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Disposal of Jasco’s interests in Reflex Solutions Propietary Limited
JASCO ELECTRONICS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1987/003293/06)
Share Code: JSC ISIN: ZAE000003794
("Jasco" or “the Group”)
DISPOSAL OF JASCO’S INTERESTS IN REFLEX SOLUTIONS PROPRIETARY LIMITED
1 INTRODUCTION
Shareholders are referred to the announcement released on SENS on Monday 21 September 2020
regarding the transaction which diluted Jasco’s interest in Reflex Solutions Proprietary Limited
(“Reflex”) (the “Dilution Announcement”). Shareholders are advised that Jasco has exercised its
option, in writing, granted to it, by Myriad Capital Communications Proprietary Limited (“Myriad”) in
terms of the Put Option Agreement that was entered into between Jasco, Reflex and Myriad. Myriad
will therefore purchase from Jasco, its entire 47.7% Reflex shareholding of 510 Reflex Ordinary
shares, at a share price of R142,857.14 per share. (the “Disposal”).
2 BACKGROUND TO REFLEX
Jasco acquired its 51% interest in Reflex with effect from 1 May 2017, from the then owners,
Gregory Michael Wilson (“Wilson”) and David Edward Robinson (“Robinson”).
Reflex was established in 2000 by Wilson in Johannesburg and initially specialised in the IT
managed services market before adding hosted IT Infrastructure, cloud services and more recently,
fibre to the home (FTTH) solutions.
Reflex’s operations cover Johannesburg, Cape Town, Port Elizabeth and Durban. Its blue-chip
customer base spans the retail, logistics, education, telecommunications and financial services
industries. It has a solid track-record of double-digit revenue growth since 2013, with consistent
operating margins above 10%.
3 BACKGROUND TO MYRIAD
As detailed in the Dilution Announcement, Wilson and Robinson entered into a Share Swap
Agreement with Myriad which Share Swap Agreement was subsequently amended between the
parties thereto such that Wilson and Robinson’s combined 560 Reflex ordinary shares are now held
by Myriad and Myriad is currently 100% indirectly owned by Wilson and Robinson. Post the
Implementation of the Disposal Myriad will own 100% of Reflex.
4 BACKGROUND AND RATIONALE FOR THE DISPOSAL
Jasco’s immediate focus is on completing the organisational restructure which commenced in the
2019 financial year and the reduction of debt. The Reflex business, however, requires significant
investment in the short term as previously indicated, and Jasco is not currently in a position to
provide the additional funding that is necessary. Accordingly, the board has decided to sell the entire
shareholding in Reflex rather than to allow further dilution of Jasco’s investment in Reflex.
5 KEY TERMS OF THE DISPOSAL
5.1 Reflex Put Option Agreement
As advised in the Dilution Announcement, Myriad, Reflex and Jasco entered into the Reflex Put
Option Agreement, the key terms, effective date and conditions precedent of which, are detailed
below:
5.1.1 Reflex Put Option Agreement
Myriad granted Jasco an option, exercisable at Jasco’s sole discretion, to require Myriad
to purchase from Jasco, its entire Reflex shareholding of 510 Reflex Ordinary shares
(“Put Option Shares”), for a total transaction consideration of R72 857 143 (the “Put
Option Agreement” and the “Put Option”).
Jasco had 90 days from the effective date, 18 September 2020, in which to exercise the
Put Option, by written notice to Myriad (the “Put Option Period”). On the expiry of the Put
Option Period, the Put Option would, to the extent that it had not been exercised, lapse
and be of no further force or effect.
The further disposal of the Put Option Shares is voetstoots and Jasco is not obliged to
provide any warranties other than the warranties that it is the legal, beneficial and
registered owner of the Put Option Shares and that, other than pursuant to a pledge and
cession of the Put Option Shares provided by Jasco to Myriad as security for a loan to
be advanced by Myriad to Jasco pursuant to the Myriad Loan Agreement detailed in the
Dilution Announcement, the Put Option Shares are not encumbered.
The effective date of the Put Option is the date of the last fulfilment or waiver of the Put
Option Conditions Precedent as detailed in 5.1.1.2 (the “Put Option Effective Date”),
being the date that Jasco shareholders approve the transaction, and the closing date of
the Put Option will fall on date which is six weeks after the Put Option Effective Date.
5.1.1.1 Put Option Consideration
The Put Option Consideration of R72 857 143 is valued at R142, 857,14 per
Put Option Share. The total outstanding amount of the Myriad Loan Agreement
detailed in Dilution Announcement (approximately R25 000 000 plus any
interest accrued thereon) will be offset against the Put Option Consideration.
If Reflex at any time between the Signature Date and the Closing Date of the
Put Option Agreement, declares and pays any dividends to its shareholders,
such that Jasco receives dividends with a total value:
• greater than R3,233,000.00, the Put Option Consideration will be
reduced by an amount equal to the difference between the total value
of all dividends received by Jasco and R3,233,000.00 on a Rand for
Rand basis; or
• less than R3,233,000.00, the Put Option Consideration will be
increased by an amount equal to the difference between
R3,233,000.00 and the total value of all dividends received by Jasco
on a Rand for Rand basis.
The balance of the Put Option Consideration will be settled in cash. The
proceeds from the Disposal will be applied to the repayment of the corporate
bond of R45,000,000.00 and a part repayment of the Bank of China working
capital loan of R15,000,000.00 with the remainder being retained to fund
working capital demands.
5.1.1.2 Conditions Precedent to the Put Option
The implementation of the Put Option transaction is subject to the fulfilment of
the following Put Option Conditions Precedent:
• on the date of the Put Option Notice, the board of directors of Jasco will
have passed a resolution approving the exercise by Jasco of the Put
Option and giving the directors of Jasco the power to exercise the Put
Option and to perform all acts required of Jasco in order to implement the
Put Option transaction (which Condition has been fulfilled); and
• by not later than 120 days after the date of the Put Option Notice, the
requisite majority of shareholders of Jasco will have passed the requisite
resolution(s) in accordance with the Companies Act and/or the JSE
Listings Requirements approving the exercise by Jasco of the Put Option
and giving the directors of Jasco the power to exercise the Put Option and
to perform all acts required of Jasco in order to implement the Put Option
transaction;
• by not later than 120 days after the date of the Put Option Notice, to the
extent applicable, the regulatory approvals required by, amongst others,
the Competition Authorities and the Takeover Regulation Panel
established in terms of the Companies Act, for the implementation of the
Put Option Transaction shall have been granted.
5.1.1.3 Call Option
The Put Option Agreement further provides Jasco with a call option which will
allow Jasco, in the event that Myriad fails to pay the Put Option price (“Trigger
Event”), to purchase 36 additional Reflex ordinary shares at the same value
per share as the Disposal and Put Option shares, within 180 days from the
Trigger Event.
If exercised, the call option will result in Jasco’s interest in Reflex being restored
to a majority interest of 51% as it was prior to the Disposal. In the event that
the call option is exercised it is expected to be classified as a category 2
acquisition in terms of the JSE Listings Requirements. Shareholders will be
advised through a further SENS announcement should this event take place.
6 PROFIT AND NET ASSET VALUE ATTRIBUTABLE TO REFLEX
The net assets of Reflex as per the unaudited interim financial results for the 6 months ended 31
December 2019, was R34,4 million, and the net operating profit after tax attributable to the net assets
for the same period was R7,4 million. The unaudited interim financial results for the 6 months ended
31 December 2019 was prepared in accordance with IFRS.
7 CATEGORISATION OF THE TRANSACTION
The Disposal constitutes a category 1 transaction in terms of the Listings Requirements of the JSE
Limited, and is therefore subject to Jasco shareholder approval. A circular and notice of general
meeting will be distributed to shareholders in due course.
Midrand
5 October 2020
Legal Advisor to Jasco
Stein Scop Attorneys Inc.
Corporate Advisor to Jasco
Samuel Kennedy
Joint Corporate Advisor and Sponsor
Grindrod Bank Limited
Date: 05-10-2020 03:15:00
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