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HUG - Huge Group Limited - Detailed cautionary announcement HUGE GROUP LIMITED (formerly Vanquish Fund Managers Limited) (Registration number 2006/023587/06) Share code: HUG & ISIN: ZAE000102042 ("Huge" or "the Company") DETAILED CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Shareholders are referred to the previous cautionary announcement dated 9 November 2007 and are advised that Huge has entered into a binding Offer to Purchase Shares Agreement ("the Agreement") with the Bebinchand Seevnarayan Trust ("the Trust") for the acquisition of 59% of iTalk Cellular (Proprietary) Limited ("iTalk")("the Transaction"). 2. CONSIDERATION The total consideration for the Transaction is the delivery of 93 000 000 ordinary shares in Huge at an issue price of 550 cents per share. In order to maintain an orderly market for the ordinary shares of Huge, the Trust has agreed that it will grant Huge the right to acquire the Huge ordinary shares to be issued and delivered to the Trust as payment for the purchase consideration, in the event that the Trust wishes to dispose of such shares ("the Call Option"). In addition, Huge will grant the Trust the right but not the obligation to sell its shares in Huge to the Company ("the Put Option"), which Huge ordinary shares the Company is obliged to acquire. In order to provide security for the payment of the purchase price of the Huge ordinary shares forming part of the Call Option and Put Option referred to above, Huge has obtained debt funding from Investec Private Bank, a division of Investec Bank Limited, and equity funding from Praesidium Capital Management (Proprietary) Limited, being an existing shareholder of Huge. The debt component of the funding amounts to R261.5mn and the equity component amounts to R80mn. As such the Transaction is fully funded. 3. NATURE OF THE BUSINESS OF ITALK iTalk is a consumer and SME focused cellular Service Provider holding an MTN SA (Proprietary) Limited ("MTNSA") service provider license agreement. In addition, iTalk is a national business operating predominantly from Kwa- Zulu Natal where it has four outlets, and a 4000 m2 head office located in Durban. It also has three outlets in Cape Town and three in Gauteng. iTalk sells both directly through iTalk Direct and through a reseller distribution channel that includes dealers that operate on a "store within a store" concept. 4. RATIONALE In keeping with the future strategy of the company, the directors of Huge have identified various growth opportunities within the telecommunications market. iTalk fits perfectly with the vision of Huge to leverage its brand and increase its points of presence throughout South Africa and augments a strong corporate-based managed telecommunications business with that of a consumer related telecommunications business with strong brand credentials. The annuity revenue base and earnings of Huge is expected to be enlarged by the transaction with iTalk. iTalk does not focus on the cellular least cost routing (CLCR) industry and as such the business of iTalk will complement the existing business of Huge, as well as assist in diversifying certain business risks of Huge relating to mobile termination rates. iTalk will facilitate aggressive growth by Huge in Kwa-Zulu Natal where the presence of Huge in the corporate market is modest. The presence of Huge in the Cape Province and Gauteng is significant and this is expected to assist iTalk in gaining significant market share in these areas. 5. CONDITIONS PRECEDENT The Transaction remains subject to a number of suspensive conditions: * The conclusion of a due diligence by Huge of the business of iTalk; * The conclusion of a comprehensive sale agreement in respect of the shares and claims; * The consent of MTNSA to the change in control of iTalk; * Final and unconditional approval for the implementation of the Transaction in terms of the Competition Act, 89 of 1998; and * All other statutory or regulatory approvals as may be necessary, including the approval of the JSE. 6. DOCUMENTATION In terms of the Listings Requirements of the JSE Limited, the Transaction is regarded as a Category 1 transaction that will require shareholder approval by way of a circular to be sent to shareholders. Shareholders will be advised on SENS within due course. 7. FURTHER CAUTIONARY ANNOUNCEMENT Further announcements will be made on SENS as soon as the financial effects of the Transaction are finalized and any of the suspensive conditions have been fulfilled or waived, as the case may be. Accordingly, shareholders are advised to continue to exercise caution when dealing in their Huge shares. Woodmead 29 November 2007 Designated advisor Arcay Moela Sponsors (Pty) Limited Date: 29/11/2007 15:14:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
