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PNC - Pinnacle Technology Holdings Limited - Acquisition by Pinnacle of an additional interest in Datanet PINNACLE TECHNOLOGY HOLDINGS LIMITED (Registration number 1986/000334/06) Share code: PNC ISIN: ZAE000022570 ("Pinnacle" or the "Company" or the "Group" insofar as the reference is to Pinnacle and some or all of its subsidiaries) ACQUISITION BY PINNACLE OF AN ADDITIONAL INTEREST IN DATANET INFRASTRUCTURE GROUP (PROPRIETARY) LIMITED ("DATANET") FROM THE LELLO FAMILY TRUST ("THE LELLO TRUST") AND LEENDERT MARTINUS PRONK ("PRONK") (COLLECTIVELY "THE SELLERS") - A SMALL RELATED PARTY TRANSACTION 1. INTRODUCTION Shareholders are advised that Pinnacle has entered into a Sale of Shares Agreement ("the Agreement") whereby the Sellers will dispose of their 40% stake in Datanet ("the Sale Shares") and their loan accounts in Datanet to Pinnacle for a total purchase price of R16 800 000 ("the Purchase Price") subject to the fulfilment of the suspensive conditions set out below ("the Transaction"). The effective date shall be the date upon which all the suspensive conditions detailed in paragraph 4 below have been fulfilled or waived, as the case may be ("the Effective Date"). The business of Datanet is the distribution of copper, fibre, wireless and related information and communications technology ("ICT") network hardware and allied infrastructure. Pinnacle already owns 60% of Datanet. 2. RATIONALE Pinnacle wishes to re-engineer and reposition the business within the Group in a manner that requires Datanet to be wholly-owned. The Board of Pinnacle believes that the re- engineering plans for the business will better realise the potential that it sees in this business, particularly in view of the fact the business augments the product range offered in the Group`s core businesses lines. 3. SALIENT TERMS In terms of the Agreement, the Sellers shall dispose of 40% of the issued ordinary share capital in Datanet held by them together with their loan accounts in Datanet to Pinnacle for the Purchase Price. Pinnacle shall make payment of the Purchase Price to the Sellers in the form of 2 000 000 ordinary shares in Pinnacle at a price of R8.40 per share on the date on which all of the suspensive conditions detailed below have been fulfilled or waived, as the case may be. The Purchase Price will be settled as follows: The Lello Trust: 1 255 000 Pinnacle ordinary shares at a price of R8.40 per Pinnacle share for 251 000 ordinary shares in Datanet representing 25.1% of Datanet`s issued share capital, being The Lello Trust`s portion of the Sale Shares plus the full balance of the loan accounts due by Datanet to David Roydon Lello ("Lello") and/or The Lello Trust as at the Effective Date. Pronk: 745 000 Pinnacle ordinary shares at a price of R8.40 per Pinnacle share for 149 000 ordinary shares in Datanet representing 14.9% of Datanet`s issued share capital, being Pronk`s portion of the Sale Shares plus the full balance of the loan account due by Datanet to Pronk as at the Effective Date. A material condition of the Transaction is that Pronk enters into an employment contract with Datanet in which he will be employed as an executive director of Datanet for a fixed non- cancellable period of 24 months. Lello has resigned his position as Managing Director and will enter into a contract under which he will remain as a non-executive director for a period of 12 months. All parties have complied with these conditions. 4. SUSPENSIVE CONDITIONS All suspensive conditions have been fulfilled, save for the Transaction still being subject to the fulfilment of the following unfulfilled suspensive conditions: 4.1 the formal approval of the Transaction by the trustees of The Lello Trust in accordance with the trust deed of The Lello Trust initially by 30 June 2011, but extended by the parties to 8 July 2011; and 4.2 compliance with the JSE Limited ("JSE") Listings Requirements and any other regulations issued by the JSE from time to time, including but not limited to Pinnacle obtaining a fairness opinion from a JSE-approved service provider by 7 July 2011 or such later date as is agreed by the parties. 5. PRO FORMA FINANCIAL EFFECTS The pro forma financial effects of the Transaction on Pinnacle`s financial results for the six months ended 31 December 2010 are not significant. 6. SMALL RELATED PARTY TRANSACTION The Sellers are material shareholders in Datanet. The Purchase Price is 1.2% of the market capitalisation of Pinnacle, calculated as at close of business on 1 July 2011 and, therefore, the Transaction is deemed to be a small related party transaction in terms of Section 10 of the Listings Requirements of the JSE and requires a fairness opinion from an independent expert. 7. INDEPENDENT OPINION The Pinnacle Board of Directors has appointed an independent expert to provide the Company with a fairness opinion on the Transaction. The appointment of the independent expert is in the process of being approved by the JSE. Shareholders will be advised of the fairness opinion once completed by the independent expert. Midrand 4 July 2011 Sponsor Deloitte & Touche Sponsor Services (Pty) Ltd (Incorporated in the Republic of South Africa) (Registration number 1996/000034/07) Date: 04/07/2011 17:35:44 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.
