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LAB - Labat Africa Limited - Detailed Cautionary Announcement Relating To The:
Proposed Acquisition By Aurora Empowerment Systems (Pty) Limited Of A 45.7%
Interest In Labat
LABAT AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
JSE code: LAB
ISIN: ZAE000018354
("Labat" or the "company")
- DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE:
PROPOSED ACQUISITION BY AURORA EMPOWERMENT SYSTEMS (PTY) LIMITED ("AURORA") OF A
45.7% INTEREST IN LABAT FROM LINK PRIVATE EQUITY AND INVESTMENTS (PTY) LIMITED
("LINK");
- A MANDATORY OFFER BY AURORA TO THE SHAREHOLDERS OF LABAT TO ACQUIRE THE
REMAINING SHARES IN LABAT;
- POSSIBLE SECTION 228 DISPOSAL THE BUSINESS CONDUCTED BY LABAT AND ALL
ASSETS, SUBSIDIARIES, AND CERTAIN LIABILITIES OF LABAT; AND
- RENEWAL OF THE CAUTIONARY ANNOUNCEMENT.
1. INTRODUCTION
Further to the cautionary announcements dated 14 September 2009, 13 October
2009, 24 November 2009, 8 January 2010 and 28 January 2010, shareholders are
advised that Aurora, Link and Labat have entered into an agreement ("the
agreement") in terms of which, and subject to the fulfilment of the suspensive
conditions set out in paragraph 6 below:
1.1 Link has agreed to sell the 90 106 335 Labat shares it owns (equal to
approximately 45.7% of the issued share capital of Labat) to Aurora for a cash
consideration of 5 cents per sale share ("the sale of the Link shares").
1.2 Link has furthermore agreed to procure irrevocable undertakings from
shareholders holding at least 21.3% of the issued share capital of Labat to
accept the mandatory offer by Aurora as described in paragraph 4 ("the
additional acceptances").
1.3 Link will acquire:
- the business conducted by Labat as a holding company on 1 March 2010 ("the
effective date") ("the business");
- all the assets of Labat including the cash on hand and in the bank
account/s of the company on the third business day after the last suspensive
condition is fulfilled or waived, as the case may be ("closing date");
- all the issued shares in all subsidiaries of Labat ("sale subsidiaries");
- all claims of whatsoever nature that Labat may have against the sales
subsidiaries as at the effective date and the closing date; and
- all liabilities of Labat as at the closing date in respect of the business
(including the liabilities of Labat to each of the sale subsidiaries as at the
closing date), apart from the shareholder loan account to a maximum of
R4 million ("the excluded liabilities")
collectively referred to as ("the disposal").
The disposal is conditional upon Labat shareholders` approval thereof as a
disposal in terms of section 228 of the Companies Act.
The sale of the Link shares, the additional acceptances, and the disposal are
indivisibly linked transactions and are collectively referred to as "the
transactions".
2. RATIONALE FOR THE DISPOSAL
South African Micro Electronic Systems (Pty) Limited ("SAMES"), the only
operating entity of Labat, has been loss-making for a number of years, requires
ongoing funding and does not have the prospects to become profitable in the
short term. Accordingly, the board decided to cease wafer production at
Koedespoort, to move manufacturing to a plant in China, and to seek alternative
uses for the existing plant and premises. Whereas the premises lend themselves
very well to a variety of alternative uses, including the establishment of a
pharmaceutical and medical diagnostic manufacturing facility, the establishment
of such will be a lengthy and expensive process and would best be managed in an
unlisted environment. Shareholders will, however, be given the opportunity to
reinvest in SAMES, as detailed in paragraph 5 below.
3. LOAN TO LABAT
Aurora will make a loan of R4 million to Labat on the closing date, which cash
shall be used to settle the excluded liabilities ("the Aurora loan").
4. MANDATORY OFFER
Should the transactions become unconditional, the sale of the Link shares will
be an "affected transaction" as defined in the Securities Regulation Code on
Take-overs and Mergers ("SRP Code") and, accordingly, Aurora shall be obliged to
make an offer to the shareholders of Labat other than Link (the "offeree
shareholders") in accordance with the provisions of the SRP Code. Aurora
accordingly undertakes to make the mandatory offer to the offeree shareholders
on comparable terms and conditions as those on which the Labat shares are
purchased from Link ("the mandatory offer"). The mandatory offer will only
become effective upon the fulfilment of all the suspensive conditions, following
which salient dates of the offer will be released on SENS.
5. REINVESTMENT OPTION - SUBSCRIPTION FOR SAMES SHARES
Following the implementation of the transactions, shareholders recorded in the
share register as at the record date for purposes of the mandatory offer will be
given the opportunity to subscribe for shares in SAMES on terms and conditions
comparable to the price at which Link has offered for SAMES.
SAMES is wholly owned and the only operational subsidiary of Labat and will be
sold to Link in terms of the disposal as described in paragraph 1.3.
SAMES shall take all necessary actions to enable it to offer its shares to
members of the public, including, but not limited to, the removal of
restrictions related to private companies from its articles of association.
6. SUSPENSIVE CONDITIONS
The agreement is subject to the following suspensive conditions:
- by 4 February 2010, Aurora furnishes Link with an irrevocable guarantee
issued by Aurora for the R4 million loan to Labat as contemplated
in paragraph 3;
- by 8 February 2010:
- the board of directors of Aurora approves the transactions;
- Labat receives an irrevocable offer from Link to affect the disposal as
contemplated in paragraph 1.3 for an amount of R6 605 012;
- Aurora furnishes Link with an irrevocable bank guarantee for, or an
irrevocable letter from its attorneys that they hold in trust, the cash required
to complete the mandatory offer as contemplated in paragraph 4.
- Link procures the additional acceptance referred to in 1.2;
- by 5 March 2010, Labat receives approval of the transactions from the JSE
Limited, Securities Regulation Panel and all other regulatory approvals;
- by 31 March 2010, approval of the transactions is obtained, where
necessary, at a general meeting of Labat shareholders; and
7. FINANCIAL EFFECTS
The financial effects of the disposal will be disclosed in due course.
8. DOCUMENTATION
The disposal constitutes a related party transaction in terms of the JSE
Listings Requirements as Mr BG van Rooyen, Mr DJ O`Neill and Mr VJ Labat are
directors of Labat and also shareholders of Link. The disposal is also an
affected transaction in terms of the SRP Code. A circular, containing full
details of the sale of the Link shares, the additional acceptances, the
disposal, the mandatory offer and incorporating a notice of a general meeting of
shareholders will be posted to Labat shareholders in due course.
9. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution when dealing in the
company`s securities until a further announcement is made in this regard.
Sandton
4 February 2010
Corporate advisor and sponsor to Labat
Vunani Corporate Finance
Legal advisor to Labat
Eversheds
Corporate advisor to Aurora
Arcay Moela Sponsors (Pty) Ltd
Date: 04/02/2010 15:52:02 Supplied by www.sharenet.co.za
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