| Fri 5 Nov 2004, 10:33 | | AGREEMENT WITH BEE PARTIES |
|
MOULDED MEDICAL SUPPLIES LIMITED - SPECIFIC ISSUES OF SHARES FOR CASH,
ACQUISITION OF BUSINESS AND APPPOINTMENT OF DIRECTORS
MOULDED MEDICAL SUPPLIES LIMITED
(Registration number 1995/003771/06)
(`Mouldmed`)
(JSE Code: MUM & ISIN Code: ZAE000058731)
AGREEMENT WITH BLACK ECONOMIC EMPOWERMENT (`BEE`) PARTIES; ACQUISITION OF
INTEREST IN TOURISM VENTURE; ISSUE OF SHARES FOR CASH AND APPOINTMENT OF
DIRECTORS
1. INTRODUCTION
Since its listing in the Venture Capital sector of the JSE Securities Exchange
SA (`JSE`) in 1997 Mouldmed was involved in medical services, the development,
manufacturing and distribution of specialized medical equipment. In addition,
via its subsidiary Rest and Recuperation Retreats Limited (`RRR`), it became a
recognized force in medical and general tourism. The long period of development
and the high costs involved in both industries led the board of directors to
consider a further issue of shares for cash and to negotiate a BEE-relationship.
This necessitated a restructuring of the company and an increase in capital.
This was done at the annual general meeting held on 22 October 2004.
2. BEE ARRANGEMENT: NUBIAN CONSULTING
As announced on SENS on 7 June 2004, Mouldmed has signed an agreement with
Nubian Management Consulting CC (Reg no CK 2002/038948/23) (`Nubian`), a BEE
group which provides management services to small and medium enterprises,
specializing in the utilization of the call centre as a delivery channel, and in
diversity management.
In terms of this agreement Nubian will subscribe to 15 000 000 new Mouldmed
shares of no par value at 10 cents per share, (thereby acquiring a 10 % interest
in Mouldmed) by way of a specific issue of shares for cash.
Due to delays in the restructuring in the capital of Mouldmed as previously
announced, the dates in the Nubian contract have been extended by agreement
between the parties.
The Nubian agreement provides for a due diligence study of Mouldmed to the
satisfaction of Nubian. This has to be completed before or on 15 November 2004.
Conversely Mouldmed is granted an opportunity to do a similar due diligence
study of Nubian (which will include confirmation of the availability of funds
for the subscription).
The issue of the Mouldmed shares is further subject to advance approval thereof
by:
2.1 Mouldmed members in general meeting; and
2.2 the JSE.
The issue of the shares itself will be made against payment of the relevant
consideration on the later of the following dates:
2.3 30 November 2004; and
2.4 the final date of the approvals referred to in 2.1 and 2.2 above.
The shares acquired by Nubian remain subject to the specific restriction that,
should it wish to sell any of the shares, it shall first offer it to other
approved BEE investors on the same terms and conditions on which a third party
is prepared to acquire such shares.
3. RATIONALE FOR THE NUBIAN AGREEMENT
The scope of Mouldmed as a financial and medical services provider will be
greatly enhanced by the quality of the services and connections of Nubian in
general and the directors appointed to the Mouldmed board (see paragraph 12
below) in particular.
4. BEE ARRANGEMENT: TSELANE BASADI
In terms of an agreement dated 26 October 2004 Tselane Basadi Management (Pty)
Ltd (reg no 2003/013799/07) purchased 130 000 000 issued ordinary shares of no
par value in RRR from Mouldmed (as vendor) for a total purchase consideration of
R13 000 000 (or 10 cents per RRR share). The shares amount to 26 % of the
total issued shares in RRR.
The purchase agreement provides for a due diligence study of Mouldmed to the
satisfaction of Tselane Basadi. This has to be completed before or on 15
November 2004.
Conversely Mouldmed is granted an opportunity to do a similar due diligence
study of Tselane Basadi (which will include confirmation of the availability of
funds for the purchase). The transfer of the Mouldmed shares is further subject
to the advance approval thereof by:
4.1 Mouldmed members in general meeting; and
4.2 the JSE.
The delivery of the 50 000 000 RRR shares by Mouldmed will be made against
payment of R5 000 000 on the later of the following dates:
4.3 4 December 2004; and
4.4 the final dates of the approvals referred to in 4.1 and 4.2 above.
The balance of R8 000 000 is payable before or on 30 April 2007 from dividends
paid by RRR or from any other source agreed to between the parties. Mouldmed
will provide a loan to Tselane Basadi for the outstanding balance, with no
interest payable thereon.
The 80 000 000 RRR shares not yet paid for will be transferred by Mouldmed to
Tselane Basadi but will be held in escrow by the auditors of RRR to be released
on the basis of payments made from time to time.
In spite of the shares being held in escrow, the relevant holder shall:
4.5 be a full member of RRR;
4.6 have a full vote at a meeting of members; and
4.7 be entitled to any dividends declared.
Tselane Basadi is an investment management company with a number of influential
black women as members. These include:
4.8 Dr Thandi Ndlovu, chairperson of the Woman`s Development Bank;
4.9 Ms Badirileng Mokone, chairperson of the South African Post Office;
4.10 Dr Namane Magau, director for Group Human Capital at the SABC; president of
the Business Women`s Association;
4.11 Dr Sibiletso Matabane, CEO of Sentech;
4.12 Ms Lyndall Shope-Mafole, chairperson of the Presidential National
Commission on Information Society and Development; new DG for Department of
Communication;
4.13 Ms Eunnice Komane, SA Ambassador to Botswana.
5. RATIONALE FOR THE TSELANE BASADI AGREEMENT
Tourism is expected to play a key role in the South African economy in future.
Tselane Basadi and its individual members will, with their influence and
connections, greatly assist RRR to expand its involvement in the sector
especially due to their expertise in the various communication industries. They
would also facilitate RRR`s role in tourism projects put out to tender by the
state.
6. ACQUISITION OF INTEREST IN ROUTE +27
On 12 October 2004 Mouldmed entered into an agreement with AS Brown, J H Loots
and PT Goosen (`the vendors`) whereby it acquired a 49 % interest in Route +27
(Pty) Ltd for R3 500 000 payable by:
6.1 the transfer by Mouldmed to the vendors of 15 000 000 RRR shares at 10
cents per share, plus
6.2 The issue by Mouldmed of 20 000 000 Mouldmed shares, also at 10 cents per
share.
The Route+27 agreement provides for a due diligence study of Mouldmed to the
satisfaction of the vendors and of Route+27. This has to be completed before or
on 15 November 2004.
Conversely Mouldmed is granted an opportunity to do a similar due diligence
study of Route+27, which will include confirmation of the commercial viability
of the Route+27 business.
The transfer of the RRR shares and the issue of the Mouldmed shares are further
subject to advance approval thereof by:
6.3 Mouldmed members in general meeting; and
6.4 the JSE.
The transfer of the RRR shares and the issue of the Mouldmed shares will be made
against the simultaneous delivery of the 49% interest in Route+27 to Mouldmed.
Mouldmed initially acquires the interest in Route +27, but has agreed to sell it
to RRR for a cash amount of R3 500 000 payable before or on 31 December 2006.
Following the Tselane transaction and the Route +27 transaction, Mouldmed will
retain an interest of 71% in RRR.
Route +27 was only incorporated on 1 September 2004. It has not traded since
that date but acquired the data development business from the vendors for R160
000, credited to their personal loan accounts. The net asset value of the
issued shares is R1.00 per share. The 49% interest acquired by Mouldmed is
equal to 49 of the 100 ordinary issued shares of R1.00 each. The premium paid
by Mouldmed therefore amounts to R3,499,951.
7. RATIONALE FOR ROUTE +27 AGREEMENT
RRR specializes in medical and in general tourism. To support its countrywide
reach and its national licensing system it needs a database of the highest
quality.
The members of Route +27 have developed such database which is available on a CD
and which probably has no equal in South Africa and very few worldwide.
This would allow RRR almost immediate market penetration all over Africa.
Mouldmed did not acquire a 100% interest since:
7.1 It was not available;
7.2 Mouldmed expects the 49% interest to be adequate to unlock the synergies
between RRR and Route+27.
8. ISSUE OF SHARES FOR CASH
Although the Tselane Basadi transaction provides a substantial amount of cash,
the funds will largely be utilized in RRR.
To improve the liquidity of the whole group, the board of directors has decided,
subject to special approval by members, to issue a further 30 000 000 ordinary
Moulded shares from the increase in capital approved at the annual general
meeting.
The amount raised will be utilized to:
1. expand the distribution of the group`s own and of acquired product ranges;
2. increase the turnover of its profitable locums subsidiary; and
3. provide a solid base for further acquisitions.
The shares will be placed at not less than 12.5 cents per share with independent
members of the public (as defined in the rules and regulations of the JSE)
before or on 31 December 2004. No related party (including any director,
employee, or associate of the company or any subsidiary) will acquire any shares
from the placement.
9. RATIONALE FOR ISSUE OF SHARES FOR CASH
As has been confirmed a number of times in the financial statements of the
group, the lack of working capital has always been the main constraint to
Mouldmed becoming a viable health industry enterprise. After unsuccessful
attempts to raise additional funds from members or bankers, Mouldmed is
presently in a position to place the shares with investors and businessmen in
the health industry who wish to assist in the growth of the group.
10. CHANGE OF CONTROL
At present the trustees of the Oxford Property Trust is the effective
controlling shareholder of Mouldmed, holding 40 %. This will be diluted to 27 %
by the envisaged share issues. Thereafter Nubian (with 9.3 %) will be the only
other significant shareholder. There is no voting or other arrangement between
Nubian and the above trustees.
The issue of additional shares (to the BEE group and to members of the public as
defined in terms of the rules and regulations of the JSE) will in no way affect
the control of Mouldmed.
11. FINANCIAL EFFECTS OF THE TRANSACTIONS
The financial effects of each transaction on the Mouldmed group are summarised
below, and are based on the assumption that the transactions have all been
effective from 1 March 2004. The information was prepared for the announcement
only, is given for illustrative purposes and, due to its nature, may not fairly
represent Mouldmed`s resultant financial position.
11.1 The Nubian transaction:
Before After the %
the transacti chan
transacti on2 ge
on1
Net asset value per (1.91) (0.31) 83.8
share (cents)
Net tangible asset (1.91) (0.31) 83.8
value per share (cents)
Earnings per share (15.1) (12.95) 14.2
(cents)
Headline earnings per (0.7) (0.48) 31.2
share (cents)
Number of shares in 96 260 111 260
issue (`000)
Principal assumptions:
(i) The position `before the transaction` is based on the audited results of
Mouldmed for the twelve months ended 29 February 2004.
(ii) The position `after the transaction` is after the issue of 15 000 000
shares at 10 cents per share in cash.
(iii) Earnings are based only on the interest received on the cash proceeds
from the transaction for a full year, and at a rate of 10% per annum.
(iv) No provision was made for income tax due to the assessed tax loss.
11.2 The Tselane Basadi transaction:
Before After the %
the transacti chan
transacti on2 ge
on1
Net asset value per (1.91) 3.28 271.
share (cents) 7
Net tangible asset (1.91) 3.28 271.
value per share (cents) 7
Earnings per share (15.1) (9.41) 37.7
(cents)
Headline earnings per (0.7) (0.19) 72.8
share (cents)
Number of shares in 96 260 96 260
issue (`000)
Principal assumptions:
(i) The position `before the transaction` is based on the audited results of
Mouldmed for the twelve months ended 29 February 2004.
(ii) The position `after the transaction` is after the sale of 130 000 000 RRR
shares to Tselane Basadi and receipt of R5 000 000 cash therefor.
(iii) Since the second payment by Tselane Basadi will be made from
dividends, it was not included in the calculations. No interest has been
provided for on the loan to Tselane Basadi from Mouldmed.
(iv) Earnings are based only on the interest received on the cash proceeds from
the transaction for a full year, and at a rate of 10% per annum. Mouldmed has
furthermore realised a profit of R 5 000 000 on the disposal of the 50 000 000
RRR shares to Tselane Basadi. No profit has been taken into account for the 80
000 000 RRR shares against which Mouldmed has provided as loan.
(v) RRR have not made any contribution to the earnings and net asset value of
Mouldmed for the above financial period.
(vi) No provision was made for income tax.
11.3 The Route +27 transaction:
Before After the %
the transacti chan
transacti on2 ge
on1
Net asset value per (1.91) 1.43 174.
share (cents) 9
Net tangible asset (1.91) (1.58) 17.3
value per share (cents)
Earnings per share (15.1) (12.52) 17.1
(cents)
Headline earnings per (0.7) (0.59) 15.7
share (cents)
Number of shares in 96 260 116 260
issue (`000)
Principal assumptions
(i) The position `before the transaction` is based on the audited results of
Mouldmed for the twelve months ended 29 February 2004.
(ii) The position `after the transaction` is after the transfer of 15 000 000
RRR shares and the issue of 20 000 000 Mouldmed shares for a total consideration
of R3 500 000 to the vendors of the Route+27 interest.
(iii) Route +27 was incorporated on 1 September 2004 and therefore have no
trading history. Goodwill of R 3 499 951 has arisen as a result of the
transaction, and Mouldmed made a profit of R 1 500 000 on the disposal of the 15
000 000 RRR shares to the vendors.
11.4 The issue of shares for cash:
Before the After the % change
transaction1 transaction2
Net asset value per (1.91) 1.51 179.1
share (cents)
Net tangible asset (1.91) 1.51 179.1
value per share (cents)
Earnings per share (15.1) (11.20) 25.8
(cents)
Headline earnings per (0.7) (0.31) 57.1
share (cents)
Number of shares in 96 260 126 260
issue (`000)
Principal assumptions
(i) The position `before the transaction` is based on the audited results of
Mouldmed for the twelve months ended 29 February 2004.
(ii) The position `after the transaction` is after the specific issue of 30 000
000 Mouldmed shares for cash at 12.5 cents per share.
(iii) Earnings are based only on the interest received on the cash proceeds
from the transaction for a full year, and at a rate of 10% per annum.
(iv) No provision was made for income tax.
11.5 Cumulative effect:
Before the After the % change
transaction1 transaction2
Net asset value per (1.91) 7.39 486.9
share (cents)
Net tangible asset (1.91) 5.21 372.8
value per share (cents)
Earnings per share (15.1) (5.29) 64.9
(cents)
Headline earnings per (0.7) 0.21 130.0
share (cents)
Number of shares in 96 260 161 260
issue (`000)
12. DIRECTORS
12.1. Nubian will appoint the following directors as its representatives on
the board of Mouldmed after receipt of their investment.
12.1.1 Dr Jacob Kekane
Dr Kekane has a BA degree from the University of the North, an HDPM from Wits
Business School, an MA from Michigan State University and a DPhil from the
University of Oxford.
As a businessman he is also an executive of Cell C and a director of African
Bank.
12.1.2 Adv Modise Geoffrey Khoza
He has a BProc-degree (from the University of the North), an LLB-degree (Wits)
and an LLM-degree (Harvard).
Mr Modise is an advocate of the High Court of South Africa and a member of
the Johannesburg bar.
The reconstituted board of Mouldmed will therefore be:
Dr Sarie Brits (Chairman); Gerrit A Theron; Prof Ryno Kriel; Henry
YA Kruger; Dr Jacob Kekane; and Adv MG Khoza (alt S Kekane).
12.2 Tselane Basadi will appoint the following directors as its representatives
on the board of RRR after receipt of the first part of the purchase
consideration.
12.2.1 Dr Namane Magau:
Director for Group Human Capital at the SABC
President of the Business Woman`s Association
12.2.2 Dr Thandi Ndlovu:
Chairperson of the Woman`s Development Bank
12.3 Route +27 will appoint the following directors as its representatives on
the board of RRR after transfer of the Route +27 shares to Mouldmed.
12.3.1 Mr AS Brown
Mr Brown holds a Masters Degree in Criminology at the University of South
Africa, and various advanced diplomas.
He has extensive experience in strategic planning, feasibility studies,
compilation of financing proposals, business plans and deals brokering.
12.3.2 Mr J H Loots
Mr Loots holds a B.Ed degree at UNISA and a High Educational Diploma at the
Educational College of Pretoria (NKP). He has 21 years educational experience at
primary, secondary and tertiary level. He has 8 years extensive experience in
the South African tourism sector.
13. CIRCULAR
A detailed circular will be issued to members in due course.
Durbanville
5 November 2004
Sponsor
Exchange Sponsors (Pty) Limited
Date: 05/11/2004 09:58:40 AM
Produced by the JSE SENS Department
