced after the effective date of the
Sale by the Sale Businesses to subsidiaries of DNA which are not being sold
to SGT, or are not selling their businesses to SGT;
* partial repayment of the DNA bank overdraft to the amount of R60 million;
and
* retention of an amount of R8 million by SGT to provide incentive bonuses for
such employees of DNA as SGT may determine.
The remainder of the Purchase Consideration ("the Net Purchase Consideration")
will be paid into escrow by SGT to settle such liabilities as are not assumed by
SGT, and the anticipated costs of the winding-up of DNA. It is currently
estimated that such liabilities and wind-up costs will be approximately R47.4
million, which has increased by R7.4 million from the amount previously
announced due to the inclusion of additional tax liabilities.
In addition, SGT will assume the ongoing trading liabilities of the Sale
Businesses identified by the parties excluding any:
* liability of DNA to the banks after the partial repayment referred to above
and a further repayment of a maximum of R67 million to the banks by SGT; and
* liabilities in respect of taxation which arose prior to the effective date
of the Sale.
The effective date of the Sale will be 1 April 2003.
DNA has provided warranties relating to ownership of the Sale Businesses and
compliance by the Sale Businesses with all statutory obligations.
4. Sale Conditions
Implementation of the Sale is subject to the fulfilment of the Sale
Conditions set out below:
* the passing of the requisite ordinary shareholders" resolutions approving
the
terms and conditions of the Sale in accordance with the provisions of
section
228 of the Companies Act, 1973 (Act 61 of 1973);
* either the unconditional approval of the Sale by the Competition Commission
of South Africa in terms of the Competition Act, 1998 (Act 89 of 1998), or
conditional approval acceptable to SGT; and
* the approval of all the necessary regulatory and statutory authorities,
including the JSE Securities Exchange South Africa ("JSE") and the
Securities
Regulation Panel ("SRP"). *
5.Interests of SGT and Super Group Limited
Neither SGT nor any of the directors of Super Group Limited currently hold an
equity interest in DNA or any of its subsidiaries.
6.Financial effects of the Sale
The table below sets out the financial effects of the Sale on DNA.
Shareholders should note that the financial effects set out below do not take
into consideration the estimated costs of winding up DNA.
Notes Before After % Change
(cents per share)(cents per share)
Loss per share 1 (12.0) (11.0) 8.3
Headline loss per share 1 (2.5) (2.9) 16.0
Tangible net asset value
per share 2 8.1 9.2 13.6
Net asset value per share 2 27.5 11.4 (58.5)
Notes:
1.The "Before" column shows the earnings and headline earnings per share for the
6 months ended 31 December 2002, calculated using the weighted average number of
626 892 847 DNA shares in issue. The "After" column reflects the effective after
tax income the Company would have earned had the Sale been effective on 1 July
2002 and had the Net Purchase Consideration been invested at an average interest
rate of 11.94%, being the average rate of interest before tax on money placed on
call account, for the six months ended 31 December 2002.
2.The "Before" column is the tangible net asset value per DNA share and the net
asset value per DNA share calculated based on 623 195 514 DNA shares in issue at
31 December 2002. The "After" column reflects the tangible net asset value per
DNA share and the net asset value per DNA share based on the assumption that the
Sale had been effected and the Net Purchase Consideration been received on
31 December 2002.
For purposes of the above calculations it was assumed that no Capital Gains
Tax would be payable on the Purchase Consideration.
The calculations above do not take into account the effects of the
anticipated winding up of DNA. The financial condition of DNA since December
2002 to the effective date of the Sale being 1 April 2003, has deteriorated
substantially as a result of further losses on foreign exchange and trading
losses in certain subsidiaries which do not form part of the Sale Businesses,
resulting in a decline in net asset value. It is anticipated that the
liquidation dividend to shareholders will be approximately 2.3 cents per share
after the repayments of liabilities as detailed in paragraph 3 above and
estimated liquidation costs of R47.4 million. The amount of the estimated
liquidation costs has increased by approximately R7.4 m from that previously
announced (and the anticipated liquidation dividend correspondingly decreased
from 3.5 cents per share to 2.3 cents per share) as a result of providing for
additional tax liabilities. Shareholders are cautioned that this estimated
distribution amount may change.
7. Salient dates and times for the shareholders of DNA
The salient dates for the implementation of the Sale are as follows:
2003
Last day for shareholders to lodge forms of proxy for the
general meeting, by 09:00 on Monday, 15 September
General meeting held at 09:00 on Wednesday, 17 September
Results of general meeting published on SENS on Wednesday, 17 September
Results of general meeting published in the press on Thursday, 18 September
The salient dates with regard to the proposed delisting and winding-up will
be communicated to shareholders of DNA in due course once the Sale has become
unconditional.
Notes:
1. Any variation of the above dates and times, approved as necessary by the
JSE and the SRP will be published in the press and released on SENS.
8. Opinions, recommendations and undertakings
EY Corporate Finance (Proprietary) Limited has been appointed as independent
adviser to the board of directors of DNA and in that capacity will issue an
opinion as to whether the terms and conditions of the Sale are fair and
reasonable to the shareholders of DNA.
The Board of Directors of DNA has considered the terms and conditions of the
Sale and recommends that the shareholders of DNA approve the resolutions
required to effect the Sale.
Shareholders of DNA representing at least 51% of the voting rights
attributable to the issued share capital of the Company have irrevocably
committed to vote in favour of the resolutions proposed at the general meeting
of the Company convened to give effect to the Sale.
9. Confirmation of financial resources
Nedbank Limited has provided the SRP in terms of Rule 21.7 of the Securities
Regulation Code on Take-overs and Mergers with the appropriate confirmation that
SGT has sufficient financial resources available to it to settle the Purchase
Consideration due in terms of the Sale.
10. Further cautionary announcement and documentation
A circular containing further information on the Sale will be posted to the
shareholders of DNA in due course.
Shareholders of DNA are advised to continue to exercise caution while dealing
in their DNA shares until the final terms of the delisting, the winding-up of
the remaining operations, and voluntary liquidation, and the distribution of the
net cash consideration to DNA shareholders have been announced.
Woodmead
31 July 2003
Corporate adviser
Chartwell Capital Group (Pty) Limited
(Registration number 1999/027720/07)
Sponsor
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Independent adviser
EY Corporate Finance (Pty) Ltd
(Registration number 2000/031575/07)
Attorneys
Brink Cohen Le Roux & Roodt Inc Attorneys
(Registration number 1993/004501/21)
