| Wed 13 Sep 2006, 15:42 | | Spectrum - Acquisition of control of Leading Edge |
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SUM
SUM
Spectrum - Acquisition of control of Leading Edge and lifting of Cautionary
Spectrum Shipping Limited
Registration number: 1998/018118/06
Share code: SUM
ISIN: ZAE000037446
("Spectrum" or "the company")
ACQUISITION OF CONTROL OF LEADING EDGE INSURANCE BROKERS (PTY) LTD, LIFTING
OF CAUTIONARY ANNOUNCEMENT AND APPOINTMENT OF DIRECTORS
1. INTRODUCTION
River Group is authorised to announce that, following the cautionary
announcement dated 30 June 2006, which was renewed on 08 September
2006, Spectrum has, as one indivisible transaction, with effect from 1
March 2006 and subject to the conditions precedent below, acquired 90%
of the total issued share capital of and all claims on shareholder
loan accounts against Leading Edge Insurance Brokers (Pty) Ltd
("Leading Edge"), which owns and operates an insurance brokerage with
offices in Durban ("the Acquisition / Transaction") from The Trustees
of the Impi Share Trust No. IT669/2002 ("the Vendor"). The Impi Trust
will retain the balance of 10% of the shares. The transaction is a
category 3 transaction per the JSE listings requirements.
2. BACKGROUND AND RATIONALE
To date the Group has referred all Marine Insurance requirements of
its clients to third parties who have the skills, expertise and
infrastructure necessary to fulfill those needs. Consistent with the
philosophy of the Group to effectively offer its clients comprehensive
supply chain logistics solutions, the Group has made the decision to
develop a full in-house capability as an independent insurance broker
with a more comprehensive marine and short term insurance product
offering. Effectively, this will be far more conducive to growing the
business of insurance through focused full time specialists in this
field of activity.
In the announcement of the acquisition of Impson Freight (Pty) Ltd on
30 June 2006, mention was made of Supply Chain Insurance Brokers (Pty)
Ltd, the subsidiary company set up to house the abovementioned
insurance product offering. In the event, it became more practical to
acquire an existing insurance brokerage and to this end, Spectrum have
acquired 90% of the shares of Leading Edge Insurance Brokers (Pty) Ltd
("LEIB") who are registered and licensed as an independent insurance
broker accredited by and compliant with all legislation. Leading Edge
was founded in September 2000 by Craig Simpson and today has in its
employ twelve well qualified personnel. Their current product offering
incorporates, yet is not limited to;
Marine Insurance (cargo, hull insurance, marine liability, inland
transit) Industrial and commercial (motor fleet, buildings, capital
equipment) Personal insurance (home owners, travel insurance, motor
vehicles) Business assurance (key man, contingent liabilities,
debtors, guarantees)
Most importantly, LEIB have the infrastructure necessary for all
administration including training, sales, invoicing, claims management
and policy administration. It is this infrastructure that will provide
the foundation to the future growth of the insurance within the
Spectrum Group.
3. ACQUISITION AND PURCHASE CONSIDERATION
Spectrum has entered into an arm"s length agreement with the
shareholder of Leading Edge Insurance Brokers (Pty) Ltd ("the Vendor")
to acquire 90% of the issued share capital in and claims on
shareholder loan accounts against Leading Edge Insurance Brokers (Pty)
Ltd with effect from 1 March 2006. The transaction consideration
payable to the vendor upon closing and after fulfillment of the
conditions precedent referred to below is the amount of 17 137 961
Spectrum shares.
The above shares will be issued as follows:
- On fulfillment of the conditions precedent referred to below 4
284 490 shares;
- If Leading Edge Insurance Brokers (Pty) Ltd achieves a pre tax
profit of R100 000 in the financial year ended 28 February, 2007
a further 4 284 490 shares will be issued; and
If Leading Edge Insurance Brokers (Pty) Ltd achieves a pre tax
profit of R600 000 in the financial year ended 28 February 2008
the final tranche of 8 568 981 shares will be issued.
- If Leading Edge Insurance Brokers (Pty) Ltd does not achieve the
R100 000 target for 28 February, 2007, the Vendor will make good
the shortfall. If the target of R600 000 is not achieved in the
financial year ended 28 February, 2008, then the price will be
reduced by R700 for each R1 000 of shortfall. In the event either
of the above occurring, the Vendor must transfer to the Purchaser
the number of shares determined by a specific formula set out in
the Agreement of Sale.
4. SPECTRUM SHIPPING SHARE PURCHASE AND OPTION SCHEME TRUST
The board of directors wish to announce that the further 10 000 000
shares which were to be issued to Spectrum Shipping Share Purchase and
Option Scheme Trust have not been so issued and that no further shares
will be issued to the Trust for the time being.
5. FINANCIAL EFFECTS OF THE TRANSACTION
Due to the fact that the acquisition of Leading Edge is of a strategic
nature and the financial effects of the acquisition are immaterial, a
financial effects statement has not been prepared.
6. CONDITIONS PRECEDENT AND OTHER REGULATORY MATTERS
The company is currently listed on the AltX board of the JSE list and
this transaction is therefore classified as a Category 3 transaction
and will not result in a change of control as the vendor will not
control more than 35% of the issued share capital. The Acquisition
is subject, inter alia, to the following conditions precedent:
a. JSE approval;
b. SRP approval;
c. Financial Services Board approval; and
d. Other Regulatory approvals to the extent required.
Following the successful completion of the transaction, the articles
of association of Leading Edge Insurance Brokers (Pty) Ltd will be
amended to the extent required to comply with Schedule 10 of the
Listing Requirements of the JSE.
7. APPOINTMENT OF DIRECTORS
The Board of Spectrum Shipping Ltd has pleasure in announcing the
appointment of Malcolm Impson and Tom Mezher, both directors of Impson
Freight (Pty) Ltd, to the Board of Spectrum Shipping at its meeting
held on 1 September, 2006.
8. LIFTING OF CAUTIONARY
Spectrum shareholders are referred to the cautionary announcement of
30 June 2006, and the renewal thereof dated 08 September 2006 and are
hereby advised that as the relevant negotiations have been concluded,
caution is no longer required to be exercised by shareholders when
dealing in their Spectrum securities.
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 Listing Requirements a designated advisor
has to be retained by the company. The designated advisor is
required, inter alia, to 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 a designed 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.
Durban
September 13, 2006
Corporate and Designated Advisor
River Group
Date: 13/09/2006 03:42:06 PM Produced by the JSE SENS Department
