| Tue 9 Mar 2004, 14:04 | | Introduction of Kagiso Trust as BEE partner |
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BTG - INTRODUCTION OF THE KAGISO TRUST AS A BLACK ECONOMIC EMPOWERMENT PARTNER
IN THE SOUTH AFRICAN OPERATIONS OF BTG
Bytes Technology Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1911/003874/06)
JSE Share Code: BTG
ISIN: ZAE000029526
("BTG")
INTRODUCTION OF THE KAGISO TRUST AS A BLACK ECONOMIC EMPOWERMENT ("BEE") PARTNER
IN THE SOUTH AFRICAN OPERATIONS OF BTG
1. INTRODUCTION
Shareholders are advised that BTG and Kagiso, a subsidiary of Kagiso Trust
Investments (Pty) Limited ("KTI"), have reached agreement in terms of which,
subject to the fulfilment of the conditions precedent referred to in 4, Kagiso
will become BTG"s BEE partner of choice through a 27% shareholding in BTG"s
South African operations ("the transaction").
The operations included in the transaction are, inter alia, Bytes Document
Solutions (Xerox), National Data Systems (to be renamed Bytes Specialised
Solutions), Bytes Communication Systems, Bytes Technology Networks, Bytes
Technology Storage, Bytes Business Solutions and Bytes Software (collectively
"South African operations"), which will be housed in a new subsidiary, Bytes
Technology Group South Africa (Proprietary) Limited ("Bytes SA"). BTG"s
minority investment of 39.1% in Digital Healthcare Solutions is not included in
the transaction.
2. RATIONALE
BTG has for some time stated its intention to introduce a BEE shareholder and to
this end has held discussions with various parties. BTG and Kagiso have entered
into this transaction as a proactive measure, prior to the implementation of a
BEE Charter for the ICT industry.
Kagiso is the investment banking arm of KTI. KTI is in turn the commercial arm
of the Kagiso Trust, a broad-based charitable organisation set up by the SA
Council of Churches in the mid 1980"s. The Kagiso Trust was established to
provide assistance to underprivileged communities, with a focus on education,
healthcare and general poverty alleviation. KTI was formed with the primary
objective of providing the Kagiso Trust with a sustainable source of income in
order to fulfill its objectives. The ultimate beneficiaries of the Kagiso Trust
are the projects and communities that it supports. KTI is generally recognised
as one of SA"s leading broad-based BEE groups. Given Kagiso"s area of focus,
Kagiso chose to invest only in BTG"s South African operations.
KTI provides strategic and operational support to its partners. It adopts a
proactive approach to investments, with a strong emphasis on business
development and strategic positioning.
BTG and Kagiso are confident that Kagiso"s shareholding will result in
operational and financial benefits to Bytes SA. The parties also believe that
the transaction will result in Bytes SA being more competitive in its respective
market niches.
3. TERMS OF THE TRANSACTION
The South African operations have been transferred into Bytes SA with effect
from 1 March 2004.
Kagiso will subscribe for ordinary shares in Bytes SA, which will represent 5%
of the increased issued share capital of Bytes SA, for a total cash subscription
price of R30 million. In addition BTG will sell 220 000 "B" shares in Bytes SA,
representing 22% of the voting rights in Bytes SA, to a wholly-owned subsidiary
of Kagiso ("Kagiso Sub"), at their par value. Kagiso will thereafter control
27% of the voting rights in Bytes SA, with BTG controlling the remaining 73%.
Kagiso Sub will simultaneously advance to Bytes SA a loan of R198 million
bearing interest at the higher of a normal commercial rate and a rate derived
from Bytes SA"s effective dividend yield, repayable after 5 years. Factored
into the transaction is the fact that Bytes SA will assume approximately R309
million of BTG"s existing debt.
Bytes SA will grant Kagiso Sub the option to subscribe for 220 000 ordinary
shares in Bytes SA at R900 per Bytes SA ordinary share ("share options"),
exercisable over a period of 5 years. On exercise of any share options, BTG SA
will simultaneously re-purchase and cancel a corresponding number of "B" shares
at their par value.
The term of the Kagiso loan and the exercise period of the share options may be
extended to 10 years in certain circumstances.
Including the share options, the total value of the transaction is R228 million.
4. CONDITIONS PRECEDENT
The transaction is subject to the fulfilment of, inter alia, the following
conditions precedent:
4.1 The final approval of the Kagiso Investment Committee;
4.2 The conclusion of detailed legal agreements; and
4.3 The obtaining of the requisite approvals of the JSE Securities Exchange
South Africa ("JSE"), the shareholders of BTG in general meeting and any other
relevant regulatory authorities (to the extent necessary).
5. CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the Trading Statement and Cautionary Announcement
dated 21 January 2004 and are advised to continue exercising caution when
dealing in BTG"s ordinary shares until both BTG"s full year results and full
details of the transaction have been announced.
Johannesburg
5 March 2004
Investment bank and joint sponsor
Nedbank Corporate
Attorneys
Werksmans
Joint sponsor
Cazenove
Corporate adviser to Kagiso
Kagiso Ventures
Legal adviser to Kagiso
Nucleus Corporate Finance
Date: 09/03/2004 01:13:03 PM Produced by the JSE SENS Department
