| Tue 22 Mar 2005, 17:28 | | Disposal By M Cubed Of The Entire Issued Share Cap |
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M Cubed - Disposal By M Cubed Of The Entire Issued Share Capital Of M Cubed
Investment Life To Channel
m CUBED HOLDINGS LIMITED
Registration number: 1998/014568/06
Share code: MCU
ISIN: ZAE000033353
(`m Cubed`)
DISPOSAL BY M CUBED OF THE ENTIRE ISSUED SHARE CAPITAL OF M CUBED INVESTMENT
LIFE LIMITED (`M CUBED INVESTMENT LIFE`) TO CHANNEL LIFE LIMITED (`CHANNEL`)
1. the disposal
1.1 Shareholders are advised that m Cubed has concluded an agreement (`the
agreement`) for the disposal by m Cubed of the entire issued share capital
of m Cubed Investment Life to Channel with effect from 1 March 2005 (`the
disposal`).
1.2 The disposal and the implementation thereof is subject to the fulfilment of
certain suspensive conditions as described in 5 below.
1.3 m Cubed has given, in terms of the agreement, such warranties to Channel in
respect of m Cubed Investment Life as are normal in a transaction of the
nature of the disposal.
2. rationale for the disposal
2.1 m Cubed owns two life companies (the one being m Cubed Investment Life)
that hold the same licences under the Long-Term Insurance Act, 1998. m
Cubed requires only one licence to carry on its life insurance operations.
The second licence, as held by m Cubed Investment Life, is not required and
m Cubed accordingly decided to sell m Cubed Investment Life.
2.2 Selling m Cubed Investment Life will release the capital previously
retained in that company to comply with actuarial capital adequacy ratios.
3. PURCHASE PRICE
3.1 The purchase price payable by Channel to m Cubed for the disposal shall be
an amount of R20 000 000 as adjusted in terms of 3.2 and 3.3 below.
3.2 To the extent applicable, the purchase price shall be reduced by an amount
equal to the amount by which the cash reserve expense provision of m Cubed
Investment Life, in respect of policies as reflected in the effective date
financial statements, is less than R1 000 000, without prejudice to any
other remedy that Channel may have as a result of such difference in terms
of the agreement or in law.
3.3 The purchase price shall be paid by the fifth business day after the later
of:
- the fulfilment or waiver of all the suspensive conditions; or
- the effective date financial statements being deemed final and binding
as provided for in the agreement,
(`the closing date`).
3.4 The purchase price shall bear interest from the effective date, being 1
March 2005, until the closing date at a rate equal to the publicly quoted
basic prime rate of interest levied by ABSA Bank Limited on overdraft.
3.5 m Cubed will apply the proceeds of the disposal as working capital in its
existing business operations.
4. financial effects
4.1 The table below sets out the unaudited pro forma financial effects of the
disposal on the earnings, headline earnings, net asset value and net
tangible asset value per m Cubed share, based on the assumptions that:
4.1.1 for purposes of the earnings and headline earnings per share
calculations:
- the disposal was effective during the interim period of six
months ended 31 August 2004; and
- the whole of the disposal consideration was received on 1
March 2004 and that such consideration was invested to earn
an after-tax return of 5,3% during the interim period ended
31 August 2004;
4.1.2 for purposes of the net asset value and net tangible asset value
per share calculations, the disposal was effected on 31 August
2004:
Unaudited(1) Pro forma Change
Before After %
(cents) (cents)
Earnings per share(2) 1,01 0,90 (10,9)
Headline earnings per share(2) 2,59 2,48 (4,2)
Net asset value per share at 31 50,5 50,6 0,2
August 2004(3)
Tangible net asset value per 28,3 28,4 0,4
share at 31 August 2004(3)
(1) Extracted from the unaudited interim financial statements of m Cubed for
the six months ended 31 August 2004.
(2) Based on a weighted average of 720,781 million shares in issue during the
interim period ended 31 August 2004.
(3) Based on 720,781 million shares in issue at 31 August 2004.
4.2 The financial effects contained in the table in 4.1.2 above have been
prepared for the purposes of illustrating how the disposal would have
affected the relevant financial ratios of m Cubed for the historic
financial period indicated and are pro forma only. Accordingly, such
effects do not necessarily represent a true reflection of the financial
effects of the disposal on m Cubed`s current and future earnings and net
asset value.
5. SUSPENSIVE conditions
5.1 The disposal is subject to, inter alia, the following suspensive
conditions:
5.1.1 that the boards of directors of m Cubed and Channel approve the
disposal;
5.1.2 that the Competition Authorities unconditionally approve the
disposal, or approve the disposal subject to such conditions as
are acceptable to Channel (and to the extent that such conditions
impact on m Cubed in a material way, such conditions are also
acceptable to m Cubed), by the issue of a merger clearance
certificate under the provisions of the Competition Act, 1998, by
16 May 2005;
5.1.3 that the Registrar of Long-term Insurance approves the disposal
in terms of the provisions of section 26 of the Long-term
Insurance Act, 1998, by 15 March 2005; and
5.1.4 such other regulatory approvals as may be required.
5.2 The dates for fulfilment of the suspensive conditions may be extended, and
the fulfilment of certain of the suspensive conditions may be waived, by
agreement between the parties.
Johannesburg
22 March 2005
Sponsor and corporate Legal adviser
adviser Prinsloo, tindle & andropoulos inc.
PSG Capital
Date: 22/03/2005 05:15:25 PM
Produced by the JSE SENS Department
