| Tue 30 Sep 2003, 9:00 | | Ccn Holdings Limited - The Specific Repurchase Of |
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Ccn Holdings Limited - The Specific Repurchase Of 18 226 000 Ordinary Shares In
Release Date: 30/09/2003 07:05:07 Code(s): CCN
CCN Holdings Limited - The Specific Repurchase Of 18 226 000 Ordinary Shares In
The Share Capital Of CCN From Selected Shareholders At 85 Cents Per Share And
Cautionary Announcement
CCN Holdings Limited
(formerly NetActive Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/006000/06)
Share code: CCN ISIN: ZAE000046819
("CCN" or "the Company")
THE SPECIFIC REPURCHASE OF 18 226 000 ORDINARY SHARES IN THE SHARE CAPITAL OF
CCN FROM SELECTED SHAREHOLDERS AT 85 CENTS PER SHARE AND CAUTIONARY ANNOUNCEMENT
1. Introduction
CCN has reached agreement with Giant Trading Inc. ("Giant") to repurchase
Giant"s entire shareholding in CCN, amounting to 15 426 000 ordinary shares
("the Giant repurchase"), and with Arbores Investments (Proprietary) Limited
("Arbores") to purchase 2 800 000 ordinary shares held by Arbores in CCN,
aggregating in total to 18 226 000 ordinary shares. Both repurchases will be
effected at 85 cents per share. The aggregate consideration accordingly amounts
to R15 492 100 and is subject to the conditions precedent set out in paragraph 8
below ("the specific repurchase").
2. Rationale
Over the past few months it has become evident that following the disposal
of CCN"s Internet Services Provider business to Tiscali (Proprietary) Limited
and the subsequent refocus of the business of CCN as a leading provider of
outsourced customer contact centre services, the strategic alliance entered into
with Giant, who is also a member of the pool consortium which controls the
Company, is no longer justified. Similarly the investment by Arbores will also
be reduced.
Accordingly it has been agreed that the Company will purchase the respective
shareholdings in accordance with the terms and conditions set out in this
announcement.
3. Terms and funding
CCN proposes to repurchase a total of 18 226 000 ordinary shares
(15 426 000 from Giant and 2 800 000 from Arbores) at 85 cents per share which
will be cancelled and their listing on the JSE Securities Exchange South Africa
("the JSE"), terminated. The 2 785 025 ordinary shares held as treasury stock by
a wholly-owned subsidiary of CCN (referred to in note 4 of paragraph 7 below),
together with a further 50 000 ordinary shares which were acquired subsequent to
30 April 2003 ("treasury shares") will also be cancelled and their listing on
the JSE terminated. A resolution to effect the cancellation of the treasury
shares will be included in the notice convening a general meeting referred to in
paragraph 10 below.
No Secondary Tax on Companies will be payable on the payment consideration
as CCN intends to utilise the share premium account to effect the specific
repurchase.
The specific repurchase will be funded from internal group cash resources.
4. Related party transaction
The repurchase from Giant constitutes a related party transaction in terms
of the Listings Requirements of the JSE, in that Giant is a member of the pool
consortium which controls the Company. In addition the price to be paid is
greater than a premium of 10% above the weighted average trading price of the
shares of the Company during the five business days immediately preceding the
date of the signing of the respective repurchase agreements, being 26 September
2003. Accordingly, an independent expert is to provide a fair and reasonable
opinion on the repurchase on both of the above bases. Their opinion will be
included in the circular to shareholders referred to in paragraph 10 below.
In addition, neither Giant nor any other member of the pool consortium nor
any other party associated with either Giant or the pool consortium, will be
entitled to vote on the special resolution to approve the Giant repurchase.
5. No change of control
The Giant repurchase will not give rise to an affected transaction,
notwithstanding the fact that Giant forms part of the pool consortium which
controls the Company. The pool consortium jointly controls
73,8% of the issued ordinary share capital, which holding will increase to an
effective 74,0% once the specific repurchase and the cancellation of the
treasury shares is implemented. In addition the current representative of the
pool consortium, Lawrence Brick, the CEO of the Company, will retain the
position as the representative post the repurchase.
The board of directors ("the board") will also not change as a consequence
of the Giant repurchase, as no director has been directly appointed by Giant.
6. Minimum spread requirements
CCN does not currently meet the minimum spread requirements as laid down in
paragraph 4.28(e) of the JSE Listings Requirements, which states that 20% of
each class of equity securities must be held by the public. At present 15,57% of
the ordinary shares in CCN are held by the public. Upon the implementation of
the specific repurchase and the cancellation of the treasury shares, the
percentage will increase to 16,5% and accordingly improves the overall position.
CCN will endeavour to meet the 20% requirement in the short term as soon as
it is practical and commercially feasible to do so.
7. Financial effects of the specific repurchase
The table below sets out the financial effects of the specific repurchase on
the earnings, headline earnings, net asset value ("NAV") and net tangible asset
value ("NTAV") per CCN share based on the audited results for the year ended 30
April 2003.
The financial effects are provided for illustrative purposes only to provide
information pertaining to the specific repurchase in terms of the effect that it
may have had on the audited results.
Before After
specific specific %
repurchase repurchase Change
(1)
Earnings per share (cents) 24,9 29,9(2) 20,1
Headline loss per share (cents) (7,0) (12,8)(2) (83,0)
NAV and NTAV per share (cents) 106 113,2(3) 6,8
Weighted number of issued
shares ("000) (4) 72 123 53 897(2) (25,3)
Closing number of issued
shares ("000) (4) 69 762 51 536(3) (26,1)
Assumptions:
(1) Extracted from the audited results of CCN in respect of the year ended 30
April 2003.
(2) Earnings and headline loss per share after the specific repurchase, have
been computed on the basis that the specific repurchase took place on 1 May
2002, and the interest foregone on the cash utilised of
R15 492 100, amounting to R1 859 million calculated at a before and after tax
rate of 12% (on the basis that the Company has an assessed loss and is not
currently paying tax), has been deducted from interest received during the
financial year. The weighted average number of shares in issue for the financial
year ended 30 April 2003, have accordingly been reduced by 18 226 000 ordinary
shares to
53 897 206 ordinary shares.
(3) NAV and NTAV per share after the specific repurchase, have been computed on
the basis that the specific repurchase took effect on
30 April 2003 accordingly reducing the number of ordinary shares in issue at
that date from 69 762 181 to 51 536 181.
(4) The closing and weighted number of shares in issue excludes the
2 785 025 ordinary shares that were repurchased by 30 April 2003 in terms of a
general authority and announced on the Securities Exchange News Service on 2 May
2003, and will now be cancelled.
8. Conditions precedent
The specific repurchase is subject to the following conditions precedent:
* approvals being obtained from the JSE, the Securities Regulation Panel and
any other applicable regulatory authority and all their respective requirements
being complied with; and
* approval by the requisite majorities of shareholders entitled to vote in
favour of the special resolutions to be proposed at the general meeting which
will be convened in terms of the circular referred to in paragraph 10 below and
the registration thereof with the Registrar of Companies.
9. Statement by the board pertaining to capital adequacy and liquidity
The board has considered the effect of the specific repurchase and is of the
opinion that:
* the Company and the CCN group will be able in the ordinary course of business
to pay their debts for a period of 12 months after the implementation date of
the specific repurchase;
* the assets of the Company and the CCN group will be in excess of the
liabilities of the Company and the CCN group for a period of 12 months after the
implementation date of the specific repurchase. For this purpose, the assets and
liabilities will be recognised and measured in accordance with the accounting
policies used in the latest audited financial statements for the CCN group;
* the ordinary capital and reserves of the Company and the CCN group will be
adequate for the Company and the CCN group"s requirements for a period of at
least 12 months after the implementation date of the specific repurchase; and
* the working capital available to the Company and the CCN group will be
sufficient for the Company and the CCN group"s requirements for a period of at
least 12 months after the implementation date of the specific repurchase.
10. Circular to shareholders
A circular to CCN shareholders setting out the details of the specific
repurchase, incorporating a notice convening a general meeting and form of
proxy, will be mailed to shareholders in due course.
11. Cautionary announcement
The board is considering proposals which, if implemented, may have a
material effect on the price of the Company"s ordinary shares. Shareholders are
accordingly advised to exercise caution when dealing in their ordinary shares on
the JSE until a further announcement is made in this regard.
Sandton
29 September 2003
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
