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L.A. Group - Announcement of participation in Gateway Communications Africa
Consortium and Acquisition of interest in Link Africa BV from
Celtel International BV
Withdrawal of Cautionary Announcement
L.A. GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1936/008786/06)
Share Code: LAR ISIN: ZAE000028676
Share Code: LAN ISIN: ZAE000028684
(`L.A.Group` or `the company`)
* Announcement of participation in Gateway Communications Africa consortium and
acquisition of interest in Link Africa BV from Celtel International BV
* Withdrawal of cautionary announcement
1. Introduction
Shareholders are referred to the cautionary announcement dated 7 April 2005. The
board of directors of the company are pleased to announce that L.A. Group
Investments (Proprietary) Limited (`L.A. Group Investments`), a subsidiary of
the company, has entered into an agreement in terms of which it will participate
in a consortium which has acquired, inter alia, the merged business of Gateway
Communications and Link Africa BV (`Gateway and Link Africa`) from Gateway
Communications International (`GCI`) and Celtel International BV (`Celtel`)
respectively (`the investment`).
1. Rationale for the investment
Consistent with the LA Group`s previously announced strategy to diversify its
business in pursuing high-growth empowerment transactions, the company has
acquired a meaningful strategic stake in Gateway Telecommunications
(Proprietary) Limited (`Gateway` - the South Africa based Newco).
Gateway and Link Africa provide international connectivity services to
telecommunications carriers and large businesses focussed on the African
continent. The company`s services include international and national voice,
data, electronic commerce and value added services, such as roaming and network
management.
2. Particulars of the investment
L.A Group Investments has entered into an agreement in terms of which it will:
* participate in a consortium led by GCI which will acquire the existing
businesses of Gateway and Link Africa from Celtel and GCI respectively
through a management facilitated leveraged buyout; and
* subscribe for a 13.23% stake in Gateway for R20 million;
Other major financiers to the transaction are Batsalani Communications, Investec
Bank and the Industrial Development Corporation of South Africa.
3. Funding and Effective date
The funding will be raised from internal resources and is payable upon
fulfilment of all conditions precedent which is expected around late May or
early June 2005.
4. Condition precedent to the acquisition
The investment will become unconditional upon approval thereof by the SA Reserve
Bank and the Competition Commission.
5. Financial effects of the acquisition
The financial effects of the investment on earnings per share, headline earnings
per share and net asset value per share is less than 3% and is therefore not
regarded as significant in terms of the Listings Requirements of the JSE. Most
of the underlying contracts, assets, liabilities, income and expenses are dollar
denominated and as such the investment will be dollar-correlated in performance.
6. Withdrawal of cautionary announcement
Shareholders are no longer required to exercise caution when dealing in the
securities of the company on the JSE.
Cape Town
6 May 2005
Sponsor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
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