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IFC - IFCA Technologies Limited - Update to the announcement regarding
the disposal of IFCA Software (Pty) Limited, The acquisitions of Third
Wave Diving and Travel (Pty) Limited and Out & About Marketing and Media
Proprietary Limited ("OAMM") and Cautionary
IFCA TECHNOLOGIES LIMITED
Incorporated in the Republic of South Africa
(Registration number 2006/030759/06)
Share code: IFC ISIN: ZAE000088555
("IFCA" or "the Company")
UPDATE TO THE ANNOUNCEMENT REGARDING THE DISPOSAL OF IFCA SOFTWARE
(PROPRIETARY) LIMITED, THE ACQUISITIONS OF THIRD WAVE DIVING AND TRAVEL
(PROPRIETARY) LIMITED ("THIRD WAVE") AND OUT & ABOUT MARKETING AND MEDIA
PROPRIETARY LIMITED ("OAMM") AND CAUTIONARY
1. INTRODUCTION
Shareholders are referred to the terms announcement released on SENS
on 5 August 2011 ("the Announcement"), wherein they were informed
that, inter alia, IFCA had entered into:
- a Memorandum of Agreement of Sale of Shares ("IFCA sWare Disposal
Agreement") with Squirewood Investments 99 (Proprietary) Limited
("Squirewood") in terms of which, subject to the fulfilment or waiver
(where waiver is permissible) of certain conditions precedent,
Squirewood will acquire from IFCA 100% of the entire issued share
capital in IFCA Software (Proprietary) Limited ("IFCA sWare"), a wholly-
owned subsidiary of IFCA ("IFCA sWare Sale Shares"), and the shareholder
loan of R4 897 037.00 owed by IFCA sWare to the Company ("IFCA sWare
Claims"), for a total consideration of R1 000.00 ("IFCA sWare
Disposal");
- a Sale of Shares and Claims Agreement ("Third Wave Acquisition
Agreement") with the Trustees of The Birdie Trust ("The Birdie Trust" or
"the Seller of Third Wave") in terms of which, subject to the fulfilment
or waiver (where waiver is permissible) of certain conditions precedent,
IFCA will acquire 100% of the entire issued share capital in, and claims
against Third Wave ("Third Wave Sale Shares" and "Third Wave Sale
Claims", respectively) from the Seller of Third Wave, for a total
purchase consideration of R107 460 273.70 ("Third Wave purchase price")
("the Third Wave Acquisition"); and
- a Sale of Shares and Claims Agreement ("OAMM Acquisition
Agreement") with RHB Holdings (Proprietary) Limited as Trustees for the
time being of the RHB Investment Trust ("RHB Trust"), Devoran Trustees
Limited as Trustees for the Jade Trust ("Jade Trust") and E&J Abbott
(Proprietary) Limited as Trustees for the E&J Abbott Family Trust ("AFT
Trust"), collectively referred to hereinafter as "the Seller of OAMM",
in terms of which, subject to the fulfilment or waiver (where waiver is
permissible) of certain conditions precedent, IFCA will acquire 45% of
the entire issued share capital in OAMM, a company incorporated in
Australia, ("OAMM Sale Shares") from the Seller of OAMM, for a total
purchase consideration of A$11 175 033 ("OAMM purchase price") ("the
OAMM Acquisition").
Shareholders are hereby provided with an update to the Announcement as
set out below.
2. THIRD WAVE AQUISITION
2.1. Rationale
The board of directors of IFCA ("the Board") views the Third Wave
Acquisition as the first of a number of strategic acquisitions to be
undertaken in the future.
Third Wave currently owns 20% of the issued share capital of
Johannesburg Expo Centre (Proprietary) Limited ("Jhb Expo") and
intends to acquire a further 37.5% of the issued share capital of Jhb
Expo following the conclusion of the Third Wave Acquisition.
IFCA`s involvement in Third Wave is in line with its intended core
business principles of acquiring and backing cash generative
businesses in industries and sectors poised for growth.
To date, Jhb Expo has created significant value for its shareholders
through infrastructural improvements and the development of additional
capabilities resulting from the successful hosting of the
International Broadcast Centre during the 2010 FIFA Soccer World Cup.
The current management has identified some innovative prospects which
the Board believes will generate future value for shareholders.
2.2. Addendum to the Third Wave Acquisition Agreement
Shareholders are advised that on 19 September 2011, the parties to the
Third Wave Acquisition Agreement, being IFCA and The Birdie Trust,
signed an addendum to the Third Wave Acquisition Agreement ("the Third
Wave Addendum"), in terms of which, inter alia, certain conditions
precedent to the Third Wave Acquisition Agreement, and certain
provisions relating to the settlement of the Third Wave purchase
price, have been amended. The amended provisions relating to the
conditions precedent and the settlement of the Third Wave purchase
price are set out in paragraphs 2.2.1 and 2.2.2 below.
2.2.1 Conditions precedent
Pursuant to the Third Wave Addendum, the Third Wave Acquisition is
subject to, inter alia, the fulfilment or waiver, as the case may be,
of the following conditions precedent:
- on or before 31 October 2011:
* the Board passing a resolution approving or ratifying, as the
case may be, the
entry by the Company into the Third Wave Agreement;
* shareholders of IFCA, in general meeting passing the
resolutions necessary to
give effect to the Third Wave Acquisition, in accordance and
compliance with the relevant requirements of the Companies Act,
2008 (Act 71 of 2008) ("Companies Act") the Listings
Requirements of the JSE Limited ("JSE") and IFCA`s Memorandum of
Incorporation;
* the Seller of Third Wave passing a resolution approving or
ratifying, as the case may be, the entry by the Seller of Third
Wave into the Third Wave Agreement;
* the successful completion of a due diligence investigation on
Third Wave and Jhb Expo;
* the Fluxrab Sale Agreement and the Montgomery Sale Agreement (as
defined in the Announcement) becoming unconditional, and IFCA
being satisfied with any addenda thereto;
* the conclusion of a Shareholders` Agreement in respect of Jhb
Expo between Third Wave, Fluxrab Investments No 125
(Proprietary) Limited ("Fluxrab") and Montgomery Specialised
Exhibitions Limited ("Montgomery");
* IFCA obtaining such warranties and undertakings in relation to
Third Wave and Jhb Expo as may be specified by IFCA;
* nominations to the board of Jhb Expo, and the entry into service
contracts with specific individuals, being finalised;
- on or before 30 November 2011:
* IFCA having concluded written agreements with funders ("Funding
Agreements") providing for the advance to IFCA of an amount
equal to the aggregate amount of the Third Wave monthly
instalments (as set out in paragraph 2.2.2.3 below), and an
amount equal to R100 000 000.00 required to be lent and advanced
by IFCA to Third Wave pursuant to the Fluxrab and Montgomery
Sale Agreements (collectively the "Aggregate Funded Amount"),
the Funding Agreements becoming unconditional and IFCA being
able to draw down an amount equal to the Aggregate Funded
Amount;
* IFCA procuring bank or similar guarantees and providing such to
the Seller of Third Wave guaranteeing payment of the monthly
instalments referred to in paragraph 2.2.2.3 below; and
- the JSE approving the listing of the consideration shares detailed
in paragraph 2.2.2 below.
2.2.2 Third Wave purchase price
Pursuant to the Third Wave Addendum, the total purchase price payable
in respect of the Third Wave Acquisition, being R107 460 273.70, will
be settled as follows:
2.2.2.1 an amount of R18 040 024 will be settled on the Third Wave
closing date (as defined in the Announcement) by way of allotment and
issue of 15 033 353 consideration shares from the authorised but
unissued share capital of IFCA, at an issue price of R1.20 per share;
2.2.2.2 an amount of R18 040 024 will be settled by way of allotment
and issue six months after the Third Wave effective date (as defined in
the Announcement), of 15 033 353 consideration shares from the
authorised but unissued share capital of IFCA, at an issue price of
R1.20 per share; and
2.2.2.3 the balance of the Third Wave purchase price, being R71 380
225.70 will be paid in cash in five equal monthly instalments of R14 276
045.14 each ("Third Wave monthly instalment"). The first Third Wave
monthly instalment will be paid on the Third Wave closing date and the
four remaining Third Wave monthly instalments will be paid,
respectively, on the first business day of each of the four months
following the Third Wave effective date.
2.2.2.4 If on the date the shares ("consideration shares") referred to
in paragraph 2.2.2.2 above are required to be allotted and issued (being
the date which is six months after the Third Wave effective date), the
30-day volume weighted average price of a consideration share on the
stock exchange operated by the JSE ("30-day VWAP") is less than R1.20
per share, then IFCA shall be liable to pay to the Seller of Third Wave
an amount calculated in accordance with the following formula:
X = 18 040 024 - 15 033 353y
where:
X is the amount, if any, payable in Rand; and
y is the 30-day VWAP of a consideration share, in Rand, on the
date the consideration shares referred to in paragraph 2.2.2.2
above are required to be issued.
3. OAMM ACQUISITION
Shareholders are advised that the OAMM Acquisition is in the process
of being restructured and that the revised terms thereof will be
announced in due course. Accordingly, at this point, a resolution
seeking shareholder approval for the OAMM Acquisition will not be
included in the circular to shareholders referred to in paragraph 4
below.
4. FURTHER DOCUMENTATION
The circular containing full details of, inter alia, the IFCA sWare
Disposal and the Third Wave Acquisition (collectively hereinafter
referred to as the "Corporate Actions"), and a notice to convene a
general meeting of IFCA shareholders ("general meeting") in order to
consider and, if deemed fit to pass, with or without modification, the
resolutions necessary to approve and implement, inter alia, the
Corporate Actions, will be distributed to IFCA shareholders in due
course.
5. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects of IFCA for the year ended
31 December 2010, set out below, have been prepared to show the impact
of the Corporate Actions as if they had occurred on 1 January 2010,
for purposes of adjusting the pro forma earnings and on 31 December
2010 for purposes of adjusting the pro forma net asset value. The
financial effects are presented for illustrative purposes only and
because of their nature may not fairly reflect IFCA`s results or
financial position going forward.
The unaudited pro forma financial effects have been prepared using
accounting policies that are consistent with International Financial
Reporting Standards and with the basis on which the historical
financial information has been prepared in terms of the accounting
policies adopted by IFCA.
The Board is responsible for the compilation, contents and
presentation of the financial effects contained in this announcement
and for the financial information from which it has been prepared.
Their responsibility includes determining that: the unaudited pro
forma financial effects have been properly compiled on the basis
stated; the basis is consistent with the accounting policies of IFCA;
and the pro forma adjustments are appropriate for the purposes of the
unaudited pro forma financial effects disclosed in terms of the
Listings Requirements of the JSE.
Before IFCA Pro Third Pro forma Percentage
the sWare forma Wave after the change
Corpora Dispos after Acquisi Third (%)
te al pro the IFCA tion Wave
Actions forma sWare pro Acquisiti
1 effect Disposal forma on
4 effect5
Basic earnings (9.32) 3.19 (6.13) 26.21 20.08 315
per share
(cents)2
Headline (1.62) (2.82) (4.44) 21.57 17.13 1 157
earnings per
share (cents)2
Net asset value (0.84) 0.69 (0.15) 1.24 1.09 230
per share
(cents)3
Tangible net (3.03) 2.88 (0.15) (28.33) (28.48) (840)
asset value per
share (cents)3
Weighted 107 890 0 107 890 30 067 137 957 28
average number
of shares in
issue (000s)
Total number of 115 000 0 115 000 30 067 145 067 26
shares in issue
(000s)
Notes:
1. The amounts in the "Before the Corporate Actions" column relate to
the audited results of IFCA for the year ended 31 December 2010.
2. The effects on basic earnings per share and headline earnings per
share are calculated based on the assumption that the Corporate Actions
were effected on 1 January 2010.
3. The effects on net asset value per share and tangible net asset
value per share are calculated based on the assumption that the
Corporate Actions were effected as at 31 December 2010.
4. The pro forma effect of the IFCA sWare Disposal assumes that the
entire issued share capital of IFCA sWare and the shareholder loan of R4
897 037.00 owed by IFCA sWare to IFCA was sold for a total consideration
of R1 000.00.
5. The pro forma effect of the Third Wave Acquisition assumes that
Third Wave had increased its interest in Jhb Expo from 20% to 57,5% by
means of a cash settlement of R100 000 000, that this increase had been
in effect as at the beginning of the financial year of Third Wave, and
that the acquisition of Third Wave was settled by an issue of 15 033 353
shares at 11 cents per share on the date of acquisition, a settlement in
cash of R71 380 225.70 in monthly instalments of R14 276 045.14 each and
an issue of 15 033 353 shares at 11 cents per share six months after the
acquisition date with the difference between 120 cents per share and 11
cents per share settled in cash. Transactional fees of R1 550 000 and
interest at 9% on funds raised for the cash settlements were assumed for
this acquisition.
6. PROSPECTS
Subsequent to the general meeting, the Board intends on applying to the
JSE to transfer the Company`s listing to the Main Board of the JSE.
Shareholders will be kept updated on the progress of the transfer of the
Company`s listing to the Main Board.
7. NO FURTHER SIGNIFICANT CHANGES
Save as set out above, there have been no further significant changes
affecting any matter contained in the Announcement and no other
significant new matter has arisen that would have been required to be
mentioned in the Announcement if it had arisen at the time of the
preparation of the Announcement.
8. CAUTIONARY
Shareholders are referred to the renewal of cautionary announcement
dated 16 September 2011, and are advised that although the pro forma
financial effects pertaining to the Corporate Actions have been
announced in paragraph 5 above, negotiations are still in progress
which, if successfully concluded, may have a material effect on the
price of the Company`s securities. As such, shareholders should continue
to exercise caution when dealing in the Company`s securities, until a
further announcement is made.
21 September 2011
Designated Adviser
Merchantec Capital
Legal Adviser to IFCA
Werksmans Attorneys
Auditors and Reporting Accountants to IFCA
Nolands
Date: 21/09/2011 07:13:00 Supplied by www.sharenet.co.za
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