| Wed 15 Dec 2004, 11:42 | | Glotec - Announcement Regarding |
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Glotec - Announcement Regarding
The Disposal By Glotec Of Its Remaining Operating Subsidiaries;
Related Party Details; And
The Voluntary Winding Up Of Glotec
GLOBAL TECHNOLOGY LIMITED
Incorporated in the Republic of South Africa
(Registration number 1996/009809/06)
Share code: GLT ISIN: ZAE000016820
(`Glotec` or `the group`)
ANNOUNCEMENT REGARDING
- THE DISPOSAL BY GLOTEC OF ITS REMAINING OPERATING SUBSIDIARIES;
- RELATED PARTY DETAILS; AND
- THE VOLUNTARY WINDING UP OF GLOTEC
1. Introduction
Shareholders are referred to the cautionary announcement dated 12 August 2004
and the announcement relating to the suspension of trading of Glotec shares on
29 September 2004. Glotec has finalised agreements to dispose of all its
remaining operating subsidiaries or their businesses (`the disposals`). The
disposals include:
- the Glotec Insurance business, being the business of Brolink
(Proprietary) Limited (`Brolink`), and the remaining related
trademarks in Global Technology Insurance Systems (Proprietary)
Limited (`GTIS`);
- the shares in and claims against Global Technology Business
Intelligence (Proprietary) Limited (`GBI`); and
- the shares in and claims against Associated Computer Solutions
(Proprietary) Limited (`ACS`).
2. The rationale for the disposals
Glotec has been in the process of restructuring for the past 18 months. As part
of this process Glotec earlier this year made a renounceable rights offer to its
ordinary shareholders in the ratio of 6 new shares for every 1 ordinary Glotec
share at a subscription price of 2 cents per share. At the close of the rights
offer on Friday, 16 April 2004, Glotec ordinary shareholders, their renouncees,
transferees and the underwriters of the rights offer had subscribed for an
aggregate of 2 432 284 169 new Glotec shares, raising R48,7 million, equivalent
to 91,81% of the total number of new Glotec shares offered in terms of the
rights offer. This process of restructuring was premised on the satisfactory
performance of the three remaining operating subsidiaries. Unfortunately, these
companies have not performed as expected during 2004 and, as a result, the group
has lost the credibility of all its stakeholders. Due to this predicament, the
directors of Glotec have taken the decision to dispose of the remaining three
operating subsidiaries and thereafter to place the group into voluntary
liquidation. Following this voluntary liquidation, it is unlikely that there
will be any distribution, cash or otherwise, to shareholders.
3. Terms and conditions of the disposals
The salient terms of the disposals are as follows:
3.1 Brolink and GTIS
Zamori 120 (Proprietary) Limited (`Zamori`), whose shareholders are
the Calibre Private Equity Investors Partnership number 11 (in which
the Kagiso Group and the Calibre Private Equity Trust have a 98,5% and
a 1,5% investment as a limited partner and as a general partner
respectively) and the current members of the Brolink directorate and
management team, has offered to acquire the business operation
conducted by Brolink including certain assets and liabilities, all
trademarks and trade names, but excluding any inter-group loans and
other liabilities. The disposal will be effective 30 June 2004 for a
net purchase consideration of R3 670 948. The assets and liabilities
which Zamori takes over are fixed assets with a book value of R4 351
209, debtors with a book value of R3 646 391 and existing liabilities
with a book value of R4 326 652, equating to net assets of R3 670 948.
Glotec is to receive R3 670 948 within three days after the date of
fulfilment of the conditions precedent detailed below. Zamori will
also acquire all the trademarks owned by GTIS for R1. No book value
has been attributed to these trademarks in the audited financial
statements of GTIS.
3.2 GBI
Glotec`s shares in and all group company claims against GBI are sold
to Enterprise Outsourcing Holdings Limited for a total purchase
consideration of R4,7 million. The effective date of the disposal is 1
August 2004. In terms of the disposal agreement, GBI has undertaken a
restraint of trade for a period of 24 months from the third business
day after the date upon which the conditions precedent are fulfilled
or waived. The disposal is subject to the conditions precedent
detailed below. As at 31 December 2003, the value of the GBI
investment in the books of Glotec was R9 688 384 and Glotec`s loan
account was R5 946 185.
3.3 ACS
Glotec`s claims on loan account against and ACS Holdings` shares in
ACS are sold to the directors and staff of ACS for a total purchase
consideration of R2 million, being R200 for the shares and the balance
for the claims in ACS of R5 659 126. The effective date of the
disposal is 1 July 2004. The disposal is subject to the conditions
precedent detailed below.
4. Conditions precedent
The disposals are subject to, inter alia, the following conditions precedent:
* approval by the Competition Commission; and
* the requisite approval by the Glotec shareholders in general meeting
being obtained.
5. Pro forma financial effects of the disposal
Set out below are the unaudited pro forma financial effects firstly of the
rights offer as announced on 19 April 2004 and thereafter of the disposals on
the audited results for the year ended 31 December 2003. The pro forma financial
effects reflect the impact that the rights offer and the disposals might have
had on the loss per share and the headline loss per share had they been effected
1 January 2003, and the effect that the rights offer and the disposals might
have had on the net asset value per share and the net tangible asset value per
share had they been effected 31 December 2003. The pro forma financial effects
are provided for illustrative purposes only and, because of their pro forma
nature, may not fairly present Glotec`s financial position, changes in equity,
results of operations or cash flows.
Before the After the Change After the Change
disposals rights % Brolink %
(1) and offer (2) disposal
rights (3)
offer
Headline loss (20,83) (2,95) 85,84 (3,10) (5,08)
per share
(cents)
Loss per share (12,07) (1,64) 86,41 (2,00) (21,95)
(cents)
Net asset value (10,51) 0,04 100,37 (0,30) (850,00)
per share
(cents)
Net tangible (15,98) (0,80) 94,99 (0,78) 2,50
asset value per
share (cents)
Weighted average 429 617 2 861 901
number of shares
in issue (`000)
After the Change After the Change After all
ACS % GBI % the
disposal disposal disposals Change
(4) (5) (6) %
Headline loss
per share
(cents) (3,13) (6,10) (3,39) (14,92) (3,72) (26,10)
Loss per
share (cents) (1,85) (12,80) (1,23) (25,00) (1,81) (10,37)
Net asset
value per 0,44
share (cents) (0,48) 1 300,00 1 000,00 (0,43) (1 175,00)
Net tangible
asset value
per share
(cents) (0,84) (5,00) (0,40) 50,00 (0,43) 46,25
Weighted
average
number of
shares in
issue (`000) 2 861 901
Notes:
1. The `Before the disposals and rights offer` column is based on the audited
results of the group for the year ended 31 December 2003.
2. The `After the rights offer` column is based on 2 874 151 568 ordinary
shares, which includes 2 432 284 169 shares issued by way of the rights
offer and the net proceeds of R47 645 683 received. Glotec`s average cost
of debt during the 12 months ended 31 December 2003 amounted to 10,5%.
3.1 The calculation of the headline loss per share and loss per share in the
`After the Brolink disposal` column makes adjustments to the `After the
rights offer` column and takes into account the audited loss after tax of
R2,6 million made by Brolink for the 12 months ended 31 December 2003, the
effect of the deconsolidation of the inter-company transactions of R7,4
million and a reduction in interest paid of R385 450 based on the net
proceeds received of R3,67million and the average after tax cost of debt
for the year ended 31 December 2003 of 10,5%. The calculation is based on
the assumption that subsequent to the disposal of the business of Brolink,
the R13,2 million in respect of goodwill as at 1 January 2003 and R2,67
million of deferred tax assets will be written off.
3.2 The calculation of the net asset value and net tangible asset value per
share in the `After the Brolink disposal` column makes adjustments to the
`After the rights offer` column and takes into account the deconsolidation
of the negative net assets of R384 517 assuming the assets were disposed as
at 31 December 2003, the R3,67 million net proceeds received and the losses
incurred from the impairment of goodwill of R10,3 million as at 31 December
2003 and deferred tax assets of R2,6 million.
4.1 The calculation of the headline loss per share and loss per share in the
`After the ACS disposal` column makes adjustments to the `After the rights
offer` column and takes into account the audited profit after tax of R4
million made by ACS for the 12 months ended 31 December 2003, the effect of
the deconsolidation of the inter-company transactions of R3,95 million and
a reduction in interest paid of R210 000 based on the proceeds received of
R2 million and the average after tax cost of debt for the year ended 31
December 2003 of 10,5%.
4.2 The calculation of the net asset value and net tangible asset value per
share in the `After the ACS disposal` column makes adjustments to the
`After the rights offer` column and takes into account the deconsolidation
of net assets of R3 million, R6,9 million of goodwill written off and the
R2 million proceeds received.
5.1 The calculation of the headline loss per share and loss per share in the
`After the GBI disposal` column takes into account the audited profit after
tax of R6,6 million made by GBI for the 12 months ended 31 December 2003,
the effect of the deconsolidation of the inter-company transactions of
R13,5 million and a reduction in interest paid of R498 750 based on the
proceeds received of R4,75 million and the average after tax cost of debt
for the year ended 31 December 2003 of 10,5%.
5.2 The calculation of the net asset value and net tangible asset value per
share in the `After the GBI disposal` column makes adjustments to the
`After the rights offer` column and takes into account the deconsolidation
of net liabilities of R12,7 million and the R4,75 million proceeds
received.
6. The `After all the disposals` column reflects the aggregated effect of the
disposals based on 2 874 151 568 shares in issue and the weighted average
number of shares in issue of 2 861 901 169 during the 12 months ended 31
December 2003.
7. The negative 10,5 cents of net asset value per share reflected above in the
`Before the disposals and rights offer` column does not agree to the annual
report of 31 December 2003 as this was erroneously based on 429 617 664
shares, whereas the above calculation was based on 441 867 399 shares.
6. Salient dates and times of the disposal
2005
Release of unreviewed interim results on SENS Thursday, 6 January
Forms of proxy for the general meeting of Tuesday, 11 January
Glotec ordinary shareholders to be lodged with
the transfer secretaries by no later than
10:30 on
General meeting of Glotec ordinary
shareholders to be held at 10:30 on Thursday, 13 January
Results of general meeting released on SENS on Thursday, 13 January
Last day to trade Friday, 21 January
Record date Friday, 28 January
Listing of Glotec shares terminated on the JSE
Securities Exchange South Africa (`JSE`) from
commencement of business on Monday, 31 January
Notes:
These dates and times are subject to amendment. Any such amendment will be
released on SENS and published in the press.
7. Related party and purchaser details
7.1 Brolink related parties
Messrs Clipstone Webber, Merwe Erasmus and Leon Burger are directors of
Brolink and hold, respectively, 37%, 8% and 4% shareholding in Zamori.
Consequently, they are related parties as defined in the Listings
Requirements of the JSE. Accordingly, the aforesaid Messrs Webber, Erasmus
and Burger may not vote on the disposal at the general meeting. However,
they may be taken into account in determining a quorum for the purposes of
the general meeting.
7.2 ACS related parties
The directors of ACS, being Stephen Wookey, Marcel Kitay, Samantha
Blignaut, Ian Foster and Sikander Choonara who, in terms of the ACS
disposal agreement will hold, respectively, 19,31%, 12,87%, 19,31%, 12,87%
and 2,57% shareholdings in ACS, together with certain staff members of ACS
who hold the remainder of the shares, are purchasing the shares in and
shareholders` claims against ACS. Consequently, these directors are related
parties as defined in the Listings Requirements of the JSE. Accordingly,
these directors may not vote on the disposal at the general meeting.
However, they may be taken into account in determining a quorum for the
purposes of the general meeting.
7.3 Fair and reasonable opinions
In terms of the Listings Requirements of the JSE, fair and reasonable
opinions are required in respect of related party transactions. The fair
and reasonable opinions in respect of the abovementioned disposals have
been prepared by Fisher Hoffman PKF (Jhb) Inc and the fair and reasonable
letters in respect of the Brolink disposal and the ACS disposal are set out
in the circular to be posted to Glotec shareholders as detailed in
paragraph 8 below.
8. Documentation
A circular, which is subject to the approval of the JSE and which includes a
notice convening a general meeting of Glotec ordinary shareholders, will be
posted to Glotec ordinary shareholders on or about 20 December 2004.
Johannesburg
14 December 2004
Sponsor
Merchant Sponsors (Proprietary) Limited
Corporate Secretary
Arcay Client Support (Proprietary) Limited
(Registration number 1998/025284/07)
Attorneys
Werksmans Incorporated
Independent advisers and reporting accountants on the financial effects
Fisher Hoffman PKF (JHB) Inc
Auditors and reporting accountants on historic information
Deloitte & Touche
Date: 15/12/2004 11:09:11 AM
Produced by the JSE SENS Department
