| Mon 30 Aug 2004, 15:58 | | Fulfilment Of Certain Conditions Precedent |
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Altech/EWG - Fulfilment Of Certain Conditions Precedent And Changes To The
Proposed Investment By Altech In EWG
ALLIED TECHNOLOGIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
Share code: ALT ISIN: ZAE000015251
(`Altech`)
ECONET WIRELESS GLOBAL LIMITED
(Incorporated in Botswana)
(Registration number 2002/1140)
(`EWG`)
FULFILMENT OF CERTAIN CONDITIONS PRECEDENT AND CHANGES TO THE PROPOSED
INVESTMENT BY ALTECH IN EWG
1. INTRODUCTION
Shareholders were advised, in an announcement dated 21 January 2004 (`the
previous announcement`), that Altech and the shareholders of EWG,
collectively referred to as `TSMI` and currently being restructured into
Econet Wireless Ventures Limited (`EWV`), a company registered in the
British Virgin Islands (`BVI`), were to establish a jointly-controlled
South African (`RSA`) holding company (`Newco`). Certain telecommunication
interests of EWG and cash funding from Altech were to be introduced into
Newco (`the proposed transaction`).
Pursuant to the previous announcement, Altech shareholders are advised
that:
* the specific TSMI assets earmarked in the previous announcement for
inclusion in the proposed transaction and certain terms of the
proposed transaction have been revised, details of which are provided
in 2 below, whilst the pro forma financial effects of the proposed
transaction on Altech are outlined in 3 below;
* the following principal conditions precedent to the proposed
transaction referred to in the previous announcement have now been
fulfilled:
- Altech has successfully completed due diligence investigations
relating to Econet`s business operations; and
- approvals of the boards of directors of Altech, TSMI and Allied
Electronics Corporation Limited (`Altron`) and the Executive
Committee of Altron have been obtained;
* the fulfilment of certain other conditions precedent remain
outstanding, as discussed in 4 below; and
* a company, to be renamed in due course and referred to herein as
Newco, has been incorporated and registered in South Africa, for the
sole purpose of implementing the proposed transaction.
2. AMENDMENTS TO THE PROPOSED TRANSACTION
Pursuant to the due diligence investigation of the operations of EWG, the
parties have agreed, subject to the obtaining of any necessary regulatory
approvals, to exclude from EWG the TSMI shareholdings in both Econet
Wireless Kenya Limited (`Econet Kenya`) and Mountain Communications
(Proprietary) Limited (`MKC`) of Lesotho, pending the clarification of
certain outstanding issues. TSMI has indemnified EWG (and its holding and
subsidiary companies) against any losses or liabilities in regard to Econet
Kenya and MKC.
These excluded assets of TSMI together with the minimum 51% shareholding
interest in Econet Wireless Holdings Limited (`Econet Zimbabwe`), referred
to in the previous announcement, may be acquired by EWG at fair market
value in the future, in exchange for the issue of new EWG shares should the
shareholders of EWG unanimously determine accordingly.
Subsequent to the previous announcement, EWG has secured indirectly,
subject to final Papua New Guinean government approvals, the exclusive
right to acquire a new investment, namely a 51% controlling shareholding in
Telikom PNG Limited (`Telikom PNG`), described in 2.1 below, which will
form part of the proposed transaction.
Accordingly, after the implementation of the proposed transaction Newco,
through EWG, will have shareholdings in the companies concerned as
indicated below:
* Mascom Wireless Botswana Proprietary Limited (`Mascom`) (40%);
* Econet Wireless New Zealand Limited (`Econet New Zealand`) (65%);
* Econet Wireless International Limited (`Econet International`) (100%);
* Econet Wireless Limited (`EWL`) (100%);
* Econet Satellite Services Limited (`Econet Satellite`) (100%);
* Telikom PNG (51%);
* conet Wireless Nigeria Limited (`Econet Nigeria` recently renamed Vee
Networks Limited, trading as V-Mobile) (5%);
* Independent SMS (Proprietary) Limited (`Independent SMS`) (50%);
* Worldstream (Proprietary) Limited (`Worldstream`) (100%); and
* Econet Wireless International (Proprietary) Limited (`Econet
International SA`)(100%).
Further information concerning amendments to the proposals previously
announced is set out below.
2.1 Details on Telikom PNG
In terms of a privatisation process adopted by the Government of the
Independent State of Papua New Guinea, a controlling 51% shareholding
in the national telecommunications operator, Telikom PNG, has been
offered for sale. Telikom PNG is the only fixed line and mobile
telecommunications operator in the country, a right that it will
retain for the next five to ten years, subject to its achievement of
certain community service obligations. EWG, indirectly, and the
Independent Public Business Corporation (`IPBC`), the privatisation
agency of the Government of Papua New Guinea, have signed a share sale
and purchase agreement, which is subject to certain conditions
precedent (including approval by the Government of Papua New Guinea).
It is expected that the transaction will be completed shortly.
2.2 Econet Nigeria
The previous announcement referred to a dispute concerning TSMI`s pre-
emptive right, through its subsidiary EWL, to increase its
shareholding in Econet Nigeria and other procedural matters, as a
result of a third party network operator making an alternative
investment proposal to Econet Nigeria. The legal proceedings and
international arbitration processes undertaken by EWL relating to the
dispute are in progress and conclusions are expected to be reached
shortly.
The third party network operator, referred to above, has since
terminated its management contract and withdrawn its intention to
invest in Econet Nigeria. It should be noted that the litigation
involving the third party network operator does not involve Altech or
Newco in any way. As a consequence, the costs and benefits arising
therefrom and relating thereto will not be borne by or affect either
Altech or Newco.
However, in view of Nigeria being a high-growth telecommunications
market in Africa, EWL intends to increase its interest in Econet
Nigeria should the arbitration process enable EWL to pursue its pre-
emptive rights as an existing shareholder in Econet Nigeria.
Similarly, Econet International intends to enforce any rights it may
have with respect to a management contract that Econet International
contends was irregularly terminated by Econet Nigeria. The possible
reinstatement of this management contract is the subject of a separate
arbitration process.
2.3 Mascom
It is now proposed that EWG will acquire Econet Zimbabwe`s 14%
interest in Mascom, subject to the approval of such transaction by the
Reserve Bank of Zimbabwe, Econet Zimbabwe shareholders and the
Zimbabwe Stock Exchange.
In the previous announcement it was envisaged that a current
shareholder of Mascom (a Botswanan consortium) would exchange its
indirect interest in Mascom for a minority shareholding in EWG. A new
structure has since been devised whereby it is envisaged that this
shareholder will hold preferred ordinary shares in an EWG subsidiary
through which EWG`s resultant effective 40% interest in Mascom will be
held.
The extent of the income participation of the preferred ordinary
shares to be held by the Botswanan consortium will be directly
dependent on the growth in the income from EWG`s indirect 40%
shareholding in Mascom.
Should any opportunities arise for EWG to increase its shareholding in
Mascom in the future, these will be pursued.
2.4 Revised structure of Newco on completion of the proposed transaction
See press for details
3. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION
The table below sets out the pro forma financial effects of the proposed
transaction on Altech shareholders. These calculations are based on the
assumption that Newco owns 100% of EWG as constituted for the proposed
transaction. Further assumptions are set out in the notes to the table.
In considering these financial effects, shareholders should be mindful of
the fact that certain of EWG`s operations are in a start-up phase.
Before the After the
proposed proposed
Description transaction transaction Percentage
(cents)1 (cents) change
Basic earnings per share2, 4 297 315 6.1
Headline earnings per share2, 4 302 328 8.6
Net asset value per share3, 5 1 484 1 484 -
Net tangible asset value per share3, 5 1 470 1 342 8.7)
Notes:
1. The `Before the proposed transaction` financial information has been
extracted, without adjustment, from the published audited results of Altech
for the year ended 29 February 2004.
2. The basic and headline earnings per share calculations are based on the
assumptions that the proposed transaction was implemented on 1 March 2003
and was effective for the full 12 month period ended 29 February 2004. The
calculation was based on the weighted average number of Altech ordinary
shares in issue for the year ended 29 February 2004 (105 221 000 shares).
3. The net asset value and net tangible asset value per share calculations
have been based on the assumption that the proposed transaction was
implemented on 29 February 2004. Net asset value per share is calculated as
shareholders` equity divided by the total number of Altech shares in issue
as at 29 February 2004 (105 224 000 shares).
4. Basic earnings per share have been adjusted to incorporate the attributable
profit of EWG for the 12 months ended 30 June 2003, the interest foregone
on cash holdings of the ZAR equivalent of US$70 million, assuming a US$/ZAR
exchange rate of 7.26:1 (being the average rate of exchange for the 12
months ended 29 February 2004, an interest rate of 6.65% (being the average
after-tax rate of interest for the 12 month period ended 29 February 2004)
and the weighted average number of Altech shares in issue being 105 221 000
shares. Headline earnings per share exclude amortisation of goodwill
arising as a result of the investment in EWG. The basic earnings and
headline earnings of EWG, for the 12 month period ended 30 June 2003, have
been extracted from the pro forma consolidated financial results of EWG,
which were based on the most recent audited results of the subsidiaries and
investments of EWG for the 12 months ended 30 June 2003 and 31 December
2003, as the case may be in respect of each envisaged asset of EWG, with
the exception of Telikom PNG, for which management accounts for the 12
month period ended 31 December 2003 have been used (adjusted to take
account of certain terms and conditions of the relevant shares sale and
purchase agreement).
5. Net asset value and net tangible asset value have been adjusted to include
the attributable portion of the assets of EWG and the payment of the total
consideration amounting to US$70 million in cash. Net asset value per share
includes the goodwill on the investment in EWG and the capitalised licence
fees included in certain EWG subsidiaries. The adjustments have been made
assuming a US$/ZAR exchange rate of 6.64:1 (being the prevailing rate of
exchange at 29 February 2004). The net asset value and the net tangible
asset value of EWG have been extracted from the pro forma consolidated
financial balance sheets of EWG, which were based on the audited balance
sheets of its subsidiaries and investments as at 30 June 2003 and 31
December 2003, as the case may be in respect of each envisaged asset of
EWG, with the exception of Telikom PNG, for which the balance sheet
extracted from its management accounts as at 31 December 2003 has been used
(adjusted to take account of certain terms and conditions of the relevant
shares sale and purchase agreement).
4. REMAINING CONDITIONS PRECEDENT TO THE PROPOSED TRANSACTION
The following further conditions precedent to the transaction apply:
* the approval of the transaction described in the announcement by the
Exchange Control Division of the South African Reserve Bank;
* the share sale and purchase agreement with respect to Telikom PNG
becoming unconditional; and
* the finalisation of agreements whereby EWG will indirectly acquire the
interests in Mascom referred to in 2.3 above.
The fulfilment of these conditions is expected shortly and shareholders
will be advised accordingly.
A presentation with respect to the proposed transaction will be made to
investors on 1 September 2004 and a copy of the presentation will
simultaneously be placed on the Altech website (www.altech.co.za).
Shareholders who are unable to obtain a copy of the presentation from
either of the above sources may request a copy from the Public Relations
Department of Altech at 79 Central street, Houghton, Johannesburg.
As the proposed transaction is classified as a Category 3 transaction in
terms of the JSE Securities Exchange South Africa Listings Requirements, no
circular to shareholders or shareholders` approval in general meeting is
required for the proposed transaction.
Johannesburg
30 August 2004
Investment bank to Altech
Standard Bank
Auditors of Altech
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration number 1994/001166/21)
Attorneys to Altech
H R Levin
Attorneys, Notaries and Conveyancers
Sponsor to Altech
Cazenove
Date: 30/08/2004 03:42:13 PM Produced by the JSE SENS Department
