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CAP - Cape Empowerment Limited - Disposal of interest in Dynamic Cables
South Africa Proprietary Limited and further cautionary announcement
CAPE EMPOWERMENT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/001807/06)
JSE Code CAP
ISIN ZAE0001450066
("Cape Empowerment" or "the company" or "the group")
DISPOSAL OF INTEREST IN DYNAMIC CABLES SOUTH AFRICA PROPRIETARY LIMITED
("DYNAMIC CABLES") AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are advised that Cape Empowerment, through its wholly-owned
subsidiary Business Venture Investments No 1246 Proprietary Limited
("BVI"), has entered into agreements to dispose of its entire
shareholding in wholly owned subsidiary Dynamic Cables by selling 75%
thereof to Nexans Participations (France)("Nexans")("the Nexans
disposal") and 25% to Mr Theo Rai ("Rai")("the Rai
disposal")(collectively "the disposals") for an aggregate consideration
of approximately R9, 802 million subject to adjustment as recorded in
3.1.2 and 3.2.2 below.
2. RATIONALE FOR THE DISPOSALS
Dynamic Cables and its operating subsidiary supply connectivity supplies
to the telecommunications, electrical and engineering sectors. The
disposal of the business is in line with Cape Empowerment`s strategy of
repositioning its investment focus to increase its exposure to the
property sector.
3. TERMS OF THE DISPOSAL
3.1 The Nexans disposal
The group shall dispose of 75% of its shares in Dynamic Cables
("Nexans sale shares") to Nexans, and Nexans shall procure
that Dynamic Cables repay all of the claims on loan account
against Dynamic Cables ("claims repayment"), on the following
terms and conditions:
3.1.1 Effective date
The effective date of the disposal is the closing date
thereof, being 4 November 2011 ("closing date"). All
conditions precedent have been fulfilled as at the
closing date.
3.1.2 Adjustment
The Nexans purchase price referred to in clause 3.1.3.1
below will be adjusted after the finalisation of the
closing date accounts which must be completed within 30
business days after the closing date.
3.1.3 Consideration
Nexans shall by the closing date make payment of an
effective amount of approximately R18,782 million to
Cape Empowerment to be allocated as follows:
3.1.3.1 approximately R7,351 million in consideration for the
Nexans sale shares ("Nexans purchase price"), which will
be dealt with as follows:
3.1.3.1.1 R3 million in cash against which the group will provide a
bank guarantee to the same value as security for the
provisions of warranties normal to a transaction of this
nature;
3.1.3.1.2 R1,5 million to be held in escrow by Nexans` attorneys
and to be released upon the finalisation of the closing
date accounts; and
3.1.3.1.3 approximately R2,851 million in cash; and
3.1.3.2 R11,430 million in respect of the claims repayment, to be
effected by means of a loan from Nexans Services, a
company established and existing under the laws of
Belgium, having its registered office at rue de Stalle 65-
B3, 1180 Uccle, Brussels-Belgium, to Dynamic Cables,
which will be utilised to fund the claims repayment
("Nexans loan agreement").
3.2 The Rai disposal
Dynamic Cables operates in an environment in which the
black economic empowerment ("BEE") status of companies
plays a critical role. As a result the Rai disposal was
concluded on the same commercial terms and conditions as
the Nexans disposal:
3.2.1 Effective date
The effective date of the Rai disposal is 31 October
2011;
3.2.2 Consideration
Rai has made payment of an amount of R2,450 million in
cash to the company, which amount is however subject to
adjustment on the same basis as the Nexans purchase price
adjustment set out in paragraph 3.1.2 above.
4. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects of the disposals on Cape
Empowerment shareholders based on the published unaudited results
of the group for the six months ended 30 June 2011 have been
calculated and are not material on the loss, headline loss, net
asset value and tangible net asset value per share of the company.
This means that the impact of the disposals is less than 3% in each
instance.
5. CATEGORISATION OF THE TRANSACTION
The disposals are categorised as a category 2 transaction in terms
of the Listings Requirements of the JSE. Mr Theo Rai is a director
of the company and Dynamic Cables and therefore the Rai disposal is
a small related party transaction in terms of the Listings
Requirements of the JSE. The JSE has been provided with written
confirmation from Mazars Corporate Finance Proprietary Limited, an
independent professional expert acceptable to the JSE, confirming
that the Rai disposal is fair to Cape Empowerment`s shareholders
("the fairness opinion"). The fairness opinion will be available
for inspection at Cape Empowerment`s registered offices for a
period of 28 days from the date of this announcement.
6. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the company is still in other
negotiations which, if successfully concluded, may have a material
impact on the price of the company`s securities. Accordingly
shareholders are advised to continue to exercise caution when
dealing in the company`s securities until a further announcement is
made.
Cape Town
4 November 2011
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Legal advisors
Cliffe Dekker Hofmeyr Inc.
Date: 04/11/2011 16:00:01 Supplied by www.sharenet.co.za
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