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IDI
IDI
Idion - Terms Announcement and Withdrawal of Cautionary
IDION TECHNOLOGY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013846/06)
Share code: IDI & ISIN: ZAE000022513
("IDION")
TERMS ANNOUNCEMENT AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Shareholders are advised that IDION entered into a definitive agreement on 20
September 2006 with IS Holdings III, Inc. ("IS Holdings" or "the purchaser"),
subject to certain conditions precedent, which are outlined in paragraph 6
below, to dispose of the issued share capital held by it ("the disposal") in
Vision Solutions International, Inc. ("Vision").
IS Holdings is a Delaware company, wholly-owned by a US-based private equity
fund named Thoma Cressey Equity Partners, Inc.
The IDION board has unanimously approved the disposal following its own
assessment and the receipt of a satisfactory fair and reasonable opinion from
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited (Independent
advisor) and will recommend the proposed transaction for approval by
shareholders. The board of IDION will also propose that, subsequent to the
approval and implementation of the disposal, the proceeds will be distributed to
shareholders as a return of capital and the IDION listing on the JSE Limited
("JSE") will subsequently be terminated.
2. RATIONALE FOR THE DISPOSAL
The IDION board has been examining various ways of extracting value for
shareholders and to this end engaged a US Investment Bank, SVB Alliant, to
conduct a strategic evaluation of the various options available to IDION, given
the offshore nature of its business and the Exchange Control rules applicable to
South African shareholders.
3. THE PURCHASE CONSIDERATION AND APPLICATION OF SUCH PROCEEDS
The purchase consideration payable by IS Holdings to IDION shall be
approximately US$62,5 million, plus certain closing adjustments as defined in
the definitive agreement. It is estimated that the purchase consideration, after
closing adjustments, will be between US$62,5 million and US$63,5 million.
Shareholders are advised that, subject to the completion of the disposal of
Vision, IDION intends to make a distribution to shareholders. The distribution
is subject to the passing at the general meeting of a special resolution in
terms of section 90 of the Companies Act,1973 (Act 61 of 1973), as amended,
("Companies Act") permitting the making of the distribution out of IDION"s share
premium and share capital account("the distribution").
After taking into consideration such things as transaction costs, the effect
of the IDION and Vision share incentive options, estimated wind up costs of
IDION, and Rand/US Dollar exchange rate, it is expected that the distribution
will be approximately R3.43 per share.
The determination of the distribution amount will be made immediately
following the receipt of the aggregate purchase consideration by IDION after the
closing date and an appropriate announcement will be made immediately
thereafter.
As soon as practical after receiving regulatory approval for the disposal,
IDION intends to hedge the risk of currency fluctuations on the purchase
consideration in order to increase the certainty as to the eventual distribution
to its shareholders.
Subject to the fulfilment or waiver of the conditions precedent referred to
in paragraph 6 below, the payment of the distribution is expected to be made on
or about Monday, 20 November 2006.
4. THE WINDING UP OF IDION
The directors have resolved that, after the disposal and the distribution
have been implemented, it will be in the best interests of all stakeholders for
IDION to be wound up as a members" voluntary winding up in terms of sections 349
and 350 of the Companies Act. In order to obviate the need to convene a further
general meeting of IDION shareholders, post the disposal, distribution and
delisting, at additional cost, a special resolution to authorise the winding up
will be proposed at the general meeting.
The registration of such special resolution, if passed, will not be effected
in terms of section 200 of the Companies Act until after implementation of the
disposal and the distribution, whereupon it will be registered and in terms of
section 352 of the Companies Act such special resolution will come into force
and effect and the winding up of IDION will commence.
5. CLOSING DATE
It is anticipated that the closing date will be on or about 31 October 2006.
The completion of the transaction is not subject to any financing arrangements.
6. CONDITIONS PRECEDENT
The conditions precedent to the disposal, are the following:
- the disposal agreement not being validly terminated in accordance with the
termination provisions contained therein;
- IDION shareholders at the general meeting approving the required resolution
in terms of section 228 of the Companies Act for the disposal as well as all
other resolutions necessary to effect and implement the disposal. Section 228 of
the Companies Act currently requires an ordinary resolution to implement a
disposal of the whole or the greater part of the assets of a company. The
Corporate Laws Amendment Bill, once it comes into force, will amend the
provisions of Section 228 of the Companies Act so that a special resolution of
shareholders will be required in order to implement such a disposal. In the
event that the Corporate Laws Amendment Bill comes into force after the date of
issue of the circular referred to in paragraph 8 below, but before the general
meeting, a special resolution of the IDION shareholders will be required to
implement the disposal of IDION"s shares in Vision, as such disposal will
constitute a disposal of the whole or a greater part of the assets of IDION;
- The approvals, to the extent necessary, of regulatory and governmental
entities including, but not being limited to, the approval of the Exchange
Control Department of the South African Reserve Bank, the Securities Regulation
Panel, the JSE, and approvals under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (as amended); and
- all other customary closing conditions for a transaction of the nature of the
disposal being satisfied.
7. FINANCIAL EFFECTS OF THE DISPOSAL
The pro forma financial effects in the table below have been prepared for the
purpose of illustrating the effect of the disposal on IDION shareholders and the
distribution to IDION shareholders, assuming that the disposal had been
concluded for income statement purposes at 1 January 2006 and for balance sheet
purposes at 30 June 2006. The pro forma financial effects are based on the
purchase consideration being US$62,5 million.
The financial effects are prepared for illustrative purposes only and owing
to their nature may not fairly present IDION"s financial position, changes in
equity, results of operations or cash flows. The unaudited pro forma financial
effects are the responsibility of the IDION board.
The pro forma financial effects should be read in conjunction with the pro
forma financial information, including the consolidated balance sheets and
income statements, which will be contained in Annexure 1 to the circular to be
posted to shareholders on or about 4 October 2006.
Before After
the the
Notes disposal disposal Change
ZAR cents ZAR cents %
Market value and cash received 1 155.0 342.6 121
30-day volume weighted average
market value and cash received 2 154.3 342.6 122
Weighted average earnings 3 (4.4) 210.7 4,900
Weighted average headline earnings 3 (4.4) (6.9) (57)
Net asset value and cash received 4 92.5 341.6 269
Net tangible asset value and cash received 4 35.6 341.6 860
Before After
the the
disposal disposal Change
Notes USD cents USD cents %
Market value and cash received 1 21.3 47.0 121
30-day volume weighted average
market value and cash received 2 21.2 47.0 122
Weighted average earnings 3 (0.7) 33.6 4,900
Weighted average headline earnings 3 (0.7) (1.1) (57)
Net asset value and cash received 4 13.0 48.0 269
Net tangible asset value and cash received 4 5.0 48.0 860
Notes:
1. The "Before the disposal" column reflects the closing JSE market value per
share on Monday, 18 September 2006, being the last practicable date preceding
publication of the terms announcement (at the exchange rate ruling on that
date). The "After the disposal" column shows the disposal consideration expected
to be received per share (at an assumed rate of R7.29 per US$1, the exchange
rate ruling at the last practicable date).
2. The "Before the disposal" column reflects the 30-day volume weighted average
JSE market value per share calculated for the 30 days preceding Monday, 18
September 2006, being the last practicable date preceding publication of the
terms announcement (at the exchange rate ruling on that date). The "After the
disposal" column shows the disposal consideration expected to be received per
share (at an assumed rate of R7.29 per US$1, the exchange rate ruling at the
last practicable date).
3. The "Before the disposal" column reflects the unaudited interim earnings and
headline earnings per share for the six-month period ended 30 June 2006. The
"After the disposal" column reflects the interest income an IDION shareholder
would have earned if the disposal consideration, net of transaction costs, had
been invested at 6.5% per annum on 1 January 2006 for a period of six months
less taxation and wind up costs for the liquidation of IDION.
4. The "Before the disposal" column reflects the unaudited interim net asset
value and tangible net asset value at 30 June 2006. The "After the disposal"
column shows the net asset value and net tangible asset value of IDION after the
purchase consideration has been received, but before the capital distribution to
shareholders and liquidation of IDION (at the exchange rate ruling on 30 June
2006 of R7.12 per US$1).
8. SALIENT DATES AND TIMES
2006
Circular posted to shareholders on or about Wednesday, 4 October
Last day to lodge forms of proxy for the
general meeting, by 11:00 on Tuesday, 24 October
General meeting held at 11:00 on Thursday, 26 October
Results of general meeting expected to be
released on SENS on Thursday, 26 October
Results of general meeting expected to be published
in the press on Friday, 27 October
Expected last day to trade in shares of IDION in order
to be entitled to receive payment of distribution on Friday, 10 November
Expected date for suspension by the JSE of shares
of IDION on Monday, 13 November
Expected record date for shares to appear in the register
of IDION for entitlement to payment of distribution on Friday, 17 November
Expected date for payment of distribution on Monday, 20 November
Expected date for the termination of the listing of the
shares of IDION on the JSE from the commencement
of trade on the JSE on Tuesday, 21 November
Notes:
1. All or any of the above dates, or dates and times associated therewith as
provided for in the circular, are subject to amendment. Any such amendment will
be released on SENS and published in the press.
2. No dematerialisation or rematerialisation of IDION documents of title may
take place after Friday, 10 November 2006.
3. Distribution payments to certificated shareholders will be effected by way of
a cheque. All monies payable by cheque will be sent by ordinary post, at the
risk of the shareholder, to:
- the address of the shareholder as set forth in the register; or
- in the case of joint registered shareholders, the registered address of the
shareholder who is first named in the register in respect of those shares; or
- such other address as may be designated in writing by the shareholder.
4. Payment of cheques sent in terms of note 3 above, shall be a complete
discharge by IDION of its relevant payment obligations in terms of the
distribution.
5. Distribution payments to dematerialised shareholders will be effected to the
relevant dematerialised shareholder"s account at his Central Securities
Depository Participant ("CSDP") or broker, as the case may be, in accordance
with the terms of the agreement entered into between the dematerialised
shareholder and his CSDP or broker. Payment to the CSDP as contemplated herein
shall be a complete discharge by IDION of its relevant payment obligations in
terms of the distribution.
6. If, after the distribution, the adjustment amount (if any), and after taking
account of the anticipated winding up costs, there is a surplus available, then
there will be a further distribution to shareholders.
9. IRREVOCABLE LETTERS OF UNDERTAKING
Irrevocable letters of undertaking totalling 73.19% from shareholders
eligible to vote have been received. All these shareholders have indicated that
they will vote in favour of the disposal and the subsequent distribution.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Having regard to the details provided in this announcement, IDION
shareholders are no longer required to exercise caution when dealing in their
shares on the JSE.
CENTURION
21 September 2006
Corporate advisor and sponsor to IDION
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
Registration number 1970/003711/07
U.S. investment bank to IDION
SVB Alliant
S.A. legal advisor to IDION
Webber Wentzel Bowens
Independent reporting accountants and registered auditors to IDION
Deloitte & Touche
Registered Auditors
U.S. legal advisor to Vision
Paul, Hastings, Janofsky & Walker LLP
U.S. legal advisor to IS Holdings
Kirkland & Ellis LLP
Independent advisor to IDION
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
Registration number 1970/003711/07
S.A. legal advisor to IS Holdings
Deneys Reitz Inc.
1984/003385/21
Date: 21/09/2006 05:00:08 PM Produced by the JSE SENS Department
