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LAB - Labat Africa Limited - The Proposed unbundling and separate listing of
Total Client Services Limited, withdrawal of cautionary and further cautionary
Labat Africa Limited
Incorporated in the Republic of South Africa
(Registration Number 1986/001616/06)
Share code: LAB ISIN: ZAE000018354
("Labat" or "the group")
THE PROPOSED UNBUNDLING AND SEPARATE LISTING OF TOTAL CLIENT SERVICES LIMITED
("TCS"), WITHDRAWAL OF CAUTIONARY AND FURTHER CAUTIONARY
1. Introduction
Further to the cautionary announcement of 7 January 2008, Labat will unbundle
and distribute 197 154 482 TCS shares ("the TCS distribution shares") to Labat
shareholders, subject to the fulfilment of the conditions precedent detailed in
paragraph 5 below ("the conditions precedent"). TCS will be separately listed on
the Alternative Exchange ("AltX") of JSE Limited ("JSE").
The TCS distribution shares will be distributed to Labat shareholders in the
ratio of one TCS distribution share for every Labat share held by a Labat
shareholder recorded in the register of Labat shareholders on Friday, 11 April
2008 ("the record date").
2. Background to TCS
TCS has been in operation for 28 years, providing technology, proprietary and
specialised application software services to Government. TCS has a national
presence in the traffic management industry, currently providing complete
solutions to its clients at 112 sites. TCS plans to extend its offering to
include risk and revenue management services in both the public and private
sectors.
3. Rationale for the unbundling
The unbundling will have a number of benefits for both Labat and its
shareholders. It has been Labat`s strategy, since the implementation of the
restructuring of the group, to unlock shareholder value. Given the stage of TCS`
growth cycle, the board has determined that it is an opportune time to
facilitate this strategy by unbundling and separately listing TCS. TCS has the
required credentials and growth prospects to prosper as a separately listed
entity, with its own experienced management team and unique business model. A
listing will also provide for the smooth unbundling of the existing shareholder
structure.
4. Salient terms of the unbundling
The unbundling will take the form of a distribution in specie by Labat to Labat
shareholders of the TCS distribution shares in the ratio of one TCS share for
every Labat share held. This unbundling will be effected in terms of section 90
of the Companies Act, 1973 (Act 61 of 1973), as amended and in accordance with
section 46 on the Income Tax Act, 1962 (Act 58 of 1962).
If the requisite resolutions necessary to effect the unbundling are passed at
the general meeting of shareholders to be convened for that purpose and to the
extent required, are duly registered by CIPRO, Labat shareholders will receive
one TCS distribution share for every Labat share held at close of business on
the record date.
5. Conditions precedent
The unbundling of TCS is subject to the fulfilment of the following conditions
precedent:
- all resolutions necessary to effect the unbundling are approved by
shareholders at a general meeting of shareholders to be convened for that
purpose and to the extent required, are registered by CIPRO;
- all requisite regulatory approvals are obtained in order to implement the
listing of TCS; and
- the approval by the JSE of the listing of the TCS shares on the AltX on the
listing date, being Monday, 7 April 2008.
6. Pro Forma Financial Effects
Pursuant to the unbundling, Labat shareholders will hold the TCS distribution
shares directly and, accordingly, there will be no material effect on the
aggregate earnings and underlying net asset value attributable to each Labat
shareholder.
The pro forma financial effects of the unbundling relate to the reversal of the
consolidation entries of TCS from Labat as at 31 August 2007. Labat`s earnings
and cost will relate to that of South African Micro Electronic Systems
(Proprietary) Limited ("SAMES"), a wholly owned subsidiary of Labat, and Labat.
Labat`s balance sheet will consist mainly of SAMES assets and liabilities.
Set out in the table below are the unaudited pro forma financial effects of the
unbundling on the reviewed results of the group for the six months ended 31
August 2007. The pro forma financial effects reflect the impact that the
unbundling might have had on the earnings per share and the headline earning per
share of Labat had it been effected on 1 March 2007, and the effect that the
unbundling might have had on the net asset value per share and net tangible
asset value per share had it been effected on 31 August 2007. The pro forma
financial effects, which are the responsibility of the directors, are provided
for illustrative purposes only and, because of their pro forma nature, may not
fairly present Labat`s financial position, changes in equity, results of
operations or cash flow.
Before After the Change
the unbundlin (%)
unbundl g2
ing1 (cents)
(cents)
Loss per share (0.5) (2.7) (440)
3
Headline loss per share (0.6) (2.8) (367)
3
Net asset value per share 21.1 13.3 (37) 4
Net tangible asset value per share 18.6 12.2 (34) 4
Number of shares in issue throughout 186 415 197 154
the period (`000)
Notes:
1. The "Before the unbundling" column has been extracted from the reviewed
interim results of Labat for the six months ended 31 August 2007.
2. The "After the unbundling" column reflects the financial effects of the
unbundling on Labat. This column excludes TCS` contribution to basic
earnings, headline earnings, net asset value and tangible net asset value.
3. The effects on earnings per share and headline earnings per share are
calculated based on the assumption that the unbundling was effected on 1
March 2007.
4. The effects of net asset value per share and net tangible asset value per
share are calculated based on the assumption that the unbundling was
effected on 31 August 2007.
5. The number of shares in issue throughout the period includes the 10 739 933
shares issued to Tuscan Mood 242 (Proprietary) Limited as per the circular
to Labat shareholders dated 28 November 2007.
7. Directors` Opinion and Recommendations
The directors are of the opinion that the terms and conditions of the unbundling
will be to the benefit of Labat shareholders and recommend that shareholders
vote in favour of the resolutions required to implement the unbundling.
The directors, who directly or indirectly, beneficially own Labat shares, intend
to vote in favour of all the resolutions necessary to implement the unbundling.
8. Further documentation and general meeting
A circular containing full details of the unbundling and incorporating a notice
of general meeting will be sent to Labat shareholders on or about Monday, 25
February 2008. The TCS prospectus will be sent to Labat shareholders on or about
Wednesday, 27 February 2008. A general meeting of Labat shareholders will be
held at 10:00 in the main boardroom of Labat, 23 Kroton Avenue, Weltevreden
Park, Roodepoort, 1709, on Tuesday, 18 March 2008 in order to consider and, if
deemed fit to pass, with or without modification, the resolutions necessary to
approve and implement the unbundling.
9. Salient dates and times
The salient dates and times of the general meeting, the unbundling and listing
of TCS are as follows:
2008
Issue and posting of circular Monday, 25 February
Last day to lodge forms of proxy for the general Friday, 14 March
meeting by 10:00 on
General meeting to be held at 10:00 on Tuesday, 18 March
Results of general meeting released on SENS on Tuesday, 18 March
Results of the general meeting published in the Wednesday, 19 March
press on
Last day to trade in Labat shares on the JSE to
participate in the unbundling on Friday, 4 April
Labat shares trade "ex" the entitlement to the Monday, 7 April
TCS distribution shares on
The listing of TCS at the commencement of trade Monday, 7 April
under the JSE Code TCS and the ISIN
ZAE000116208.
Announcement of apportionment of base cost of Wednesday, 9 April
TCS on
Record date to participate in the unbundling on Friday, 11 April
TCS share certificates will be posted, by
registered post, at the risk of the certificated
shareholders concerned, to certificated Monday, 14 April
shareholders, and dematerialised shareholders
will have their accounts at their CSDP or broker
updated on
Notes:
1. The above dates and times are subject to amendment. Any such amendment will
be released on SENS and published in the press.
2. Labat share certificates may not be dematerialised or rematerialised
between Monday, 7 April 2008 and Friday, 11 April 2008, both days
inclusive.
3. Copies of this circular are available during normal business hours from
Monday, 25 February 2008 to Monday, 14 April 2008, from Labat, 23 Kroton
Avenue, Weltevreden Park, Roodepoort, 1709, and the Sponsor, Merchant
Sponsors (Proprietary) Limited, 2nd Floor, North Block, Hyde Park Office
Towers, Corner 6th Road and Jan Smuts Avenue, Hyde Park, Johannesburg,
2196.
10. Withdrawal of cautionary and further cautionary
Shareholders are referred to the cautionary announcement dated 7 January 2008,
and are advised that as the details of the unbundling have been announced, the
cautionary is now withdrawn. However, further to the aforementioned cautionary
announcement, shareholders are advised that the de-listing of Labat may have a
material effect on the price at which Labat`s shares trade. Accordingly,
shareholders are advised to exercise caution when trading in Labat shares on the
JSE until a further announcement setting out the details of the de-listing is
made.
25 February 2008
Sponsor
Merchant Sponsors (Proprietary) Limited
Corporate adviser
Merchantec (Proprietary) Limited
Corporate law advisors
Fluxmans Inc.
Reporting accountants to Labat
PKF (Jhb) Inc.
Auditors and reporting accountants to TCS
PricewaterhouseCoopers
Date: 25/02/2008 11:50:01 Supplied by www.sharenet.co.za
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