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MICROMEGA HOLDINGS LIMITED - DISPOSAL OF GLOBAL CREDIT RATING COMPANY LIMITED
AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
MICROMEGA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/003821/06)
JSE Share code: MMG
ISIN: ZAE000034435
("Micromega" or "the company")
DISPOSAL OF GLOBAL CREDIT RATING COMPANY LIMITED ("GCR") AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement published on 8 December 2003,
MICROmega Holdings Limited ("MICROmega") shareholders are advised that
MICROmega has entered into an agreement with Enigma Holdings Limited
("Enigma") in terms of which, subject to the fulfilment of the conditions
precedent set out below, MICROmega will dispose of its wholly owned
subsidiary, GCR, to Enigma with effect from 1 November 2003 for a total
consideration of R14 million as detailed in paragraph 3 ("the disposal").
GCR is a holding company which incorporates all the activities of its
subsidiary, Global Credit Rating Co. (Proprietary) Limited and its
associate, Globalmicrorate Africa Limited. The principal business
activities of GCR are debt evaluation and ratings throughout Africa.
2. RATIONALE FOR THE DISPOSAL
During the 2003 financial year GCR experienced difficulty in meeting the
corporate performance levels required by MICROmega. This situation is not
expected to improve in the near term. MICROmega is consequently of the
opinion that continued investment in the debt rating industry would not
provide the growth rate that the company requires of its investment.
3. TERMS OF THE DISPOSAL
3.1 Disposal, Consideration And Settlement Terms
The disposal consideration of R14 million is to be settled in cash as
follows:
- R8 million which was fully paid by 16 January 2004
- R3 million on 1 November 2004
- R3 million on 1 November 2005
Enigma will pay interest every six months in arrears on the
outstanding consideration of R6 million at the prime lending rate as
determined by MICROmega"s bankers. Enigma reserves the right to settle
all or part of the outstanding consideration prior to the dates
mentioned above.
3.2 Other Significant Terms
MICROmega has given no significant guarantees or warranties in respect
of GCR and accordingly all contingent or actual liabilities due
directly or indirectly to third parties at the effective date are the
responsibility of Enigma.
In terms of the original purchase agreement concluded with GCR during
January 2001, MICROmega was required to make payment to the vendors
over a three year period, provided the vendors met certain profit
warranties. Enigma will take full responsibility for any outstanding
payments, be they directly or indirectly partially settled or
unsettled, as contained in the original purchase agreement.
MICROmega will not compete directly or indirectly in the debt
evaluation and rating industry for a period of five years, ending on
31 October 2008.
4. CONDITIONS PRECEDENT
The implementation of the disposal is subject to approval by the
appropriate regulatory authorities.
5. FINANCIAL EFFECTS OF THE DISPOSAL
The table below shows the per share effect of the sale of GCR for the 6
months ended 30 June 2003. The pro forma financial effects have been
prepared for illustrative purposes only and, because of its nature, may not
fairly present MICROmega"s financial position at 30 June 2003 or the effect
of future earnings. The financial effects are determined in accordance with
the Listing Requirements of the JSE.
Note Unaudited Unaudited Change
At At (%)
30 June 30 June
2003 2003
Before After
(cents) (cents)
Loss per share 1 & (23.32) (13.84) 40.65
2
Headline earnings per 3 6.61 5.41 (18.15)
share
Net asset value per 4 48.87 58.35 19.39
share
Net tangible asset 4 19.80 36.79 85.81
value per share
Notes:
1. The figures in the "Before" column were extracted from the published
unaudited interim results of MICROmega for the six months ended
30 June 2003.
2. The loss per share calculation in the "After" column is based on
following assumptions:
- The disposal was effective from 1 January 2003.
- Interest would have been earned on the cash consideration for the
period at an after tax interest rate of 8.75%.
- MICROmega had a weighted average number of shares of 85 904 528
in issue during the period.
3. The headline earnings per share calculation in the "After" column is
based on the same assumptions as the earnings per share calculation,
except for the exclusion from headline earnings of amortisation of
goodwill and the capital profit on disposal of business interests.
4. Net asset and net tangible asset value per share are based on the
following assumptions:
- The net asset value and net tangible asset value of MICROmega
reflected on the balance sheet at 30 June 2003 was R41.9 million
and R17.01 million respectively.
- The net asset value and net tangible asset value in the "After"
column assumes the transaction was effective from 1 January 2003.
6. MATERIAL SHAREHOLDERS OF ENIGMA
The following table depicts those shareholders holding 5% or more of the
issued share capital of Enigma:
SHAREHOLDER NUMBER OF SHARES PERCENTAGE
First Somers Guernsey 10 000 100%
Limited
7. APPLICATION OF THE SALE PROCEEDS
The proceeds from the disposal will be used to strengthen the balance sheet
of MICROmega and enhance the ability of the company to make further
acquisitions.
8. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Negotiations are in progress, which if successful, could have an influence
on the price of MICROmega shares, and shareholders are therefore advised to
continue to exercise caution when dealing in MICROmega shares.
Johannesburg
22 January 2004
SPONSOR:
LPC MANHATTAN
Date: 22/01/2004 05:45:07 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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