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UPDATE ON THE SPECIFIC REPURCHASE OF FONEWORX SHARES AND SPECIFIC ISSUE OF FONEWORX SHARES AND RENEWAL OF CAUTIONARY
FoneWorx Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1997/010640/06)
Share code: FWX ISIN: ZAE000086237
(“FoneWorx” or “the Company”)
UPDATE ON THE SPECIFIC REPURCHASE OF FONEWORX SHARES AND SPECIFIC ISSUE OF
FONEWORX SHARES AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Further to the announcement released on SENS on 12 July 2012 (“terms announcement”) and using the
terms defined therein unless otherwise stated, shareholders are hereby provided with an update to the
Specific Repurchase, the Specific Issue and the Put Option, collectively referred to hereinafter as the
“Transactions”.
Subsequent to the release of the terms announcement wherein it was stated that the specific repurchase by
FoneWorx of the Repurchase Shares from the IDC would be at a price equal to the higher of 130 cents per
share or a 15% premium to the 30-day VWAP over an agreed period up to a maximum of 139 cents per
share, the price at which FoneWorx will acquire the Repurchase Shares from the IDC has been determined
to be 130.81 cents per share.
1. Pro forma financial effects
The unaudited pro forma financial effects have been prepared to illustrate the impact of the Transactions
on the reported financial information of FoneWorx for the six months ended 31 December 2011, had the
Transactions occurred on 1 July 2011 for statement of comprehensive income purposes and on
31 December 2011 for statement of financial position purposes.
The unaudited pro forma financial effects have been prepared using accounting policies that comply with
IFRS and that are consistent with those applied in the results for the six months ended 31 December
2011 as well as the audited results of FoneWorx for the 12 months ended 30 June 2011.
The unaudited pro forma financial effects, which are the responsibility of the directors, are provided for
illustrative purposes only and, because of their pro forma nature, may not fairly present FoneWorx’s
financial position, changes in equity, results of operations or cash flows.
Before Specific After the Specific Issue After the Granting After the Change
Repurchase Specific Adjustment Specific of the Put Specific %
Adjustment Repurchase Repurchase Option Repurchase,
and Specific Specific Issue
Issue and granting
of the Put
Option
Earnings per
share (cents) 7.96 2.33 10.29 (2.34) 7.95 (1.74) 6.21 (21.98)
Headline
earnings per
share (cents) 7.92 2.31 10.23 (2.31) 7.92 (1.74) 6.18 (21.96)
Net asset value
per share (cents) 73.79 (24.92) 48.87 24.58 73.46 (37.60) 35.93 (51.30)
Net tangible
asset value per
share (cents) 69.75 (26.65) 43.10 26.31 69.42 (37.52) 31.89 (54.28)
Weighted average
number of shares
in issue 134 533 189 (40 800 612) 93 732 577 40 800 612 134 533 189 - 134 533 189 -
Total number of
shares in issue 136 002 041 (40 800 612) 95 201 429 40 800 612 136 002 041 - 136 002 041 -
Notes:
1. The “Before” column has been extracted from the unaudited interim results of FoneWorx for the six months
ended 31 December 2011.
2. The “Specific Repurchase Adjustment” column represents the Specific Repurchase of 40 800 612 FoneWorx
ordinary shares from the IDC. Transaction costs have been applied to share capital in accordance with IAS 32.
It is assumed that purchase price and transaction costs are funded from FoneWorx’s existing cash resources
and interest foregone has been calculated at the Company’s average interest rate on call funds of 5.5% per
annum before tax. The South African corporate tax rate of 28% has been applied.
3. The “After the Specific Repurchase” column reflects the financial effects of the Specific Repurchase on
FoneWorx.
4. The “Specific Issue Adjustment” column reflects the Specific Issue of 40 800 612 FoneWorx shares to the Kirsh
Family Trusts. It has been assumed that the cash received in respect of the Specific Issue represents excess
cash, on which interest at the Company’s average interest rate on call funds of 5.5% per annum will be earned.
The South African corporate tax rate of 28% has been applied.
5. The “After the Specific Repurchase and Specific Issue” column reflects the financial effects of the Specific
Repurchase and the Specific Issue on FoneWorx.
6. The “Granting of the Put Option” column reflects the adjustment required for the effects of the six month period
during which the Put Option attached to the shares issued to the Kirsh Family Trusts can be exercised. It has
been assumed for the purpose of the pro forma financial information that these shares can be put back to
FoneWorx at a price of 130 cents per share. The present value of the option exercise price has been
reclassified from equity to a current financial liability, in accordance with IAS 32. The finance cost in respect of
the Put Option liability has been calculated at a rate of 9% per annum. Should the Put Option period lapse
without the Kirsh Family Trusts exercising their rights in terms of the Put Option, the Put Option liability will be
reclassified as equity. There are no tax effects relating to the accounting treatment of the Put Option. The
effects relating to the granting of the Put Option are non-recurring.
7. The “After the Specific Repurchase, Specific Issue and granting of the Put Option” column reflects the financial
effects of the Specific Repurchase, the Specific Issue and granting of the Put Option on FoneWorx.
8. The effects on earnings per share and headline earnings per share are calculated based on the assumption that
the Transactions were effected on 1 July 2011.
9. The effects on net asset value per share and net tangible asset value per share are calculated based on the
assumption that the Transactions were effected on 31 December 2011.
10. In the event that the Put Option is not exercised, the net asset value per share and net tangible asset value per
share will revert back to the values stated in the “After the Specific Repurchase and Specific Issue” column,
being 73.46 cents and 69.42 cents respectively.
11. In the event that the Put Option is exercised, the net asset value per share and net tangible asset value per
share will revert back to the values stated in the “After the Specific Repurchase” column, being 48.87 cents and
43.10 cents respectively.
2. Irrevocable undertakings
Shareholders are further advised that one of the conditions precedent to the Specific Issue, namely that
FoneWorx obtains written irrevocable undertakings from shareholders holding, in aggregate, not less
than 55 792 813 FoneWorx ordinary shares:
- to vote in favour of all ordinary and special resolutions at a general meeting convened to approve the
Transactions; and
- not to dispose of or encumber any of their FoneWorx ordinary shares or to take any action or make
any statement which may be prejudicial to the success of the adoption of the resolutions;
has been fulfilled.
FoneWorx has obtained written irrevocable undertakings from shareholders holding, in aggregate,
71 762 967 FoneWorx ordinary shares, being 52.8% of the issued shares in the Company. Given that
the IDC and the Kirsh Family Trusts are precluded from voting on the Transactions at the general
meeting, the irrevocable undertakings in respect of the Transactions effectively comprise 78.5% of the
issued shares in the Company.
3. Further documentation
The circular containing full details of the Transactions and incorporating a notice to convene a general
meeting of FoneWorx shareholders in order to consider and, if deemed fit to pass, with or without
modification, the resolutions necessary to approve and implement the Specific Repurchase, the Specific
Issue and the Put Option, which is in the process of being finalised and approved, is expected to be
distributed on or about 14 August 2012.
4. Renewal of cautionary announcement
Further to the cautionary announcement dated 12 July 2012, shareholders are advised that although the
pro forma financial effects of the Transactions have been disclosed in paragraph 1 above, caution is still
required to be exercised when dealing in the Company’s securities due to on-going negotiations between
FoneWorx and the Kirsh Family regarding the new envisaged strategic direction for the Company.
Johannesburg
1 August 2012
Designated Adviser
Merchantec Capital
Reporting Accountants
PKF (Jhb) Inc.
Date: 01/08/2012 09:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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