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ANNOUNCEMENT RELATING TO THE ISSUE OF OPTIONS OVER EQUITY SHARES
Introduction
Earlier this year, FRM Strategies (Pty) Limited ("FRM") was appointed to drive
the implementation phase of the newly developed strategic plan designed to
return the Company to profitability and maximize shareholder value. Messrs
Flack, Robertson and Moffat of FRM have been appointed as directors of the
Company.
Options Issued To FRM
In the implementation phase, FRM is incentivised to maximise Sallies" market
capitalisation, by the award of options over Sallies shares. The agreement
provides the following:
In terms of the agreement with FRM, options for 14 million shares (or 15% of the
shares in issue for the period of the agreement), at a price of 20 cents per
share, have been granted and will vest as follows:
(a) 3 million shares on 13 February 2004
2 million shares on 13 February 2005
2 million shares on 13 February 2006
(b) when the weighted average price, as listed below, of the shares traded on
the JSE Securities Exchange South Africa ("JSE") over 10 trading days is
attained or exceeded:
Price (cents) Shares
40 1 million
50 1 million
60 1 million
70 1 million
80 1 million
90 1 million
100 1 million
The options are unlisted, issued for zero consideration and are American in
nature.
Options Issued To Rand Merchant Bank Limited
Sallies has entered into an agreement with RMB Resources Limited, in terms of
which options will be issued in consideration for RMB Australia Holdings Limited
deferring the repayment of the balance of the loan of US$1.1 million, not
charging penalty interest on the deferred amounts and consenting to the
provision of increased security to the Company"s commercial bankers for an
increase in the overdraft facility.
In terms of the agreement, Rand Merchant Bank Limited will be issued with two
million options (effective date 31 March 2003), expiring two years after issue,
to acquire the Company"s shares at a premium of 15% over the weighted average
price of the Company"s shares traded over the 20 JSE trading days prior to
31 March 2003.
Financial Effects
The table below sets out the unaudited pro forma financial effects of the option
agreements entered into with FRM Strategies (Pty) Limited and RMB Resources
Limited based on the published audited consolidated financial results of Sallies
Limited for the financial year ended 30 June 2003.
Unaudited
Pro forma
After the
grant
Audited of the said
Before Options %
Per Sallies share (cents) (cents) Change
Loss (15.8) (1) (13.2) (2) 16.5
Headline loss (13.4) (1) (11.1) (2) 17.2
Net asset value 51.7 47.1 (8.8)
Net tangible
asset value 39.9 37.1 (7.0)
Number of shares
in issue (000) 92 294 (1) 108 294 (2) 17.3
Weighted average
number of shares
in issue 92 294 (1) 108 294 (2) 17.3
Notes:
1. Extracted from the published audited consolidated financial results of
Sallies Limited for the financial year ended 30 June 2003.
2. It has been assumed that the options issued in terms of the proposed Option
Agreements are all exercised and that all of the options were issued on
1 July 2002 and 30 June 2003 for purposes of the effect on
earnings/headline earnings and net asset/net tangible asset value,
respectively.
3. An adjustment has been made for the earnings effect of the cash raised from
the exercise of the proposed options by attributing an effective after-tax
rate of interest to the cash proceeds of 8% (eight percent) per annum.
4. In respect of the 6 415 000 Share Incentive Scheme issued options at
30 June 2003 it has been assumed that these options were cancelled.
Shareholders" Approval
The matters mentioned above will require shareholder approval and accordingly
full details of the options are set out in the annual report and notice of
annual general meeting which was sent to shareholders on 18 November 2003.
Johannesburg
18 November 2003
Sponsor:
Ernst & Young Sponsors (Pty) Ltd
(Registration number 2000/031843/07)
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