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Acquisition by Bytes SA of 27% of its issued share capital from KSI and Venopt
Allied Electronics Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
Share code: ATN ISIN: ZAE000029658
Share Code: ATNP ISIN: ZAE000029666
("Altron")
ACQUISITION BY BYTES TECHNOLOGY GROUP SOUTH AFRICA PROPRIETARY
LIMITED (“BYTES SA”), OF 27% OF ITS ISSUED SHARE CAPITAL FROM KAGISO
STRATEGIC INVESTMENTS PROPRIETARY LIMITED (“KSI”) AND VENOPT
PROPRIETARY LIMITED (“VENOPT”)
1. INTRODUCTION
On 31 May 2004, Bytes Technology Group Limited’s (“Bytes”) shareholders, including
Altron which held a 54.6% (fifty four point six percent) equity interest in Bytes at that
time, in General Meeting, approved a transaction whereby, inter alia, KSI and Venopt
(“the sellers”) acquired a 27% (twenty seven percent) equity interest in Bytes SA with
the right to dispose of their holdings at a later stage, in terms of a shareholders
agreement.
Altron shareholders are advised that on 9 May 2014, Bytes SA, a subsidiary of Altron,
entered into an agreement (“share repurchase agreement”) with the sellers whereby
Bytes SA will, as one indivisible transaction, acquire the sellers’ 27% (twenty seven
percent) equity interest in the issued share capital of Bytes SA for R669,190,000 (six
hundred and sixty nine million, one hundred and ninety thousand rand) (the
“consideration”), by way of a share repurchase (“the acquisition”).
The acquisition will become effective on 30 June 2014 (“the effective date”).
2. RATIONALE FOR THE ACQUISITION
In terms of the shareholders’ agreement concluded by the parties in 2004, the sellers
were, among others, granted the future right to sell their equity interest in Bytes SA and
Bytes was, inter alia, granted the right to acquire the sellers’ equity interest in Bytes SA
at a value to be agreed on by the parties, failing which, to be determined by an
independent third party.
Pursuant to the delisting of Allied Technologies Limited (“Altech”) in August 2013 and
the formation of the Altron Telecommunications, Multimedia and Information
Technology division (“Altron TMT”), the Altron group has been engaged in a review of
all of its broad-based black economic empowerment structures in order to align with
Altron TMT and Altron Power going forward. Altron is currently rated as a Level 2
Contributor under the recently promulgated ICT Charter Codes. KSI, which has been a
valuable and strategic equity partner of Bytes since 2004 has now determined, in
consultation with Altron, that from a timing perspective, it is opportune for it to realise
the value of its investment in Bytes SA.
Accordingly, the parties have reached agreement in terms of which the sellers will
dispose of their 27% (twenty seven percent) equity interest in Bytes SA, by way of a
share repurchase.
3. SALIENT TERMS OF THE ACQUISITION
3.1 The consideration will be settled by Bytes SA primarily in cash on the effective
date. The source of the cash will come from the proceeds of various non-core
asset disposals in the past year, including the Liquid Telecommunications put
exercised by Altech earlier this year and which has subsequently been received
(USD 55 million). In terms of the share repurchase agreement, Altron is entitled,
on behalf of Bytes SA, to settle all or a part of the consideration by way of a
vendor placement.
3.2 The acquisition will be effected by way of a share repurchase in terms of section
48 of the Companies Act No. 71 of 2008 (“the Companies Act”). Bytes SA has
complied with the relevant provisions of the Companies Act in order to effect the
share repurchase.
3.3 The standard warranties and indemnities for transactions of this nature have
been included in the share repurchase agreement entered into by the parties.
3.4 The acquisition will be subject to certain conditions precedent referred to
hereunder.
4. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects set out below have been prepared for
illustrative purposes only to assist Altron shareholders to assess the impact of the
acquisition, based on a cash only consideration, on the earnings per share (“EPS”),
headline earnings per share (“HEPS”), net asset value (“NAV”) per share and tangible
net asset value (“TNAV”) per share. The unaudited pro forma financial effects have
been prepared on the unaudited results for the six months ended 31 August 2013.
The unaudited pro forma financial effects have been prepared in accordance with the
Listings Requirements of the JSE Limited, the guide on Pro Forma Financial
information issued by the South African Institute of Chartered Accountants and the
measurement and recognition requirements of International Financial Reporting
Standards (“IFRS”). The accounting policies used to prepare the unaudited pro forma
financial effects are consistent with those applied in preparation of the financial
statements for the period ended 31 August 2013.
These unaudited pro forma financial effects have been prepared in terms of the
Listings Requirements and due to their nature they may not give a true reflection of the
actual financial effects. The unaudited pro forma financial effects are the responsibility
of the directors of Altron and are provided for illustrative purposes only.
Before the After the Change
acquisition acquisition
Cents Cents %
EPS 82 86 5.2
HEPS 82 86 5.2
NAV per share 1131 1019 (9.9)
TNAV per share 608 496 (18.4)
Notes:
i) The financial information in the “Before the acquisition” column of the table, has
been prepared based on Altron’s unaudited consolidated results for the six
months ended 31 August 2013.
ii) The financial information included in the “After the acquisition” column has been
prepared based on Altron’s unaudited consolidated interim results for the six
months ended 31 August 2013, taking into account the following:
a) the acquisition is assumed to be effective on 1 March 2013 for statement of
comprehensive income purposes;
b) the acquisition is assumed to be effective on 31 August 2013 for statement
of financial position purposes;
c) the acquisition cost of R669 million will be settled in cash;
d) the impact of the reduction in cash balances has been accounted for at the
borrowing rate of 7.23% as it would otherwise have offset borrowings;
e) the premium arising on the acquisition of the non-controlling interests of
R363 million has been written off against equity in accordance with the
Altron group’s accounting policies;
f) the costs relating to the acquisition, which are immaterial and once off in
nature, have not been included in the calculation; and
g) the weighted average number of shares of 318 million and number of
shares in issue of 324 million have been used in the calculations, and have
not changed as a result of the acquisition.
5. CONDITIONS PRECEDENT TO THE ACQUISITION
The acquisition is subject to relevant board approvals, including those of Altron and
Bytes.
The last day upon which the conditions precedent are capable of being fulfilled is
16 May 2014, failing which the share repurchase agreement shall lapse and cease to
have any force or effect.
6. CATEGORISATION OF THE ACQUISITION
The acquisition is categorised as a Category 2 transaction for Altron in terms of section
9.5(a) of the JSE Listings Requirements.
Johannesburg
9 May 2014
Investment Bank and Sponsor: INVESTEC BANK
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