| Thu 6 Oct 2005, 17:46 | | African Dawn - Proposed acquisition of Bhenka Fina |
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African Dawn - Proposed acquisition of Bhenka Financial Services and withdrawal
of cautionary
AFRICAN DAWN CAPITAL LIMITED
(Formerly ABC Cash Plus Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2003/005353/07)
JSE Share code: ADW & ISIN: ZAE000060703
("African Dawn" or "the Company")
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer.
PROPOSED ACQUISITION OF BHENKA FINANCIAL SERVICES AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 26 August 2005, shareholders
are advised that, on Friday, 15 September 2005, African Dawn entered into
an agreement with the shareholders of Bhenka Financial Services (Pty) Ltd
("Bhenka") to acquire 100% of the shares and claims from the shareholders
of Bhenka ("the transaction").
2. TERMS OF THE ACQUISITION
2.1 Purchase Consideration
The purchase consideration in terms of the transaction is R19 928 571.
The purchase price will be adjusted to the lesser of R19 928 571 or
the after tax profit for the year ending 28 February 2007, multiplied
with a price earnings ratio of 4,98. The purchase consideration will
be settled as follows:
- First payment by the issue of 4 285 714 new ordinary shares in
African Dawn at an issue price of 40 cents per ordinary share on
the date the transaction becomes unconditional;
- Second payment on 31 May 2006 being a cash payment of R2 250 000
and the issue of 6 428 571 new ordinary shares in African Dawn at
an issue price of 40 cents per ordinary share. The second payment
is subject to the achievement of an after tax profit of R 3 000
000 for the year ending 28 February 2006 with a pro-rata
adjustment if the after tax profit is lower;
- Final payment on 31 May 2007 being a cash payment of R2 250 000
and the balance by the issue of new ordinary shares in African
Dawn at an issue price of 40 cents per ordinary share. The final
payment is subject to the achievement of an after tax profit of R
4 000 000 for the year ending 28 February 2007 with a pro-rata
adjustment if the after tax profit is lower.
If the 90 day weighted average trading price of African Dawn to 31 May 2007
is less than 40 cents per share then the number of African Dawn ordinary
shares to be issued will be pro-rata increased subject to a maximum of 25%
additional shares to be issued.
2.2 Transaction Structure
African Dawn acquired 100% of the entire issued share capital and
claims in Bhenka from Bhenka Investment Holdings (Pty) Limited and
Wage Payment Services (Pty) Limited.
The executive directors of Bhenka have signed restraint of trade
agreements and service contracts.
2.3 Conditions Precedent
The transaction is subject to the fulfillment of, inter alia, the
following suspensive conditions:
- Successful completion of a due diligence on Bhenka by African
Dawn by no later than 31 October 2005;
- Successful completion of a due diligence on African Dawn by
Bhenka by no later than 31 October 2005;
- The approval of the terms of the transaction by African Dawn
shareholders by no later than 31 December 2005;
- The approval, to the extent required, of the JSE Limited ("JSE")
and any other regulatory approvals as may be required;
2.4 Effective Date
The effective date of the acquisition is 1 September 2005.
3. RATIONALE FOR THE TRANSACTION
Bhenka is the leading provider of basic consumer financial services
education to rural and urban communities, enabling them to make more
informed decisions about their financial matters. Bhenka is the only
company in South Africa conducting the education on behalf of the Financial
Services Board. Bhenka also has a unique and proven capability to issue
bank debit cards outside the formal bank branch networks and to ensure that
the clients are properly trained in its usage. Bhenka currently has a
contract with one of the leading banks to open Mzansi accounts on a remote
basis and also for the opening of all Sekulula accounts for Social Grant
recipients in Gauteng and the Eastern Cape. The financial services charter
will in future demand that all potential clients be educated and trained
before financial institutions grant them any form of finance.
The acquisition will expand African Dawn"s product range and client base as
well as increase its empowerment shareholding as Bhenka is a black owned
company.
4. PRO-FORMA FINANCIAL EFFECTS
4.1 The table below sets out the unaudited pro forma financial effects of
the transaction on the earnings, headline earnings and the net asset
value and tangible net asset value per African Dawn share, based on
the assumption that:
4.1.1 for the purpose of calculating the earnings and headline
earnings per share as if the transaction was implemented on
1 March 2005 and using a weighted average of 94 456 990
ordinary African Dawn shares in issue for the 6 months.
4.1.2 For the purpose of calculating the net asset value and net
tangible asset value per share, the transaction was effected
on 31 August 2005.
Before After Change
(cents) (cents) (%)
(1)
Earnings per share (cents) 3,68 4,13 12,2%
Headline earnings per share 3,68 4,13 12,2%
(cents) (2)
Net asset value per share 18,3 27,1 48,1
(cents) (3)
Tangible net asset value per 18,3 6,0 (67,2)%
share (cents) (3)
Notes:
1. Extracted from the reviewed interim results of African Dawn for
the six months ended 31 August 2005.
2. Based on a weighted average of 94 456 990 ordinary African Dawn
shares in issue for the 6 months ended 31 August 2005.
3. Based on 94 456 990 shares in issue at 31 August 2005. The net
tangible asset value has been reduced due to the goodwill arising
on the acquisition of Bhenka.
4.2 The financial effects contained in table 4.1 above have been prepared
for the purposes of illustrating how the transaction would have
affected the relevant financial results and position of African Dawn
for the historical financial period indicated and on a pro forma
basis. Accordingly, such effects do not necessarily represent a true
reflection of the financial effects of the transaction on African
Dawn"s current and future earnings.
5. FURTHER DOCUMENTATION
A circular setting out the detailed terms of the transaction and convening
a general meeting of shareholders to approve the transaction will be posted
to the shareholders on or before 16 November 2005 after the successful
completion of the due diligence.
6 October 2005
Johannesburg
Corporate and Designated Advisor
Exchange Sponsors
Date: 06/10/2005 05:46:08 PM Produced by the JSE SENS Department
