| Tue 31 Oct 2006, 14:11 | | Excellerate - Revised terms regarding the introdu |
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EXL
EXL
Excellerate - Revised terms regarding the 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")
REVISED TERMS 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 referred to the cautionary announcement dated 11 August 2006
(and the renewal thereof dated 6 October 2006) in which they were advised that
the terms and conditions of the two transactions entered into with Akenton, in
terms of which Akenton would be introduced as a 25% BEE shareholder in the
Excellerate group ("the transactions"), were to be re-negotiated with Akenton.
2. Revision of the terms and conditions of the transactions
In assessing the original terms and conditions of the transactions in the light
of the current financial information available to the Excellerate Board ("the
Board"), the Board determined that the terms and conditions of the transactions
needed to be revised by considerably increasing the total enterprise value
attributable to Excellerate"s operating subsidiaries. This has been agreed to in
the new agreements relating to the transactions dated 27 October 2006, details
of which are set out below:
2.1 The first transaction
The salient terms of the first transaction are as follows:
- Excellerate Investment Holdings (Proprietary) Limited ("EIH"), an
existing dormant, wholly-owned subsidiary of Excellerate, in
which Excellerate currently holds 1 000 ordinary shares, will
still 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;
- As initially agreed, Akenton will subscribe for 2 500 ordinary
shares in EIH for an aggregate subscription price of R2 500 and
will lend R2 997 500 to EIH, which will be placed on loan account
("the loan"); and
- Excellerate will acquire a further 6 500 ordinary shares in EIH
at a price of R7 400. Excellerate will also lend R8 992 500 to
EIH, which will be placed on loan account and a further R3 000
000 to EIH which will be a treasury loan. EIH will further issue
70 000 variable rate, redeemable, cumulative preference shares
("the preference shares") at an aggregate issue price of R70
million to Excellerate. Dividends attaching to the preference
shares will be based on the prime rate plus 2% less the corporate
tax rate, but will be adjusted during the first four years after
the effective date according to the profitability of EIH, within
certain parameters.
- Further to the revised enterprise value in light of updated
financial information being available to the Board, the first
transaction imputes a total enterprise value to Excellerate"s
operating subsidiaries of approximately R215 million (previously
approximately R146 million in terms of the original agreement).
This now values the equity in the subsidiaries to be acquired by
EIH at R82 million because the subsidiaries are indebted to
Excellerate in terms of treasury loans of approximately R133
million which treasury loans will in future be advanced to EIH
for on-lending to the operating subsidiaries.
2.2 The second transaction
The terms of the second transaction have not changed and a summary of
the terms of the second transaction are set out below.
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 5 below.
3. Financial effects of the transactions
The unaudited pro forma financial effects of the new agreements 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 new agreements going forward, and is the
responsibility of Excellerate"s directors.
3.1 The first transaction
Per Excellerate share (cents) Before After (2) Change
(1) (%)
EPS 5.3 5.8(3) 9.4
HEPS 5.1 5.6(3) 9.8
NAV 82.2 81.9 (0.3)
NTAV 50.4 50 0.0
Number of shares for EPS and 173 564 173 564
HEPS purposes ("000)
Number of shares for NAV and 174 095 174 095
NTAV ("000)
Notes:
1. Based on the audited published results for the year ended 30 June
2006.
2. Based on the assumption that the first transaction took place on
1 July 2005 for income statement purposes and 30 June 2006 for
balance sheet purposes.
3. To take into account the amounts 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.
3.2 The second transaction
Per Excellerate share (cents) Before After (2) Change
(1) (%)
EPS 5.3 5.1 (3) (3.8)
HEPS 5.1 4.9 (3) (3.9)
NAV 82.2 81.9 (0.3)
NTAV 50.4 50.4 0.0
Number of shares for EPS and 173 564 173 564
HEPS purposes ("000)
Number of shares for NAV and 174 095 174 095
NTAV ("000)
Notes:
1. Based on the audited published results for the year ended 30 June
2006.
2. Based on the assumption that the second transaction took place on
1 July 2005 for income statement purposes and 30 June 2006 for
balance sheet purposes and the first transaction has been
effected.
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 0% (the 0%
is based on the historical amounts of the underlying operating
subsidiaries attributable to Akenton for the year ended 30 June
2006 in comparison to historical group consolidated profits for
the year ended 30 June 2006. In this illustrative example a
negative amount was attributable to Akenton as the historical
profits were less than the interest and dividends attributable to
Excellerate shareholders. Notwithstanding this, the future swap
ratio will be determined on the future profitability of EIH and
group consolidated profits). A swap ratio of nil% would result in
the issue of nil new Excellerate shares based on the 30-day
weighted average price up and to including 30 June 2006.
4. Suspensive conditions of the transactions
The agreements are subject to, inter alia, the following conditions:
4.1 the obtaining of regulatory approvals, to the extent required;
4.2 the approval of Excellerate shareholders in general meeting; and
4.3 the approval of Excellerate"s bankers and certain other creditors.
5. 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.
6. Withdrawal of cautionary announcement
Excellerate shareholders are referred to the cautionary announcement dated 6
October 2006 and are advised that further to the information above, caution need
no longer be exercised when dealing in the Company"s securities.
Sandton
31 October 2006
Investment bank and sponsor
Nedbank Capital
Reporting accountants and auditors
Grant Thornton
Legal advisors
Werksmans Inc.
Date: 31/10/2006 02:11:10 PM Produced by the JSE SENS Department
