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Altron - Settlement of disputes between Allied Technologies Limited and the
other shareholders of Econet Wireless Global Limited
Allied Electronics Corporation Limited
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
(Share Code: ATN) (ISIN Number: ZAE000029658)
(Share code: ATNP) (ISIN: ZAE000029666)
(`Altron`)
SETTLEMENT OF DISPUTES BETWEEN ALLIED TECHNOLOGIES LIMITED (`ALTECH`) AND THE
OTHER SHAREHOLDERS OF ECONET WIRELESS GLOBAL LIMITED (`EWG`)
1. Introduction
Shareholders are referred to an announcement by Altech, dated 31 August
2005, in terms of which Altech has entered into a settlement agreement
(`the settlement agreement`) with the other shareholders of EWG (`the TSMI
shareholders`) to settle all disputes between Altech and the TSMI
shareholders (`the proposed transaction`).
Altron has a 57.9% shareholding in Altech, and as such, the proposed
transaction constitutes a Category 3 transaction for Altron in terms of the
JSE Limited Listings Requirements.
2. Salient features of the settlement agreement
The salient features of the settlement agreement are as follows:
2.1. Altech will receive a total cash payment of US$87.5 million in respect
of its interests in EWG, to be settled in three tranches as set out in
the announcement referred to above;
2.2. the effective date of the settlement agreement and the sale of
Altech`s interest in EWG is 1 September 2005;
2.3. the TSMI shareholders will be obliged to furnish Altech with a bank
guarantee in terms of the settlement agreement by no later than 20
September 2005;
2.4. Altech and the TSMI shareholders have agreed to settle all disputes
between them by waiving all claims they have against one another;
2.5 all agreements between Altech and the TSMI shareholders will be
cancelled with effect from 1 September 2005; and
2.6 Altech will be released from any restraint undertakings that it has
given in favour of EWG and the TSMI shareholders and, accordingly,
will be able to pursue other network opportunities in Africa and
elsewhere.
3. Conditions precedent
The settlement agreement is not subject to the fulfilment of any condition
precedent.
4. Financial effects
Based on the published audited results of Altron for the year ended 28
February 2005, the pro forma financial effects of the proposed transaction
on Altron`s basic earnings, headline earnings and net asset value (`NAV`)
per share are as follows:
Note Before the After the % change
proposed proposed
transaction transaction
(1) (2)
Basic earnings per 3 144.7 170.3 +17.7%
share (cents)
Headline earnings per 4 161.2 161.2 -
share (cents)
NAV (cents) 5 & 938.0 964.7 +2.8%
6
Notes:
1. The `Before the proposed transaction` financial information has been
extracted, without adjustment, from the published audited results of Altron
for the year ended 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 shares in EWG, ie. 1
December 2004. The relevant calculations are based on the weighted average
number of Altron shares in issue for the year ended 28 February 2005
(approximately 97 174 115 ordinary shares and 208 698 664 participating
preference shares).
3. Basic earnings per share have been adjusted for the following:
(a). to exclude Altron`s portion of the attributable profits of EWG earned
by Altron for the 3 month period ended 28 February 2005 which were
included in the audited income statement of Altron for the year ended
28 February 2005;
(b). to exclude Altron`s portion of the actual interest earned 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;
. to include Altron`s portion of 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 Altron`s portion of 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 per share calculation has 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 Altron shares in issue as at 28 February 2005 (97 174 115
ordinary shares and 208 698 664 participating preference shares).
6. Net asset value (`After the proposed transaction`) has 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 Altron
as at 28 February 2005 (refer 1), and to include Altron`s portion of the
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.
General
Shareholders will be advised of any further developments regarding the proposed
transaction should this become necessary.
Johannesburg
2 September 2005
Sponsor
Nedbank Capital
Date: 02/09/2005 05:00:13 PM
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