| Mon 17 Nov 2003, 9:27 | | Settlement Agreement with the Management of MGX Bu |
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MGX Holdings Limited - Settlement Agreement with the Management of MGX Business
Continuity Solutions (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")
SETTLEMENT AGREEMENT WITH THE MANAGEMENT OF MGX BUSINESS CONTINUITY SOLUTIONS
(PROPRIETARY) LIMITED
1. INTRODUCTION
Shareholders are advised that MGX has entered into an agreement with Allen
Smith ("Smith"), Jorgen Nielsen ("Nielsen"), Keith Partridge ("Partridge") and a
management consortium (collectively, "the Purchasers"), whereby MGX is to:
- procure the issue by MGX Business Continuity Solutions (Proprietary) Limited
("BCS"), a wholly-owned subsidiary of MGX, of 8.1% of ordinary shares in the
share capital of BCS ("the BCS shares") to the Purchasers at a subscription
price of R2 750 000;
- acquire the BCS shares from the Purchasers for a purchase consideration
comprising:
* an amount of R2 750 000 in cash; and
* equity to the value of R5 500 000, being the value of MGX"s 100% interest in
the issued share capital of MGX Properties Faerie Glen (Proprietary) Limited
("Faerie Glen") ("the Faerie Glen equity") ("the Faerie Glen settlement
transaction"), (collectively, "the purchase consideration").
Faerie Glen is the registered owner of Portion 1 of Erf 3 Faerie Glen Township,
situated at the corner of Atterbury Road and Oberon Avenue, Faerie Glen,
Pretoria ("the Faerie Glen property").
The Faerie Glen settlement transaction is in full and final settlement of all
claims that the Purchasers may have against MGX or any of its subsidiaries,
pursuant to an agreement between MGX and the Purchasers regarding equity
participation by the Purchasers in BCS.
2. RATIONALE FOR THE FAERIE GLEN SETTLEMENT TRANSACTION
The disposal by MGX of the businesses of BCS and MGX Business Continuity
Solutions (Cape) (Proprietary) Limited to Continuity SA (Proprietary) Limited
("the BCS disposal"), as approved by shareholders at the general meeting of
shareholders held on Thursday, 23 October 2003, was subject to the condition
precedent that MGX and the Purchasers conclude the Faerie Glen settlement
transaction. Pursuant to the BCS disposal, MGX and the Purchasers have entered
into the Faerie Glen settlement transaction.
3. IMPORTANT TERMS AND CONDITIONS
The important terms and conditions of the Faerie Glen settlement transaction
are set out below. 3.1 Effective date
The effective date was 13 November 2003.
3.2 Purchase consideration
The purchase consideration is payable three business days after the effective
date.
3.3 Voetstoots and warranties
The transfer of the Faerie Glen equity by MGX to the Purchasers is voetstoots
and MGX has provided limited warranties to the Purchasers in relation thereto.
3.4 Conditions precedent
As discussed in paragraphs 6 and 7, MGX has obtained irrevocable undertakings
to vote in favour of the Faerie Glen settlement transaction and will request MGX
shareholders to ratify the Faerie Glen settlement transaction. Accordingly, all
the conditions precedent of the Faerie Glen settlement transaction have been
fulfilled.
4. RELATED PARTY TRANSACTION
Smith, Nielsen and Partridge are all directors of BCS. Consequently, the Faerie
Glen settlement transaction 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 Faerie Glen settlement transaction are fair and reasonable to MGX
shareholders, is required.
In addition, Smith, Nielsen and Partridge and their associates will be excluded
when determining a quorum at the general meeting relating to the Faerie Glen
settlement transaction and their votes will not be taken into account in
determining the results of the voting at such general meeting, should they hold
any MGX shares.
5. INDEPENDENT ADVISER"S OPINION
Deloitte & Touche Corporate Finance has been appointed by the board of
directors of MGX ("the board") to act as an independent adviser to the board to
advise it on whether the terms and conditions of the Faerie Glen settlement
transaction are fair and reasonable to the shareholders of MGX. The substance of
such advice will be included in a circular to MGX shareholders.
6. IRREVOCABLE UNDERTAKINGS
MGX has received irrevocable undertakings to vote in favour of the resolutions
relating to the Faerie Glen settlement transaction from shareholders holding in
excess of 50% of the issued share capital of MGX.
7. RATIFICATION
On the basis that MGX has obtained the irrevocable undertakings described in
paragraph 6, MGX has obtained dispensation from the JSE to request MGX
shareholders to ratify the Faerie Glen settlement transaction.
8. 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 important dates and times in respect of the general meeting of shareholders
and the financial effects of the Faerie Glen settlement transaction are
published ("the further announcement"). It is expected that the further
announcement will be published before 30 November 2003, once MGX"s financial
results for the financial year ended 30 June 2003 have been published.
14 November 2003
Sandton
Merchant bank and sponsor
SCMB
Standard Corporate and Merchant Bank TECHNOLOGY
A division of 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 and Conveyencers
Date: 17/11/2003 08:43:20 AM Produced by the JSE SENS Department
