| Wed 27 Aug 2003, 15:20 | | Disposal, Advance Payment, Delisting And Voluntary |
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Softline Limited - Disposal, Advance Payment, Delisting And Voluntary Winding-Up
("The Proposed Transactions") And Withdrawal Of Cautionary Announcement
(Incorporated in the Republic of South Africa)
(Registration number 1977/002304/06)
Share code: SFT ISIN: ZAE000012316
("Softline" or "the company")
DISPOSAL, ADVANCE PAYMENT, DELISTING AND VOLUNTARY WINDING-UP ("THE PROPOSED
TRANSACTIONS") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. DISPOSAL
1.1 Introduction
Further to the firm offer from The Sage Group plc ("Sage") ("the Sage firm
offer") and further cautionary announcement dated 8 August 2003, Brait Corporate
Finance, a division of Brait South Africa Limited is authorised to announce
that, given that the relevant disposal agreement has been signed and subject to
the fulfilment or waiver of certain suspensive conditions (see 4 below), Flagman
Investments (Proprietary) Limited ("Sage SA"), a wholly-owned subsidiary of
Sage, will acquire, in terms of section 228 of the Companies Act, Act 61 of
1973, as amended ("the Act"), the entire undertaking of Softline ("the
disposal") as follows:
- the shares held by Softline in all the direct subsidiaries of Softline;
- the shares in Integrity Software Limited, incorporated in England and Wales,
held by Softline;
- the shares of common and preferred stock in Island Pacific Inc. (previously
SVI Solutions Inc.), incorporated in the State of Delaware (USA), held by
Softline;
- all shareholder loans made to such subsidiaries by Softline or any other
companies owned and controlled by Softline; and
- all of Softline"s other assets of every kind.
In addition, Sage SA has agreed to assume and discharge certain liabilities of
Softline as and when they fall due.
Softline is entitled, at any time before the date of the general meeting, to
conclude an agreement with any third party for the sale of the entire
undertaking of Softline which is on the whole more favourable than the terms of
the disposal agreement with Sage SA ("disposal agreement"), provided that such
agreement is conditional upon the disposal agreement not being approved by
shareholders at the general meeting.
The disposal is in no way conditional upon the approval and/or registration
of the special resolution for the voluntary winding-up (see 6 below).
1.2 Purchase price
The purchase price for the disposal is R784 830 000, which will be paid in
cash by Sage SA on the closing date as per the circular to shareholders (see 8
below), plus the assumption and discharge of all liabilities set out in the
disposal agreement, including, subject to 6.4 below, certain potential taxes and
duties on the proposed transactions.
In addition, Sage SA will bear all transaction costs of the proposed
transactions.
The Securities Regulation Panel ("SRP") has received confirmation from
Deutsche Securities (SA) (Proprietary) Limited that Sage has sufficient
resources to satisfy the purchase price.
1.3 Rationale
- Sage is a leading international supplier of accounting and business management
software solutions and related products for small to medium sized enterprises.
Formed in 1981, Sage was floated on the London Stock Exchange in 1989 and is a
member of the FTSE 100 Index. Sage SA was created for the sole purpose of
implementing the Sage firm offer.
The proposed transactions are consistent with the Sage strategy of acquiring
locally developed and locally supported market-leading software brands in
attractive new geographic markets. The acquisition of Softline would:
- extend Sage"s geographical presence to the attractive South African and
Australian markets in which Softline is well established;
- provide Sage with a strong market position and access to a sizeable customer
and reseller base, and leading product brands;
- align with Sage"s focus on developing accounting, payroll and taxation
software for the small to medium size enterprise market;
- fit with the Sage business model of building a recurring revenue stream; and
- enable Sage to create further value through selling additional Sage products
and services to Softline"s customers.
Softline has produced real growth in operational earnings and cash flow over
the past few reporting periods. However, Softline"s share price performance,
prior to the issue of the first cautionary announcement on 5 February 2003, was
characterised by a relatively low rating and low levels of liquidity.
Accordingly, Sage has identified Softline as a good value opportunity.
The proposed transactions present Softline shareholders with an opportunity to
exit at an attractive premium to the market price at which the ordinary shares
have traded on the JSE Securities Exchange South Africa ("the JSE") (the average
closing price for the 20 months, September 2001 to January 2003, prior to the
issue of the first cautionary announcement on 5 February 2003, was between 80
cents and 93 cents) and to Softline"s net asset value of 133,9 cents per
ordinary share and tangible net asset value of 91,4 cents per ordinary share as
at 31 March 2003.
The competitive global software environment dictates that Softline must invest
additional resources and funds in research and development and marketing and
sales, in order to continue to grow revenues and profits. Accordingly,
investment in these areas will be considerably strengthened by Sage.
2. ADVANCE PAYMENT TO SOFTLINE SHAREHOLDERS
2.1 Subject to the disposal agreement becoming unconditional, shareholders
approving the special resolution for the voluntary winding-up and such
resolution being registered, Softline will distribute the proceeds on the
disposal to shareholders by way of:
- a payment out of share capital of 1 cent per Softline ordinary share and out
of share premium of 33,4 cents per Softline ordinary share in terms of section
90 of the Act; and
- an advance liquidation dividend of 165,6 cents per share in anticipation of
the voluntary winding-up (see 6 below),
totalling 200 cents per Softline ordinary share (collectively the "advance
payment").
2.2 The advance payment represents the following premia to the respective prices
at which Softline shares traded on the JSE on the following dates:
Closing
Softline
share price
on the JSE Premium
Wednesday, 5 February 2003 - First cautionary
announcement published in the press 93 115%
Wednesday, 16 April 2003 - Detailed cautionary
announcement published in the press 117 71%
Thursday, 11 June 2003 - Last trading date prior to
the consortium consisting of Exact Holding N.V.
and Mr. Ivan Ferrer ("Exact/Ferrer Consortium") publishing
its potential offer of 145 cents per share in the press 125 60%
Wednesday, 25 June 2003 - Date on which the Sage
potential offer of not less than 180 cents per share
was published in the press 160 25%
Friday, 1 August 2003 - Last trading date prior to
publication of details of the Sage firm offer in the press 184 9%
Tuesday, 26 August 2003 - Last trading date prior to
the publication of this announcement 191 5%
2.3 In the unlikely event that the disposal agreement becomes unconditional but
shareholders do not approve the special resolution for the voluntary winding-up
and/or such resolution is not registered, shareholders will not receive the
advance payment but will remain shareholders in a cash shell.
3. FINANCIAL EFFECTS
3.1 The following table has been prepared for illustrative purposes only and
sets out the pro forma financial effects of the disposal and the advance payment
per ordinary share of Softline based on the audited financial statements of
Softline for the year ended 31 March 2003.
3.2 The circular to shareholders (see 8 below) will contain the audited annual
financial statements of the company and the Softline Group for the year ended 31
March 2003.
3.3 The pro forma financial effects are based on a total of 392 414 573 ordinary
shares in issue and are set out in the table below:
Column D
Column A Column B Column C Increase/
Before the After the After the (decrease)
disposal disposal, disposal between
and the but before and the Column A
advance the advance advance and
payment payment(3) payment(4) Column B
(cents) (cents) (cents) (percentage)
Net asset value(1) 133,9 200,0 0,0 49,4
Net tangible asset value(1) 91,4 200,0 0,0 118,8
Headline earnings(2) 23,0 14,0 0,0 (39,1)
Earnings(2) 2,3 14,0 0,0 508,7
Notes:
1. The pro forma net asset value per ordinary share and the pro forma net
tangible asset value per ordinary share in "Column A" are based on the audited
annual financial statements of Softline for the year ended 31 March 2003. The
net intangible asset value as at 31 March 2003 was 42,5 cents per share.
2. The pro forma headline earnings per ordinary share and the pro forma earnings
per ordinary share in "Column A" are based on the audited financial statements
of Softline for the year ended 31 March 2003.
3. "Column B" illustrates the impact of the disposal prior to the advance
payment and is based on the assumptions, for earnings purposes, that the
purchase price of R785 million has been paid on 1 April 2002 and that Softline
invested the R785 million at an after tax rate of 7% per annum from 1 April 2002
until 31 March 2003. For net asset value purposes, no earnings on the cash
received has been imputed as the advance payment will be paid soon after the
receipt of the cash.
4. "Column C" illustrates the impact of the advance payment. It is based on the
assumption that the purchase price of R785 million had been paid on 1 April 2003
and that Softline, on 1 April 2003, distributed the 200 cents per ordinary
share, by way of an advance payment, representing a total amount of R785
million, to shareholders.
5. Potential taxes, duties and transaction costs on the proposed transactions
have not been provided for on the basis that Sage SA has undertaken to pay any
taxes (excluding personal taxes) and transaction costs that may arise as
contemplated in 6.4 below.
4. SUSPENSIVE CONDITIONS
The disposal is subject to and conditional upon the following outstanding
suspensive conditions:
- receiving all unconditional approvals required in terms of the Competition
Act, Act 89 of 1998, as amended, provided that where any such approval is
conditional, this suspensive condition will only be deemed to be fulfilled if
Softline and Sage SA, in their sole discretion, agree thereto in writing;
- receiving or being deemed to have received all and any approvals required from
antitrust, competition or other regulatory authorities, provided that where any
such approval is conditional, this suspensive condition will only be deemed to
be fulfilled if Softline and Sage SA, in their sole discretion, agree thereto in
writing;
- receiving all and any approvals of the Exchange Control Department of the
South African Reserve Bank, provided that where such approval is conditional,
this suspensive condition will only be deemed to be fulfilled if Sage SA, in its
sole discretion, agrees thereto in writing;
- the shareholders of Softline authorising and approving the disposal as
required by section 228 of the Act;
- the consent by third parties to certain contracts, listed in annexures 4 and
11 to the disposal agreement, to the assignment of rights and obligations under
such contracts to Sage SA or the change of control in Softline, provided that
where any consent is subject to any conditions, this suspensive condition will
only be deemed to have been fulfilled if Sage SA, in its sole discretion, agrees
in writing to such conditions;
Softline obtaining a certificate in terms of Section 116 of the Income Tax Act
(Canada) and delivering a certified copy of this certificate to Sage SA;
Sage SA delivering a guarantee to Softline from Sage for the due performance of
Sage SA"s obligations under the disposal agreement; and
- the receipt of certain consents and waivers in respect of the disposal of the
shares of common and preferred stock in Island Pacific Inc. held by Softline,
including certain approvals by the board of directors of Island Pacific Inc.
5. OPINIONS AND RECOMMENDATIONS
The recommendation of the non-executive independent directors of the board of
directors of Softline and the advice of KPMG, in its capacity as independent
advisor to the minority shareholders, was contained in the announcement of 8
August 2003. Details will be included in the circular to be posted to
shareholders (see 8 below).
6. VOLUNTARY WINDING-UP AND DELISTING
6.1 Although the disposal is in no way conditional upon a winding-up, it is
proposed that Softline be delisted from the JSE and that Softline be wound-up by
way of a voluntary winding-up, subject to the fulfilment or waiver of the
suspensive conditions.
6.2 The voluntary winding-up is proposed in terms of sections 349 and 350 of the
Act.
6.3 If the voluntary winding-up is not approved and/or registered, no advance
payment will be made.
6.4 Sage SA has agreed to assume and discharge the Capital Gains Tax and
Secondary Tax on Companies liability on the advance payment only if the special
resolution for the voluntary winding-up is approved and registered or, if it is
not approved at the general meeting, that the advance payment occurs within six
months after the disposal and provided that Softline distributes the advance
payment in accordance with the provisions of the disposal agreement and a
special resolution for a voluntary winding-up is approved and registered.
7. IMPORTANT DATES AND TIMES
2003
Circular and notice of general meeting posted to
shareholders on Monday, 1 September
Last day for receipt of forms of proxy from
ordinary shareholders for the general meeting by
not later than 10:00 on Friday, 19 September
General meeting to be held at 10:00 on Tuesday, 23 September
*Announcement in respect of fulfilment or waiver
of all the suspensive conditions and results of
general meeting released on the Securities Exchange
News Service ("SENS") on Tuesday, 23 September
*Announcement in respect of fulfilment or waiver
of all the suspensive conditions and results
of general meeting published in the press on Thursday, 25 September
*Last day to trade in ordinary shares to be recorded
in the shareholders register of Softline as a
shareholder on the record date on Friday, 3 October
*Suspension of the listing of ordinary shares on
the JSE from commencement of trading on Monday, 6 October
*Record date for purposes of the advance payment on Friday, 10 October
*Electronic transfer of funds or cheques posted
by ordinary mail on (see note 1) Monday, 13 October
*Dematerialised shareholders" accounts held
at their Central Securities Depository Participant
("CSDP") or broker credited on (see note 2) Monday, 13 October
*Termination of the listing of ordinary shares on
the JSE from commencement of trading on Tuesday, 14 October
*These dates are dependent on the required Softline shareholders" approval being
obtained and the fulfilment or waiver of all the suspensive conditions.
Notes:
1. Refers to shareholders who have not dematerialised their share certificates
in terms of Share Transactions Totally Electronic ("STRATE").
2. Refers to shareholders who have dematerialised their shares with a CSDP or
broker, who will receive payment from the CSDP or broker concerned in terms of
the custody agreement entered into between them.
3. The JSE has introduced STRATE for all share transactions concluded on the
JSE. STRATE, which, inter alia, involves dematerialisation, has already been
implemented by Softline. Accordingly, Softline share certificates need to first
be dematerialised before shareholders will be able to trade in the shares
concerned. Shareholders are advised to contact a CSDP or broker to make the
necessary practical arrangements for dematerialisation. It is anticipated that
the dematerialisation of shares may take up to ten days to be finalised once a
shareholder has made the necessary arrangements with the CSDP or broker.
4. No share certificates may be dematerialised or rematerialised after
Friday, 3 October 2003.
5. If the special resolution for the voluntary winding-up is passed and
registered, it is anticipated that the final winding-up of Softline will take
approximately six months to complete.
6. The above dates and times are subject to amendment. Any amendment to the
dates and times will be announced on SENS and published in the press.
8. GENERAL MEETING AND CIRCULAR TO SHAREHOLDERS
A general meeting of Softline shareholders will be held on Tuesday, 23
September 2003 at which shareholders will consider and, if deemed fit, pass the
ordinary and special resolutions necessary to approve the audited financial
statements of the company for the 12 months ended 31 March 2003, the disposal,
the advance payment, the delisting of Softline from the JSE and the voluntary
winding-up of Softline. Full details of the proposed transactions will be set
out in a circular to be posted to Softline shareholders on or about Monday, 1
September 2003 in accordance with the Rules and Regulations of the JSE and SRP.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Softline shareholders are advised that the Exact/Ferrer Consortium, on
Friday, 15 August 2003, published an announcement on SENS informing Softline
that the Exact/Ferrer Consortium will not, at this stage, make a firm offer for
the business of Softline at a price greater than the 200 cents per share offer
made by Sage. The Exact/Ferrer Consortium did reserve its right to submit an
offer in the event that the Sage firm offer is amended or fails. Accordingly,
further to the detailed terms of the Sage firm offer which are contained in this
announcement, shareholders are no longer required to exercise caution when
dealing in their shares on the JSE.
Johannesburg
27 August 2003
Corporate advisor to Softline
Brait
Legal advisor to Softline
Read Hope Phillips Attorneys
Auditors and reporting accountants
Charles Orbach & Company
Chartered Accountants (SA) Registered Accountants & Auditors
Independent advisor to minorities
KPMG
Legal advisor to Sage
Bowman Gilfillan
John & Kernick * Findlay & Tait
Corporate advisors to Sage
Deutsche Bank
Deutsche Securities
Member of the Deutsche Bank Group
Deutsche Securities (SA) (Proprietary) Limited
(Registration number 1995/011798/07)
Sponsor to Softline
Brait Sponsors (Proprietary) Limited
(Registration number 2000/031069/07)
Date: 27/08/2003 03:00:10 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
