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M-CELL LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 94/09584/06)
("M-CELL" OR "THE COMPANY")
CHANGE OF SECTOR, AMENDMENTS TO ARTICLES AND CAPITAL REDUCTIONS
INTRODUCTION
THE BOARD OF DIRECTORS OF M-CELL ("THE BOARD") WOULD LIKE TO:
* INFORM SHAREHOLDERS OF THE TRANSFER OF THE LISTING OF M-CELL FROM THE
INDUSTRIAL - DEVELOPMENT SECTOR TO THE INDUSTRIAL - TELECOMMUNICATIONS SECTOR
OF THE JOHANNESBURG STOCK EXCHANGE ("THE JSE")
* PROPOSE THAT
- M-CELL'S ARTICLES OF ASSOCIATION BE AMENDED TO ACCOMMODATE RECENT AMENDMENTS
EFFECTED TO THE COMPANIES ACT, NO. 61 OF 1973 ("THE COMPANIES ACT"); AND
- THE GOODWILL WHICH AROSE AS A RESULT OF CERTAIN ACQUISITIONS, AND FURTHER
GOODWILL WHICH WILL ARISE AS A RESULT OF A PROPOSED ACQUISITION, WHICH WAS
APPROVED BY SHAREHOLDERS AT A GENERAL MEETING ON 29 APRIL 1999, BE ELIMINATED
BY EFFECTIVELY WRITING OFF SUCH GOODWILL AGAINST THE SHARE PREMIUM ACCOUNT.
CHANGE OF SECTOR
SHAREHOLDERS ARE ADVISED THAT THE JSE HAS GIVEN APPROVAL FOR THE TRANSFER OF
THE LISTING OF M-CELL FROM THE INDUSTRIAL - DEVELOPMENT SECTOR TO THE
INDUSTRIAL - TELECOMMUNICATIONS SECTOR, WITH EFFECT FROM MONDAY, 10 JANUARY
2000.
THE DIRECTORS ARE OF THE OPINION THAT, GIVEN THE PROFIT PERFORMANCE OF M-CELL,
THE COMPANY SHOULD NO LONGER BE SEEN AS AN ENTITY STILL IN ITS DEVELOPMENTAL
PHASE.
AMENDMENTS TO THE ARTICLES OF ASSOCIATION
TO ENABLE M-CELL TO TAKE ADVANTAGE OF RECENT AMENDMENTS TO THE COMPANIES ACT,
THE BOARD PROPOSES THAT THE ARTICLES OF ASSOCIATION OF M-CELL BE AMENDED BY
SPECIAL RESOLUTION TO ENABLE M-CELL, SUBJECT TO THE REQUIREMENTS OF THE
COMPANIES ACT AND THE LISTINGS REQUIREMENTS OF THE JSE ("THE LISTINGS
REQUIREMENTS"), TO:
- ACQUIRE ITS OWN SHARES OR THE SHARES IN ITS HOLDING COMPANY; AND
- EFFECT PAYMENTS TO ITS SHAREHOLDERS, AND IN PARTICULAR PAYMENTS ENVISAGED IN
TERMS OF SECTION 90 OF THE COMPANIES ACT.
CAPITAL REDUCTIONS
M-CELL HAS MADE A NUMBER OF ACQUISITIONS ("THE PREVIOUS ACQUISITIONS") AND
PROPOSES TO MAKE AN ACQUISITION PURSUANT TO AUTHORITY PREVIOUSLY GIVEN BY
SHAREHOLDERS ("THE PROPOSED ACQUISITION"), IN TERMS OF WHICH A SIGNIFICANT
PORTION OF THE PURCHASE PRICE IN RESPECT OF SUCH ACQUISITIONS WAS AND WILL BE
ATTRIBUTED TO GOODWILL. THE BOARD BELIEVES THAT, IN RESPECT OF THE PREVIOUS
ACQUISITIONS, IT IS IN THE COMPANY'S BEST INTEREST TO WRITE DOWN THAT PORTION
OF M-CELL'S INVESTMENTS IN ITS SUBSIDIARIES ATTRIBUTABLE TO GOODWILL BY R4 539
744 303 AGAINST RESERVES, TO REDUCE M-CELL'S SHARE PREMIUM ACCOUNT BY R4 539
744 303 BY THE TRANSFER TO RESERVES OF THE AMOUNT OF R4 539 744 303, THEREBY
ELIMINATING THE GOODWILL OF R4 539 744 303 WHICH HAS ARISEN ON GROUP
CONSOLIDATION ATTRIBUTABLE TO THE PREVIOUS ACQUISITIONS.
THE BOARD ALSO BELIEVES THAT, IN RESPECT OF THE PROPOSED ACQUISITION, IT IS IN
THE COMPANY'S BEST INTEREST TO WRITE DOWN THAT PORTION OF M-CELL'S INVESTMENTS
IN ITS SUBSIDIARIES ATTRIBUTABLE TO GOODWILL, WHICH WILL ARISE FROM THE
PROPOSED ACQUISITION, AGAINST RESERVES, TO REDUCE M-CELL'S SHARE PREMIUM
ACCOUNT BY THE SAME AMOUNT BY THE TRANSFER TO RESERVES OF THAT AMOUNT, THEREBY
ELIMINATING THE GOODWILL WHICH WILL ARISE ON GROUP CONSOLIDATION ATTRIBUTABLE
TO THE PROPOSED ACQUISITION.
IN TERMS OF THE LISTINGS REQUIREMENTS, THE CAPITAL REDUCTIONS REQUIRE THE
APPROVAL OF SHAREHOLDERS BY ORDINARY RESOLUTION IN GENERAL MEETING.
THE CAPITAL REDUCTIONS WILL HAVE:
- NO EFFECT ON THE NET TANGIBLE ASSET VALUE PER SHARE;
- NO EFFECT ON THE ISSUED SHARE CAPITAL OF M-CELL OR THE NUMBER OF SHARES
CURRENTLY IN ISSUE;
- NO EFFECT IN ANY WAY ON M-CELL'S ABILITY TO SETTLE ITS LIABILITIES AND
GENERALLY MEET ITS COMMITMENTS, IN THE NORMAL COURSE OF BUSINESS; AND
- NO CASH FLOW IMPLICATIONS, NOR ENTAIL THE PAYMENT OF ANY AMOUNT TO ANY PERSON
GENERAL MEETING OF SHAREHOLDERS AND DOCUMENTATION
A GENERAL MEETING OF SHAREHOLDERS HAS BEEN CONVENED TO BE HELD AT 09H30 ON
MONDAY 20 DECEMBER 1999, IN THE AUDITORIUM, GROUND FLOOR, 28 HARRISON STREET,
JOHANNESBURG, 2001, FOR THE PURPOSE OF CONSIDERING, AND IF DEEMED FIT, PASSING,
WITH OR WITHOUT MODIFICATION, THE REQUISITE RESOLUTIONS.
A CIRCULAR PROVIDING DETAILS OF THE CHANGE OF SECTOR, AMENDMENTS TO THE
ARTICLES, AND THE CAPITAL REDUCTIONS INCORPORATING A NOTICE OF GENERAL MEETING,
PROXY FORM AND A FORM OF SURRENDER, WAS POSTED TO SHAREHOLDERS ON 23 NOVEMBER
1999.
JOHANNESBURG
24 NOVEMBER 1999
CORPORATE ADVISER
PRICEWATERHOUSECOOPERS
CORPORATE FINANCE (PTY) LTD
(REGISTRATION NUMBER 70/03711/07)
SPONSORING BROKER
MERRILL LYNCH SOUTH AFRICA (PTY) LTD
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
REGISTRATION NUMBER 95/01805/07
LEGAL ADVISER
WEBBER WENTZEL BOWENS