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MICROMEGA HOLDINGS LIMITED - DISPOSAL OF GLOBAL CREDIT RATING COMPANY LIMITED

Release Date: 22/01/2004 17:45
Code(s): MMG
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MICROMEGA HOLDINGS LIMITED - DISPOSAL OF GLOBAL CREDIT RATING COMPANY LIMITED AND RENEWAL OF CAUTIONARY ANNOUNCEMENT MICROMEGA HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1998/003821/06) JSE Share code: MMG ISIN: ZAE000034435 ("Micromega" or "the company") DISPOSAL OF GLOBAL CREDIT RATING COMPANY LIMITED ("GCR") AND RENEWAL OF CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Further to the cautionary announcement published on 8 December 2003, MICROmega Holdings Limited ("MICROmega") shareholders are advised that MICROmega has entered into an agreement with Enigma Holdings Limited ("Enigma") in terms of which, subject to the fulfilment of the conditions precedent set out below, MICROmega will dispose of its wholly owned subsidiary, GCR, to Enigma with effect from 1 November 2003 for a total consideration of R14 million as detailed in paragraph 3 ("the disposal"). GCR is a holding company which incorporates all the activities of its subsidiary, Global Credit Rating Co. (Proprietary) Limited and its associate, Globalmicrorate Africa Limited. The principal business activities of GCR are debt evaluation and ratings throughout Africa. 2. RATIONALE FOR THE DISPOSAL During the 2003 financial year GCR experienced difficulty in meeting the corporate performance levels required by MICROmega. This situation is not expected to improve in the near term. MICROmega is consequently of the opinion that continued investment in the debt rating industry would not provide the growth rate that the company requires of its investment. 3. TERMS OF THE DISPOSAL 3.1 Disposal, Consideration And Settlement Terms The disposal consideration of R14 million is to be settled in cash as follows: - R8 million which was fully paid by 16 January 2004 - R3 million on 1 November 2004 - R3 million on 1 November 2005 Enigma will pay interest every six months in arrears on the outstanding consideration of R6 million at the prime lending rate as determined by MICROmega"s bankers. Enigma reserves the right to settle all or part of the outstanding consideration prior to the dates mentioned above. 3.2 Other Significant Terms MICROmega has given no significant guarantees or warranties in respect of GCR and accordingly all contingent or actual liabilities due directly or indirectly to third parties at the effective date are the responsibility of Enigma. In terms of the original purchase agreement concluded with GCR during January 2001, MICROmega was required to make payment to the vendors over a three year period, provided the vendors met certain profit warranties. Enigma will take full responsibility for any outstanding payments, be they directly or indirectly partially settled or unsettled, as contained in the original purchase agreement. MICROmega will not compete directly or indirectly in the debt evaluation and rating industry for a period of five years, ending on 31 October 2008. 4. CONDITIONS PRECEDENT The implementation of the disposal is subject to approval by the appropriate regulatory authorities. 5. FINANCIAL EFFECTS OF THE DISPOSAL The table below shows the per share effect of the sale of GCR for the 6 months ended 30 June 2003. The pro forma financial effects have been prepared for illustrative purposes only and, because of its nature, may not fairly present MICROmega"s financial position at 30 June 2003 or the effect of future earnings. The financial effects are determined in accordance with the Listing Requirements of the JSE. Note Unaudited Unaudited Change At At (%) 30 June 30 June 2003 2003
Before After (cents) (cents) Loss per share 1 & (23.32) (13.84) 40.65 2
Headline earnings per 3 6.61 5.41 (18.15) share Net asset value per 4 48.87 58.35 19.39 share Net tangible asset 4 19.80 36.79 85.81 value per share Notes: 1. The figures in the "Before" column were extracted from the published unaudited interim results of MICROmega for the six months ended 30 June 2003. 2. The loss per share calculation in the "After" column is based on following assumptions: - The disposal was effective from 1 January 2003. - Interest would have been earned on the cash consideration for the period at an after tax interest rate of 8.75%. - MICROmega had a weighted average number of shares of 85 904 528 in issue during the period. 3. The headline earnings per share calculation in the "After" column is based on the same assumptions as the earnings per share calculation, except for the exclusion from headline earnings of amortisation of goodwill and the capital profit on disposal of business interests. 4. Net asset and net tangible asset value per share are based on the following assumptions: - The net asset value and net tangible asset value of MICROmega reflected on the balance sheet at 30 June 2003 was R41.9 million and R17.01 million respectively. - The net asset value and net tangible asset value in the "After" column assumes the transaction was effective from 1 January 2003.
6. MATERIAL SHAREHOLDERS OF ENIGMA The following table depicts those shareholders holding 5% or more of the issued share capital of Enigma: SHAREHOLDER NUMBER OF SHARES PERCENTAGE First Somers Guernsey 10 000 100% Limited 7. APPLICATION OF THE SALE PROCEEDS The proceeds from the disposal will be used to strengthen the balance sheet of MICROmega and enhance the ability of the company to make further acquisitions. 8. RENEWAL OF CAUTIONARY ANNOUNCEMENT Negotiations are in progress, which if successful, could have an influence on the price of MICROmega shares, and shareholders are therefore advised to continue to exercise caution when dealing in MICROmega shares. Johannesburg 22 January 2004 SPONSOR: LPC MANHATTAN Date: 22/01/2004 05:45:07 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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