| Wed 31 Aug 2005, 11:11 | | Settlement of disputes re Econet Wireless Global |
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Altech - Settlement of disputes re Econet Wireless Global Limited
Allied Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
Share code: ALT
ISIN: ZAE000015251
(`Altech` or `the Company`)
SETTLEMENT OF DISPUTES RE ECONET WIRELESS GLOBAL LIMITED (`EWG`)
Introduction
Shareholders are referred to the announcement dated 4 August 2005 stating that
Altech had launched an application in the High Court of Botswana for the winding
up of EWG on a just and equitable basis. This was due to the relationship
between Altech and the other shareholders of EWG (`TSMI shareholders`) having
irretrievably broken down.
On 24 August 2005 a cautionary announcement advised shareholders that Altech had
been approached by the TSMI shareholders with a view to settling the matter.
Agreement
An agreement has been entered into between inter alia Altech and the TSMI
shareholders (`the settlement agreement`) in terms of which all disputes between
Altech and the TSMI shareholders have been settled, on the basis that Altech
will receive a total cash payment of US$87,5 million in respect of its interests
in EWG.
Salient features of the settlement agreement are as follows:
1. the cash will be received by Altech in three tranches, namely:
1.1 an amount of US$13 473 297 of Altech`s claims on loan account against
EWG shall be repaid to Altech by EWG on 2 September 2005;
1.2 an amount of US$13 473 297 of Altech`s claims on loan account against
EWG shall be acquired from Altech by the TSMI shareholders on 2
September 2005; and
1.3 the TSMI shareholders shall acquire Altech`s shares in and the balance
of Altech`s claims on loan account against EWG on 29 October 2005 by
paying an amount of US$ 60 553 406 together with interest thereon
(`the balance amount`) in cash to Altech.
2. the effective date of the settlement agreement and the sale of Altech`s
interest in EWG is 1 September 2005;
3. the TSMI shareholders will be obliged to furnish Altech with a bank
guarantee in respect of the balance amount by no later than 20 September
2005;
4. subject to the implementation in full of the settlement agreement -
4.1 Altech and the TSMI shareholders have agreed to settle all disputes
between them by waiving all claims that they have against one another;
4.2 all agreements between Altech and the TSMI shareholders will be
cancelled with effect from 1 September 2005;
4.3 Altech will be released from any restraint undertakings that it has
given in favour of EWG and the TSMI shareholders and, accordingly,
Altech will be free to pursue other network opportunities in Africa
and elsewhere.
The settlement agreement is not subject to the fulfillment of any condition
precedent. Due to the size of the transaction (category 3), Altech shareholder
approval is not required.
Gain realised
Altech`s interests in EWG were acquired with effect from 1 December 2004 for a
total purchase consideration of US$70 million, which represented a Rand cost of
R411 million. The settlement agreement will result in the realisation of a US$
gain of US$17,5 million for Altech and, at the exchange rate of R6.46 per US$,
applicable in terms of the settlement agreement, (which is the average of the
exchange rates at 11:00 on Friday 26 and Monday 29 August 2005), a profit on
investment of R154 million (ie approximately 37%).
Proforma financial effects
The table below sets out the pro forma effects of the proposed transaction on
Altech shareholders. All assumptions are set out in the notes to the table.
Description Before the After the Change
proposed proposed
transaction transaction
(cents)(0) (cents)
Basic earnings per share 295 418 (0;3) +41.7%
Headline earnings per 339 339 (0;4) -
share
Net asset value per 1 495 1 621 (0;6) +8.4%
share
Net tangible asset value 943 1 220 (5;0) +29.4%
per share
Notes
1. The `Before the proposed transaction` financial information has been
extracted, without adjustment, from the published audited results of Altech
for the year ended and as at 28 February 2005.
2. The basic and headline earnings per share calculations (`After the proposed
transaction`) are based on the assumption that the proposed transaction was
implemented on the same date that Altech acquired its share in EWG, i.e. 1
December 2004. The relevant calculations are based on the weighted average
number of Altech ordinary shares in issue for the year ended 28 February
2005 (approximately 99,344,000 shares).
3. Basic earnings per share have been adjusted for the following:
a. to exclude 50% of the attributable profits of EWG earned by Altech for
the 3 month period ended 28 February 2005 which were included in the
audited income statement of Altech for the year ended 28 February
2005;
b. to exclude actual interest earned by Altech on the cash balance of
R174 million held in escrow for EWG on which Altech earned all
interest arising therefrom in terms of the EWG shareholders`
agreement;
c. to include the theoretical interest earned on the proceeds (R565
million assuming a ZAR/US$ exchange rate of R6.46) at an interest rate
of 4.79% (being the average after-tax rate of interest for the 3
months ended 28 February 2005) received from the proposed transaction;
and
d. to include a net capital gain of R123 million on the proposed
transaction after taking into account the capital gains tax arising of
R22 million, the attributable net assets of EWG of R383 million as at
28 February 2005, and the carrying value of goodwill relating to the
original acquisition of R37 million.
4. Headline earnings per share include 3 above and exclude the net capital
gain on the proposed transaction.
5. The net asset value and net tangible asset value per share calculations
have been based on the assumption that the proposed transaction was
implemented on 28 February 2005. Net asset value per share is calculated
as shareholders` equity divided by the total number of Altech shares in
issue as at 28 February 2005 (97,412,768 shares).
6. Net asset value and net tangible asset value (`After the proposed
transaction`) have been adjusted to exclude the attributable portion of the
assets of EWG and goodwill relating to the acquisition and accounted for in
the audited balance sheet of Altech as at 28 February 2005 (refer 0), and
to include net cash proceeds of R543 million after deducting capital gains
tax.
7. Costs related to the proposed transaction have been estimated not to be
material and, as a result, have not been included in the above
calculations.
Future strategy
Altech will continue to pursue opportunities to acquire and develop interests in
network operating activities in Africa and elsewhere, in the future. Where
appropriate, this will be done on a partnership basis, with existing operators.
Furthermore, Altech will continue to explore other acquisition opportunities in
all of its core activities.
General
Shareholders will be advised of any further developments in this matter
including the conclusion of the transaction.
JOHANNESBURG
31 August 2005
Sponsor - Investec Bank Limited
Date: 31/08/2005 11:10:17 AM
Produced by the JSE SENS Department
