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FRT
FRT
Faritec Holdings Limited - Update On The Acquisition
Faritec Holdings Limited
(Registration number 1998/004872/06)
Share code: FRT
ISIN: ZAE000016838
("Faritec")
UPDATE ON THE ACQUISITION BY FARITEC OF THE BUSINESS OWNED BY ENTERPRISE
CONNECTION (PROPRIETARY) LIMITED ("ENTERPRISE CONNECTION") AS A GOING CONCERN
UPDATE ON THE INTERIM ORDER
As announced on SENS on 20 April 2006, certain parties ("the applicants"), which
contend that they have a claim against Enterprise Connection, have obtained an
interim court order which, amongst other things, interdicts the implementation
of the acquisition until the date on which the interim order will either be
confirmed or set aside by the court ("the return date"). The return date has
been postponed to 21 June 2006. Faritec and Enterprise Connection have prepared
and lodged answering affidavits to the applicants" application. As previously
advised, any claims which the applicants may have against Enterprise Connection
would not form part of the business being acquired by Faritec pursuant to the
acquisition. Enterprise Connection has advised Faritec that it remains confident
that the interim order will be set aside on the return date.
THE ACQUISITION AGREEMENT
The parties to the acquisition agreement have concluded various addenda to the
acquisition agreement principally to extend the dates for fulfilment of the
conditions precedent.
In terms of the acquisition agreement, shareholders are advised that one of the
assets being acquired comprises Enterprise Connection"s 25.1% stake in nVisionIT
(Proprietary) Limited ("nVisionIT"). If the remaining shareholder of nVisionIT
does not consent to the transfer of shares in nVisionIT the aggregate purchase
price of R54 100 000 will be reduced by R3 500 000 (by way of an equal reduction
in the share and cash components of the purchase price). Faritec and Enterprise
Connection are engaging with the remaining shareholder in nVisionIT and are
confident that Faritec will acquire the shares in nVisionIT.
UPDATED FINANCIAL EFFECTS OF THE ACQUISITION
The financial effects contained in the announcement dated 8 February 2006 have
been updated to take into account Faritec"s unaudited interim results for the
six-month period ended 31 December 2005, which were released on
23 February 2006, and prepared in accordance with International Financial
Reporting Standards.
The pro forma financial effects presented below are the responsibility of the
board of directors of Faritec and are presented for illustrative purposes only
to provide information on how the acquisition would have impacted the reported
financial information of Faritec if it had been implemented in the six-month
period ended 31 December 2005. Because of their nature, the pro forma financial
effects may not fairly present Faritec"s pro forma financial position, changes
in equity, results of operations or cash flows at 31 December 2005 or the
results for the six-month period then ended. The pro forma financial effects
presented below have been based on information prepared in accordance with
International Financial Reporting Standards.
Before the After the Percentag
acquisition1 acquisitio e change
(cents) n2 (%)
(cents)
Headline earnings per share 6.7 7.4 10.4
Earnings per share 6.6 7.3 10.6
Net asset value per share 65.8 63.8 (3.0)
Net tangible asset value per 28.4 13.2 (53.5)
share
Weighted average number of 132 895 179 533 35.1
ordinary shares in issue (`000)
2
Number of ordinary shares in 136 161 182 799 34.3
issue and to be issued (`000)2
Notes:
1. The figures in the first column are extracted from the interim results of
Faritec for the six-month period ended 31 December 2005.
2. The figures in the second column are based on the consolidated results of
Faritec and Enterprise Connection for the six-month period ended 31 December
2005, assuming that:
- the acquisition had been implemented on 1 July 2005 and control of
Enterprise Connection passed to Faritec on the same date for earnings purposes.
For asset value purposes it was assumed that the acquisition had been
implemented on 31 December 2005;
- 46 637 931 Faritec ordinary shares had been issued as part payment of the
acquisition price;
- interest bearing funding of R27,05 million had been secured and utilised
for payment of the balance of the acquisition price. The funding is assumed to -
be subject to a variable interest rate commencing at 10.5% per annum;
- transaction costs of R1 500 000 were incurred and treated as part of the
cost of acquisition;
- additional goodwill arising on the acquisition of R39 318 000 being the
excess of the cost of acquisition over the fair value of the net identifiable
assets, liabilities and contingent liabilities of the business acquired, has
been treated in accordance with Faritec"s accounting policy and therefore
recognised/stated at cost, less any impairment losses, and is not amortised.
CIRCULAR TO SHAREHOLDERS
A circular providing full details of the acquisition and enclosing a notice
convening a general meeting of shareholders of Faritec (to be held at 12:00am on
Tuesday, 27 June 2006 at the offices of the company, Faritec House, 150 Kelvin
Drive, Woodmead, Sandton) was posted to Faritec"s shareholders today.
Woodmead
12 June 2006
Sponsor to Faritec
Java Capital (Proprietary) Limited
Legal advisor to Faritec
Read Hope Phillips Thomas & Cadman Inc
Auditors and Reporting Accountants to Faritec
Charles Orbach & Company
Financial advisor to Faritec
JC Capital (Proprietary) Limited
Corporate advisor to Enterprise Connection
Metier Advisory (Proprietary) Limited
Date: 12/06/2006 05:20:26 PM Produced by the JSE SENS Department
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