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ACQUISITION BY M-CELL OF AN EFFECTIVE 20% INTEREST IN MTN

Release Date: 07/04/1999 07:31
Code(s): MCE
Wrap Text
M-CELL LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 94/09584/06)
("M-CELL")

ACQUISITION BY M-CELL OF AN EFFECTIVE 20% INTEREST IN MOBILE TELEPHONE NETWORKS HOLDINGS (PROPRIETARY) LIMITED ("MTN HOLDINGS") FOR THE ISSUE OF NEW ORDINARY M-CELL SHARES AND FURTHER CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION
FURTHER TO THE CAUTIONARY ANNOUNCEMENT DATED 15 MARCH 1999, STANDARD CORPORATE AND MERCHANT BANK IS AUTHORISED TO ANNOUNCE THAT, SUBJECT TO THE APPROVAL OF M-CELL SHAREHOLDERS IN GENERAL MEETING, M-CELL HAS REACHED AGREEMENT WITH JOHNNIES INDUSTRIAL CORPORATION LIMITED ("JOHNNIC") TO ACQUIRE 67 500 000 MTN HOLDINGS SHARES (13,5%), IN EXCHANGE FOR AN ISSUE OF 204 352 340 NEW ORDINARY M-CELL SHARES AND HAS REACHED AGREEMENT WITH TRANSNET LIMITED ("TRANSNET") TO ACQUIRE 32 500 000 MTN HOLDINGS SHARES (6,5%) IN EXCHANGE FOR AN ISSUE OF 98 391 865 NEW ORDINARY M-CELL SHARES ("THE ACQUISITION"). THE TERMS OF THE ACQUISITION ARE DETAILED IN PARAGRAPH 3 BELOW. 2. RATIONALE FOR THE ACQUISITION
M-CELL WISHES TO INCREASE ITS INTEREST IN MTN HOLDINGS. THE ACQUISITION PRESENTS M-CELL WITH AN OPPORTUNITY OF FURTHER CONSOLIDATING ITS INTEREST IN MTN HOLDINGS AND OF BUILDING SYNERGIES WITH THE SHAREHOLDERS OF MTN HOLDINGS INCLUDING TRANSNET AND JOHNNIC. 3. TERMS OF THE ACQUISITION
3.1 IN TERMS OF THE ACQUISITION, M-CELL WILL ACQUIRE 67 500 000 MTN HOLDINGS SHARES FROM JOHNNIC IN EXCHANGE FOR THE ISSUE OF 204 352 340 NEW ORDINARY M-CELL SHARES TO JOHNNIC, SUBJECT TO THE APPROVAL OF THE M-CELL SHAREHOLDERS IN GENERAL MEETING AND IN RESPECT OF WHICH 3.2 BELOW WILL APPLY, AND WILL ACQUIRE 32 500 000 MTN HOLDINGS SHARES FROM TRANSNET IN EXCHANGE FOR THE ISSUE OF 98 391 865 NEW ORDINARY M-CELL SHARES TO TRANSNET, SUBJECT TO THE APPROVAL OF THE M-CELL SHAREHOLDERS IN GENERAL MEETING. THE ACQUISITION CONSIDERATION AMOUNTS TO R2,5 BILLION.
3.2 IN TERMS OF SECTION 10.1 OF THE LISTINGS REQUIREMENTS OF THE JOHANNESBURG STOCK EXCHANGE ("THE JSE"), JOHNNIC AND ITS SUBSIDIARY, OMNI MEDIA CORPORATION LIMITED ("OMNI"), ARE RELATED PARTIES TO M-CELL BECAUSE OF THEIR DIRECT AND INDIRECT SHAREHOLDINGS IN M-CELL. THE INDEPENDENT SHAREHOLDERS OF M-CELL ARE, THEREFORE, REQUIRED TO APPROVE, IN GENERAL MEETING, THE ACQUISITION OF THE 67 500 000 MTN HOLDINGS SHARES FROM JOHNNIC. JOHNNIC, OMNI AND THEIR ASSOCIATES AND SUBSIDIARIES ARE REQUIRED TO REFRAIN FROM VOTING ON THE NECESSARY
RESOLUTIONS AT SUCH GENERAL MEETING IN RESPECT OF ANY M-CELL ORDINARY SHARES IN WHICH THEY HOLD ANY BENEFICIAL OR NON-BENEFICIAL INTEREST.
3.3 THE ACQUISITION IS SUBJECT TO APPROVAL BY THE SHAREHOLDERS OF M-CELL IN GENERAL MEETING BY 30 APRIL 1999. 4. FINANCIAL EFFECTS OF THE ACQUISITION
THE FINANCIAL EFFECTS ON THE EARNINGS PER SHARE ("EPS") AND NET ASSET VALUE ("NAV") ATTRIBUTABLE TO AN M-CELL ORDINARY SHARE BEFORE AND AFTER THE
ACQUISITION HAVE BEEN CALCULATED USING THE FOLLOWING ASSUMPTIONS:
4.1 FOR THE PURPOSE OF THE EPS CALCULATION, IT HAS BEEN ASSUMED THAT THE ACQUISITION HAS BEEN EFFECTIVE FROM 1 APRIL 1998; AND
4.2 FOR THE PURPOSE OF THE NAV CALCULATION, IT HAS BEEN ASSUMED THAT THE ACQUISITION WAS IMPLEMENTED ON 30 SEPTEMBER 1998 (BEING THE DATE OF M-CELL'S LATEST PUBLISHED INTERIM RESULTS).
BASED ON THE ABOVE ASSUMPTIONS, THERE WOULD HAVE BEEN NO MATERIAL CHANGE IN THE EPS OF M-CELL, WHILE ITS NAV WOULD HAVE INCREASED FROM 118,5 CENTS TO 370,4 CENTS (PERCENTAGE INCREASE OF 212,5%). 5. INDEPENDENT OPINION
SCMB WAS REQUESTED TO ADVISE THE DIRECTORS OF M-CELL IN RELATION TO THE ACQUISITION OF THE 67 500 000 MTN HOLDINGS SHARES FROM JOHNNIC ("THE JOHNNIC ACQUISITION"). SCMB IS OF THE OPINION THAT THE JOHNNIC ACQUISITION IS FAIR AND REASONABLE TO M-CELL SHAREHOLDERS. 6. FURTHER CAUTIONARY ANNOUNCEMENT
M-CELL IS INVOLVED IN FURTHER NEGOTIATIONS WHICH, IF SUCCESSFULLY CONCLUDED, COULD HAVE AN EFFECT ON THE PRICE AT WHICH M-CELL ORDINARY SHARES TRADE ON THE JSE AND M-CELL SHAREHOLDERS ARE, ACCORDINGLY, ADVISED TO CONTINUE TO EXERCISE CAUTION WHEN DEALING IN THEIR M-CELL ORDINARY SHARES. 7. DOCUMENTATION
A CIRCULAR CONTAINING INFORMATION ON THE ACQUISITION AND INCLUDING A NOTICE CONVENING A GENERAL MEETING OF M-CELL SHAREHOLDERS, IS CURRENTLY BEING PREPARED AND WILL, SUBJECT TO THE APPROVAL OF THE JSE, BE POSTED TO M-CELL SHAREHOLDERS IN DUE COURSE. JOHANNESBURG 7 APRIL 1999 MERCHANT BANK AND INDEPENDENT ADVISER SCMB STANDARD CORPORATE AND MERCHANT BANK
(A DIVISION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED) (REGISTRATION NUMBER 62/00738/06) SPONSORING BROKER MERRILL LYNCH SOUTH AFRICA (PTY) LTD MEMBER OF THE JOHANNESBURG STOCK EXCHANGE REG. NO. 95/01805/07 ATTORNEYS WWB WEBBER WENTZEL BOWENS

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