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CONVERGENET HOLDINGS LIMITED - Declaration announcement regarding the proposed restructure of the group, notice of general meeting and withdrawal

Release Date: 20/09/2013 16:30
Code(s): CVN     PDF:  
Wrap Text
Declaration announcement regarding the proposed restructure of the group, notice of general meeting and withdrawal

ConvergeNet Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/015580/06)
Share code: CVN      ISIN: ZAE000102067
("ConvergeNet" or the "Company" or the "Group")

Declaration announcement regarding the proposed restructure of the Group,
notice of General Meeting and withdrawal of cautionary announcement

Shareholders are referred to the announcement released on SENS on 29 July 2013 (the "Terms
Announcement") regarding, inter alia, the closure of the Company's head office, the consolidation of
the Company's share capital, an odd-lot offer and specific offer, and the disposal of, inter alia,:
-   Sizwe Africa IT Group Proprietary Limited ("Sizwe") (the "Sizwe Disposal");
-   EQ Tickets Proprietary Limited ("EQ Tickets") (the "EQ Tickets Disposal"); and
-   Telesto Communications Proprietary Limited ("Telesto") (the "Telesto Disposal").
Shareholders are hereby advised of the final terms of the aforementioned transactions.
All terms defined in the Terms Announcement shall bear the same meaning in this announcement. The
Sizwe Disposal, the Telesto Disposal, the Share Consolidation, the Odd-lot Offer and the Specific Offer
                                                               .
are, collectively, hereinafter referred to as the "Transactions"

1.      THE SIZWE DISPOSAL
1.1     The Company entered into a Sale of Shares Agreement on 29 August 2013 (the "Sizwe
        Sale of Shares Agreement") with Zaloserve Proprietary Limited (the "Sizwe Purchaser") in
        terms of which ConvergeNet has disposed of 100% of ConvergeNet's interest in Sizwe (the
        "Sizwe Sale Shares") to the Sizwe Purchaser for R120 million (the "Sizwe Sale Price"),
        which transaction constitutes a disposal by ConvergeNet in terms of section 112 of the
        Companies Act.
1.2     Rationale for the Sizwe Disposal
        The Board is of the view that a restructured Group, which will initially comprise the core
        operations of Contract Kitting and SCS only, as detailed in the Terms Announcement, will
        form a solid base from which to build a scalable business that is focused on the provision of
        ICT solutions to the private sector across Africa. Accordingly, the Board has proposed that
        the Company disposes of Sizwe as this business does not form part of the strategy of the
        Company going forward.
1.3     Terms of the Sizwe Disposal
1.3.1   The Sizwe Sale Price will be settled as follows:
1.3.1.1 R40 million deposit payable in cash on or before 31 October 2013; and
1.3.1.2 R80 million by crediting the loan account of ConvergeNet in the books of
        account of the Sizwe Purchaser (the "Sizwe Loan") on the effective date
        of the Sizwe Disposal, being the date on which the Sizwe Disposal will
        become effective, being the fifth business day immediately following the
        date on which the last of the outstanding suspensive conditions, as detailed
        in paragraph 1.4 below, has been fulfilled or waived (the "Sizwe Disposal
        Effective Date").
1.3.2   The terms of the Sizwe Loan are as follows:
(i)     Term: 4 years
(ii)    Repayable in semi-annually instalments of no less than R10 million each (on or
        before 30 June and 31 December in each year) ("Payment Date"), provided
        that on the last Payment Date the Sizwe Purchaser shall only be obliged to pay
        the outstanding balance of the Sizwe Loan, notwithstanding that it may be less
        than R10 million.
(iii)   Interest rate: Prime Rate minus 2%, payable monthly in arrears, subject to
        adjustment as detailed in paragraph 1.3.4 below.
(iv)    First capital repayment to be made on 30 June 2014.
(v)     First interest payment to be made on the first day of the month following the
        Sizwe Disposal Effective Date.
1.3.3   The Sizwe Sale Price will be subject to the following adjustments:
1.3.3.1 If the Sizwe Purchaser has paid, in capital reduction of the Sizwe Loan:
1.3.3.1.1   an amount of at least R17 million on or in the six-month period
            prior to the Payment Date (each the "Relevant Period"), the
            outstanding balance of the Sizwe Sale Price will be reduced by an
            amount of R2.5 million on the applicable Payment Date (i.e. if the
            Sizwe Purchaser pays, in capital reduction of the Sizwe Loan, an
            amount of R17 million on or before 30 June 2014, the outstanding
            balance of the Sizwe Sale Price will be reduced by an amount of
            R2.5 million on 30 June 2014), provided that, if the outstanding
            balance of the Sizwe Loan is not settled in full by 31 December
            2015, the Sizwe Purchaser shall not be entitled to any of the
            capital reductions contemplated in this paragraph 1.3.3.1.1, and
            will, on 31 December 2015, pay an amount equal to any capital
            reductions granted in terms hereof together with any interest
            which would have accrued had such capital reductions not been
            granted; and provided further that, if by 31 of December 2015, the
            Sizwe Purchase has paid a total amount of R70 million in respect
            of capital reductions of the Sizwe Loan (irrespective of the actual
            amounts paid by the Sizwe Purchaser on each of the Payment
            Dates) the Sizwe Purchaser will be entitled to a capital reduction
            in respect of the Sizwe Loan in an amount of R10 million with
            effect from 31 December 2015; or
1.3.3.1.2   an amount of R30 million in a Relevant Period, the outstanding
            balance of the Sizwe Loan will be reduced by R10 million on
            the applicable Payment Date (i.e. if the Sizwe Purchaser pays an
            amount of at least R30 million on or in the six-month period prior
            to 30 June 2014, the outstanding balance of the Sizwe Loan
            will reduce by R10 million on 30 June 2014), provided that if
            the outstanding balance of the Sizwe Loan is not settled in full
            by no later than 31 December 2014, the Sizwe Purchaser will
            not be entitled to any of the capital reductions contemplated
            in this paragraph 1.3.3.1.2, and will, on 31 December 2014, pay
            an amount equal to any capital reductions granted in terms
            hereof together with any interest that would have accrued
            had such capital reductions not been granted, provided further
            that if by 31 of December 2014, the Sizwe Purchaser has paid
            a total amount of R60 million in respect of capital reductions
            of the Sizwe Loan (irrespective of the actual amounts paid by
            the Sizwe Purchaser on each of the payment dates), the Sizwe
            Purchaser will be entitled to a capital reduction in respect of
            the Sizwe Loan in an amount of R20 million with effect from
            31 December 2014.
1.3.4   If the Sizwe Purchaser has paid to the Company (in addition to the amount of
        R40 million detailed in paragraph 1.3.1.1 above):
1.3.4.1 an amount of R17 million or more in capital reduction after the Sizwe
        Disposal Effective Date in respect of Relevant Period, then the outstanding
        amount under the Sizwe Loan will bear interest during the immediately
        subsequent Relevant Period at the Prime Rate minus 3%; or
1.3.4.2 an amount of R30 million or more in capital reduction after the Sizwe
        Disposal Effective Date in respect of Relevant Period, then the outstanding
        amount under the Sizwe Loan will bear interest during the immediately
        subsequent Relevant Period at the Prime Rate minus 6%.
1.3.5   As security for the due, proper and timeous payment and performance in full of
        the Sizwe Loan, the Sizwe Purchaser has ceded and pledged to and in favour
        of the Company (i) the Sizwe Sale Shares, (ii) rights to dividends and other distributions
        of whatsoever nature attaching to the Sizwe Sale Shares and (iii) any and all claims of
        whatsoever nature which the Sizwe Purchaser may from time to time have against
        Sizwe. Similarly, Sizwe has ceded and pledged to and in favour of the Company its
        book debts.
1.4     Suspensive conditions of the Sizwe Disposal
        The Sizwe Disposal is subject to the fulfilment of the following outstanding suspensive
        conditions on or before 24 October 2013:
1.4.1   approval and ratification by the board of directors of Sizwe of the entering into of the
        Sizwe Sale of Shares Agreement by Sizwe and all other agreements and transactions
        contemplated therein;
1.4.2   receipt of written confirmation by the Company from Contract Kitting stating that all
        amounts owed by Sizwe to Contract Kitting have been settled;
1.4.3   settlement of all amounts, which are 60 days and more in arrears as at 29 August
        2013, due by Sizwe and Sizwe's subsidiaries to the Company and the Company's
        subsidiaries, and settlement of all amounts due by the Company and the Company's
        subsidiaries to Sizwe and Sizwe's subsidiaries;
1.4.4   Sizwe entering into an irrevocable power of attorney conferred on Sizwe by the
        Company to execute and register a general notarial bond over all of the movable
        assets of Sizwe from time to time for a maximum capital sum of R100 000 000 as
        security for the Sizwe Purchaser's obligations to the Company in terms of the Sizwe
        Sale of Shares Agreement;
1.4.5   the Sizwe Purchaser delivering to the Company the written resignation of H van Dyk
        as a director of ConvergeNet with effect from the Sizwe Disposal Effective Date;

1.4.6   approval by the requisite majority of shareholders in general meeting of financial
        assistance to be granted by ConvergeNet to the Sizwe Purchaser by way of deferring
        a portion of the purchase consideration payable for the purpose of, or in connection
        with, the purchase of the Sizwe Sale Shares in terms of section 44(3)(a)(ii) of the
        Companies Act;
1.4.7   approval by the requisite majority of shareholders in general meeting of financial
        assistance to be granted by ConvergeNet to H van Dyk, a director of both ConvergeNet
        and the Sizwe Purchaser, by way of deferring a portion of the purchase consideration
        payable for the purpose of, or in connection with, the purchase of the Sizwe Sale
        Shares in terms of section 45(3)(a)(ii) of the Companies Act;
1.4.8   approval by the requisite majority of shareholders in general meeting in terms
        of (i) section 9.20(a) of the Listings Requirements and (ii) section 115(2)(a) of the
        Companies Act (being not less than 75% of the votes exercised by shareholders
        present and entitled to vote at the general meeting referred to in paragraph 9 below
        (the "General Meeting"); and
   (a)     to the extent required, the approval of the implementation of such resolution by
           a court in terms of section 115(2)(c) and/or section 115(3) of the Companies Act;
           and
   (b)     if applicable, ConvergeNet not treating the aforesaid resolution as a nullity, as
           contemplated in section 115(5)(b) of the Companies Act;
1.4.9   the receipt of unconditional approval from the TRP in terms of a compliance certificate
        or exemption to be issued in terms of the Companies Act in relation to the Sizwe
        Disposal; and
1.4.10  in relation to any objections to the Sizwe Disposal by shareholders:
1.4.10.1   if shareholders give notice objecting to the Sizwe Disposal, as contemplated
           in section 164(3) of the Companies Act, and vote against the relevant
           resolution proposed at the General Meeting, shareholders holding no more
           than 10% of all ConvergeNet shares eligible to be voted at the General
           Meeting give such notice and vote against the relevant resolution proposed
           at the General Meeting; or
1.4.10.2   if shareholders holding more than 10% of all ConvergeNet shares eligible
           to vote at the General Meeting give notice objecting to the Sizwe Disposal,
           as contemplated in section 164(3) of the Companies Act, and vote against
           the relevant resolution proposed at the General Meeting, the relevant
           shareholders do not exercise their Appraisal Rights afforded to them in
           terms of section 164 of the Companies Act, by giving valid demands in
           terms of sections 164(5) to 164(8) of the Companies Act within 30 (thirty)
           business days following the General Meeting, in respect of more than 10%
           of the ConvergeNet shares eligible to be voted at the General Meeting.
1.5     Fairness opinion by the Independent Expert
        The Board appointed BDO Corporate Finance Proprietary Limited ("BDO") as the
        Independent Expert to determine whether the terms and conditions of the Sizwe Disposal
        are fair to shareholders in terms of the Listings Requirements, and fair and reasonable to
        shareholders in terms of the Companies Regulations (collectively, hereinafter referred to
        as "fair"). The Independent Expert has considered the terms and conditions of the Sizwe
        Disposal, and is of the opinion that such terms and conditions are fair to shareholders on the
        basis set out in their fairness opinion included in the circular referred to in paragraph 9 below
        (the "Circular").

2. THE TELESTO DISPOSAL
2.1     The Company entered into a Sale of Shares Agreement on 16 August 2013 (the "Telesto Sale
        of Shares Agreement") with ConvergeCom Proprietary Limited (the "Telesto Purchaser")
        in terms of which ConvergeNet has disposed of 100% of ConvergeNet's interest in Telesto
                                                                   .3
        (the "Telesto Sale Shares") to the Telesto Purchaser for R7 million (the "Telesto Sale
        Price").
2.2     Rationale for the Telesto Disposal
        Shareholders are referred to paragraph 1.2 above for the rationale for the Telesto Transaction.
2.3     Terms of the Telesto Disposal
2.3.1   The Telesto Sale Price will be settled as follows:
2.3.1.1 R6 million payable in cash on or before 15 November 2013; and
2.3.1.2 R1.3 million payable in cash on or before 31 October 2014 (the "Final Payment").
2.3.2   Notwithstanding anything to the contrary contained in paragraph 2.3.1 above, the
        Telesto Sale Price will be considered as settled in full by the Telesto Purchaser if an
        amount of R7 million is paid to ConvergeNet on or before 15 December 2013 in
        settlement of the Telesto Sale Price.
2.4     Suspensive conditions of the Telesto Disposal
        The Telesto Disposal is subject to the fulfilment of the following outstanding suspensive
        conditions on or before 31 October 2013, or such later date as the parties may agree in
        writing:
2.4.1   approval and ratification by the Board of the entering into of the Telesto Sale of Shares
        Agreement by ConvergeNet and the implementation of the Telesto Disposal;
2.4.2   the shareholders of the Telesto Purchaser in general meeting passing a resolution
        ratifying and approving the entering into of the Telesto Sale of Shares Agreement by
        ConvergeNet and the implementation of the Telesto Disposal;
2.4.3   the shareholders of Telesto in general meeting passing a resolution ratifying and
        approving the entering into of the Telesto Sale of Shares Agreement by ConvergeNet
        and the implementation of the Telesto Disposal;
2.4.4   a written consulting agreement being entered into between and becomes binding
        in all respects on ConvergeNet and DF Bisschoff in terms whereof, inter alia,
        DF Bisschoff is appointed to fulfil the role of interim Chief Executive Officer of
        ConvergeNet until such time as the audited financial statements of ConvergeNet
        have been distributed to shareholders of ConvergeNet in terms of the requirements
        set in the Companies Act;
2.4.5   approval by the requisite majority of shareholders in General Meeting in terms of
        section 9.20(a) of the Listings Requirements;
2.4.6   approval by the requisite majority of shareholders in General Meeting of financial
        assistance to be granted by ConvergeNet to the Telesto Purchaser by way of deferring
        a portion of the purchase consideration payable for the purpose of, or in connection
        with, the purchase of the Telesto Sale Shares in terms of section 44(3)(a)(ii) of the
        Companies Act;
2.4.7   approval by the requisite majority of shareholders in General Meeting of financial
        assistance to be granted by ConvergeNet to DF Bisschoff, a director of both
        ConvergeNet and the Telesto Purchaser, by way of deferring a portion of the purchase
        consideration payable for the purpose of, or in connection with, the purchase of the
        Telesto Sale Shares in terms of section 45(3)(a)(ii) of the Companies Act; and
2.4.8   the completion of the head office closure and any retrenchments that may be
        envisaged thereby, as detailed in the Terms Announcement, as well as finalising the
        matter of the lease agreement in respect of the Company's head office, following the
        closure thereof.
2.5     Fairness opinion by the Independent Expert
        The Board appointed BDO as the Independent Expert to determine whether the terms
        and conditions of the Telesto Disposal are fair to shareholders. The Independent Expert has
        considered the terms and conditions of the Telesto Disposal, and is of the opinion that such
        terms and conditions are fair to shareholders on the basis set out in their fairness opinion
        included in the Circular.

3.      THE EQ TICKETS DISPOSAL
        Shareholders are advised that negotiations to finalise a sale of shares agreement with Mr Daki
        Nkanyane in respect of the EQ Tickets Disposal, as detailed in the Terms Announcement, have
        not been successfully concluded. However, the following transactions have subsequently been
        concluded by Sizwe:
3.1     On 1 August 2013 Sizwe entered into a Sale of Shares Agreement with Kilimanjaro Holdings
        Proprietary Limited ("Kilimanjaro") and EQ Tickets for the purchase of 100% of Kilimanjaro's
        interest in EQ Tickets (being 26% not already owned by Sizwe) for R2.00.
3.2     On 28 August 2013 Sizwe entered into a Sale of Shares Agreement with Ikeganya Support
        Services Proprietary Limited and EQ Tickets for the disposal of 100% of Sizwe's interest in
        EQ Tickets for R5.0001 million.
3.3     In terms of the Listings Requirements, the transactions referred to in paragraphs 3.1 and 3.2
        above are not categorised, and are therefore included in this announcement for information
        purposes only.
3.4     In light of the above, the reference to Sizwe's interest of 74% in EQ Tickets which was
        included in paragraph 11.7 on page 68 of the Circular should be disregarded.

4.      THE SHARE CONSOLIDATION
        Shareholders are referred to the Terms Announcement with regards to the terms of the Share Consolidation, which have remained unchanged.
        The Company's new ISIN pursuant to the proposed implementation of the Share Consolidation will be ZAE000182440.

5.      ODD-LOT OFFER AND SPECIFIC OFFER
5.1     As detailed in the Terms Announcement, ConvergeNet wishes to extend an odd-lot offer to shareholders holding less than 100 shares,
        amounting to a total of 9 shareholders, holding a total of 287 shares (which represent approximately 0.00003% of the total issued share
        capital of ConvergeNet) and a specific offer to shareholders holding 100 or more shares but fewer than 5 001 shares, amounting to a total
        of 161 shareholders, holding a total of 314 088 shares (which represents approximately 0.03235% of the total issued share capital of
        ConvergeNet).
5.2     The Odd-lot Offer and the Specific Offer will be made at an offer price of 12 cents, being the five-day volume weighted average price of
        ConvergeNet shares traded on the JSE up to the close of business on the day prior to the Terms Announcement plus a 5% premium.
5.3     Shareholders are referred to the Terms Announcement for details regarding the mechanism of the Odd-lot Offer and the Specific Offer.

6. PRO FORMA FINANCIAL EFFECTS
6.1   The table below sets out the pro forma financial effects of the Transactions on ConvergeNet.
6.2   The pro forma consolidated statement of comprehensive income for the six-month period ended 28 February 2013 and pro forma consolidated statement of financial position at 28 February 2013 have
      been prepared for illustrative purposes only, based on current information available to management, in order to provide information about the financial results and position of the Company. Due to its
      nature, the pro forma financial information may not fairly present the Company's financial position, changes in equity and results of operations or cash flows after the Transactions, and are based on the
      assumptions that:
      - for the purpose of calculating earnings per share and headline earnings per share, the Transactions were implemented on 1 September 2012; and
      - for the purpose of calculating net asset value per share and net tangible asset value per share, the Transactions were implemented on 28 February 2013.
6.3   The pro forma financial information has been prepared using the most recent financial period of the Company for the six-month period ended 28 February 2013 in terms of the Listings Requirements and
      guidelines issued by the South African Institute of Chartered Accountants.
6.4   The accounting policies of ConvergeNet have been used in calculating the pro forma financial effects. The accounting policies used are consistent with previous accounting policies used by ConvergeNet
      and the accounting policies have been applied on the same basis.
6.5   The directors of the Company are responsible for the preparation of the pro forma financial information contained in this announcement.

                                                                               After Post
                                                                                 Balance-                 After the                After the                     After the
                                                                             Sheet Change              Sizwe Change           Telesto Change                  Share Change                    After the      Change
                                                               Before1     Adjustments3.1      (%)    Disposal(3.2)       (%)  Disposal(3.3)      (%)   Consolidation(3.4)       (%)  Transactions(3.5)         (%)
Basic (loss) per ordinary share (cents)                         (2.34)             (2.54)    (8.5)           (6.38)   (151.2)         (3.94)   (55.1)              (25.43)   (901.2)            (77.76)   (2 961.4)
Diluted basic (loss) per ordinary share (cents)                 (2.34)             (2.54)    (8.5)           (6.37)   (150.8)         (3.93)   (54.7)              (25.37)   (898.8)            (77.59)   (2 954.7)
Headline (loss) per ordinary share (cents)                      (2.06)             (2.28)   (10.7)           (0.36)      84.2         (2.29)    (0.4)              (22.83)   (901.3)             (3.74)      (64.0)
Diluted headline (loss) per ordinary share (cents)              (2.06)             (2.28)   (10.7)           (0.36)      84.2         (2.29)    (0.4)              (22.78)   (899.1)             (3.73)      (63.6)
Weighted average number of shares in issue (000)          842 829 240        892 829 240      5.6      892 829 240       0.0    892 829 240      0.0           89 282 924    (90.0)         89 282 924      (90.0)
Number of shares in issue  net of treasury shares (000)  844 785 906        894 785 906      5.6      894 785 906       0.0    894 785 906      0.0           89 478 591    (90.0)         89 478 591      (90.0)
Net asset value per share (cents)                                43.39              41.27    (5.1)            34.57    (16.2)          39.38    (4.6)               412.47     899.4             326.60       691.4
Tangible net asset value per share (cents)                       23.50              23.39    (0.5)            21.67     (7.4)          23.21    (0.8)               233.66     899.0             214.77       818.2

Notes and assumptions:
1.   Extracted from the restated consolidated reviewed interim results of ConvergeNet for the six-month period ended 28 February 2013.
2.   The pro forma financial effects have been prepared on the assumption that the Sizwe Disposal, Telesto Disposal and Share Consolidation took place on 1 September 2012 for purposes of the pro forma statement of comprehensive income and on 28 February 2013
     for purposes of the pro forma statement of financial position.
3.   The pro forma financial effects are shown:
     3.1 after the Post Reporting Period Events, namely the acquisition of the remaining 26% interest in Contract Kitting and the remaining 25% interest in Sizwe as detailed in the circular dated 12 February 2013 and bridge financing in the amount of R20 000 000
         obtained from Bell Tower during August 2013 (the "Post Reporting Events");
     3.2 after the Sizwe Disposal shown as the stand-alone effect of the Sizwe Disposal;
     3.3 after the Telesto Disposal shown as the stand-alone effect of the Telesto Disposal;
     3.4 after the Share Consolidation shown as the stand-alone effects of the Share Consolidation; and
     3.5 after the Transactions shown as the cumulative effects of the Post Reporting Period Events, Sizwe Disposal, Telesto Disposal and Share Consolidation.
4.   The pro forma financial effects of the Odd-lot Offer and Specific Offer are not significant (i.e. less than 3%) and are not reflected above.

7.   SALIENT DATES AND TIMES
     7.1   The General Meeting
                                                                                                   2013
           Declaration announcement released on SENS on                            Friday, 20 September
           Notice of General Meeting published on SENS on                          Friday, 20 September
           Circular and notice of General Meeting posted to
           shareholders on                                                         Friday, 20 September
           Declaration announcement published in the press on                      Monday, 23 September
           Last date to trade in ConvergeNet shares in order to be
           recorded in the register to vote at the General Meeting on                 Friday, 4 October
           Voting Record Date by close of trading on                                 Friday, 11 October
           Last date to lodge forms of proxy in respect of the General
           Meeting by 10:00 on                                                       Friday, 18 October
           Last date and time for shareholders to give notice, in terms of
           section 164 of the Companies Act, to ConvergeNet objecting to
           the special resolution approving the Sizwe Disposal by 10:00 on          Tuesday, 22 October
           General Meeting to be held at 10:00 on                                   Tuesday, 22 October
           Results of General Meeting released on SENS on                           Tuesday, 22 October
           If the Sizwe Disposal is approved by shareholders at the
           General Meeting:
           Last date on which shareholders can make application to the
           court in terms of section 115(3) of the Companies Act                    Tuesday, 5 November
           Last date for ConvergeNet to send objecting shareholders
           notices of the adoption of the special resolution approving the
           Sizwe Disposal, in terms of section 164 of the Companies Act             Tuesday, 5 November
           If shareholders holding not more than 10% exercise their
           rights in terms of section 115 of the Companies Act:
           Finalisation announcement in respect of the Sizwe Disposal
           released on SENS on                                                   Wednesday, 20 November

     7.2   The Odd-lot Offer and the Specific Offer
                                                                                                   2013
           Declaration announcement released on SENS on                            Friday, 20 September
           Notice of General Meeting published on SENS on                          Friday, 20 September
           Circular and notice of General Meeting posted to
           shareholders on                                                         Friday, 20 September
           Declaration announcement published in the press on                      Monday, 23 September
           Last date to trade in ConvergeNet shares in order to be
           recorded in the register to vote at the General Meeting on                 Friday, 4 October
           Voting Record Date by close of trading on                                 Friday, 11 October
           Last date to lodge forms of proxy in respect of the General
           Meeting by 10:00 on                                                       Friday, 18 October
           General Meeting to be held at 10:00 on                                   Tuesday, 22 October
           Results of General Meeting released on SENS on                           Tuesday, 22 October
           Filing of special resolutions relating to the amendments to the
           Memorandum of Incorporation with CIPC on                               Wednesday, 23 October
           Finalisation announcement relating to the Odd-lot Offer and the
           Specific Offer released on SENS on                                       Friday, 15 November
           Odd-lot Offer and Specific Offer opens at 09:00 on                       Friday, 15 November
           Finalisation announcement relating to the Odd-lot Offer and the
           Specific Offer published in the press on                                 Monday, 18 November
           Last day to trade in ConvergeNet shares in order to be eligible
           to participate in the Odd-lot Offer and the Specific Offer on            Friday, 22 November
           Shares trade "ex" the Odd-lot Offer and the Specific Offer on            Monday, 25 November
           Forms of election and surrender for the Odd-lot Offer and the
           Specific Offer to be received by the Transfer Secretaries by
           12:00 on                                                                 Friday, 29 November
           Odd-lot Offer and the Specific Offer closes at 12:00 on                  Friday, 29 November
           Record date for the Odd-lot Offer and the Specific Offer to
           determine the shareholders entitled to participate in the Odd-lot
           Offer and the Specific Offer (Offer Record Date)                         Friday, 29 November
           Odd-lot Offer and the Specific Offer becomes effective at
           commencement of trade on                                                  Monday, 2 December
           Odd-lot Holders and Specific Offer Shareholders with
           dematerialised shares will have their accounts held at their
           CSDP or broker credited with the amount of the Cash
           Alternative, unless Odd-lot Holders and Specific Offer
           Shareholders have elected to retain their holdings, and where
           no election has been made by Specific Offer Shareholders, on              Monday, 2 December
           Cheques posted in respect of the sale of Odd-lot Holdings
           by Odd-lot Holders and the sale of holdings by Specific Offer
           Shareholders with certificated shares, at the risk of such
           holders, on or about                                                      Monday, 2 December
           Results of the Odd-lot Offer and Specific Offer released on
           SENS on                                                                   Monday, 2 December

     7.3   The Share Consolidation
                                                                                                   2013
           Notice of General Meeting published on SENS on                          Friday, 20 September
           Circular and notice of General Meeting posted to
           shareholders on                                                         Friday, 20 September
           Last date to trade in ConvergeNet shares in order to be
           recorded in the register to vote at the General Meeting on                 Friday, 4 October
           Voting Record Date by close of trading on                                 Friday, 11 October

                                                                                                           2013
Last date to lodge forms of proxy in respect of the General
Meeting by 10:00 on                                                                          Friday, 18 October
General Meeting to be held at 10:00 on                                                      Tuesday, 22 October
Results of General Meeting released on SENS on                                              Tuesday, 22 October
Filing of special resolutions relating to the amendments to the
Memorandum of Incorporation with CIPC on                                                  Wednesday, 23 October
Finalisation announcement relating to the Share Consolidation
released on SENS on                                                                         Friday, 15 November
Finalisation announcement relating to the Share Consolidation
published in the press on                                                                   Monday, 18 November
Last day to trade under the present share capital in order to be
recorded as a shareholder on                                                                 Friday, 6 December
Trading in shares under the new consolidation share capital
under the new ISIN: ZAE000182440) commences on                                               Monday, 9 December
Record date to determine those shareholders whose shares will
be subject to the Share Consolidation on                                                    Friday, 13 December
Forms of surrender for new certificate to be received by the
Transfer Secretaries (in order for new certificates reflecting the
Share Consolidation to be posted) by 12:00 on                                               Friday, 13 December
Dematerialised shareholders will have their accounts at their
CSDP or broker updated on                                                                  Tuesday, 17 December
Replacement share certificates posted to certificated
shareholders, by registered post, provided their existing
share certificates are surrendered by 12:00 on the Share
Consolidation Record Date (failing which, within five business
days after receipt of such existing share certificates) on or about                        Tuesday, 17 December
Notes:
1. The specified dates and times are subject to change. Any changes will be released on SENS and published in
   the press.
2.   Shareholders may not dematerialise or rematerialise their shares between Monday, 25 November 2013 and
     Friday, 29 November 2013, both days inclusive and after Friday, 6 December 2013 in pre-consolidated form.
3.   In the case of Odd-lot Holders of certificated shares who elect to sell their Odd-lot Holdings and Specific Offer
     Shareholders who accept the Specific Offer, cheques will be posted at the risk of such Odd-lot Holders and
     Specific Offer Shareholders on or about Monday, 2 December 2013 or within five business days after the receipt
     of such Documents of Title by the Transfer Secretaries, whichever is the later.
4.   Shareholders who wish to retain their Odd-lot Holdings must lodge the form of election and surrender
     for the Odd-lot Offer, as enclosed with the Circular, by 12:00 on the Offer Record Date, which date is
     expected to be Friday, 29 November 2013, failing which their shares will be purchased by ConvergeNet.
5.   Certificated shareholders who did not qualify for the Odd-lot Offer or Specific Offer should note that they will
     not receive replacement share certificates in consolidation form until the Odd-lot Offer and Specific Offer have
     been implemented.
6.   Those Specific Offer Shareholders who do not make an election will automatically be regarded as not having
     accepted the Specific Offer.

8.  IRREVOCABLE UNDERTAKINGS
    ConvergeNet has received irrevocable undertakings from the following shareholders to vote in
    favour of the Transactions and related resolutions to be proposed at the General Meeting in respect
    of their shareholding in ConvergeNet, as indicated, to the extent they are permitted to do so in
    terms of the Companies Regulations and the Listings Requirements:

                                                                                                  % of issued
                                                                                Number of    share capital of
    Shareholder                                                               shares held        ConvergeNet#
    AfrAsia Special Opportunities Fund Limited                                277 255 768              28.86%
    Heritage Capital Assets Limited                                           277 255 768              28.86%
    Trinity Asset Management Proprietary Limited                              138 000 000              14.36%
    Green Tree Investments 301 Proprietary Limited                            132 338 037              13.77%
    DF Bisschoff*                                                               4 850 000               0.50%
    Total                                                                     830 169 323              86.36%
    *Vote will not be taken into account in respect of the Telesto Disposal
    #Net of 10 157 756 treasury shares

9. POSTING OF CIRCULAR AND NOTICE OF GENERAL MEETING
    A circular containing full details of the Transactions, including, inter alia, a notice convening the
    General Meeting and the form of proxy, was dispatched to shareholders today, Friday, 20 September
    2013. The General Meeting will be held at the Company's registered office at Lakefield Office Park,
    272 West Avenue, Office Park, Block D, 1st Floor, Centurion at 10:00 on Tuesday, 22 October 2013,
    to consider and, if deemed fit, to pass, with or without modification, the special and ordinary
    resolutions required to implement the Transactions.

10. RESPONSIBILITY STATEMENT
    The Board accepts responsibility for the information contained in this announcement. To the best
    of their knowledge and belief, the information contained in this announcement is true and nothing
    has been omitted which is likely to affect the importance of the information included.

11. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
    Shareholders are referred to the cautionary announcement included in the Terms Announcement,
    and are advised that, following the release of this announcement, shareholders no longer need to
    exercise caution when dealing in the Company's securities.

Centurion
20 September 2013

Corporate advisor to ConvergeNet                                        
AFRASIA Corporate Finance

Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd


Date: 20/09/2013 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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