| Mon 21 Feb 2005, 9:44 | | AST Group Limited - Further Announcement With Resp |
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AST Group Limited - Further Announcement With Respect To The Proposed
Transaction, Proposed Change Of Name, Notice Of General Meeting And Trading
Statement
AST Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/021790/06)
Share code: AAA
ISIN: ZAE000049441
(`AST` or `the Company`)
FURTHER ANNOUNCEMENT WITH RESPECT TO THE PROPOSED TRANSACTION, PROPOSED CHANGE
OF NAME, NOTICE OF GENERAL MEETING AND TRADING STATEMENT
1. INTRODUCTION
Further to the cautionary announcements dated 29 September 2004 and 10 November
2004, respectively, and the announcements dated 13 December 2004 and 25 January
2005, respectively, in which the board of directors of AST (`the board`)
announced that AST has entered into agreements, subject to the fulfilment of
certain conditions precedent, in terms of which:
* AST-A Holdings (Proprietary) Limited (`AST-A`), a wholly-owned subsidiary of
AST, will acquire certain information technology businesses and interests from
Gijima Support Services (Proprietary) Limited, Gijima Technologies (Proprietary)
Limited and Gijima Technologies Group (Proprietary) Limited, respectively, which
are owned and controlled by Gijima Info Technologies Afrika (Proprietary)
Limited (`Gijima`) (`the target businesses`), for a purchase consideration to be
settled by way of an issue of ordinary shares in AST (`the proposed merger`);
and
* AST will recapitalise its balance sheet by undertaking a partially
underwritten rights offer for an amount of R160 million, of which an amount of
R116.75 million will be underwritten by the Iscor Pension Fund, Kumba Resources
Limited, The Standard Bank of South Africa Limited and Cadtech (Proprietary)
Limited (collectively, `the underwriters`), who are existing lenders to AST,
(`the proposed rights offer`),
(collectively, `the proposed transaction`),
the board wishes to provide AST shareholders with information relating to the
financial effects of the proposed transaction and to advise shareholders that a
general meeting of AST shareholders will be held on
14 March 2005 to consider and, if deemed fit, approve the resolutions necessary
to implement the proposed transaction.
2. OPINIONS AND RECOMMENDATIONS
KPMG Services, the independent expert to AST, has considered the terms and
conditions of the proposed transaction and is of the opinion that they are fair
and reasonable to the shareholders of AST and has advised the board accordingly.
The directors are of the opinion that the terms and conditions of the proposed
transaction are fair and reasonable to AST shareholders.
Accordingly, the directors recommend that shareholders vote in favour of the
resolutions to be proposed at the general meeting.
The directors with direct and/or indirect interests in AST intend to vote in
favour of the resolutions to be proposed at the general meeting.
3. FINANCIAL EFFECTS
In order to assist shareholders in understanding the financial effects of the
proposed transaction, the pro forma financial effects set out below reflect the
impact of the proposed transaction should no more than the underwritten amount
of R116.75 million be raised through the proposed rights offer and should the
full amount of R160 million be raised through the proposed rights offer.
3.1 Unaudited pro forma financial effects of the proposed transaction if the
minimum amount of R116.75 million is raised in terms of the proposed rights
offer
The table below sets out the pro forma financial effects of the proposed
transaction on the net asset value (`NAV`) and tangible NAV (`TNAV`) per AST
share and earnings per AST share (`EPS`) and headline EPS (`HEPS`), based on
AST`s audited results for the year ended 30 June 2004 and assuming that no more
than the underwritten amount of R116.75 million is raised through the proposed
rights offer. These financial effects have been prepared for illustrative
purposes only, in order to provide information about the financial position and
results of AST assuming that the proposed transaction had been implemented on
30 June 2004 and 1 July 2003, respectively. Due to its nature, the pro forma
financial information may not give a fair reflection of AST`s financial position
and results of operations subsequent to the proposed transaction.
Before the proposed After the proposed
transaction1 transaction 2-5 Increase
Financial effects (cents) (cents) %
EPS 2,3 (91.92) (16.23) 82.43
HEPS 2,3 (8.56) 1.38 *
NAV per AST share 4,5 15.92 30.13 89.26
TNAV per AST share 4,5 (93.83) (3.61) 96.15
* As the change is from a negative value to a positive value, the percentage
increase is not reflected.
Notes:
1. Extracted from the audited published results of AST for the year ended 30
June 2004.
2. The pro forma EPS and HEPS after the proposed transaction have been
calculated based on a weighted average of 795 454 878 AST shares in issue after
the proposed transaction and on the following assumptions:
* the proposed transaction was implemented on 1 July 2003;
* no more than the underwritten amount of R116.75 million was raised through the
proposed rights offer;
* interest, calculated at a pre-tax rate of 11%, on R10 million additional loan
funding received subsequent to year end has been provided for;
* tax on the adjustments has been calculated at 30%, where applicable; and
* interest saving, calculated at a pre-tax rate of 11%, on the R111.63 million
interest bearing borrowings and bank overdrafts that will be repaid from the
proceeds of the underwritten portion of the proposed rights offer after the
payment of the costs of the proposed transaction as set out in the circular to
AST shareholders dated 18 February 2005.
3. The pro forma EPS and HEPS have been prepared including the aggregated income
statement of the target businesses to be acquired in terms of the proposed
merger adjusted for:
* the amortisation, over a period of six years, of the goodwill arising on the
proposed merger; and
* an interest adjustment, calculated at a pre-tax rate of 6%, on certain cash
balances not acquired from the target businesses.
4. The pro forma NAV and TNAV after the proposed transaction have been
calculated based on 826 621 285 AST shares in issue after the proposed
transaction and on the following assumptions:
* the proposed transaction was implemented on 30 June 2004;
* no more than the underwritten amount of R116.75 million was raised through the
proposed rights offer; and
* the costs of the proposed transaction as set out in the circular to AST
shareholders dated 18 February 2005 have been paid.
5. The pro forma NAV and TNAV after the proposed transaction have been
calculated including the aggregated balance sheet of the assets and liabilities
of the target businesses to be acquired in terms of the proposed merger,
adjusted for the goodwill arising on the proposed merger and the cash balances
that are not being taken over from the target businesses.
3.2 Unaudited pro forma financial effects of the proposed transaction if the
maximum amount of R160 million is raised in terms of the proposed rights offer
The table below sets out the pro forma financial effects of the proposed
transaction on the NAV and TNAV per AST share and EPS and HEPS, based on AST`s
audited results for the year ended 30 June 2004 and assuming that the rights
offer is fully subscribed for and an amount of R160 million is raised through
the proposed rights offer. These financial effects have been prepared for
illustrative purposes only, in order to provide information about the financial
position and results of AST assuming that the proposed transaction had been
implemented on 30 June 2004 and 1 July 2003, respectively. Due to its nature,
the pro forma financial information may not give a fair reflection of AST`s
financial position and results of operations subsequent to the proposed
transaction.
Before the proposed After the proposed
transaction1 transaction 2-5 Increase
Financial effects (cents) (cents) %
EPS 2,3 (91.92) (13.74) 85.05
HEPS 2,3 (8.56) 1.51 *
NAV per AST share 4,5 15.92 30.76 93.22
TNAV per AST share 4,5 (93.83) 1.41 *
* As the change is from a negative value to a positive value, the percentage
increase is not reflected.
Notes:
1. Extracted from the audited published results of AST for the year ended 30
June 2004.
2. The pro forma EPS and HEPS after the proposed transaction have been
calculated based on a weighted average of 919 026 306 AST shares in issue after
the proposed transaction and on the following assumptions:
* the proposed transaction was implemented on 1 July 2003;
* the total amount of R160 million was raised through the proposed rights offer;
* interest, calculated at a pre-tax rate of 11%, on R10 million additional loan
funding received subsequent to year end has been provided for;
* interest saving, calculated at a pre-tax rate of 11%, on the R116.75 million
interest bearing borrowings and bank overdrafts that will be repaid from the
proceeds of the proposed rights offer;
* interest saving, calculated at a pre-tax rate of 11%, on the settlement of
other bank overdrafts from the portion of the proceeds of the proposed rights
offer that exceed the R116.75 million, in order to clear the pro forma overdraft
balance;
* interest earned at a pre-tax rate of 6% on the excess proceeds from the
proposed rights offer after the payment of the costs of the proposed transaction
as set out in the circular to AST shareholders dated 18 February 2005 and after
settlement of the pro forma bank overdrafts; and
* tax on the adjustments has been calculated at 30%, where applicable.
3. The pro forma EPS and HEPS have been prepared including the aggregated income
statement of the target businesses to be acquired in terms of the proposed
merger adjusted for:
* the amortisation, over a period of six years, of the goodwill arising on the
proposed merger; and
* an interest adjustment, calculated at a pre-tax rate of 6%, on certain cash
balances not being acquired from the target businesses.
4. The pro forma NAV and TNAV after the proposed transaction have been
calculated based on 950 192 714 AST shares in issue after the proposed
transaction and on the following assumptions:
* the proposed transaction was implemented on 30 June 2004;
* the total amount of R160 million was raised through the proposed rights offer;
and
* the costs of the proposed transaction as set out in the circular to AST
shareholders dated 18 February 2005 have been paid.
5. The pro forma NAV and TNAV after the proposed transaction have been
calculated including the aggregated balance sheet of the assets and liabilities
of the target businesses to be acquired in terms of the proposed merger adjusted
for the goodwill arising on the proposed merger and the cash balances that are
not being taken over from the target businesses.
3.3 Financial effects of the SARS settlement agreement
Shareholders were advised in September 2004 of the signature of a confidential
settlement agreement with the South African Revenue Service (`SARS`) (`the SARS
settlement agreement`) that brought finality to the various uncertainties that
existed between AST and SARS. Further to this, AST shareholders are advised
that, based upon the audited accounts of AST for the financial year ended 30
June 2004, the pro forma financial effects of the SARS settlement agreement
would have been to increase HEPS by 11.09 cents, decrease EPS by 43.16 cents,
decrease NAV per AST share by 35.86 cents and increase TNAV per AST share by
9.22 cents. The outcome of the settlement agreement is a once-off net income
statement charge of R66.087 million. This, however, has no immediate cash flow
effect.
4. PROPOSED CHANGE OF NAME
Subject to the approval of the resolutions necessary to implement the proposed
transaction, AST proposes to change its name to Gijima AST Group Limited in
order to reflect its newly acquired Black Economic Empowerment status, the
demographics of its shareholder base and the constituent parts of the enlarged
AST.
5. GENERAL MEETING AND CIRCULARS TO AST SHAREHOLDERS
A circular to AST shareholders, dated 18 February 2005 (`the circular`), has
been posted to certificated AST shareholders and those dematerialised AST
shareholders who have indicated to their Central Securities Depository
Participants or brokers that they wish to receive such communications by the
Company. The circular contains full details of the proposed transaction and the
proposed change of name and convenes a general meeting of AST shareholders to be
held at 09:00 on Monday, 14 March 2005 in Boardroom DTSG25 of the Company, Block
B, AST Offices, 47 Landmarks Avenue, Kosmosdal, Samrand, Centurion, 0157 (`the
general meeting`).
AST shareholders will be asked at the general meeting to consider and, if deemed
appropriate, to approve the resolutions necessary to:
* approve the necessary increase in the authorised share capital of AST;
* place sufficient unissued AST shares under the control of the directors to
implement the proposed transaction;
* approve the proposed merger;
* approve the proposed change of AST`s name; and
* waive any requirement for a mandatory offer in connection with the proposed
transaction, subject to the Securities Regulation Panel granting the necessary
dispensation.
A further circular relating to the proposed rights offer will be sent to AST
shareholders when the underwriting agreement is unconditional.
6. TRADING STATEMENT
AST is currently finalising its results for the six months ended 31 December
2004, which should be released by 31 March 2005.
In this regard, shareholders are advised that AST`s headline earnings per share
for the six months ended 31 December 2004 are likely to be between 100% and 120%
higher and basic loss per share for the same period is likely to be between 15%
and 25% lower than that of the comparative period in 2003.
The financial information on which this trading statement is based has not been
reviewed and reported on by the Company`s auditors, in accordance with the JSE
Securities Exchange South Africa Listings Requirements.
Samrand
18 February 2005
Investment bank and transactional sponsor to AST
STANDARD BANK
Lead sponsor to AST
CAZENOVE SOUTH AFRICA (PROPRIETARY) LIMITED
Corporate advisers to Gijima
PRICEWATERHOUSECOOPERS CORPORATE FINANCE (PROPRIETARY) LIMITED
and REGIMENTS CAPITAL
Attorneys to AST
ROUTLEDGE MODISE MOSS MORRIS
Corporate law advisers to Gijima
EDWARD NATHAN
Reporting accountants for AST
PRICEWATERHOUSECOOPERS INC.
Independent expert to AST
KPMG SERVICES (PROPRIETARY) LIMITED
Attorneys to Gijima
CHUENE KWINANA MOTSATSE
Reporting accountants on Gijima
KPMG INC
Underwriters to the proposed rights offer
CADTECH (PROPRIETARY) LIMITED
ISCOR PENSION FUND
KUMBA (PROPRIETARY) LIMITED
THE STANDARD BANK OF SOUTH AFRICA LIMITED
Date: 18/02/2005 02:57:54 PM
Produced by the JSE SENS Department
