| Mon 29 May 2006, 16:12 | | Faritec - Acquisition of the IT storage solutions |
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FRT
FRT
Faritec - Acquisition of the IT storage solutions business of Lechabile and
withdrawal of cautionary
Faritec Holdings Limited
(Registration number 1998/004872/06)
Share code: FRT
ISIN: ZAE000016838
("Faritec")
ACQUISITION OF THE INFORMATION TECHNOLOGY ("IT") STORAGE SOLUTIONS BUSINESS OF
LECHABILE STORAGE SOLUTIONS (PROPRIETARY) LIMITED ("LECHABILE") AND WITHDRAWAL
OF CAUTIONARY
INTRODUCTION
Faritec, through its subsidiary Faritec (Proprietary) Limited ("the purchaser"),
has concluded an agreement to acquire the IT storage solutions business ("the
business") of Lechabile as a going concern ("the acquisition") with effect from
31 January 2006 ("the effective date").
The business being acquired comprises the assets used in the conduct of the
business together with certain liabilities incurred in the ordinary course of
the business ("the sale liabilities"), but excluding all other liabilities. As
at the effective date, the value of the sale liabilities exceeded the value of
the assets of the business by R8 240 395 ("the net sale liabilities").
RATIONALE FOR THE ACQUISITION
Lechabile is a leading supplier of storage solutions to the South African
Corporate, Public Sector and SME Markets. Working together with their strategic
partners including Veritas, IBM and FileNet, they deliver large storage
solutions including infrastructure, software, implementation, support and
managed services, to a diverse customer base.
The acquisition will establish Faritec as a leading provider of information
integrity (information security and information availability) solutions by
broadening Faritec"s storage and security solutions. It will also enhance
Faritec"s position with IBM and Veritas and adds a FileNet capability to
Faritec"s significant technology solutions suite.
TERMS OF THE ACQUSITION
The purchase price for the business is R15 975 000 which will be discharged by
the purchaser:
- assuming the net sale liabilities (of R8 240 395);
- paying R3 093 842 in cash;
- procuring the issue of such number of Faritec shares, which, when
multiplied by the 30 day volume weighted average price per share at which
Faritec shares were sold on the JSE prior to the date on which the last of
the conditions precedent set out below is fulfilled or waived ("market
price"), equals R4 640 763 ("the consideration shares"), on the following
basis:
- 50% of the consideration shares will be issued to Lechabile on the closing
date; and
- the balance of the consideration shares will be issued to Lechabile six
months after the closing date ("final date").
Any claims that the purchaser may have against Lechabile in terms of the
acquisition agreement will be set off against the amount payable to Lechabile on
the final date. If the consideration shares to be issued on the final date,
valued at the market price, are insufficient to satisfy the purchaser"s claims
against Lechabile, the purchaser will claim the balance from Lechabile in cash.
CONDITIONS PRECEDENT
The acquisition is subject to the following conditions precedent:
- the approval of the acquisition, either unconditionally or subject to
conditions acceptable to the purchaser and Lechabile, by the competition
authorities by no later than 21 October 2006;
- the unconditional approval by the JSE Limited of the acquisition by no
later than 23 July 2006;
- specified key employees of the business concluding written service,
confidentiality and restraint agreements with the purchaser by no later
than 23 July 2006;
Veritas and FileNet:
- signing written agreements, by no later than 23 July 2006, with either the
purchaser or Lechabile appointing either of them as authorised resellers of
their products on terms and conditions acceptable to the purchaser
("resellers agreement");
- agreeing to the assignment by Lechabile of all of its rights and
obligations under the resellers agreement to the purchaser (if such
agreement is concluded with Lechabile as opposed to the purchaser) by no
later than 23 July 2006;
Veritas:
- signing a written agreement with either Lechabile or Faritec, by no later
than 30 June 2006, appointing either of them as an authorised Veritas
trainer on terms and conditions acceptable to the purchaser ("trainers
agreement");
- agreeing to the assignment by Lechabile of all of its rights and
obligations under the trainers agreement to the purchaser (if such
agreement is concluded with Lechabile as opposed to the purchaser) by no
later than 30 June 2006;
- providing written confirmation to the purchaser, by no later than 30 June
2006, that Lechabile is currently certified as a Platinum Partner;
a specified key customer -
- concluding a written agreement, by no later than 30 June 2006, with either
Lechabile or the purchaser outsourcing its IT storage function to either of
them on terms and conditions acceptable to the purchaser ("outsourcing
agreement");and
- agreeing to the assignment by Lechabile of all of its rights and
obligations under the outsourcing agreement to the purchaser (if such
agreement is concluded with Lechabile as opposed to the purchaser) by no
later than 30 June 2006;
- the implementation of the memorandum of agreement dated 23 May 2006 between
Lechabile Investment Holdings (Proprietary) Limited and King-at-Arms
Holdings (Proprietary) Limited by no later than 30 June 2006; and
- Lechabile"s auditors reporting, without qualification to the satisfaction
of the purchaser, on the statement of assets and liabilities forming part
of the business being acquired by the purchaser by no later than 30 June
2006.
FINANCIAL EFFECTS OF THE ACQUISITION
The effects of the transaction on the historical earnings per share, headline
earnings per share, net asset value per share and net tangible asset value per
share of Faritec is not material.
CATEGORISATION OF THE ACQUISITION
The acquisition has been categorised as a category 3 transaction in terms of
section 9.5(a) of the Listings Requirements of the JSE.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Faritec shareholders are referred to the cautionary announcement of 29 March
2006 and are informed that caution need no longer be exercised when trading in
Faritec shares.
Woodmead
29 May 2006
Sponsor to Faritec
Java Capital (Proprietary) Limited
Date: 29/05/2006 04:12:08 PM Produced by the JSE SENS Department
