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JCM
JCM
Johncom - Disposal; Unbundling and withdrawal of cautionary announcement
Johnnic Communications Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1889/000352/06)
ISIN: ZAE000024584 & Share Code: JCM
("Johncom" or "the Company")
Announcement regarding:
* the disposal by Johncom of an effective economic interest of 38,56%
in Electronic Media Network Limited ("M-Net") and SuperSport
International Holdings Limited ("SuperSport") ("the M-
Net/SuperSport stake");
* the unbundling of the Naspers Limited ("Naspers") shares received
as consideration for the M-Net/SuperSport stake to the shareholders
of Johncom; and
* the withdrawal of the Johncom cautionary announcement.
1. Introduction
Further to the cautionary announcement released on SENS on 27
October 2006, Nedbank Capital is authorised to announce that
Johncom has disposed of its M-Net/SuperSport stake to Naspers,
subject to the conditions precedent set out in paragraph 4 below.
The purchase consideration will be discharged by Naspers through:
* the issue of 20 886 667 new Naspers N shares to be listed on
the JSE Limited ("JSE"); and
* R250 million cash payable on the effective date.
The Naspers N shares issued to Johncom after the effective date
will, upon their receipt, be immediately unbundled to the Johncom
shareholders.
(hereinafter collectively referred to as "the transaction")
In addition, Johncom will receive its share of 38,56% of an
aggregate cash dividend of not less than R200 million payable by M-
Net and SuperSport by 31 December 2006.
The cash consideration of R250 million will be applied towards the
taxes payable as a result of the disposal of the M-Net/SuperSport
stake and the distribution of the Naspers N shares to Johncom
shareholders.
The total consideration for the disposal of the M-Net/SuperSport
stake is estimated at R3,145 billion based on the closing share
price of R138,60 per Naspers N share as at 10 November 2006.
2. Rationale for the transaction
Johncom has been invested in M-Net and SuperSport since their
inception. These businesses have enjoyed remarkable success and
have appreciated in value. Through the disposal of the M-
Net/SuperSport stake, Johncom will be able to distribute value to
shareholders in the form of Naspers N shares.
3. Nature and business of M-Net and SuperSport
M-Net conducts the business of subscription television services
which include the acquisition, scheduling and broadcasting of
premier film entertainment, as well as the controlling of
advertising revenue on the M-Net channels.
SuperSport"s operations consist of the acquisition, packaging and
scheduling of sports and sports-related television programming,
sports-related franchising and merchandising, sports competitions
and ownership of sports-related assets, including stadiums and
professional sports teams.
4. Conditions precedent to the transaction
The transaction is subject to the following conditions precedent,
the last of which has to be fulfilled by 13 November 2007:
* the requisite approval of the transaction by the JSE;
* the requisite approval of the transaction by the Johncom
shareholders in a general meeting;
* the approval of the transaction by all the regulatory
authorities including, without limitation, the Competition
Authorities;
* the JSE unconditionally approving the listing of the Naspers N
shares;
* approval, to the extent necessary, by the Natal Witness
Investments (Proprietary) Limited; and
* the declaration and payment to all shareholders pro rata to
their shareholding by no later than 31 December 2006 of a cash
dividend by the board of directors of M-Net and SuperSport in
relation to all the M-Net and SuperSport shares then in issue,
in an aggregate amount of not less than R200 million.
5. Effective date
The effective date of the transaction will be the third business
day following the day on which the last of the conditions precedent
is fulfilled.
6. Financial effects of the transaction on Johncom shareholders
The table below sets out the reviewed pro forma financial effects
of the transaction on Johncom shareholders. These financial effects
are prepared for illustrative purposes only, to provide information
about how the transaction might have affected the financial
information presented by Johncom and, because of their pro forma
nature, may not give a true reflection of Johncom"s financial
position and results of its operations. These financial effects are
the responsibility of the board of directors of Johncom ("the
Johncom board"). The financial effects have been reviewed by the
reporting accountants, Deloitte & Touche.
Before the After the % change
transaction transaction
Earnings per share (cents) 491,6 2 553,6 419,4
Headline earnings per 485,8 291,3 -40,0
share (cents)
Net asset value per share 2 254,0 1 675,2 -25,7
(cents)
Tangible net asset value 1 890,6 1 580,0 -16,4
per share (cents)
Number of shares in issue 103 821,2 103 821,2 0,0
("000)
Weighted average number of 104 014,8 104 014,8 0,0
shares in issue ("000)
Notes:
a) The "before the transaction" financial information has been
extracted, without adjustment, from the audited results of
Johncom for the year ended 31 March 2006.
b) The earnings per share and headline earnings per share figures
as reflected in the "after the transaction" financial
information are based on the assumption that the transaction
was implemented on 1 April 2005.
c) The net asset value per share and tangible net asset value per
share figures as reflected in the "after the transaction"
financial information are based on the assumption that the
transaction was implemented on 31 March 2006.
d) The earnings per share and headline earnings per share were
adjusted for:
* the receipt of the consideration in respect of the
disposal of the M-Net/ SuperSport stake (see paragraph
1), the disposal by Johncom of the M-Net/SuperSport
stake, and the unbundling to Johncom shareholders of the
Naspers N shares;
* the payment of capital gains tax ("CGT") of R188 million;
* the reversal of the brand amortisation (which arises on
consolidation) of R4 million for the year ended 31 March
2006;
* the payment of secondary tax on companies ("STC") on the
unbundling of the Naspers N shares of R225 million (see
note e);
* the reduction in interest earned, at an after-tax rate of
4,615% per annum, of R8 million as a result of the
utilisation of R163 million of Johncom"s cash (after the
introduction of the R250 million cash received as part of
the purchase consideration) to fund the CGT and STC
payments;
* the elimination of the proportionately consolidated
results of M-Net and SuperSport for the year ended 31
March 2006; and
* the payment of STC of R1 million arising as a result of
Johncom"s dividend declared on 24 November 2005.
e) The STC on the unbundling of the Naspers N shares received as
consideration for the M-Net/SuperSport stake is calculated on
the basis that:
* R302 million of available STC credits are utilised in
respect of the income statement pro forma financial
effects, and that R390 million of available STC credits
are utilised in respect of the balance sheet pro forma
financial effects; and
* R796 million of the unbundled Naspers N shares will be
paid to Johncom"s shareholders by means of a reduction of
share premium.
f) The earnings per share and headline earnings per share were
not adjusted for any costs relating to the transaction.
g) The net asset value per share and tangible net asset value per
share were adjusted for:
* the receipt of the consideration in respect of the
disposal of the M-Net/SuperSport stake (see paragraph 1),
the disposal by Johncom of the M-Net/SuperSport stake,
and the unbundling to Johncom shareholders of the Naspers
N shares;
* the payment of CGT of R205 million;
* the payment of STC on the unbundling of the Naspers N
shares of R213 million (see note e);
* the elimination of the proportionately consolidated
assets and liabilities of M-Net and SuperSport as at 31
March 2006; and
* the elimination of intangible assets (which arise on
consolidation) comprising goodwill of R221 million and
brand of R53 million as at 31 March 2006.
h) The net asset value per share and tangible net asset value per
share were not adjusted for any costs relating to the
transaction.
7. Resignation of directors
The Johncom directors appointed to the respective M-Net and
SuperSport boards will resign from their respective board positions
with effect from the effective date.
8. Categorisation of the transaction in terms of the JSE Listings
Requirements
The transaction is a Category 1 transaction for Johncom in terms of
Section 9.5 (c) of the JSE Listings Requirements.
9. Documentation to Johncom shareholders and withdrawal of cautionary
announcement
A circular containing the final terms of the transaction and
details of the unbundling will be posted to Johncom shareholders in
due course.
Johncom shareholders are no longer advised to exercise caution in
trading in their Johncom ordinary shares.
Johannesburg
14 November 2006
Investment bank, Legal advisers to Independent reporting
Corporate Adviser and Johncom accountants to Johncom
Sponsor to Johncom
Nedbank Capital Werksmans Deloitte
Date: 14/11/2006 03:38:07 PM Produced by the JSE SENS Department
