| Fri 5 Mar 2004, 13:56 | | ACQUISITION OF FURTHER INTERESTS IN JACARANDA FM |
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KAGISO MEDIA LIMITED - ACQUISITION OF FURTHER INTERESTS IN JACARANDA FM (PTY)
LIMITED AND RADMARK (PTY) LIMITED
Kagiso Media Limited
(Incorporated in the Republic of South Africa)
Registration number 1957/000036/06
JSE Share code: KGM
ISIN: ZAE000014007
("Kagiso Media" or "the Company")
ACQUISITION OF FURTHER INTERESTS IN JACARANDA FM (PROPRIETARY) LIMITED
("JACARANDA") AND RADMARK (PROPRIETARY) LIMITED ("RADMARK")
1. INTRODUCTION
Shareholders are referred to the announcements dated 18 November 2003 and
19 February 2004 wherein it was announced that Kagiso Media was still
engaged in processes to secure certain of the media assets of New Africa
Investments Limited or its subsidiaries ("NAIL"). Nedbank Corporate is
pleased to announce that NAIL has accepted an offer from Kagiso Media to
acquire further interests in Jacaranda and RadMark.
Subject to the conditions precedent set out below, Kagiso Media has
acquired a further 22.5% shareholding in Jacaranda for a purchase
consideration of R70.17 million, and a further 16.7% shareholding in
RadMark for a purchase consideration of R5.79 million (together referred to
as "the acquisitions"). The consideration will be adjusted for the pro rata
portion of the cash in the businesses on the effective date of the
acquisitions.
2. RATIONALE FOR THE ACQUISITION
Kagiso Media has availed itself of the opportunity presented by the NAIL
unbundling to increase its interest in these two strategic investments in
its core business of Broadcasting. Kagiso Media will increase its holding
in Jacaranda to 65% and will exercise control over the station, which will
allow it to unlock operational and strategic synergies between Jacaranda
and East Coast Radio (Proprietary) Limited.
The acquisitions place Kagiso Media in an optimal position to extract
maximum benefit from the pending changes to the broadcasting regulations.
To compliment this strategy Kagiso Media has recently appointed Omar Essack
as Executive Director for Broadcasting.
The net cash consideration of R76 million will be funded from borrowing
facilities. Kagiso Media has opted to fund the acquisitions through
borrowings rather than from its own cash resources, given the ungeared
state of its balance sheet and the attractive rates currently available in
the debt market. The amount of debt raised is well within the group"s total
borrowing ability, and as such the board does not expect the servicing of
this debt to have a substantial impact on the group"s ability to pay a
relatively high percentage of profits to shareholders as a dividend.
3. CONDITIONS PRECEDENT
The acquisitions are subject to the fulfilment of certain conditions
precedent including:
* to the extent required by NAIL, the obtaining of the approval of the
JSE Securities Exchange South Africa, the Securities Regulation Panel
and the South African Reserve Bank to be obtained by no later than
30 April 2004, and
* the approval of the Competition Commission, the approval of the
Independent Communications Authority of South Africa in the case of
Jacaranda and any other regulatory authorities, on terms and
conditions that are reasonably acceptable to the parties, to be
obtained by no later than 31 December 2004.
To the extent that pre-emptive rights are exercised the percentages
acquired, and the purchase consideration paid for the acquisitions, may be
adjusted downwards. In any event Kagiso Media will as a result of the
acquisitions acquire control of Jacaranda.
The effective date is the last business day of the month preceding the
fulfilment of the last of the conditions precedent for each of the
acquisitions.
4. CONSIDERATION AND FINANCIAL EFFECTS
The table below sets out the pro forma financial effects of the
acquisitions and have been provided for illustrative purposes only, to
provide information about how the acquisitions may have affected the
unaudited financial information for the six months to 31 December 2003.
Before (cents After Percentage
per share) (pro change
forma
cents per
share)
Earnings 42.9(1) 45.7(2) 6.5
Headline earnings 43.2(1) 46.0(2) 6.6
Net asset value 121(3) 119(4,5) (2.0)
Tangible net asset value 118(3) 70(4,6) (40.3)
Notes:
1. Kagiso Media earnings and headline earnings for the interim period
ended 31 December 2003, based on the weighted average of 129 244 326
Kagiso Media shares in issue for the period;
2. Based on the aggregate of Kagiso Media"s earnings and headline
earnings, the additional earnings acquired from Jacaranda and RadMark,
and the assumed cost of funding the acquisitions;
3. The net asset value and tangible net asset value per Kagiso Media
share at 31 December 2003, based on 129 244 326 shares in issue;
4. The net asset value and tangible net asset value attributable to the
assets the subject of the acquisitions were R72.9 million and R14.1
million respectively;
5. The aggregate of the net asset value of Kagiso Media at 31 December
2003, the additional assets acquired, net of the amortisation of
intangible assets acquired for the six months to 31 December 2003,
less the loan funding raised to finance the acquisitions;
6. The aggregate of the tangible net asset value of Kagiso Media at
31 December 2003, the additional assets acquired (excluding goodwill
and trademarks) less the loan funding raised to finance the
acquisitions;
7. Earnings were calculated for the period 1 January 2003 to 31 December
2003 and asset value figures were calculated as at 31 December 2003.
5. CATEGORISATION OF THE ACQUISITIONS
The acquisitions have been categorized as category 3 transactions in terms
of section 9.5(a) of the JSE Listings Requirements.
6. WITHDRAWAL OF CAUTIONARY
As the terms and financial effects in respect of the acquisitions have been
announced, shareholders no longer need to exercise caution when dealing in
their Kagiso Media shares.
Johannesburg
5 March 2004
Investment Bank and Transaction Sponsor:
Nedbank Corporate
Sponsor:
Investec Securities
Legal Advisers:
Webber Wentzel Bowens
Regulatory Advisers:
Mahlangu, Nkomo, Mabandla, Ratshimbilani Attorneys
Date: 05/03/2004 01:34:56 PM Produced by the JSE SENS Department
