| Thu 21 Dec 2006, 17:00 | | MCU - mCubed - Disposal by Mcubed Life Limited (MC |
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MCU
MCU
MCU - mCubed - Disposal by Mcubed Life Limited ("MCL") and
renewal of cautionary announcement
m Cubed Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1998/014568/06
Share code: MCU
ISIN: ZAE000033353
("mCubed" or "the company")
Disposal by Mcubed Life Limited ("Mcl") and renewal of
cautionary announcement
1. Introduction
Shareholders are referred to the cautionary
announcements of 23 November 2006 and 14 December 2006,
and the company`s interim financial statements released
on 8 December 2006, in terms whereof various references
were made to the unlocking of value for shareholders
and the disposal by the company of its businesses.
2. Disposal of mCL
Shareholders are advised that the directors of the
company have received an offer from Alternative
Channel, a subsidiary of Channel Life Limited
("Alternative Channel"), to acquire mCL`s
policyholders` book, representing mCL`s only and
substantial asset, by way of a 100% re-insurance
transaction. The directors` of the company have advised
Alternative Channel of their acceptance of such offer,
subject, inter alia, to the fulfillment of certain
other conditions precedent, as set out in 4 below ("the
disposal").
3. Salient terms of the disposal
3.1 Subject to the fulfillment of the conditions precedent
in 4 below, the effective date of the transaction is 1
February 2007 ("effective date"). The period between the
effective date and the fulfillment of the final condition
precedent as set out in 4 below is referred to as the
"interim period".
3.2 Alternative Channel has offered to acquire mCL`s
policyholders` book for a cash purchase consideration of R30
million, together with the book value of any movable assets
that may be taken over from mCL within 30 days of the
effective date, but excluding shareholders` equity of
approximately R68 million, to be paid into a designated
trust account on the effective date or upon signature of the
necessary re-insurance agreement, whichever is the sooner.
3.3 From the effective date, all premiums, claims and
expenses incurred in respect of the policyholders will
accrue to Alternative Channel.
3.4 The parties will co-operate to ensure that all
actuarial reports and annual financial statements of mCL
will be unqualified by December 2007.
3.5 As soon as such reports may be issued as unqualified or
by no later than 30 June 2008, whichever is the sooner,
Alternative Channel will be entitled to apply for ownership
of all policies pertaining to its policyholders` book from
mCL in terms of the Long Term Insurance Act.
3.6 Upon such transfer as contemplated on 3.5 above, mCl
will cease to have any rights or obligations in respect of
its policyholders` book, and Alternative Channel shall be
deemed to have assumed all such rights and obligations.
3.7 mCL has indemnified Alternative Channel against certain
losses and risks that may have arisen prior to the effective
date. The terms of such warranties shall be finalised upon
the conclusion of the relevant re-insurance agreement.
3.8 mCl shall be restrained for a period of 5 years from
the effective date from conducting any form of life
insurance and investment business. The terms of such
restraint shall be finalised upon the conclusion of the
relevant re-insurance agreement.
4. Conditions precedent
The disposal is subject to the fulfillment of the
following conditions precedent:
4.1 Approval of the disposal by the shareholders of the
company in terms of section 228 of the Companies Act (61 of
1973)(to the extent necessary);
4.2 Conclusion of the necessary re-insurance agreement
between the parties within 30 days of the effective date;
4.3 During the interim period, mCL will make available to
Alternative Channel its "mCubed "brand.
4.4 Approval from the necessary Competition Authorities;
4.5 Approval from the Financial Services Board, and the
Long-Term Insurance Regulator (to the extent necessary);
4.6 Submission of a certificate by mCL`s auditors to
Alternative Channel confirming the values of the
policyholders` assets as at the effective date by no later
than 30 November 2007;
4.7 Submission of a certificate by the appointed valuator
of mCL to Alternative Channel confirming the value of the
in-force policyholders` business ("VIF") as at the effective
date, with all underlying actuarial assumptions having been
agreed upon by the parties; and
4.8 Conclusion of interim management agreement within 30
days of the effective date.
5. mCL staff members
As a specific term of the disposal, Alternative Channel
has agreed that it shall take over all employment
contracts, excluding those of directors, on the same
terms and conditions, of all mCL employees.
6.Financial effects of the disposal
The pro-forma financial effects of the disposal shall be
provided in a further announcement to be released as soon
as such effects have been determined, finalised and
reviewed by the reporting accountants.
7. Renewal of cautionary announcement
The company`s shareholders are accordingly advised to
continue to exercise caution when dealing in their
securities until a further announcement is made.
A full terms announcement shall be made in respect of the
disposal as soon as possible in the new year.
21 December 2006
Stellenbosch
PSG Capital Limited - Sponsor and Corporate Adviser
Date: 21/12/2006 17:00:03 Produced by the JSE SENS Department.
