| Fri 22 Aug 2003, 19:15 | | MGX Holdings Limited - Disposals |
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MGX
MGX Holdings Limited - Disposals
MGX Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1983/012697/06)
Share code: MGX ISIN: ZAE000009262
("MGX" or "the Company")
THE DISPOSALS OF:
* THE BUSINESSES OF MGX BUSINESS CONTINUITY SOLUTIONS (PROPRIETARY) LIMITED
AND MGX BUSINESS CONTINUITY SOLUTIONS (CAPE) (PROPRIETARY) LIMITED;
* MGX"S 50% INTEREST IN DRIVE CONTROL HOLDINGS (PROPRIETARY) LIMITED;
* MGX"S shares and CLAIMS IN AND AGAINST MGX STORAGE SOLUTIONS PROPRIETARY)
LIMITED AND MGX STORAGE SOLUTIONS PROFESSIONAL SERVICES (PROPRIETARY)
LIMITED; AND
* MGX"s 95% interest in mgx software futures (PROPRIETARY) LIMITED.
1. INTRODUCTION
Further to the cautionary announcements dated 10 June 2003 and 7 August 2003,
and the terms announcement dated 13 August 2003 relating to the disposal of
MGX"s 95% interest in MGX Software Futures (Proprietary) Limited ("Software
Futures") ("The Software Futures announcement"), shareholders are advised that
agreements have been entered into to:
* dispose of, subject to the conditions precedent set out in paragraph 2.3.8
below, the businesses of MGX Business Continuity Solutions (Proprietary) Limited
and MGX Business Continuity Solutions (Cape) (Proprietary) Limited
(collectively, "BCS") to ContinuitySA (Proprietary) Limited ("ContinuitySA")
("the BCS disposal");
* transfer, assign and make over MGX"s 50% interest in the issued share capital
of Drive Control Holdings (Proprietary) Limited ("Drive Control") and all claims
that MGX may have against the Trustees of the Nerex Trust ("Nerex Trust"), Damor
Investments Limited, the Trustees of the Karfour Trust, Neil Rex, Drive Control
and Drive Control Services (Proprietary) Limited ("Drive Control Services")
(collectively, "the Drive Control Consortium") ("the Drive Control disposal");
* dispose of, subject to the conditions precedent set out in paragraph 4.3.5
below, MGX"s shares and claims in MGX Storage Solutions (Proprietary) Limited
("Storage Solutions") and MGX Storage Solutions Professional Services
(Proprietary) Limited ("Professional Services") ("the Storage Solutions
disposal"); and
* dispose of, subject to the conditions precedent as set out in paragraph 3.10
of the Software Futures announcement, MGX"s 95% interest in Software Futures
("the Software Futures disposal"),(collectively, "the disposals").
2. THE BCS DISPOSAL
2.1 The transaction
BCS is a provider of continuity planning solutions and its services include
disaster recovery, office recovery, treasury dealing room recovery, call centre
recovery and business continuity consulting. MGX and BCS have entered into an
agreement relating to the BCS disposal, for the disposal by BCS of its
respective businesses, comprising certain assets and liabilities, as going
concerns to ContinuitySA. ContinuitySA is a company owned by:
- certain senior management of BCS, namely Allen Smith, Keith Partridge and
Jorgen Nielsen ("the senior management of BCS");
- the Sirius Development Foundation (Proprietary) Limited;
- Eurevest Leasing (Proprietary) Limited ("Eurevest"); and
- the Development Bank of South Africa Limited ("DBSA").
In addition to the BCS disposal, MGX will assign the Rentworks (Proprietary)
Limited ("Rentworks") operating leases relevant to BCS ("the Rentworks operating
leases"), currently representing a liability to MGX of approximately R25
million, to ContinuitySA.
2.2 Rationale for the BCS disposal
The board of directors ("the Board") is in the process of implementing a
recovery plan to return MGX to profitability and its primary objectives are to:
- use the proceeds from the sale of several of MGX"s operating subsidiaries and
commercial properties to reduce the interest-bearing debt of the Company;
- refinance the interest-bearing debt to a position which can be sustained by
the remaining operating subsidiaries of MGX; and
- create a smaller group which can be rebuilt over a period of two to three
years into a profitable business.
Pursuant to the recovery plan, MGX has entered into an agreement for the BCS
disposal. The funds received for the BCS disposal will be used by MGX to reduce
the Company"s interest-bearing debt by R57.5 million. Together with the
assignment of the Rentworks operating leases, MGX estimates that the BCS
disposal will reduce MGX"s interest-bearing liabilities by approximately R82.5
million.
2.3 Important terms and conditions of the BCS disposal
The important terms and conditions of the BCS disposal are set out below.
2.3.1 Effective date
The effective date of the BCS disposal is the last day of the calendar month
in which the last of the conditions precedent, set out in paragraph 2.3.8 below,
is fulfilled ("the BCS effective date"). It is expected that the BCS effective
date will be no later than 31 October 2003.
2.3.2 Purchase consideration
The purchase consideration will consist of:
* cash of R60 million; and
* the book values of the BCS liabilities and trade creditors, at the BCS
effective date, (collectively, "the purchase consideration").
The entire cash portion of the purchase consideration will be payable to MGX
on the BCS effective date.
2.3.3 Voetstoots and warranties
The BCS disposal is voetstoots and MGX has provided limited warranties in
relation thereto.
2.3.4 Interest
The cash portion of the purchase consideration or any portion thereof
outstanding from time to time, will bear interest at various rates linked to
ContinuitySA"s funding rates calculated with effect from and including 1 August
2003, up to and including the date of payment of the outstanding balance of the
cash portion of the purchase consideration.
2.3.5 Restraint undertakings by MGX and BCS
MGX and BCS have undertaken, in favour of ContinuitySA, that they will not
compete with the business of ContinuitySA for a period of 36 months calculated
from 1 May 2003, which restraint of trade undertakings are normally given by a
seller and its holding company in the course of a transaction of this nature.
2.3.6 Restraint undertaking by ContinuitySA and the senior management of BCS
ContinuitySA and the senior management of BCS have undertaken, in favour of
MGX, that they will not, without the prior written consent of MGX, compete with
any subsidiary or division of MGX engaged in the business of providing storage
and conversion services and products in relation to records, back-up media,
computer data and the provision of electronic document and record management
systems, for a period of 36 months from 1 May 2003, which restraint of trade
undertakings are normally given by a purchaser in the course of a transaction of
this nature.
2.3.7 Assignment of the Rentworks operating leases
The parties to the BCS disposal have undertaken to procure the assignment of
the Rentworks operating leases from MGX to ContinuitySA with effect on and from
the BCS effective date, subject to obtaining the consents in writing from
Rentworks, MGX and ContinuitySA.
2.3.8 Conditions precedent
The BCS disposal is subject to the fulfilment of the following conditions
precedent:
* ContinuitySA and the senior management of BCS procuring and delivering to MGX
the approval and confirmation of funding, in writing, by each of Citibank, N.A.,
South Africa Branch ("Citibank"), DBSA and Eurevest on terms and conditions
acceptable to MGX and ContinuitySA;
* ContinuitySA and the senior management of BCS procuring the consent in writing
of each of the respective parties to the leases and sub-leases in respect of
certain business premises leased by BCS and its subsidiaries, to the assignment
of all of the respective rights and obligations of BCS and each of the other
companies in the MGX Group under the separate lease and sub-lease agreements in
respect of the relevant business premises to ContinuitySA, on and with effect
from the effective date;
* ContinuitySA and the senior management of BCS procuring the consents in
writing of Rentworks, MGX and BCS to the assignment of the Rentworks operating
leases to ContinuitySA;
* ContinuitySA confirming that it is satisfied that there are no material
outstanding liabilities in respect of BCS"s pension fund;
* MGX and the senior management of BCS concluding a separate written settlement
agreement resolving all of the claims of the senior management of BCS to an
equity interest in BCS;
* receiving the necessary approval of the competition authorities; and
* MGX shareholders in general meeting passing the ordinary resolution necessary
to approve the BCS disposal.
It is expected that the conditions precedent will all be fulfilled prior to
31 October 2003.
2.4 Financial effects of the BCS disposal
The table below sets out the pro forma financial effects of the BCS disposal on
the net asset value ("NAV") and tangible net asset value ("TNAV") per MGX
ordinary share, headline earnings per MGX ordinary share ("HEPS") and earnings
per MGX ordinary share ("EPS"), based on the Company"s results for the six
months ended 31 December 2002.
Pro forma
Before the After the
BCS disposal BCS disposal Change
(cents) (cents) (%)
NAV per MGX ordinary share 16.081 12.992 (19.19)
TNAV per MGX ordinary share (211.83)1 (115.22)2 45.61
HEPS (216.67)3 (169.27)4 21.88
EPS (687.68)3 (349.99)4 49.10
Notes:
1. The NAV and TNAV per MGX ordinary share Before the BCS disposal have been
extracted from MGX"s interim financial results for the six months to 31 December
2002 and calculated based on 67.200 million MGX ordinary shares in issue,
assuming that the BCS disposal had not yet been implemented.
2. The pro forma NAV and TNAV per MGX ordinary share After the BCS disposal have
been calculated based on 67.200 million MGX ordinary shares in issue, assuming
that the BCS disposal was implemented on 31 December 2002 with the negative NAV
of BCS being R4.93 million on that date and a loss of R2.07 million on the BCS
disposal had been incurred.
3. The HEPS and EPS Before the BCS disposal have been extracted from MGX"s
interim financial results for the six months to 31 December 2002 and have been
calculated based on 66.525 million MGX ordinary shares in issue, being the
weighted average of the number of MGX shares in issue during the six-month
period.
4. The pro forma HEPS and EPS After the BCS disposal have been calculated based
on 66.525 million MGX ordinary shares, assuming that:
* the BCS disposal was implemented on 30 June 2002;
* the cash portion of the purchase consideration of R60 million that MGX will
receive for the BCS disposal was used to settle interest-bearing liabilities at
an average after-tax rate of 14.72% for the six months to 31 December 2002; and
* MGX"s headline earnings and earnings are increased by R27.11 million,
being the headline earnings and earnings contribution of BCS to MGX for the six
months to 31 December 2002.
2.5 Related party transaction
The senior management of BCS are all directors of BCS and are also
shareholders of ContinuitySA. As a result, all of the senior management of BCS
are related parties in relation to ContinuitySA.
Consequently, the BCS disposal constitutes a related party transaction in terms
of the Listings Requirements of the JSE Securities Exchange South Africa
("JSE"). Accordingly, written confirmation from an independent professional
expert acceptable to the JSE Listings Division, as to whether the terms and
conditions of the BCS disposal are fair and reasonable to MGX shareholders, is
required.
In addition, the senior management of BCS and their associates will be
excluded when determining a quorum at the general meeting relating to the BCS
disposal and their votes will not be taken into account in determining the
results of the voting on the resolution relating to the BCS disposal at such
general meeting, should they hold MGX shares.
2.6 Independent adviser"s opinion
Deloitte & Touche Corporate Finance has been appointed by the board to act as
an independent adviser to the board to advise it on whether the terms and
conditions of the BCS disposal are fair and reasonable to the shareholders of
MGX. The substance of such advice will be included in a circular to MGX
shareholders.
3. The Drive Control disposal
3.1 The transaction
Drive Control is a channel distributor of storage-related products and
solutions.
With regard to a legal dispute that MGX has with the Drive Control Consortium
in respect of Drive Control, MGX has entered into a settlement agreement with
the Drive Control Consortium to transfer, assign and make over MGX"s 50%
interest in the issued share capital of Drive Control and all claims that MGX
may have against the Drive Control Consortium to the Nerex Trust.
3.2 Rationale for the Drive Control Holdings disposal
On 17 May 2000, MGX and the Drive Control Consortium entered into an
agreement in terms of which the Drive Control Consortium sold shares and claims
in Drive Control to MGX and MGX paid for the shares and claims in the form of a
cash payment of R15 million and MGX shares which were issued to the Drive
Control Consortium when certain profit warranties were met by Drive Control
("the principal agreement").
A dispute arose between MGX and the Drive Control Consortium over the
principal agreement and the Drive Control Consortium is of the opinion that:
- MGX is in breach of its obligations in terms of the principal agreement and is
therefore indebted to the Drive Control Consortium for R88 014 976;
- pursuant to the averred breach by MGX of the principal agreement, the Drive
Control Consortium cancelled the principal agreement on 4 June 2003; and
- in terms of such cancellation, the Drive Control Consortium is entitled to
claim in law, inter alia, restitution of the shares and claims sold to MGX in
terms of the principal agreement ("the Drive Control Consortium averments").
MGX has not conceded the correctness of the Drive Control Consortium
averments, and in settlement of the dispute, MGX and the Drive Control
Consortium have entered into an agreement for the Drive Control disposal. In
addition, the Drive Control disposal is in line with the recovery plan of MGX as
discussed in paragraph 2.2 above, to create a smaller group which can be rebuilt
as a sustainable and profitable business.
3.3 Important terms and conditions of the Drive Control disposal
The important terms and conditions of the Drive Control disposal are set out
below.
3.3.1 Effective date
The effective date of the Drive Control disposal was 9 July 2003.
3.3.2 Cancellation of principal agreement
MGX and the Drive Control Consortium, by mutual consent, have cancelled the
principal agreement.
3.3.3 Settlement consideration
The settlement consideration consists of:
* MGX transferring, assigning, making over and ceding to the Nerex Trust, MGX"s
50% interest in the issued share capital of Drive Control and all claims that
MGX may have against the Drive Control Consortium; and
* the Drive Control Consortium waiving all claims which it held against MGX at 9
July 2003, including the claim of R88 014 976 discussed in paragraph 3.2 above.
3.3.4 Warranties
MGX has provided the warranties to the Drive Control Consortium normally
given by a seller in the course of a transaction of this nature.
3.3.5 Conditions precedent
As discussed in paragraphs 3.6 and 3.7 below, MGX has obtained irrevocable
undertakings to vote in favour of the Drive Control disposal from MGX
shareholders, eligible to vote on the Drive Control disposal, holding in excess
of 50% of the issued share capital of MGX and therefore all the conditions
precedent relating to the Drive Control disposal have been fulfilled.
3.4 Related party transaction
Neil Rex, who is a beneficial holder of 1 248 000 MGX shares, is a director
and material beneficial shareholder of Drive Control which, prior to the Drive
Control disposal, was a subsidiary of MGX. As a result, Neil Rex is a related
party in relation to Drive Control. Consequently, the Drive Control disposal
constitutes a related party transaction in terms of the Listings Requirements of
the JSE. Accordingly, written confirmation from an independent professional
expert acceptable to the JSE Listings Division as to whether the terms and
conditions of the Drive Control disposal are fair and reasonable to MGX
shareholders is required.
In addition, Neil Rex and his associates will be excluded when determining a
quorum at the general meeting relating to the Drive Control disposal and their
votes will not be taken into account in determining the results of the voting on
the resolution relating to the Drive Control disposal at such general meeting.
3.5 Independent adviser"s opinion
Deloitte & Touche Corporate Finance has been appointed by the board to act as
an independent adviser to the board to advise it on whether the terms and
conditions of the Drive Control disposal are fair and reasonable to the
shareholders of MGX. The substance of such advice will be included in a circular
to MGX shareholders.
3.6 Irrevocable undertakings
MGX has obtained irrevocable undertakings to vote in favour of the resolution
necessary to ratify the Drive Control disposal from the requisite majority of
independent shareholders of MGX.
3.7 Ratification
On the basis that MGX has obtained irrevocable undertakings to vote in favour
of the Drive Control disposal from MGX shareholders, eligible to vote on the
Drive Control disposal, holding in excess of 50% of the issued share capital of
MGX, MGX has obtained dispensation from the JSE to request MGX shareholders to
ratify the Drive Control disposal.
3.8 Financial effects of the Drive Control disposal
The table below sets out the pro forma financial effects of the Drive Control
disposal on the NAV and TNAV per MGX ordinary share, HEPS and EPS, based on the
Company"s results for the six months ended 31 December 2002.
Pro forma
Before the After the
Drive Control Drive Control
disposal disposal Change
(cents) (cents) (%)
NAV per MGX ordinary share 16.081 (38.28)2 (338.10)
TNAV per MGX ordinary share (211.83)1 (234.50)2 (10.70)
HEPS (216.67)3 (230.00)4 (6.15)
EPS (687.68)3 (699.34)4 (1.70)
Notes:
1. The NAV and TNAV per MGX ordinary share Before the Drive Control disposal
have been extracted from MGX"s interim financial results for the six months to
31 December 2002 and calculated based on 67.200 million MGX ordinary shares in
issue, assuming that the Drive Control disposal had not yet been implemented.
2. The pro forma NAV and TNAV per MGX ordinary share After the Drive Control
disposal have been calculated based on 67.200 million MGX ordinary shares in
issue, assuming that the Drive Control disposal was implemented on 31 December
2002 with the NAV of Drive Control being R52.88 million on that date and a loss
of R36.53 million on the Drive Control disposal had been incurred.
3. The HEPS and EPS Before the Drive Control disposal have been extracted from
MGX"s interim financial results for the six months to 31 December 2002 and have
been calculated based on 66.525 million MGX ordinary shares in issue.
4. The pro forma HEPS and EPS After the Drive Control disposal have been
calculated based on 66.525 million MGX ordinary shares, assuming that:
* the Drive Control disposal was implemented on 30 June 2002; and
* MGX headline earnings and earnings are reduced by R8.87 million and R8.86
million respectively, being the headline earnings and earnings contribution of
Drive Control to MGX for the six months to 31 December 2002.
4. THE STORAGE SOLUTIONS DISPOSAL
4.1 The transaction
Storage Solutions and Professional Services are providers, distributors and
implementors of storage products and solutions. MGX has entered into an
agreement relating to the Storage Solutions disposal, subject to the conditions
precedent set out in paragraph 4.3.5 below, with King-At-Arms Holdings
(Proprietary) Limited ("King-At-Arms") in terms of which MGX has sold to King-At
Arms:
- MGX"s interest in Storage Solutions, comprising 100% of the issued share
capital of Storage Solutions ("the Storage Solutions shares");
- MGX"s interest in Professional Services, comprising 100% of the issued share
capital of Professional Services ("the Professional Services shares");
- the claims which MGX has on loan account against Storage Solutions ("the
Storage Solutions claims"); and
- the claims which MGX has on loan account against Professional Services
- ("the Professional Services claims"),
(collectively, "the sold equity").
King-At-Arms is a wholly-owned company of the chief executive officer of
Storage Solutions, Dan McMahon.
4.2 Rationale for the Storage Solutions disposal
MGX has analysed the financial positions of Storage Solutions and
Professional Services and their prospects and has concluded that, given the
depressed market conditions in which these companies are trading, MGX is
unlikely to return the businesses to profitability for some time. Pursuant to
MGX"s strategy, to create a smaller group which can be rebuilt into a
sustainable and profitable business, MGX has decided to dispose of these
companies. As an alternative to the Storage Solutions disposal, MGX investigated
the possibility of winding the companies down but elected to proceed with the
Storage Solutions disposal, having regard to the costs associated to effect such
a wind down.
4.3 Important terms and conditions of the Storage Solutions disposal
The important terms and conditions of the Storage Solutions disposal are set
out below.
4.3.1 Effective date
The effective date of the Storage Solutions disposal will be the last
business day of the calendar month in which the last of the conditions
precedent, is fulfilled ("the Storage Solutions effective date"). As discussed
in paragraph 4.3.5 below, all conditions precedent have been fulfilled and
therefore the Storage Solutions effective date will be 30 August 2003.
4.3.2 Purchase price
The purchase price in respect of:
* the Storage Solutions shares and Professional Services shares is R1.00; and
* the Storage Solutions claims and the Professional Services claims is R1.00.
4.3.3 Voetstoots and warranties
The Storage Solutions disposal is voetstoots and MGX has not provided
warranties in relation thereto or the business of Storage Solutions or any of
the assets and liabilities of Storage Solutions, save that MGX has warranted
that it is the owner of the sold equity and entitled to sell it to King-At-Arms.
4.3.4 Debt reduction
Storage Solutions will reduce its indebtedness to MGX by an amount of R4
million prior to the effective date ("the debt reduction").
4.3.5 Conditions precedent
As discussed in paragraphs 4.6 and 4.7 below, MGX has obtained irrevocable
undertakings to vote in favour of the Storage Solutions disposal
from MGX shareholders, eligible to vote on the Storage Solutions disposal,
holding in excess of 50% of the issued share capital of MGX and therefore all
the conditions precedent relating to the Storage Solutions disposal have been
fulfilled.
4.4 Related party transaction
Dan McMahon, who holds 180 000 MGX shares is a director of MGX and Storage
Solutions. As a result, Dan McMahon is a related party in relation to King-At-
Arms. Consequently, the Storage Solutions disposal constitutes a related party
transaction in terms of the Listings Requirements of the JSE. Accordingly,
written confirmation from an independent expert acceptable to the JSE Listings
Division as to whether the terms and conditions of the Storage Solutions
disposal are fair and reasonable to MGX shareholders is required.
In addition, Dan McMahon and his associates will be excluded when determining
a quorum of the general meeting relating to the Storage Solutions disposal and
their votes will not be taken into account in determining the results of the
voting of such general meeting.
4.5 Independent adviser"s opinion
Deloitte & Touche Corporate Finance has been appointed by the board to act as
an independent adviser to the board to advise it on whether the terms and
conditions of the Storage Solutions disposal are fair and reasonable to the
shareholders of MGX. The substance of such advice will be included in a circular
to MGX shareholders.
4.6 Irrevocable undertakings
MGX has obtained irrevocable undertakings to vote in favour of the resolution
necessary to ratify the Storage Solutions disposal from the requisite majority
of independent shareholders of MGX.
4.7 Ratification
On the basis that MGX has obtained irrevocable undertakings to vote in favour
of the Storage Solutions disposal from MGX shareholders, eligible to vote on the
Storage Solutions disposal, holding in excess of 50% of the issued share capital
of MGX, MGX has obtained dispensation from the JSE to request MGX shareholders
to ratify the Storage Solutions disposal.
4.8 Financial effects of the Storage Solutions disposal
The table below sets out the pro forma financial effects of the Storage
Solutions disposal on the NAV and TNAV per MGX ordinary share, HEPS and EPS,
based on the Company"s results for the six months ended 31 December 2002.
Before the Pro forma
Storage Solutions After the Storage
disposal Solutions disposal Change
(cents) (cents) (%)
NAV per MGX ordinary share 16.081 (12.71)2 (179.08)
TNAV per MGX ordinary share (211.83)1 (240.63)2 (13.59)
HEPS (216.67)3 (196.33)4 9.38
EPS (687.68)3 (757.77)4 (10.19)
Notes:
1. The NAV and TNAV per MGX ordinary share Before the Storage Solutions disposal
have been extracted from MGX"s interim financial results for the six months to
31 December 2002 and calculated based on 67.200 million MGX ordinary shares in
issue, assuming that the Storage Solutions disposal had not yet been
implemented.
2. The pro forma NAV and TNAV per MGX ordinary share After the Storage Solutions
disposal have been calculated based on 67.200 million MGX ordinary shares in
issue, assuming that Storage Solutions disposal was implemented on 31 December
2002 with the combined NAV of Storage Solutions and Professional Services being
R23.35 million on that date and a loss of R19.35 million on the Storage
Solutions disposal had been incurred.
3. The HEPS and EPS Before the Storage Solutions disposal have been extracted
from MGX"s interim financial results for the six months to 31 December 2002 and
have been calculated based on 66.525 million MGX ordinary shares in issue.
4. The pro forma HEPS and EPS After the Storage Solutions disposal have been
calculated based on 66.525 million MGX ordinary shares, assuming that:
* the Storage Solutions disposal was implemented on 30 June 2002;
* the cash portion of the purchase consideration of R4 million that MGX will
receive in terms of the debt reduction was used to settle interest-bearing
liabilities at an average after-tax rate of 14.72% for the six months to 31
December 2002; and
* MGX"s headline earnings and earnings are increased by R13.23 million being the
headline loss and attributable loss of Storage Solutions to MGX for the six
months to 31 December 2002.
5. THE SOFTWARE FUTURES DISPOSAL
Shareholders were notified of the terms and conditions of the Software
Futures disposal in the Software Futures announcement.
5.1 Irrevocable undertakings
MGX has obtained irrevocable undertakings to vote in favour of the resolution
necessary to ratify the Software Futures disposal from the requisite majority
of independent shareholders of MGX.
5.2 Ratification
On the basis that MGX has obtained irrevocable undertakings to vote in favour
of the Software Futures disposal from MGX shareholders, eligible to vote on the
Software Futures disposal, holding in excess of 50% of the issued share capital
of MGX, MGX has obtained dispensation from the JSE to request MGX shareholders
to ratify the Software Futures disposal.
5.3 Financial effects of the Software Futures disposal The table below sets
out the pro forma financial effects of the Software Futures disposal on the NAV
and TNAV per MGX ordinary share, HEPS and EPS, based on the Company"s results
for the six months ended 31 December 2002.
Pro forma
Before the After the
Software Futures Software Futures Change
disposal disposal (%)
NAV per MGX ordinary share 16.081 (37.68)2 (334.38)
TNAV per MGX ordinary share (211.83)1 (238.81)2 (12.73)
HEPS per MGX ordinary share (216.67)3 (208.91)4 3.58
EPS per MGX ordinary share (687.68)3 (669.44)4 2.65
Notes:
1. The NAV and TNAV per MGX ordinary share Before the Software Futures disposal
have been extracted from MGX"s interim financial results for the six months to
31 December 2002 and calculated based on 67.200 million MGX ordinary shares in
issue, assuming that the Software Futures disposal had not yet been implemented.
2. The pro forma NAV and TNAV per MGX ordinary share After the Software Futures
disposal have been calculated based on 67.200 million MGX ordinary shares in
issue, assuming that the Software Futures disposal was implemented on 31
December 2002 with the NAV of Software Futures being R31.65 million on that date
and a loss of R36.13 million on the Software Futures disposal had been incurred.
3. The HEPS and EPS Before the Software Futures disposal have been extracted
from MGX"s interim financial results for the six months to 31 December 2002 and
have been calculated based on 66.525 million ordinary shares in issue.
4. The pro forma HEPS and EPS After the Software Futures disposal have been
calculated based on 66.525 million MGX ordinary shares, assuming that:
* the Software Futures disposal was implemented on 30 June 2002;
* the cash portion of the purchase consideration of R19.38 million that MGX will
receive in terms of the debt reduction was used to settle interest-bearing
liabilities at an average after-tax rate of 14.72% for the six months to 31
December 2002; and
* MGX"s headline earnings and earnings are increased by R3.81 million and R4.50
million respectively, being the headline loss and attributable loss of Software
Futures for the six months to 31 December 2002.
6. IMPORTANT DATES AND TIMES
The important dates and times in respect of the general meeting of
shareholders relating to the disposals are expected to be as set out below.
2003
Last day to lodge forms of proxy for the general meeting of
shareholders at 09:00, on Thursday, 9 October
General meeting of shareholders at 09:00, on Friday, 10 October
Results of the general meeting published on SENS, on Friday, 10 October
Results of the general meeting published in the press, on Monday, 13 October
Notes:
1. These dates and times are subject to amendment. Any such amendment will be
published on SENS and in the press.
2. If the date of the general meeting is adjourned or postponed, forms of proxy
must be received by the transfer secretaries by no later than 24 hours prior to
the adjourned or postponed general meeting.
7. GENERAL MEETING AND CIRCULAR
A general meeting of MGX shareholders will be held at MGX House, 22 Milky Way
Avenue, Linbro Business Park, Linbro Park, Sandton, 09:00 on Friday, 10 October
2003, for the purpose of considering and, if deemed appropriate:
* approving the resolution necessary to effect the BCS disposal; and
* ratifying the Drive Control disposal, Storage Solutions disposal and
Software Futures disposal.
A circular containing full details of the disposals and the general meeting
will be posted to shareholders in due course.
22 August 2003
Sandton
Merchant bank and sponsor
SCMB
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Reporting accountants and auditors
Deloitte & Touche Chartered Accountants (SA)
Registered Accountants and Auditors
Attorneys
WEBBER WENTZEL BOWENS
Independent advisers
Deloitte & Touche
Corporate Finance
Date: 22/08/2003 05:58:41 PM Produced by the JSE SENS Department
