| Fri 19 May 2006, 17:10 | | Excellerate - Introduction of Akenton as a BEE Sh |
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EXL
EXL
Excellerate - Introduction of Akenton as a BEE Shareholder and Withdrawal of
Cautionary Announcement
Excellerate Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/009884/06)
Share code: EXL ISIN: ZAE000026092
("Excellerate" or "the Company")
ANNOUNCEMENT REGARDING THE INTRODUCTION OF AKENTON SERVICES (PROPRIETARY)
LIMITED ("AKENTON") AS A BLACK ECONOMIC EMPOWERMENT ("BEE") SHAREHOLDER IN
EXCELLERATE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are advised that Excellerate has concluded agreements
providing for two transactions with Akenton dated 18 May 2006 in terms of
which Akenton will be introduced as a 25% BEE shareholder in the
Excellerate group ("the transactions").
2. The transactions
The transactions will take place in the following manner:
2.1 The first transaction
Excellerate Investment Holdings (Proprietary) Limited ("EIH"), an existing
dormant, wholly-owned subsidiary of Excellerate will be used as the vehicle
through which Akenton will acquire a 25% share in Excellerate"s operations.
Excellerate will hold the remaining 75% of EIH"s shares after the transfer
to EIH of all the shares in Excellerate"s operational subsidiaries.
Akenton will invest R3 000 000 in EIH by subscribing for 2 500 ordinary
shares at a price of R2 500 and lending R2 997 500 to EIH, which will be
placed on loan account ("the loan").
Excellerate will have invested R9 000 000 in EIH by acquiring 7 500
ordinary shares at a price of R7 500 and lending R8 992 500 to EIH, which
will be placed on loan account.
The transaction values the equity in the subsidiaries to be acquired by EIH
at R12 million because the subsidiaries are indebted to Excellerate in
terms of treasury loans of approximately R134 million which treasury loans
will in future be advanced to EIH for on-lending to the operating
subsidiaries. The transaction imputes a total enterprise value of
Excellerate"s operating subsidiaries of approximately R146 million.
2.2 The second transaction
Akenton will have the right to exchange its shares in EIH for Excellerate
shares in the percentage ratio that the profit earned by EIH attributable
to Akenton as a shareholder bears to Excellerate"s consolidated profit
after tax ("the swap ratio").
This exchange can occur on or after the fifth anniversary of the effective
date of the transaction, at Akenton"s election (or, possibly, prior to the
fifth anniversary of the effective date if Excellerate enters into a large
transaction outside of EIH and that transaction would be categorised as
Category 1 in terms of the JSE Limited Listings Requirements).
The details of the transactions will be set out in the circular referred to
in paragraph 6 below.
3. Rationale for the transactions and information regarding Akenton
Akenton was formed in 2003 by a group of young black professionals and
comprises Keamogetse "Moula" Nyoka (Chairperson), Nhlanhla Chocho (CEO),
Litha Nkombisa, Ciko Thomas, Zanele Nyoka and Khomotso Mthimunye (Financial
Director). Other transactions involving Akenton shareholders include Joburg
City Auto and Enterprise Connection.
The directors of the Company believe that Akenton will add value to
Excellerate through the skill sets, dynamism and ability to do business
deals that Akenton"s directors possess thereby bringing significant value
and economic benefits to Excellerate shareholders.
4. Financial effects of the transactions
The unaudited pro forma financial effects of the transactions on
Excellerate"s earnings per share ("EPS"), headline earnings per share
("HEPS"), net asset value per share ("NAV") and tangible net asset value
per share ("NTAV") are set out below. This unaudited pro forma financial
information has been prepared for illustrative purposes only and because of
its nature may not give a fair reflection of Excellerate"s financial
position and results of operations, nor the effect and impact of the
transactions going forward, and is the responsibility of Excellerate"s
directors.
4.1 The first transaction
Per Excellerate share (cents) Before (1) After (2) Change
(%)
EPS 5.3 4.9(3) (7.5)
HEPS 4.2 3.8(3) (9.5)
NAV 82 82 0
NTAV 52 52 0
Number of shares for EPS and 173 485 173 485
HEPS purposes ("000)
Number of shares for NAV and 173 595 173 595
NTAV ("000)
Notes:
1. Based on the unaudited published results for the six months ended 31
December 2005.
2. Based on the assumption that the first transaction took place on 1
July 2005 for income statement purposes and 31 December 2005 for
balance sheet purposes.
3. To take into account the increased income attributable to minority
shareholders as a result of the sale agreement. Further to this, an
adjustment was made to take into account interest on the loan at prime
plus 2%. As the proceeds from the loan will be used to reduce group
borrowings, an adjustment has been made to take into account an
interest saving which was calculated at prime, being the average
borrowing rate of the group.
4.2 The second transaction
Per Excellerate share (cents) Before After (2) Change
(1) (%)
EPS 5.3 5.0 (3) (5.7)
HEPS 4.2 3.9 (3) (7.1)
NAV 82 82 (0.0)
NTAV 52 50 (3.8)
Number of shares for EPS and HEPS 173 485 187 651
purposes ("000)
Number of shares for NAV and NTAV 173 595 187 761
("000)
Notes:
1. Based on the unaudited published results for the six months ended 31
December 2005.
2. Based on the assumption that the second transaction took place on 1
July 2005 for income statement purposes and 31 December 2005 for
balance sheet purposes.
3. After taking into account interest on the loan at prime plus 2%. As
the proceeds from the loan will be used to reduce group borrowings, an
adjustment has been made to take into account an interest saving which
was calculated at prime, being the average borrowing rate of the
group.
4. Based on the assumption that the exchange in EIH shares for
Excellerate shares takes place and the swap ratio is 7.5% (the 7.5% is
based on the historical profits of the underlying operating
subsidiaries attributable to Akenton for the six months ended 31
December 2005 in comparison to historical group consolidated profits
for the six months ended 31 December 2005. Notwithstanding this, the
future swap ratio will be determined on the future profitability of
EIH and group consolidated profits). A swap ratio of 7.5% would result
in the issue of 14 166 198 new Excellerate shares at the 30-day
weighted average price applicable 31 December 2005.
5. Suspensive conditions of the transactions
The agreements are subject to, inter alia, the following conditions:
5.1 the obtaining of regulatory approvals, to the extent required;
5.2 the approval of Excellerate shareholders in general meeting; and
5.3 the approval of Excellerate"s bankers and certain other creditors.
6. Documentation
A circular setting out further details of the transactions and the notice
of general meeting will be despatched to Excellerate shareholders in due
course.
7. Withdrawal of cautionary announcement
Excellerate shareholders are referred to the cautionary announcement dated
4 April 2006 and are advised that further to the information above, caution
need no longer be exercised when dealing in the Company"s securities.
Sandton
19 May 2006
Investment bank and sponsor
Nedbank Capital
Reporting accountants and auditors
Grant Thornton
Legal advisors
Werksmans Inc.
Date: 19/05/2006 05:10:17 PM Produced by the JSE SENS Department
