VALUECOM/DDH - DISPOSAL OF VALUECOM SA TO DIMENSION DATA HOLDINGS

DISPOSAL OF VALUECOM SOUTH AFRICA TO DIMESION DATA HOLDINGS
VALUECOM HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 98/06815/06)
("VALUECOM")
DIMENSION DATA HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 97/01527/06)
("DDH")

DISPOSAL OF VALUECOM (PROPRIETARY) LIMITED ("VALUECOM SOUTH AFRICA") TO DDH
1. INTRODUCTION

FURTHER TO THE ANNOUNCEMENT DATED 25 JANUARY 1999, INVESTEC BANK LIMITED IS
AUTHORISED TO ANNOUNCE THAT VALUECOM AND DDH HAVE REACHED AN AGREEMENT IN TERMS
OF WHICH VALUECOM HAS, SUBJECT TO THE CONDITIONS PRECEDENT SET OUT IN PARAGRAPH
4 BELOW, DISPOSED OF THE SHARES IN AND SHAREHOLDERS' CLAIMS AGAINST VALUECOM
SOUTH AFRICA TO DDH WITH EFFECT FROM 1 APRIL 1999 ("THE DISPOSAL").
2. RATIONALE FOR THE DISPOSAL

VALUECOM'S STRATEGY HAS BEEN, AND REMAINS, TO BE A PROVIDER OF FAX TECHNOLOGY
AND NETWORK SERVICES INTERNATIONALLY. TO THIS END, IT HAS DEVELOPED ITS
TECHNOLOGY AND OPERATIONS THROUGH VALUECOM SOUTH AFRICA AND HAS SET UP
OPERATIONS IN SINGAPORE IN LATE 1998. VALUECOM HAS NOW SECURED CO-OPERATION
AGREEMENTS IN PRINCIPLE FROM OPERATORS IN 11 ASIA PACIFIC COUNTRIES, AND THE
DISPOSAL OF VALUECOM SOUTH AFRICA WILL BRING ITS SOUTH AFRICAN OPERATIONS IN
LINE WITH VALUECOM'S GLOBAL MODEL. IN LICENSING ITS PROPRIETARY TECHNOLOGY TO
OPERATIONAL PARTNERS IN VARIOUS COUNTRIES, VALUECOM HAS ADOPTED THE APPROACH OF
CHOOSING DOMINANT PROVIDERS OF RELATED SERVICES WHOSE RESPECTIVE TECHNOLOGIES
AND CLIENT BASES OFFER THE BEST SYNERGIES.

THE DISPOSAL AND AN ALLIANCE WITH DDH AND ITS WHOLLY-OWNED SUBSIDIARY, THE
INTERNET SOLUTION (PTY) LIMITED ("IS"), WILL BRING SIGNIFICANT SYNERGISTIC
BENEFITS TO BOTH VALUECOM SOUTH AFRICA AND VALUECOM, IN TERMS OF ACCESS TO
TECHNOLOGIES SUPPORT, BANDWIDTH FOR THE TRANSMISSION OF VALUECOM FAX TRAFFIC
AND A SALES FORCE AND CUSTOMER BASE WHICH IS UNRIVALLED AMONG SOUTH AFRICAN
INTERNET SERVICE PROVIDERS. IT IS EXPECTED THAT THIS WILL ACCELERATE THE
ENHANCEMENT OF VALUECOM'S TECHNOLOGIES AND VALUECOM SOUTH AFRICA'S PENETRATION
OF THE CORPORATE MARKET.

IS' STRATEGY HAS FOCUSED ON THE DEVELOPMENT OF ITS VALUE ADDED SERVICES MODEL
AND SOLUTIONS APPROACH TO SOUTH AFRICA'S CORPORATE MARKET. IP FAX SERVICES WILL
COMPLEMENT ITS ACCESS SERVICE, HOSTING, VPN, REMOTE ACCESS, SECURITY AND
E-COMMERCE OFFERINGS. THE DISPOSAL STRENGTHENS IS' ABILITY TO ADD VALUE TO ITS
CUSTOMERS BY ACTING AS THE SOURCE FOR ALL INTERNET AND IP-BASED NETWORK
SERVICES.

VALUECOM'S INTENTION HAS BEEN TO DEVELOP VIABLE TECHNOLOGY AND CREATE A WORKING
COUNTRY MODEL. DEVELOPMENTS IN SOUTH AFRICA, THE DISPOSAL AND THE ESTABLISHMENT
OF OPERATIONS IN SINGAPORE WILL NOW ALLOW VALUECOM TO FAST TRACK ITS
INTERNATIONAL ACTIVITIES.
3. TERMS OF THE AGREEMENT
3.1 SALIENT TERMS

3.1.1 VALUECOM WILL DISPOSE OF ALL OF THE SHARES IN AND SHAREHOLDERS' CLAIMS
AGAINST VALUECOM SOUTH AFRICA TO DDH WITH EFFECT FROM 1 APRIL 1999.

3.1.2 PRIOR TO THIS, VALUECOM SOUTH AFRICA WILL ASSIGN ALL OF ITS PROPRIETARY
TECHNOLOGY AND INTELLECTUAL PROPERTY TO VALUECOM, WHICH WILL IN TURN GRANT
VALUECOM SOUTH AFRICA A LICENCE TO USE SUCH TECHNOLOGY AND INTELLECTUAL
PROPERTY WITHIN SOUTH AFRICA IN PERPETUITY.

3.1.3 IS HAS AGREED TO PROVIDE FULL CO-OPERATION IN THE ENHANCEMENT OF
VALUECOM'S TECHNOLOGY AND THE DISTRIBUTION OF VALUECOM SOUTH AFRICA'S PRODUCT
THROUGH THEIR SALES FORCE. IN ADDITION, IS HAS ENTERED INTO A RESTRAINT OF
TRADE AGREEMENT ENSURING THAT ITS ACTIVITIES IN INTERNET BASED FAX SERVICES
WILL BE CHANNELLED EXCLUSIVELY THROUGH VALUECOM SOUTH AFRICA.

3.1.4 VALUECOM WILL RETAIN FULL OPERATIONAL AND MANAGEMENT CONTROL OVER
VALUECOM SOUTH AFRICA UNTIL 30 JUNE 2001, WHEREAFTER MANAGEMENT CONTROL WILL
PASS TO DDH.

3.1.5 VALUECOM WILL RETAIN OWNERSHIP OF ALL TECHNOLOGY AND INTELLECTUAL
PROPERTY, AND WILL LEVERAGE ITS TECHNOLOGY THROUGH THE BASE ESTABLISHED IN
SINGAPORE INITIALLY IN THE ASIA PACIFIC REGION AND THEN GLOBALLY.
3.2 THE PURCHASE CONSIDERATION

DDH WILL PURCHASE ALL OF THE SHARES IN AND SHAREHOLDERS' CLAIMS ON LOAN ACCOUNT
AGAINST VALUECOM SOUTH AFRICA WITH EFFECT FROM THE EFFECTIVE DATE FOR A
PURCHASE CONSIDERATION BASED UPON A MULTIPLE OF 15 TIMES THE AUDITED AFTER TAX
PROFITS OF VALUECOM SOUTH AFRICA FOR THE EITHER OF THE YEARS ENDING 30 JUNE
2000 OR 30 JUNE 2001 ("THE PROFITS"), WHICHEVER IS THE HIGHER ("THE PURCHASE
CONSIDERATION").

THE PURCHASE CONSIDERATION SHALL BE SUBJECT TO THE ADJUSTMENT THAT SHOULD THE
PROFITS EXCEED R34 MILLION, THE MULTIPLE OF

15 REFERRED TO ABOVE SHALL INCREASE BY 1 FOR EVERY COMPLETE R2 MILLION BY WHICH
THE PROFITS EXCEED R34 MILLION, SUBJECT TO A MAXIMUM MULTIPLE OF 25.
3.3 SETTLEMENT OF THE PURCHASE CONSIDERATION

THE PURCHASE CONSIDERATION SHALL BE SETTLED AS FOLLOWS:

* AN AMOUNT OF R29,64 MILLION IN CASH AS A NON-REFUNDABLE DEPOSIT ON 1 OCTOBER
1999;

* THE BALANCE (CALCULATED IN ACCORDANCE WITH PARAGRAPH 3.2 ABOVE) IN CASH ON
PRESENTATION OF THE AUDITED FINANCIAL STATEMENTS OF VALUECOM SOUTH AFRICA FOR
THE YEAR ENDING 30 JUNE 2000 ON OR BEFORE 31 DECEMBER 2000; AND

* SHOULD THE PROFITS FOR THE YEAR ENDING 30 JUNE 2001 BE GREATER THAN THE
PROFITS FOR THE YEAR ENDING 30 JUNE 2000, AN AMOUNT REPRESENTING THE

OUTSTANDING BALANCE (CALCULATED IN ACCORDANCE WITH PARAGRAPH 3.2 ABOVE) IN CASH
ON PRESENTATION OF THE AUDITED FINANCIAL STATEMENTS OF VALUECOM SOUTH AFRICA
FOR THE YEAR ENDING 30 JUNE 2001.
3.4 FINANCIAL EFFECTS

SHAREHOLDERS ARE REFERRED TO THE ANNOUNCEMENT OF VALUECOM'S INTERIM RESULTS FOR
THE 6 MONTHS TO 31 DECEMBER 1998, WHICH APPEARS ELSEWHERE IN THIS PUBLICATION.
AS A START-UP TECHNOLOGY COMPANY, VALUECOM INCURRED AN OPERATING LOSS FOR THIS
PERIOD IN LINE WITH MANGEMENT EXPECTATION. THIS OPERATING LOSS IS EXPECTED TO
BE REVERSED IN THE FULL FINANCIAL YEAR TO 30 JUNE 1999 AND THE DISPOSAL IS
EXPECTED TO ACCELERATE THE PROFITABILITY OF VALUECOM SOUTH AFRICA.

GIVEN THE FORMULA FOR THE CALCULATION OF THE PURCHASE CONSIDERATION AND THE
DIFFICULTY OF ACCURATELY FORECASTING THE PROFITS OF VALUECOM SOUTH AFRICA FOR
THE YEAR ENDING 30 JUNE 2001, IT IS IMPOSSIBLE AT THIS TIME TO PREDICT THE
AMOUNT OF THE PURCHASE CONSIDERATION WHICH WILL ULTIMATELY BE PAID. FOR THIS
REASON THE PRESENTATION OF ANY FINANCIAL EFFECTS OF THE DISPOSAL WOULD BE
MEANINGLESS AND THESE HAVE THEREFORE BEEN EXCLUDED.
4. CONDITIONS PRECEDENT

THE DISPOSAL AGREEMENT IS SUBJECT TO, INTER ALIA, THE FULFILMENT OF THE
FOLLOWING CONDITIONS PRECEDENT:

* THE COMPLETION OF A DUE DILIGENCE INVESTIGATION INTO THE BUSINESS OF VALUECOM
SOUTH AFRICA TO THE SATISFACTION OF DDH;

* THE APPROVAL OF DOCUMENTATION, IN SO FAR AS IT IS REQUIRED, BY THE
JOHANNESBURG STOCK EXCHANGE ("THE JSE"); AND

* THE PASSING BY VALUECOM SHAREHOLDERS IN GENERAL MEETING OF THE RESOLUTIONS
NECESSARY TO GIVE EFFECT TO THE DISPOSAL.
5. DOCUMENTATION

A CIRCULAR DETAILING THE TERMS OF THE DISPOSAL AND INCORPORATING A NOTICE OF
GENERAL MEETING OF SHAREHOLDERS WILL, SUBJECT TO THE APPROVAL OF THE JSE, BE
MAILED TO SHAREHOLDERS IN DUE COURSE.
JOHANNESBURG
9 APRIL 1999
MERCHANT BANK TO VALUECOM
INVESTEC BANK LIMITED
(REG NO 69/04763/06)
ATTORNEYS TO VALUECOM
BRIAN KAHN INC ATTORNEYS
SPONSORING BROKER TO VALUECOM
INVESTEC SECURITIES LIMITED
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
REGISTRATION NO. 72/08905/06
ATTORNEYS TO DDH
ROUTLEDGE-MODISE ATTORNEYS