| Mon 3 Nov 2003, 17:19 | | ANNOUNCEMENT REGARDING A VOLUNTARY OFFER TO THE MI |
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CCN - Company 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")
ANNOUNCEMENT REGARDING A VOLUNTARY OFFER TO THE MINORITY
SHAREHOLDERS OF CCN AT 85 CENTS PER SHARE, TRADING UPDATE
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the announcement dated 29 September 2003
pertaining, inter alia, to the specific repurchase of
ordinary shares from two shareholders at 85 cents per share,
aggregating in total to 18 226 000 ordinary shares at a
total purchase consideration of R15 492 100 ("the specific
repurchase"), and a cautionary announcement, the board of
directors of CCN ("the board") wishes to announce that they
have resolved, in the interests of equity and fairness, to
extend a similar voluntary offer to minority shareholders,
by way of a specific repurchase, to acquire all or a part of
their ordinary shares in CCN ("the voluntary offer"). The
voluntary offer is only being extended to public minority
shareholders.
A special resolution to make provision for the voluntary
offer by way of a specific repurchase is included in the
notice convening a general meeting referred to in paragraph
11 below.
2. Rationale
The board felt that, notwithstanding that the decision to
effect the specific repurchase was due to strategic
considerations, the voluntary offer is being extended to
afford all minority shareholders the opportunity to sell all
or a part of their shareholding in CCN at the same price as
that offered in terms of the specific repurchase.
3. Terms and funding
The ordinary shares which are acquired in terms of the
voluntary offer will be cancelled and application will be
made for their listing on the JSE Securities Exchange South
Africa ("the JSE") to be terminated.
No Secondary Tax on Companies will be payable in respect
of the voluntary offer consideration as CCN intends to
utilise the share premium account to effect the specific
repurchase in terms of the voluntary offer.
The voluntary offer will be funded from internal group
cash resources.
4. 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 15,7% of the ordinary shares in CCN are held by the
public. Upon the implementation of the specific repurchase
and the cancellation of treasury shares referred to in the
29 September 2003 announcement, the percentage will increase
to 16,7% and accordingly improves the overall position.
The impact of the outcome of the voluntary offer on the
minimum spread requirements will be disclosed when the
results of the voluntary offer are announced on the
Securities Exchange News Service ("SENS") on completion of
the offer. The JSE will review the position of the Company"s
spread requirements on completion of the voluntary offer and
will make a decision as to the continued listing of the
Company at that time.
5. Financial effects of the specific repurchase and the
voluntary offer
The table below sets out the pro forma financial effects
of the specific repurchase and the voluntary offer 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.
Column 2 reflects the effects of the specific repurchase
on the Company and Columns 3 and 4 reflect the effects on a
minority shareholder accepting the voluntary offer in
respect of both 50% and 100% of his/her holding,
respectively. The effects of the acceptances are compared
with Column 2 on the basis that the specific repurchase has
been approved and implemented.
The pro forma 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 and because of its
nature may not give a true reflection of the Company or the
group"s financial position.
Change
%
Before After (Comparing
specific specific Column 2
repurchase repurchase with
(Column 1)(1) (Column 2) Column 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 51536(3) (26,1)
Assuming Change Assuming Change
50% 100%
acceptance % acceptance %
of (Comparing of (Comparing
voluntary Column 3 voluntary Column 4
offer with offer with
(Column 3) Column 2) (Column 4) Column 2)
Earnings per
share (cents) 18,1(5) (39,3) 6,4(7) (78,7)
Headline loss
per share (cents)(3,2)(5) 74,9 6,4(7) 149,8
NAV and NTAV per
share (cents) 99,1(6) (12,5) 85(8) (24,9)
Weighted number
of issued shares
("000)(4)
Closing number of issued shares
("000)(4)
Assumptions:
(1) Extracted from the audited results of CCN in respect of
the year ended 30 April 2003.
(2) Earnings and headline earnings 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, has accordingly been
reduced by 18 226 000 ordinary shares to 53 897 226 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 shares in issue at that date from 69 762 181 to 51
536 181 shares.
(4) The closing and weighted number of shares in issue
exclude the 2 785 025 ordinary shares that were repurchased
in terms of a general authority and announced on SENS on 2
May 2003.
(5) The earnings per share in Column (3) is based on the
assumption that a shareholder accepted the voluntary offer
in respect of 50% of his/her shareholding and the proceeds
were paid out on 1 May 2002, and interest at 7,5% after tax
was earned thereon for a 12-month period. The earnings in
respect of the balance of the shareholding is based on the
earnings per share and headline loss per share after the
specific repurchase as set out in Column (2). The aggregate
of both sources of earnings on a per share basis are in turn
compared with the earnings per share after the specific
repurchase. Similarly the aggregate of both sources of
earnings on a per share basis are compared with the headline
loss per share after the specific repurchase.
(6) The NAV and NTAV per share in Column (3) is based on the
assumption that a minority shareholder accepted the
voluntary offer in respect of 50% of his/her shareholding
and the proceeds were paid out on 30 April 2003. The NAV and
NTAV per share in respect of the balance of the shareholding
is based on the NAV and NTAV per share after the specific
repurchase as set out in Column (2). The aggregate is, in
turn, compared with the NAV and NTAV per share after the
specific repurchase.
(7) As for note (5), except that the acceptance of the
voluntary offer pertains to 100% of the shareholder"s
holding and the proceeds are invested at 7,5% after tax and
compared with the specific repurchase in Column (2).
(8) As for note (6), except that the acceptance of the
voluntary offer pertains to 100% of the shareholder"s
holding and is compared with the specific repurchase in
Column (2).
The table below sets out, for illustrative purposes, the
premium attributable to the voluntary offer price in
relation to the closing market price on the last trading day
prior to the release of the cautionary announcement on SENS,
the volume weighted average traded price for the 30 trading
days up to and including the last trading day prior to the
release of the cautionary announcement.
Market Voluntary Premium over
price (cents) offer price (cents) market price (%)
75(1) 85 13,3
66(2) 85 28,8
(1) The closing price of a CCN ordinary share on 26
September 2003, being the last trading day prior to the
release of the cautionary announcement on SENS on Monday, 29
September 2003.
(2) The volume weighted average traded price of a CCN
ordinary share for the 30 trading days up to and including
26 September 2003.
6. Conditions precedent
The voluntary offer 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;
- approval by the requisite majority of public minority
shareholders in favour of the special resolution to be
proposed at the general meeting which will be convened in
terms of the circular referred to in paragraph 11 below and
the registration thereof with the Registrar of Companies;
and
- approval of the special resolutions pertaining to the
specific repurchase.
7. Statement by the board pertaining to capital adequacy and
liquidity
The board has considered the effect of the specific
repurchase and the voluntary offer and are 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 and the voluntary offer;
- 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 and the voluntary offer. 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 voluntary offer;
- 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 and the
voluntary offer.
8. Prospects
CCN believes that growth for outsourced customer
management solutions and services will be driven by the
trend of global Fortune 1 000 companies turning to
outsourcers to provide cost-effective, high quality customer
support solutions.
CCN anticipates that the acceleration to an offshore
solution, which provides customer management solutions at
significantly lower costs and a highly skilled labour force,
will drive significant growth in the South African contact
centre outsourcing industry. CCN believes South Africa is
becoming one of the offshore geographic markets where
companies have access to high quality customer support
solutions at lower costs compared to first world markets.
The current strength of the Rand will have a short-term
impact on the rate of acceptance of South Africa as a
preferred offshore contact centre location.
CCN is well-positioned within the South African market in
order to benefit from the above trends.
9. Trading update
CCN intends to release its interim results in respect of
the six months ended 31 October 2003, simultaneously with
the posting of the circular to shareholders referred to in
paragraph 11 below which is expected to be on or about
24 November 2003. The loss after taxation in respect of
continuing operations, will have reduced substantially
(being an reduction of more than 30% as defined in the JSE
Listings Requirements), in comparison with the previous
corresponding period. The interim results have not been
reviewed and reported on by the Company"s auditors and
shareholders are accordingly advised to exercise caution in
dealing in the Company"s securities on the JSE until the
interim results are published on or about 24 November 2003.
Over the past six months, CCN has successfully integrated
both the acquisition of the Centre Call Nucleus business as
well as the Tiscali contact centre. A strong management team
has been developed in order to deliver world-class customer
service, together with a highly skilled staff complement. It
has invested in training and quality procedures ensuring
that staff continually update and enhance their skills, and
is currently undergoing COPC certification, which ensures
that all processes are in accordance with global best
practice. The trading businesses, consisting of Call Centre
Nucleus and Netflorist have recently achieved breakeven
levels on a month by month basis. However, it is anticipated
that additional investment will be required in order to grow
the market, build infrastructure and develop skills in the
short to medium term, with benefits being realised over the
longer term.
10. Independent advisor"s opinion and directors
recommendation
The circular to shareholders referred to in paragraph
11 below will contain an opinion from an independent advisor
and the directors recommendation on the voluntary offer.
11. Circular to shareholders
A circular to CCN shareholders setting out, inter alia, the
details of the specific repurchase and the voluntary offer,
incorporating a notice convening a general meeting and form
of proxy, and including the opinion from the independent
advisors, will be mailed to shareholders on or about 24
November 2003.
12. Cautionary announcement
The cautionary announcement contained in the 29
September 2003 announcement is accordingly withdrawn. In the
light of the trading update referred to in paragraph
9 above, shareholders should continue exercising caution in
dealing in their securities on the JSE until the interim
results are announced on or about 24 November 2003.
Sandton
30 October 2003
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
Date: 03/11/2003 05:15:08 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
