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KGM - Kagiso Media Limited - Revised announcement

Release Date: 04/10/2011 15:01
Code(s): KGM
Wrap Text

KGM - Kagiso Media Limited - Revised announcement KAGISO MEDIA LIMITED Incorporated in the Republic of South Africa) Reg. No 1957/000036/06 Share Code: KGM ISIN:ZAE000014007 ("Kagiso Media" or "the Company") ANNOUNCEMENT RELATING TO THE DISPOSAL OF KAGISO MEDIA`S 50% SHARES AND CLAIMS IN LEXISNEXIS (PROPRIETARY) LIMITED ("LEXISNEXIS") AND WITHDRAWAL OF CAUTIONARY 1. INTRODUCTION Further to the cautionary announcement released by Kagiso Media on SENS on 22 September 2011, Kagiso Media shareholders are advised that Kagiso Media has accepted an offer from Reed Elsevier South Africa ("Reed Elsevier") for its 50% shareholding in and claims against LexisNexis ("Sale Interest") and is in the process of negotiating the terms of a sale and purchase agreement in this respect ("the Disposal"). Kagiso Media holds a 50% interest in the LexisNexis joint venture. The purpose of this announcement is to provide Kagiso Media shareholders with the salient terms of the Disposal, which are set out below. 2. RATIONALE OF THE DISPOSAL LexisNexis is a provider of content-enabled workflow solutions for professionals in the legal, risk management, corporate, government, law enforcement, accounting and academic markets. It has a unique combination of Butterworths authoritative content, powerful online research, and advanced productivity tools, which help companies and individuals to stay one step ahead in a constantly changing corporate, political or legal environment. The evolution of Kagiso Media strategy has led to a change in its investment criteria as it became apparent that a more proactive approach to managing its assets would enhance value creation in the longer term. In terms of this strategy, it was imperative that Kagiso Media assume majority control of the joint venture. However Kagiso Media`s partner in the joint venture would not agree to Kagiso Media buying up. Kagiso Media`s approach is on the back of a strategic decision to attain a 50+% shareholding in all its investments. Pursuant to this, Reed Elsevier subsequently offered to purchase Kagiso Media`s shares in LexisNexis. The company believes that the agreed price of R565 million represents a good outcome for Kagiso Media shareholders. 3. TERMS AND DETAILS OF THE DISPOSAL In terms of the Disposal, the purchase price to be paid for the Sale Interest will be an amount equal to R565 million (five hundred and sixty-five million), payable in cash. Kagiso Media will apply the proceeds from the Disposal to other key projects currently being pursued by Kagiso Media. LexisNexis declared and paid a dividend to its current shareholders of R53.9 million on 30 September 2011. 4. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL ON KAGISO MEDIA SHAREHOLDERS The pro forma financial effects below for which the Kagiso Media board of directors are responsible, illustrate the impact of the Disposal on the most recently published results of Kagiso Media for the year ended 30 June 2011. Pro forma financial information is presented for illustrative purposes only on the assumption that the Disposal was implemented with effect from 1 July 2010 for purposes of the statement of comprehensive income and on 30 June 2011 for purposes of the statement of financial position and, because of its nature, may not fairly present the financial position, changes in equity and results of operations or cash flows post the implementation of the Disposal. The pro-forma financial effects are as follows: Before the Post the % change Disposal Disposal
Basic earnings per share (cents) 1 152.2 423.9 179% Headline earnings per share (cents) 1 153.1 119.2 -22% Net asset value per share (cents) 2 519.0 824.6 59% Tangible net asset value per share (cents) 165.0 491.4 198% 2 Number of ordinary shares in issue (`000) 133,792 133,792 Weighted average number of ordinary shares 133,792 133,792 in issue (`000) Notes and assumptions: 1. The basic earnings per share have been adjusted for the following items: - The de-recognition of the earnings from LexisNexis of R45 million; - The recognition of the profit on the Disposal of R409 million, after taking into account estimated Capital Gains Tax ("CGT") arising from the Disposal; and - Estimated transaction costs of R2 million. - Interest income based on the net proceeds after tax and transaction costs has not been included as the cash proceeds are expected to be utilised in the normal course of business. It is anticipated that interest would be earned at approximately 4% of the net proceeds after deducting capital gains tax and the relevant tax. 2. The net asset value and tangible net asset value have been adjusted for the following: - The de-recognition of the LexisNexis net assets of R82 million and the LexisNexis tangible net assets of R54 million; - The increase in the cash balance by R491 million as a result of the cash proceeds received from the Disposal (net of CGT); and - Transaction costs based on current estimates of R2 million which will be paid in cash. - This includes earnings from LexisNexis of R45 million. 5. SUSPENSIVE CONDITIONS The Disposal has been approved by the board of directors of Kagiso Media but remains subject to the fulfillment of the following, inter- alia, suspensive conditions: - Finalisation and signature of the sale and purchase agreement; - Regulatory approvals; - Completion of a due diligence exercise, and - Kagiso Media shareholder approval. All Suspensive Conditions are expected to be fulfilled by November 2011. The Disposal will be effective three business days following the date upon which the last of the suspensive conditions have been fulfilled. 6. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY The Disposal is classified as a Category 1 transaction in terms of the JSE Listings Requirements and accordingly a circular with the information in respect of the Disposal and incorporating a notice convening a general meeting of Kagiso Media shareholders will be posted to the shareholders in due course. Kagiso Media shareholders are advised that, as a result of the publication of this announcement, the relevant cautionary announcement is now withdrawn and caution is no longer required to be exercised when dealing in their Kagiso Media shares. 4 October 2011 Sponsor : Investec Bank Limited Date: 04/10/2011 15:01:10 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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