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LAB - Labat - Reversal of Change In Control, Change to the board of directors,
Re-Appointment Of Company Secretary, General Update and Renewal of Cautionary
Incorporated in the Republic of South Africa
(Registration number 1986/001616/06)
JSE code: LAB ISIN: ZAE000018354
("Labat" or "the company")
REVERSAL OF CHANGE IN CONTROL, CHANGE TO THE BOARD OF DIRECTORS, RE-APPOINTMENT
OF COMPANY SECRETARY, GENERAL UPDATE AND RENEWAL OF CAUTIONARY
Following the agreement of 21 July 2010, as announced on SENS on 23 July 2010,
and the results announcement of 01 October 2010, shareholders are advised that
Link Private Equity and Investments (Pty) Ltd ("Link") and Cyndara 131 (Pty)
Ltd, trading as Aurora Investment Holdings ("AIH") entered into a settlement
agreement dated 20 January 2011.
The revised terms of the settlement agreement are as follows:
As announced on SENS on 09 November 2010, shareholders were advised that the
acquisition agreement between Aurora and the vendors of Primrose had lapsed.
Also the Conditions Precedent for the SAMES disposal were not met timeously.
Accordingly, the Primrose sale agreement and the SAMES sale agreement are of no
force or effect.
As a result of the failure by AIH to procure the fulfillment of the conditions
precedent in the Primrose sale and the SAMES disposal, Labat, Link and AIH have
entered into a settlement agreement in full and final settlement of any claim
which Link may have against Labat and/or AIH arising from such failure.
Accordingly, under the terms of the settlement agreement, AIH will return to
Link 50 000 000 shares held by AIH in Labat.
In the event that either Link or AIH introduce any new opportunities to Labat,
Link and AIH shall share any proceeds which they may receive from Labat in the
proportion 40% to Link and 60% to AIH.
Link and AIH ("the parties") will work together to re-structure Labat and
position it for future growth.
With the return of 50 million shares from AIH to Link, AIH`s shareholding in
Labat will decrease from 45.7% to 20.3% which shareholding will no longer
trigger the Securities Regulation Panel ("SRP") requirement for a mandatory
offer to minority shareholders at 5 cents per share and the cash confirmation
will be released by the SRP.
Link will hold 25.4% in Labat after the return of 50 million shares.
Accordingly, Labat does not have a controlling shareholder, holding 35% or more
in the Company and there are no arrangements, agreements or undertakings between
any parties in relation to the control of Labat.
The directors confirm their responsibility in terms of the SRP Code that, so far
as they are reasonably able, the SRP Code has been complied with in relation to
this agreement.
RESTRUCTURING
The agreement reached above allows the parties to re-structure the Labat
business into three distinct areas of operation:
- Mining
- Pharmaceuticals
- Telecommunications and Technologies
Link and AIH have identified major growth opportunities for each of these
operations.
FUNDING AND PROSPECTS
The company is in discussions with funders for the funding of the growth of the
business. As mentioned in the results announcement of 01 October 2010 GEM has
agreed in principle to make funds of up to $50 million available for suitable
Pharmaceutical acquisitions. The Company has already identified a number of key
related businesses to complement the existing pharmaceutical operation within
Labat. Negotiations are ongoing at this stage.
Other funds are being sourced for the development of the Technologies operation.
The Company plans to introduce newer technology into the ICDC (Integrated
Circuit Design) business, which introduction will improve the earning potential
of that business.
Furthermore, the ICDC products continue to be designed in South Africa whilst
manufacturing has been outsourced to China. This was proving to be a very
efficient business model and is allowing ICDC to realise greater margins.
ACQUISITIONS
The company has agreed to expand the three operational areas through a
combination of organic growth and acquisitions. Several strategic acquisitions
have already been identified and negotiations are taking place.
The Company is also renegotiating the acquisition of the income-producing
Primrose business, which acquisition, if successful, will give Labat control
over two of only four ore crushing and gold smelting plants on the East Rand and
unlock shareholder value providing a solid foundation in the gold industry. In
addition, AIH have provided 25 000 000 Labat shares as security to DRD Gold
Limited for the acquisition of one of their mining assets which transaction will
also be negotiated directly in due course.
Further announcements to this effect will be made shortly.
BOARD OF DIRECTORS
Following the above mentioned corporate and restructuring activities as well as
the part reversal of the original sale of shares it was necessary to strengthen
the existing board. Accordingly, Mr D J O`Neill has been re-appointed as
executive director responsible for strategy and Mr D Asmal CA(S.A.) has been
appointed as Financial Director, both with immediate effect.
Mr B van Rooyen will revert back as the Chief Executive Officer of the group and
Messrs ZG Mandela and TS Ngubane will change roles to non-executive directors
with immediate effect. Mr KC Zuma will remain on as non-executive chairman of
Labat whilst Mr ZG Mandela will become the Chairman of the mining subsidiary. Mr
M Hulley remains on the board as non-executive director. The board is in the
process of identifying independent non-executive directors.
RE-APPOINTMENT OF COMPANY SECRETARY
Mr Alison Britto has been re-appointed as the company secretary with immediate
effect.
TRADING UPDATE
Due to the recent positive developments as mentioned above relating to the
reversal of the SAMES disposal as well as the pleasing development of the ICDC
business, the Company anticipates issuing a positive trading statement on SENS
in a separate announcement in due course.
RENEWAL OF CAUTIONARY
Further to the cautionary announcement dated 15 December 2010, shareholders are
advised that negotiations are ongoing and that they should continue to exercise
caution when dealing in their securities until a further announcement is made.
By order of the Board
KC Zuma B van Rooyen
Chairman Chief Executive Officer
27 January 2011
Johannesburg
Registered Office
23 Krowton Avenue, Weltevreden Park, Johannesburg, 1079
Private Bag X09-248, Welteverden Park, 1715
Directors
KC Zuma (Chairman)*, BG van Rooyen (CEO), D Asmal CA (S.A.); DJ O
Neill (IRL); ZG Mandela*, TS Ngubane*, M Hulley*
* Non-executive
Transaction sponsor Transfer Office
Arcay Moela Sponsors Computershare Investor Services
(Proprietary) Limited (Proprietary) Limited
Date: 27/01/2011 13:21:00 Supplied by www.sharenet.co.za
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