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HUG - Huge Group Limited - Specific repurchase of shares from related parties

Release Date: 04/08/2011 15:43
Code(s): HUG
Wrap Text

HUG - Huge Group Limited - Specific repurchase of shares from related parties HUGE GROUP LIMITED (Registration number 2006/023587/06) Share code: HUG ISIN: ZAE000102042 ("Huge" or "the Group" or "the Company") SPECIFIC REPURCHASE OF SHARES FROM RELATED PARTIES 1. Shareholders are advised that the board of directors of Huge ("Board") has resolved to exercise the following call options held against certain past serving directors of Huge Telecom Proprietary Limited, a wholly owned subsidiary of the Company, subject to all shareholder, banking and regulatory approvals (including the approval of the JSE Limited) with regard to the following: a) The acquisition of 233 600 Huge Group ordinary shares ("Ordinary Shares"), by way of a specific authority to repurchase these Ordinary Shares, from Michelle Allison Meth, a related party to the Company, for a purchase consideration of R120 000; b) The acquisition of 233 600 Ordinary Shares, by way of a specific authority to repurchase these Ordinary Shares, from Barend Jacobus Vorster, a related party to the Company, for a purchase consideration of R120 000; c) The acquisition of 233 600 Ordinary Shares, by way of a specific authority to repurchase these Ordinary Shares, from Eugene Volschenk, a related party to the Company, for a purchase consideration of R120 000; and d) The acquisition of 233 600 Ordinary Shares, by way of a specific authority to repurchase these Ordinary Shares, from Gregory Wayne Wright, a related party to the Company, for a purchase consideration of R120 000. 2. In summary, Huge may, subject to the approvals referred to in the aforesaid, acquire a total of 934 400 Ordinary Shares in the issued share capital of the Company, at a price of 51.4 cents per Ordinary Share, representing a discount of 29.8 % to the 30 day weighted average share price ("the Acquisitions") of 73.21 cents per share. The Acquisitions are in line with the Company`s continuing strategy of acquiring its own Ordinary Shares when it is in the interests of the Company to do so. The Ordinary Shares shall be acquired using available working capital resources of the Company. 3. The Acquisitions will be from related parties, and shall therefore be subject to the inclusion of a statement by the Board, in a circular, confirming whether the Acquisitions are fair insofar as the shareholders (excluding the related parties) of the Company are concerned. The Board shall be advised by an independent expert in this regard and obtain a fairness opinion from the independent expert. 4. The Board, after considering the effect of such Acquisitions, confirms that the Company is in compliance with the provisions of section 4 of the Listings Requirements of the JSE Limited, and section 48 of the Companies Act, Act 71 of 2008, and: a) the Company and the Group will be able, in the ordinary course of business, to pay its debts for a period of 12 months after the dates of the approval of the circular to be issued in this regard; b) the assets of the Company and the Group will be in excess of the liabilities of the Company and the Group for a period of 12 months after the date of the approval of the circular to be issued in this regard; c) the share capital and reserves of the Company will be adequate for ordinary business purposes for a period of 12 months after the date of the circular to be issued in this regard; and d) the working capital of the Company and the Group will be adequate for ordinary business purposes after the date of the approval of the circular to be issued in this regard. 5. The Board proposes the granting, by shareholders of the Company, of a specific authority to repurchase the foregoing Ordinary Shares by means of a special resolution to be tabled before shareholders at a general meeting, on the basis that the Company has passed the solvency and liquidity test, and since the test was performed no material changes to the financial position of the Company or the Group have been noted. 6. Pro-forma effects The table below sets out the unaudited pro forma financial effects of the Acquisitions on Huge`s basic loss and headline loss, net asset value and net tangible asset value per Ordinary Share. The unaudited pro forma financial effects have been prepared to illustrate the impact of the Acquisitions on the provisional condensed reviewed results of Huge for the year ended 28 February 2011 after adjusting for the disposal of a 49% interest in TelePassport Communications Proprietary Limited ("TelePassport" or "the Associate") ("the Sale Transaction"), which was announced on 8 July 2011, had the Acquisitions occurred on 1 March 2010 for income statement purposes and on 28 February 2011 for statement of financial position purposes. The unaudited pro forma financial effects set out below are the responsibility of the Board and have been prepared for illustrative purposes only and because of their nature may not fairly present the financial position, changes in equity, results of operations or cash flows of Huge after the Acquisitions: Before (1) After the After the Percentage
Sale Sale change (4) Transaction Transaction (2) and Acquisitions
(3) Basic (loss) / (15.34) (14.66) (14.90) (1.61) earnings per share (cents) Headline (loss) / (15.41) (18.02) (18.20) (1.00) earnings per share (cents) Net asset value per 245.54 252.36 254.37 0.79 share (cents) Net tangible asset 2.72 0.34 (0.23) (166.36) value per share (cents) Total number of 95,901 92,401 91,467 (1.01) shares in issue (`000) Weighted average 97,663 94,163 93,229 (0.99) number of shares in issue (`000) NOTES: 1. The "Before" basic and headline loss per share, and the net asset value and net tangible asset value per share have been extracted without adjustment from the provisional condensed reviewed results of Huge for the year ended 28 February 2011. The "Before" net asset value and net tangible asset value per share have been calculated from the financial information presented in the provisional condensed reviewed results of Huge for the year ended 28 February 2011. 2. The "After the Sale Transaction" column assumes: a. Recognition of the profit on sale of the Associate, being the excess of the expected proceeds on the sale of the Associate over
the carrying value of the Associate as at 28 February 2011; b. Reversal of share of Associate profit of R1 438 375 for the year ended 28 February 2011; c. Payment of R478 135 in respect of transaction costs relating to the Sale Transaction; d. Reversal of the carrying value of the investment in Associate; e. Reduction in share capital and share premium amounting to R 4 900 000, due to the repurchase of 3 500 000 shares by Huge at 140
cents per share. 3. The "After the Sale Transaction and Acquisitions" column assumes: a. the adjustments detailed in note 2 above; b. reduction in the interest received on the cash balance, due to the acquisition of 934 400 Ordinary Shares being settled in cash; c. payment of R46 865 in respect of transaction costs relating to the Acquisitions; d. reduction in share capital and share premium amounting to R 480 282, due to the repurchase of 934 400 Ordinary Shares by Huge at 51.4 cents per Ordinary Share. 4. The "Percentage change" column has been based on the "after the Sale Transaction and Acquisitions" column as a percentage of the "after the Sale Transaction" column. 7. A circular to shareholders containing details of the foregoing is currently being prepared. It is anticipated that the general meeting in this regard will be held 15 business days after the posting of the circular, and it is expected that the Ordinary shares in questions will be cancelled and the listing thereof terminated as soon as practicably possible thereafter. Johannesburg 4 August 2011 Designated Advisor Arcay Moela Sponsors Proprietary Limited Date: 04/08/2011 15:43:14 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.

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