| Wed 2 Feb 2005, 17:06 | | Disposal and Withdrawal of Cautionary Announcement |
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Sasani - Disposal and Withdrawal of Cautionary Announcement
SASANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1955/000259/06)
Share code: SSA ISIN: ZAE000044384
(`Sasani` or `the company`)
DISPOSALS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 14 January 2005, Lanark Financial
Services is authorised to announce that Sasani has entered into agreements in
terms of which, in an indivisible transaction:
- it will dispose of its 47,5% shareholding in and all claims on loan account
against Condor Post Cape (Proprietary) Limited (`Condor` and `the Condor
disposal`) to an existing minority shareholder of Condor, Mr M J Smit or his
nominee (`Smit`); and
- The Video Lab Group (Proprietary) Limited (`Video Lab`), a wholly-owned
subsidiary of Sasani, will dispose of its interests in Chris Fellows Sound
Studios (and the related trademark), The Video Lab Johannesburg and The Video
Lab Cape Town (and the related trademark), Sasani Studios Cape Town and The Film
Lab Cape Town (`the Video Lab disposal`) to The Refinery Post Production
Facilities (Proprietary) Limited (`The Refinery`),
(jointly `the disposals` and Smit and The Refinery jointly `the purchasers`) on
the terms and conditions set out in this announcement.
The agreements governing the disposals are subject to the conditions precedent
set out in paragraph 4 below.
2. RATIONALE FOR THE DISPOSALS
The board of directors of Sasani is of the opinion that the disposals offer
more value to shareholders than operating these assets as ongoing concerns.
Rapidly changing technology, increasing competition and the reliance on creative
talent has contributed to declining returns in an oversupplied post-production
sector. The supply base needs to be consolidated and a fair price has been
achieved because of the consolidation benefits available to the purchasers.
The assets being disposed of consist of post production and film rental
facilities.
3. DETAILS OF THE DISPOSALS
3.1 The Condor disposal
Sasani will dispose of its 47,5% shareholding in and all claims on loan
account against Condor to Smit for an amount of R6 500 475, consisting of its
current exposure on loan account (approximately R8,3 million) and the par value
of the shares (R475,00). The consideration will be settled in cash on the
closing date of the disposals, which is the third business day after the
fulfilment of the conditions precedent (`the closing date`).
The agreement contains limited warranties that are usually found in agreements
regarding transactions of this nature.
3.2 The Video Lab disposal
The Video Lab will, in one indivisible transaction, dispose of its interests
in the businesses concerned to The Refinery for an amount of R44,6 million. The
consideration will be settled in cash on the closing date,
The agreement contains limited warranties that are usually found in agreements
regarding transactions of this nature. In addition, provision is made for the
change of name of Video Lab and certain limited restraints of trade are imposed
on Sasani.
3.3 Utilisation of the proceeds
The proceeds of the disposals will be invested in an interest bearing account
in the short term.
4. CONDITIONS PRECEDENT
The conditions precedent to which the agreements are subject are:
4.1 approval of each of the disposals by the shareholders of Sasani in general
meeting;
4.2 a written resolution of the board of directors of Video Lab approving the
Video Lab disposal;
4.3 approval of the documentation required to implement the disposals by the
JSE Securities Exchange South Africa;
4.4 written confirmation to the satisfaction of Sasani that Smit and The
Refinery have obtained suitable financing;
4.5 the written approval of the Industrial Development Corporation of South
Africa Limited (`the IDC`) to the conclusion of the Condor and Video Lab
agreements. The IDC is a material (34%) shareholder in The Refinery; and
4.6 the satisfactory completion of due diligence exercises by the purchasers.
5. FINANCIAL EFFECTS OF THE DISPOSALS
The unaudited pro forma financial effects of the disposals on the earnings,
headline earnings, net asset value and net tangible asset value per Sasani
share, before and after the disposal, are set out below. The unaudited pro forma
financial information provided is the responsibility of the directors. The
unaudited pro forma financial information has been prepared for illustrative
purposes only and because of its nature, may not fairly reflect the financial
position of Sasani or its operations after the disposals.
5.1 The Condor disposal
Before the Pro forma After
Condor the Condor Change
disposal(1) (cents) disposal (cents) (%)
Earnings per share 2 20,5 25,1 22,4
Headline earnings per share 2 18,6 22,8 22,6
Tangible net asset value per share 3 228,7 232,8 1,8
Net asset value per share 3 285,8 289,9 1,4
Weighted average number of shares in issue 58 599 250 58 599 250 -
Notes:
1. Based on the annual audited financial statements of Sasani for the year
ended 30 June 2004.
2. The effects on earnings and headline earnings per share are prepared on the
following assumptions
- the Condor disposal was effective 1 July 2003; and
- interest was earned on the proceeds of the disposal at an assumed interest
rate of 7% before tax.
3. The effects on net asset and tangible net asset value per share were
prepared on the assumption that the Condor disposal was effective 30 June 2004.
5.2 The Video Lab disposal
Before the Pro forma After
Video Lab the Video Lab Change
Disposal(1) (cents) disposal (cents) (%)
Earnings per share 2 20,5 (3,6) (117,6)
Headline earnings per share 2 18,6 10,9 (41,4)
Tangible net asset value per share 3 228,7 237,8 4,0
Net asset value per share 3 285,8 269,5 (5,7)
Weighted average number of shares
in issue 58 599 250 58 599 250 -
Notes:
1. Based on the annual audited financial statements of Sasani for the year
ended 30 June 2004.
2. The effects on earnings and headline earnings per share are prepared on the
following assumptions:
- the Video Lab disposal was effective 1 July 2003;
- transaction costs of R0,6 million; and
- interest was earned on the proceeds of the disposal at an assumed interest
rate of 7% before tax.
3. The effects on net asset and tangible net asset value per share were
prepared on the following assumptions:
- the Video Lab disposal was effective 30 June 2004; and
- transaction costs of R0,6 million.
5.2 The disposals
Before the Pro forma After
disposal(1) the disposal(2) Change
(cents) (cents) (%)
Earnings per share 2 20,5 1,0 (95,1)
Headline earnings per share 2 18,6 15,1 (18,8)
Tangible net asset value per
share 3 228,7 241,8 5,7
Net asset value per share 3 285,8 273,6 (4,3)
Weighted average number of
shares in issue 58 599 250 58 599 250 -
Notes:
1. Based on the annual audited financial statements of Sasani for the year
ended 30 June 2004.
2. Represents the combined effects of the Condor disposal and the Video Lab
disposal.
3. The adjustments to earnings, headline earnings, tangible and net tangible
asset per share are based on the assumptions as per paragraphs 5.1 and 5.2
above.
6. CIRCULAR TO SHAREHOLDERS
A circular containing details of the disposals and a notice convening a general
meeting of the company will be posted to the shareholders of Sasani in due
course.
7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement dated 14 January 2005 is hereby withdrawn.
By order of the board
Johannesburg
2 February 2005
Corporate adviser
LANARK FINANCIAL SERVICES
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
Auditors and reporting accountants
PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration no. 1998/012055/21)
Attorneys
TABACKS
