Sharenet Sites 
Sharenet Sites
LAB - Labat Africa Limited - Announcement and Renewal of Cautionary LABAT AFRICA LIMITED Incorporated in the Republic of South Africa (Registration number 1986/001616/06) Share code: LAB ISIN: ZAE000018354 ("Labat" or "the company") INTRODUCTION OF MVELAPHANDA HOLDINGS (PROPRIETARY) LIMITED ("MVELA") AS A STRATEGIC EMPOWERMENT PARTNER INTO LABAT TRAFFIC SOLUTIONS (PROPRIETARY) LIMITED ("LTS") AND A RENEWAL OF CAUTIONARY INTRODUCTION Further to the cautionary announcement dated 22 June 2007, Labat shareholders are advised that agreements have been concluded between Labat, LTS (an unlisted subsidiary of Labat), Mvela (a black economic empowerment investment company), and the current minority shareholders of LTS (The Suikerbos Trust and Pharaoh Limited, hereinafter collectively referred to as "the sellers") in terms of which Mvela, in line with its intention to facilitate an increase in the black economic empowerment profile of LTS, will acquire all of the minority shareholdings in LTS from the sellers ("the acquisition") and will subscribe for 2 600 preference shares in LTS for an aggregate amount of R26 million ("issue of the preference shares"). In addition, LTS will repurchase 21,54% of its issued shares from Mvela for a consideration of R26 million ("share buy-back"). Hereinafter "the acquisition", "the share buy-back" and "the issue of the preference shares" are collectively referred to as "the transactions". BACKGROUND TO LTS LTS was started in December in 1999 to provide customised IT and financial solutions and a high-tech traffic management system to Municipalities and Provincial Governments. The unique solution offered by LTS enables its clients to obtain a state of the art system together with an experienced team to run back-office processing. LTS intends to become a prominent supplier to Municipalities and Provincial Governments of various outsourced automated back- office systems. LTS owns 51% in Total Computer Services (Proprietary) Limited ("TCS"). TCS is a service business, targeting the development of products and services to the traffic management sector, and is dedicated to the design, development, installation, training and supporting of traffic systems. DETAILS OF THE TRANSACTIONS In terms of a sale of shares agreement between Mvela, LTS and the sellers, Mvela has transacted to acquire the respective holdings of the sellers in LTS as well as their loan claims against LTS for an aggregate consideration of R26 538 874,97. Labat has agreed to waive its pre-emptive rights in respect of the acquisition of the LTS minority shares. In terms of a further agreement dated 13 June 2007 ("the subscription agreement"), Mvela, Labat and LTS have agreed as follows: Mvela shall subscribe for 2 600 cumulative, redeemable preference shares of R1,00 each in the share capital of LTS, at a price of R10 000,00 per preference share, in cash; and LTS shall acquire from Mvela, 21,54% of Mvela`s newly acquired shares in LTS at an aggregate consideration of R26 million in cash. Following the share buy-back, Labat will have increased its effective holding in LTS from 51% to 65%, while Mvela will hold the remaining 35%. All the agreements pertaining to the transactions are linked and inter- conditional. Conditions precedent The acquisition by Mvela of the minority shares in LTS is suspensive upon approval of all relevant regulatory authorities by 30 September 2007. The subscription agreement is subject to the following remaining suspensive conditions: - the amendment of the memorandum and articles of association of LTS by 31 August 2007 to: - authorise the repurchase of its shares; - authorise the subdivision of its shares into shares of 1 cent each; create the preference shares and to incorporate the terms of their issue into the articles of association of LTS; - incorporate a special condition providing for the approval by Mvela in respect of any amendment to the preference shares; and - approval by JSE Limited ("JSE") and approval of the relevant transactions by Labat shareholders at a general meeting to be held by 30 September 2007. The effective date of the subscription agreement is the third business day after the date upon which the last of the conditions is validly fulfilled or waived. Shareholders, holding in aggregate 48,86% of issued shares in Labat, have given irrevocable undertakings to vote in favour of the above transactions at any general meeting of Labat. The financial effects in relation to the issue of shares for cash will be published in due course. Until such time the company will remain under cautionary. FURTHER DOCUMENTATION A circular containing full details of the transactions and incorporating a notice of general meeting will be sent to Labat shareholders in due course. INTENTION REGARDING THE LISTING OF LTS The rationale for the transactions is to increase Labat`s shareholding in LTS, at the same time facilitating the introduction of an empowerment partner, Mvela, into LTS. The directors reiterate their intention to seek the restructuring of LTS and TCS with a view to applying for a separate listing in respect of LTS. RENEWAL OF CAUTIONARY Shareholders are advised that the full impact of the transactions are still being determined and, further, that Labat is still engaged in negotiations which, if successfully concluded, may have a material effect on the price of Labat shares. Accordingly, shareholders are advised to continue exercising caution when trading in Labat shares on the JSE until a further announcement is made. 27 July 2007 Sponsor Merchant Sponsors (Proprietary) Limited Legal adviser Stein Scop Attorneys Auditors RAiN Date: 27/07/2007 13:13:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.
