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Digicore Holdings Limited - Specific Pro Rata Share Repurchase
Release Date: 05/03/2004 08:00:01 Code(s): DGC
Digicore Holdings Limited - Specific pro rata share repurchase
Digicore Holdings Limited
Registration number: 1998/012601/06
Share Code: DGC
ISIN Number: ZAE000016945
("Digicore")
PROPOSED SPECIFIC PRO-RATA REPURCHASE OF SHARES
1. INTRODUCTION
PSG Capital Limited ("PSG Capital") is authorised to announce that, following on
the trading update and cautionary announcement published on SENS and in the
press on 21 January 2004 ("the cautionary announcement"), and subject to the
fulfilment of the conditions precedent referred to in paragraph 6 below, the
directors of Digicore ("the directors") propose that Digicore, and or any of its
subsidiaries, repurchase up to 40% of Digicore"s issued shares from those
Digicore shareholders who wish to tender their shares in respect of the offer
("the proposal").
2. THE PROPOSAL
2.1 It is proposed that Digicore acquire from shareholders, pro rata to
their shareholdings, up to 40% of their ordinary shareholding in
Digicore, subject to an aggregate maximum of 71 730 000 ordinary
shares, at a price of 60 cents per share ("the specific repurchase").
2.2 Digicore shareholders collectively holding or controlling 83 258 733
Digicore shares, constituting approximately 34,8% of Digicore"s issued
share capital, have irrevocably and in writing undertaken to only
tender 6 900 000 Digicore shares in terms of the specific repurchase
and to vote in favour of all shareholder resolutions required to
implement the proposal.
3. RATIONALE
3.1 To deploy a portion of Digicore"s cash resources in an appropriate
manner, the board has proposed the specific repurchase, the effect of
which should enhance Digicore"s earnings and headline earnings per
share and increase the return on shareholders" equity.
3.2 The proposal will enable shareholders to realise value for their
shares. The repurchase price of 60 cents per share represents a
premium of 30,4% to the weighted average share price of 46,0 cents for
the 30 trading days to Tuesday, 20 January 2004, being the day prior
to the publication of the cautionary announcement.
4. TERMS OF THE SPECIFIC PRO RATA REPURCHASE
4.1 In terms of the specific repurchase, Digicore will propose to acquire
from shareholders up to 40% of their shareholding.
4.2 The price per share payable to shareholders in terms of the specific
repurchase is 60 cents per share, payable in cash.
4.3 Shareholders may elect to tender further shares in excess of 40% of
their shareholding.
4.4 The maximum number of shares that will be repurchased is 71 730 000
shares.
4.5 Should the excess shares tendered in 4.3 exceed the maximum of 71 730
000 shares, the excess shares tendered will be pooled and repurchased
in equitable proportions.
5. FINANCIAL EFFECTS
5.1 On Digicore
Set out below are the unaudited pro forma financial effects of the
specific repurchase, based on the audited consolidated results of
Digicore for the year ended 30 June 2003 and on the assumption that 71
730 000 shares, being the maximum number of shares available in terms
of the specific repurchase, are repurchased.
Audited Pro forma Percentage
before the after the change
specific specific (%)
repurchase repurchase
(1) (cents)
(cents)
Earnings per share (2) 7,10 8,62 21,5
Headline earnings per 7,47 9,16 22,6
share (2)
Net asset value per share 52,6 49,2 (6,5)
(3)
Net tangible asset value 43,2 35,4 (18,0)
per share (3)
(1) The figures in the "Audited before the specific repurchase" column have
been extracted from the audited financial results of Digicore for the year
ended 30 June 2003.
(2) The earnings and headline earnings per share figures in the "Pro forma
after the specific repurchase" column have been calculated:
- on the basis that the specific repurchase was effected on 1 July 2002;
and
- assuming that Digicore would have earned an after-tax interest return
of 6% per annum, being the average after-tax interest rate earned by
Digicore on its treasury operations during the year ended 30 June
2003, and on the cash resources required to implement the specific
repurchase.
(3) The net asset value and net tangible asset value per share figures in the
"Pro forma after the specific repurchase" column have been calculated on
the basis that the specific repurchase was effected on 30 June 2003 and
based on 226 212 149 shares in issue (239 256 113 shares in issue less 13
043 964 treasury shares).
The financial effects contained in the table above have been prepared to
illustrate how the specific repurchase would have affected the relevant
financial ratios of Digicore for the financial period indicated and are pro
forma only.
5.2 On Digicore shareholders
The table below sets out the pro forma financial effects of the specific
repurchase on a Digicore shareholder accepting the offer in respect of 40% of
his shares. This is provided for illustrative purposes only and because of its
historical nature may not be a true reflection of the effects into the future.
Before the Pro forma after the Percentage
specific specific repurchase change (%)
repurchase
1000 600 Cash Total
Digicore Digicore (Rand) (Rand)
shares shares
(Rand) (Rand)
Attributable 460 276 240 516 12,2
market value(1)
Earnings (2) 71 42,6 14,4 57 (19,7)
(3)
(1) Based on the weighted average share price of Digicore of 46 cents for the 30
day period ended on Tuesday, 20 January 2004, the last trading day prior to
publication of the cautionary announcement.
(2) Based on Digicore"s earnings per share for the year ended 30 June 2003.
The earnings figure in the "Cash" column is based on the assumption that the
repurchase consideration of 60 cents per share had been invested to earn an
after-tax return of 6% per annum during the year ended 30 June 2003.
6. CONDITIONS PRECEDENT
The proposal is subject to the fulfilment of the following conditions precedent:
- Digicore shareholders in general meeting passing such ordinary and
pspecial resolutions as are necessary to implement the proposal and
all special resolutions being registered by the Registrar of
Companies; and
- the JSE approving the proposal, to the extent required.
7. FUNDING OF THE SPECIFIC REPURCHASE
Digicore intends making use of available cash resources to fund the specific
repurchase. The directors have satisfied themselves as to the liquidity and
solvency of Digicore for the 12-month period immediately following the
implementation date.
8. CIRCULAR TO SHAREHOLDERS
A circular to Digicore shareholders, containing details of the proposed specific
repurchase and notice of a general meeting of Digicore shareholders, is being
prepared and will, subject to the approval of the JSE, be sent to Digicore
shareholders within 28 days. Details of all the relevant dates and times will be
published in the press and on SENS as soon as the circular is ready to be sent
to shareholders.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The part of the cautionary announcement not relating to the trading update is
hereby withdrawn.
Pretoria
5 March 2004
Corporate advisor and sponsor
PSG Capital
