| Mon 3 Oct 2005, 10:50 | | Xantium - Merger between Xantium and MICT Solution |
|
Xantium - Merger between Xantium and MICT Solutions Group (Pty) Ltd
Xantium Technology Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2003/012583/06)
Share code: XAN ISIN code: ZAE000057386
("Xantium" or "the company")
MERGER BETWEEN XANTIUM AND MICT SOLUTIONS GROUP (PTY) LTD ("MICT")
INTRODUCTION
Xantium shareholders are advised that Xantium has concluded an agreement that
will result in the merger of Xantium and MICT ("the merger").
The merger will be implemented by the acquisition by Xantium of:
- the entire issued share capital of and the shareholders claims against MICT
from the MICT shareholders, comprising Motoma ICT Group (Proprietary) Limited
("Motoma"), Tozamile Botha, M S Varachia Holding Company (Proprietary) Limited
and various minority shareholders; and
- a majority stake in Motoma Mithratech (Pty) Ltd ("Mithratech") from Motoma;
in consideration for the issue by Xantium of up to 150 000 000 Xantium shares
("the consideration shares").
The merger is effective 1 December 2005.
RATIONALE
The merger cements Xantium as a formidable black owned and controlled IT company
with levels of black ownership, directors and employment equity significantly
above the requirements set out in the ICT Charter. The company views its
empowerment credentials as a significant asset providing it with opportunities
in government, parastatals and the private sector.
Commercially the merger allows Xantium, which provides its customers with
complete IT solutions:
- to broaden the range of products, services and solutions available to its -
existing clients and to new clients in government and industry;
- an additional client base for its products, services and solutions;
- to leverage off MICT"s and Mithratech"s strong presence in sub-saharan Africa
and its growth opportunities in the rest of Africa.
APPOINTMENTS TO THE BOARD
As part of the merger:
- Mohammed Varachia will be appointed as an executive director and joint chief
executive officer alongside James Murray;
- Suren Singh will be appointed as an executive director and chief financial
officer;
- Madoda Papiyana will be appointed as an executive director and head of group
human resources; and
- Tozamile Botha will be appointed as a non-executive director.
These appointments (all of whom have substantial knowledge of and experience in
the IT industry) will add significant value to Xantium.
MICT
Tozamile Botha and Mohammed Varachia established MICT in 2003, MICT is 95% black
owned and provides customers a full turnkey solution for their information,
communication and technology ("ICT") requirements.
MICT partners with original equipment manufacturers ("OEM"s") to ensure the
highest level of quality and service delivery.
MICT operates through the following subsidiaries:
- Matomo Technologies which assembles ICT equipment to customer specifications
and is currently the exclusive assembler to Hewlett Packard in Africa for
certain desktop ranges;
- Advocate Solutions which provides maintenance and support on ICT hardware.
This covers maintenance agreements and original purchase warranties and is
undertaken through a national network of service outlets and competent
management resources;
- Intergraph Systems which delivers hardware, software and services enabling
government agencies and private sector customers to manage and visually
represent complex spatial information for global information systems;
- Independent Computer Support Services which provides specialised modular and
component repairs for a broad range of computers and peripheral hardware. It is
currently the largest carry-in facility in the country and is accredited to
several major OEMs;
- Cybernet Africa Logistics provides point-to-point IT logistical services to
and from several major centres in South Africa. It supports "carry-in" business
of large OEM"s as well as providing warehousing, maintenance and support of
components and equipment.
MITHRATECH
Mithratech is a manufacturing and consulting organisation specialising in secure
card production and solutions for the telecommunications industry. Products
include secure recharge scratch vouchers for mobile cellular and fixed line
telecommunication networks as well as providing mobile network fulfilment
services of starter packs and SIM cards.
TERMS OF THE MERGER
The consideration for MICT is R81 million to be settled by delivery of 135
million consideration shares at 60 cents per share.
The consideration is premised on R2.5 million of debt being raised in MICT and
paid to Motoma prior to the implementation of the merger. To the extent that the
parties agree to raise additional third party debt (up to a maximum of an
additional R10.1 million) and pay the proceeds to Motoma in reduction of
Motoma"s claims against MICT, the 135 million consideration shares will be
reduced by 1.67 shares for every Rand of debt above R2.5 million.
The consideration for Motoma"s shares in and claims against Mithratech (which
shares constitute 50.003% of the issued share capital of Mithratech) is based on
an agreed earn-out formula for the years ending June 2006 and June 2007. The
consideration is capped at R9 000 000 and will be settled by the issue of up to
15 000 000 consideration shares at 60 cents per share.
In terms of the earn out formula:
- on the implementation of the merger, Xantium will issue Motoma 7 500 000
consideration shares, provided that if the profit after tax ("PAT") of
Mithratech for the 12 months ending June 2006 is less than R3 million Motoma
will be obliged for every Rand of such shortfall to deliver 2.5 of the
consideration shares received by it to Xantium or its nominee;
- Xantium will issue Motoma 3.75 consideration shares for every rand by which
Mithratech"s PAT for the 12 months ending June 2007 is greater than R3.6
million, up to a maximum of 7 500 000 additional consideration shares.
The consideration shares are subject to trading restrictions and pre-emptive
rights in favour Xantium.
CONDITIONS TO THE MERGER
The merger is subject to the following conditions:
- the requisite regulatory approvals including the JSE Limited, the SRP and the
competition authorities;
- approval by shareholders of Xantium and, if applicable, a waiver of any
mandatory offer which would otherwise be required to be made as a result of the
merger;
- the conclusion of employment and restraint of trade agreements by key
executives of MICT and Mithratech;
- consent of the minority shareholders of Mithratech to the sale by Motoma of
its shares in Mithratech;
- conclusion of a written agreement regulating the repayment of loans to related
parties of the minority shareholders of Mithratech.
FINANCIAL EFFECTS OF THE MERGER
As the number of shares to be issued (and accordingly the financial effects of
the merger) depends upon whether or not the parties agree to raise additional
debt in MICT, financial effects will only be announced once this is finalised.
FURTHER CAUTIONARY ANNOUNCEMENT
Further details of the merger including financial effects will be announced in
due course. Accordingly, shareholders are advised to exercise caution when
dealing in the company"s shares, pending further announcements.
Rosebank
3 October 2005
Warning: The listing of the ordinary shares in the company is on the ALTX.
Shareholders are advised of the risks of investing in a company listed on the
ALTX. Shareholders are advised that the JSE does not guarantee the viability or
the success of a company listed on the ALTX. In terms of the JSE Listings
Requirements a designated advisor has to be retained by the company. The
designated advisor is required to, inter alia, attend all board meetings held by
the company to ensure that all JSE 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 the designated advisor it must make arrangements to
appoint a new designated advisor within 10 business days, failing which the
company faces suspension of trading of its securities. If a designated advisor
is not appointed within 30 days of its suspension the company faces the
termination of its listing without an offer to minority shareholders.
Designated advisor, corporate advisor and legal advisor to Xantium
Java Capital (Proprietary) Limited
Corporate advisor to MICT and Mithratech
Java Capital (Proprietary) Limited
Legal advisor to MICT and Mithratech
Alex Evan Attorneys Inc
Date: 03/10/2005 10:50:16 AM Produced by the JSE SENS Department