| Thu 30 Oct 2003, 14:58 | | THE DISPOSAL OF MGX"S 100% INTEREST IN DION BUSINE |
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MGX HOLDINGS LIMITED - THE DISPOSAL OF MGX"S 100% INTEREST IN DION BUSINESS
SYSTEMS (PROPRIETARY) LIMITED
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 DISPOSAL OF MGX"S 100% INTEREST IN DION BUSINESS SYSTEMS
(PROPRIETARY) LIMITED
1. INTRODUCTION
Shareholders are advised that MGX has entered into an agreement with
the Trustees for the Time Being of the Kia Tanara Price Trust ("the
Purchaser"), subject to the conditions precedent set out in paragraph
3.5, to sell to the Purchaser MGX"s 100% interest in the issued share
capital of Dion Business Systems (Proprietary) Limited ("DBS") ("the DBS
shares") and all claims that MGX may have against DBS ("the DBS claims")
for a purchase price of R6 064 920 ("the purchase price") ("the DBS
disposal"). In addition, MGX will be released from interest-bearing
obligations amounting to R16 435 080 resulting from certain guarantees
provided by MGX for DBS.
DBS is the registered owner of the immovable property situated at
22 Milkyway Avenue, Linbro Business Park, Linbro Park, Sandton ("the
Linbro Property").
2. Rationale for the DB Systems disposal
As has been announced previously by the Company, MGX is in the
process of implementing a recovery plan to return the MGX Group to
profitability.
Pursuant to the recovery plan, MGX has entered into an agreement for
the DBS disposal. The effect of the DBS disposal will be to reduce MGX"s
interest-bearing liabilities and obligations by an amount of R22 500
000.
3. Important terms and conditions
The important terms and conditions of the DBS disposal are set out
below.
3.1 Effective date
The effective date of the DBS disposal will be the last day of the
month in which the last of the conditions precedent set out in 3.5
below, has been fulfiled ("the effective date"). It is expected that the
effective date will be 31 December 2003.
3.2 Purchase price
The purchase price is R6 064 920 which will be settled in full on the
effective date.
3.3 Interest
If the purchase price or any portion thereof is not paid on or before
the effective date, the outstanding balance will bear interest at the
prime rate plus 2%.
3.4 Voetstoots and warranties
The DBS shares and DBS claims are sold voetstoots and MGX and DBS
have given no warranties to the Purchaser in relation thereto, except
that:
* MGX is the owner of the DBS shares; and
* DBS is the owner of the Linbro property.
3.5 Conditions precedent
The DBS disposal is subject to the fulfilment of the following
conditions precedent:
* the board of directors of MGX ("the board") approving the DBS
disposal;
* MGX procuring the necessary approval of the JSE Securities Exchange
South Africa ("JSE");
* MGX procuring an agreement of cancellation between Investec Bank
Limited ("Investec") and MGX in terms of which MGX, as guarantor, is
released from all liabilities and obligations under the investment
agreement between DBS and Investec entered into on 8 May 1998, pursuant
to which DBS raised capital in the amount of
R22 million to fund the acquisition and further development of the
Linbro property and issued a debenture to Investec ("the Investec
agreement");
* the Purchaser procuring the written approval to cede and assign to
Eurevest Leasing (Proprietary) Limited the obligation to settle
R3.5 million of the purchase price;
* MGX"s bankers approving the DBS disposal;
* MGX and the Purchaser procuring the execution of a lease agreement
between Metrofile (Proprietary) Limited ("Metrofile") and the Purchaser,
pursuant to which Metrofile will lease a portion of the Linbro property
from DBS; and
* Deloitte & Touche Corporate Finance, as independent advisers to the
board, completing and submitting to MGX a fairness opinion.
It is expected that the conditions precedent will all be fulfiled prior
to 31 December 2003.
3.6 MGX"s obligations under the Investec agreement
MGX will be released from its obligations, as guarantor, in terms of
the Investec agreement, amounting to R16 435 080.
4. RELATED PARTY TRANSACTION
Ronald Price is the beneficial shareholder of a material interest in
MGX. In addition,
Kia Tanara Price, the daughter of Ronald Price, is a beneficiary of the
Purchaser and other immediate family members of Ronald Price are
trustees of the Purchaser. Consequently, the DBS disposal is being
treated as 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 DBS disposal are fair and
reasonable to MGX shareholders, is required.
Ronald Price and his associates will be excluded when determining a
quorum at the general meeting relating to the DBS disposal and their
votes will not be taken into account in determining the results of the
voting on the resolutions relating to the DBS disposal at such general
meeting.
5. INDEPENDENT ADVISER"S OPINION
Deloitte & Touche Corporate Finance has been appointed by MGX to act
as an independent adviser to the board to advise it on whether the terms
and conditions of the DBS disposal are fair and reasonable to the
shareholders of MGX. The substance of such advice will be included in a
circular to MGX shareholders.
6. CAUTIONARY ANNOUNCEMENT
MGX shareholders are reminded that the listing of the MGX share on
the JSE is currently suspended. However, in the event that the
suspension of the listing of the MGX share is lifted, MGX shareholders
are advised to exercise caution when dealing with their MGX shares until
such time as a further announcement relating to the important dates and
times in respect of the general meeting of shareholders and the
financial effects of the DBS disposal on MGX is published ("the further
announcement"). It is expected that the further announcement will be
published before 15 November 2003, once MGX"s financial results for the
financial year ended 30 June 2003 have been published.
30 October 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
Independent adviser
Deloitte & Touche Corporate Finance
Attorneys
Charl du Plessis Attorneys
Attorneys, Notary Publics & Conveyancers
Date: 30/10/2003 02:53:50 PM Produced by the JSE SENS Department
