| Wed 21 Jul 2004, 8:29 | | ZAPTRONIX TO ACQUIRE DUO SOLUTIONS PROVIDER |
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ZAPTRONIX LIMITED - ZAPTRONIX TO ACQUIRE DUO SOLUTIONS PROVIDER LIMITED (`DUO`),
TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
Zaptronix Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/014928/06)
JSE share code: ZPT
ISIN: ZAE000015145
(`Zaptronix` or `the company`)
ZAPTRONIX TO ACQUIRE DUO SOLUTIONS PROVIDER LIMITED (`DUO`),
TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 17 March 2004, Radagast Capital
(Pty) Ltd and River Group are authorised to announce that an agreement has been
reached between Zaptronix and DuO in terms of which Zaptronix will extend an
offer to the shareholders of DuO for the acquisition of all of their DuO shares
(`the offer`) for the consideration as set out in paragraph 3 below (`the
acquisition` or `the transaction`). The acquisition, which will be
implemented by means of a scheme of arrangement (`the scheme`) in terms of
section 311 of the Companies Act, 1973, as amended (`the Act`) will, subject to
the fulfilment of the conditions precedent, result in DuO becoming a whollyowned
subsidiary of Zaptronix.
2. THE SCHEME
The scheme between DuO and all DuO shareholders, will result in Zaptronix
acquiring the entire shareholding of DuO.The implementation of the scheme will
be subject to the approval of the acquisition by Zaptronix shareholders at a
general meeting, the approval of the scheme by the requisite majority of DuO
shareholders at a scheme meeting of DuO shareholders, the sanctioning of the
scheme by the High Court of South Africa and the registration of the Order of
Court by the Registrar of Companies.
3. CONSIDERATION
In terms of the scheme (and post the restructuring of the Zaptronix share
capital as detailed in paragraph 5 below), Zaptronix will issue 306 916 667
consolidated Zaptronix shares, representing 81% of the consolidated shares in
issue, to the shareholders of DuO, registered as such at the close of business
48 hours before the convening of the scheme meeting, in a ratio of one
consolidated Zaptronix share for every one DuO share held. The shares will be
issued at one cent per share equating to a consideration of R3 069 167 and will
rank pari passu in all respects with existing Zaptronix shares. The Net Asset
Value of DuO as at 29 February 2004 amounted to R5 775 949.
4. RATIONALE FOR THE ACQUISITION
DuO is a public unlisted company involved in the supply chain, logistics and
fleet management and vehicle monitoring markets. DuO owns the software and
patents to its own advanced fleet management system, which is complemented
by a 24-hour bureau monitoring service. In addition to continual software
enhancement to stay ahead of a changing market environment, the company`s next
generation hardware and software, currently under development, will enable
its customers to assume complete control over their logistics management
function, whilst still enjoying the benefits of DuO`s bureau service. The effect
of the acquisition will be to constitute DuO as a subsidiary of Zaptronix.
Zaptronix will continue its business and expand its current offering of
providing products, turnkey solutions and services to the metering and utility
industry in combination with DuO`s bureau services and annuity business model.
The synergies between the two businesses will create a technologically advanced
logistics and utilities management company providing a 24/7 bureau and
comprehensive service offering.
5. RESTRUCTURING OF SHARE CAPITAL
In terms of the transaction, the Zaptronix share capital will be consolidated on
a 1:2 basis, which will result in a reduction of the authorised share capital
from 200 000 000 ordinary shares to 100 000 000 consolidated shares and a
reduction of the issued share capital from 144 804 526 ordinary shares to 72 402
263 consolidated shares. Subsequent to the consolidation and in order to
implement the acquisition, the authorised shares will be increased by 400 000
000 shares to 500 000 000 shares and the issued shares will be increased by 306
916 667 to 379 318 930 ordinary issued shares.
6. FINANCIAL EFFECTS AND TRADING UPDATE
The annual financial statements of Zaptronix for the year-ended 30 April 2004
are currently being prepared and the financial effects of the acquisition will
accordingly be announced simultaneously with the audited annual financial
statements, which are expected to be released on or about 30 July 2004.
Shareholders are advised that the company`s results in relation to headline
earnings and net asset value per share for the year ended 30 April 2004 will be
substantially lower (`substantially` being a decrease of equal to or greater
than 30% as defined in the JSE Securities Exchange South Africa`s (`the JSE`)
Listings Requirements), when compared to the prior comparative period. This
decrease is attributable to the costs incurred in the restructuring of the
company and the writing-down of development costs in order to provide for the
amalgamation of the Zaptronix and DuO businesses. Zaptronix shareholders are
advised to continue to exercise caution when dealing in the company`s securities
until this announcement is made.
7. RECONSTITUTION OF THE BOARD
It is intended that on approval by shareholders of the transaction, the board of
directors will be reconstituted to include the appointments of Deon Oberholzer
and Antonio De Canio, from the DuO board of directors, who will act as Chief
Executive Officer and Chief Financial Officer of the new entity. Jens
Stratenwerth will continue to serve as an executive director, whilst Karl
Gribnitz and Jan Nel will continue to act as non-executive directors.
8. CONDITIONS PRECEDENT
The transaction is subject to the normal conditions precedent that would be
applicable to a transaction of this nature, which conditions are indivisible and
include, inter alia, the following:
* ?Approval of the JSE, the Securities Regulation Panel (`SRP`), the South
African Reserve Bank and any other
regulatory authorities to the extent required;
* ?The High Court of South Africa (`the Court`) granting an Order convening a
meeting of DuO shareholders to vote on the
scheme;
* ?The scheme being approved by a majority of DuO shareholders representing not
less than 75% of the votes
exercisable by the scheme members present and voting, either in person or by
proxy, at the scheme meeting;
* ?The sanctioning by the Court of the scheme and a certified copy of the Order
of Court being registered by the Registrar
of Companies in terms of the Act; and
* ?The approval of resolutions relating, inter alia, to the acquisition, the
share capital restructure and the reconstitution of
the board of directors by the requisite majority of Zaptronix shareholders at a
general meeting convened for the
purpose.
9. OPINIONS AND RECOMMENDATION
The directors of Zaptronix are unanimously of the opinion that the terms of the
proposed transaction are fair and reasonable to shareholders and will assist in
unlocking the value of the Zaptronix listing.
10. FURTHER CAUTIONERY
Shareholders are cautioned that due to the fact that this transaction, according
the JSE rules, is a reverse takeover. The continuation of the listing of the
company is uncertain. Furthermore, because this transaction is a related party
transaction due to the fact that Gandalf Trust is a controlling shareholder in
both companies, the circular to shareholders will include a fair and reasonable
opinion by an independent third party.
11. DOCUMENTATION
Documentation in respect of the scheme and the offer is in the process of being
prepared, and being approved by the SRP and a circular will be mailed to
Zaptronix shareholders in due course. Further details in respect of the scheme
incorporating a notice of scheme meeting will be mailed to DuO shareholders in
due course.
Johannesburg
20 July 2004
Sponsor & Joint Corporate Advisor
River Group
Corporate Advisor
Radagast Capital (Pty) Ltd
Restructuring Advisor
Gandalf Trust
Date: 21/07/2004 08:02:09 AM
Produced by the JSE SENS Department
