DIGICORE HOLDINGS LIMITED - Joint announcement of the Firm Intention of Novatel to make an offer to acquire all the ordinary shares in Digicore

Release Date: 19/06/2015 07:10
Code(s): DGC
 
Wrap Text
Joint announcement of the Firm Intention of Novatel to make an offer to acquire all the ordinary shares in Digicore

DIGICORE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/012601/06)
Share code: DGC
ISIN: ZAE000016945
("Digicore" or “the Company”)

NOVATEL WIRELESS INC
(Incorporated under the laws of the State of Delaware, United
States of America with registration number 2614230)
NASDAQ share code: MIFI
("Novatel")

JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF NOVATEL TO MAKE AN
OFFER TO ACQUIRE ALL THE ORDINARY SHARES IN DIGICORE (SAVE FOR ANY
TREASURY SHARES AND THE TRUST SHARES), BY WAY OF A SCHEME OF
ARRANGEMENT OR SUBSTITUTE OFFER

1.    INTRODUCTION

1.1     Shareholders of Digicore (“Shareholders”) are referred to
        Digicore’s updated detailed cautionary announcement dated
        5 June 2015 and are advised that Digicore has entered into a
        transaction implementation agreement with Novatel dated
        Thursday, 18 June 2015 (“Implementation Agreement”) which
        constitutes notification to the Digicore board of directors
        (“Digicore Board”) of a firm intention from Novatel to make
        an offer to acquire (either itself or through a subsidiary)
        all the ordinary shares in Digicore (“Ordinary Shares”),
        other than any Ordinary Shares held by any subsidiaries of
        Digicore (“Treasury Shares”) and the Ordinary Shares held by
        the Digicore Holdings Limited Share Trust (“Trust Shares”)
        (collectively the “Excluded Shares”), by way of a scheme of
        arrangement (“the Scheme”) or, if specified conditions of the
        Scheme should not be fulfilled, to acquire all or a majority
        of the Ordinary Shares, excluding the Excluded Shares, by way
        of a substitute offer (“the Substitute Offer”), with the
        Ordinary Shares to be so acquired being referred to hereafter
        as “Scheme Shares” (the Scheme and the Substitute offer,
        together with the Employee Option Offer described below,
        collectively as “the Transaction”).

1.2     Shareholders are further advised that the Digicore Board has
        established an independent board (“Independent Board”) to
        provide the opinion as required by the Companies Regulations,
        2011 (“the Companies Regulations”) promulgated in terms of
        the Companies Act 71 of 2008 (“Companies Act”).

1.3     The purpose of this announcement is to advise Shareholders of
        the terms and conditions of the Implementation Agreement.

2.    BACKGROUND IN RESPECT OF NOVATEL

2.1     Novatel is a leader in the design and development of M2M
        wireless solutions based on 3G and 4G technologies. Novatel
        delivers Internet of Things (IoT) and Cloud SaaS services to
        carriers, distributors, retailers, OEMs and vertical markets
        worldwide. Product lines include MiFi Mobile Hotspots, USB
        modems, Expedite and Enabler embedded modules, Mobile
        Tracking Solutions and Asset Tracking Solutions. These
        innovative products provide anywhere, anytime communications
        solutions for consumers and enterprises.

2.2     Novatel is incorporated in the State of Delaware, USA.
        Novatel’s headquarters are in San Diego, California and
        Novatel’s securities are listed on the NASDAQ exchange.

3.    RATIONALE

3.1     Rationale for Novatel

        Digicore specialises in the research, development,
        manufacturing, sales and marketing of telematics tools used
        for fleet management and consumer and enterprise-level
        vehicle tracking for an international client base. Novatel
        believes that its acquisition of Digicore would establish
        Novatel's position as a significant player in the global
        asset tracking and management market, and would provide
        immediate top-line contribution and meaningful earnings
        contribution in 2016.

3.2     Rationale for Digicore

3.2.1     The scheme consideration of R4.40 per Scheme Share,
          represents a premium of 67.9% to the 30-day volume weighted
          average traded price of Digicore of R2.62 per Ordinary
          Share, as at 7 May 2015. See paragraph 5.1 below in
          this regard.

3.2.2     The Transaction will provide Shareholders with an
          opportunity to dispose of their Scheme Shares at a
          substantial premium, accordingly the Independent Board
          believes that it is in the interest of Digicore and the
          Shareholders that they be given an opportunity to consider
          the Scheme.

3.2.3     The Independent Board’s opinion in connection with the
          Scheme and Substitute Offer will be communicated to
          Shareholders in due course.

4.    THE SCHEME

4.1     The Scheme will constitute an “affected transaction” as
        defined in section 117(1)(c) of the Companies Act. It will
        be implemented in accordance with the Companies Act, the
        Companies Regulations (which include the takeover regulations
        prescribed by the Minister of Trade and Industry in terms of
        section 120 of the Companies Act (“Takeover Regulations) and
        will be regulated by the Takeover Regulation Panel (“TRP”).

4.2     The Scheme will be implemented by way of a scheme of
        arrangement in terms of sections 114 and 115 of the Companies
        Act to be proposed by the Digicore Board between Digicore and
        the Shareholders (other than the holders of the Excluded
        Shares).

4.3     The posting of the scheme circular to Shareholders, in
        relation to the Scheme, and of the documents setting out the
        full terms and conditions of the Scheme and the Substitute
        Offer, including any report, opinion, form of proxy,
        acceptance forms, notice or other document required in
        connection with the Scheme and  the Substitute Offer
        (collectively, “Scheme Documents”) is subject to the
        fulfilment or, where applicable, waiver or deferral, of the
        conditions precedent set out in paragraph 5.2 below ("Pre-
        Conditions").

4.4     The Scheme will be subject to the fulfilment (or, where
        applicable, waiver) of the conditions precedent set out in
        paragraph 6 below ("Conditions").

5.    MATERIAL TERMS AND PRE-CONDITIONS

5.1     Material terms of the Implementation Agreement

5.1.1     Pursuant to implementation of the Scheme –

5.1.1.1     Novatel will acquire all of the Scheme Shares, and as a
            consequence Digicore will become a subsidiary of Novatel;

5.1.1.2     Shareholders will receive the scheme consideration of
            R4.40 for every Scheme Share disposed of in terms of the
            Scheme (“Scheme Consideration”), subject to a maximum
            consideration payable by Novatel of R1 094 223 363.20
            (being R4.40 times 248 687 128, being the current
            aggregate number of issued Ordinary Shares).

5.1.2     The Scheme Consideration represents a premium of 67.9% to
          the 30-day volume weighted average traded price of Digicore
          of R2.62 per Ordinary Share, as at 7 May 2015.

5.2     Pre-Conditions

5.2.1     The posting of the Scheme Documents is subject to the
          fulfilment or, where applicable, waiver or deferral by
          Novatel, by no later than 30 South African business days
          (that is excluding Saturdays, Sundays and statutory public
          holidays in South Africa) (“Business Day”) after the
          signature date of the Implementation Agreement, being
          Thursday, 18 June 2015 (“Signature Date”), or by such later
          date, no later than 45 Business Days after the Signature
          Date, as Digicore or Novatel may stipulate in writing, or
          by such other date as Digicore and Novatel may agree upon
          in writing, of the following Pre-Conditions –

5.2.1.1     that each of several specified employees of Digicore and
            its subsidiary companies (“Group Companies”) has, to the
            extent he is party to a “change of control agreement”, or
            any other agreement or arrangement with any of the Group
            Companies which provides for certain rights or benefits
            in the event of a change of control of Digicore, waived
            all such rights or benefits arising under that agreement
            or arrangement, or such rights and benefits have
            otherwise terminated;

5.2.1.2     that each holder of employee options (“Employee Options”)
            in terms of the scheme (“Employee Option Scheme”) as
            defined in the trust deed of the Digicore Holdings
            Limited Share Trust (“Employee Option Deed”) has
            irrevocably agreed in writing to accept the Employee
            Option Offer contemplated in paragraph 9.1 below if and
            when made, and has (i) conditionally waived all his right
            title and interest in and to all his Employee Options and
            (ii) waived all rights to receive a comparable offer in
            terms of section 125 of the Companies Act read with
            Regulation 87 of the Companies Regulations (“Comparable
            Offer”) from Novatel in respect of his Employee Options;

5.2.1.3     that the TRP has either –

5.2.1.3.1     granted Novatel an exemption in terms of section 119(6)
              of the Companies Act from the obligation to make a
              Comparable Offer in respect of the Employee Options; or

5.2.1.3.2     confirmed in writing that –

5.2.1.3.2.1     if the approach to the Employee Option Offer in
                paragraph 9.2.1 below were elected by Novatel, there
                would be no requirement for a Comparable Offer to be
                made; or

5.2.1.3.2.2     the making of the Employee Option Offer as may be
                proposed by Novatel in terms of paragraph 9.2.2 would
                discharge the obligations of Novatel to make a
                Comparable Offer;

5.2.1.4     that, as at the date of fulfilment of each of the other
            Pre-Conditions, Shareholders remain bound by, and are not
            in breach of, written irrevocable undertakings in favour
            of Novatel, inter alia, to vote in favour of the Scheme
            and to accept the Substitute Offer if made, in respect of
            Ordinary Shares comprising more than 50% of the voting
            rights exercisable at the Shareholders’ meeting (“Scheme
            Meeting”) convened in order for the Shareholders to
            consider and approve the special resolution to approve
            the Scheme as contemplated in section 115(2)(a) of the
            Companies Act (“Transaction Resolution”);

5.2.1.5     that each of the counterparties to a specified set of
            contracts concluded with a Group Company that has a
            change in control provision in such contract (“Material
            Counterparties”):

5.2.1.5.1     consents to the change in shareholding in Digicore
              which will result from the implementation of the
              transaction (to the extent required);

5.2.1.5.2     consents to the change in the constitution of the
              Digicore   Board  which  will   result  from  the
              implementation of the transaction (to the extent
              required); and/or

5.2.1.5.3     provides any other consent required from it by virtue
              of the entering into of the Implementation Agreement
              and/or the implementation of any of the matters
              contemplated in the Implementation Agreement,

            in order to prevent the breach, default, acceleration,
            termination or amendment of any agreement between any of
            the Material Counterparties, on the one hand, and any
            Group Company, on the other hand, or other adverse effect
            on any Group Company arising from such relationship;

5.2.1.6     that Digicore provides a written certificate, signed by a
            duly authorised Digicore director, to Novatel that, to
            Digicore’s knowledge, no Company Material Adverse Change
            (as defined in the Implementation Agreement) has
            occurred, provided that if, to Digicore’s knowledge, no
            Company Material Adverse Change has occurred immediately
            prior to the fulfilment of the other Pre-Conditions other
            than that in paragraph 5.2.1.4, Digicore shall be obliged
            to deliver such certificate;

5.2.1.7     that the Scheme Documents be approved by the TRP and (to
            the extent required) by the JSE and the Financial
            Surveillance Department of the South African Reserve Bank
            in terms of the South African Exchange Control
            Regulations (promulgated in terms of the South African
            Currency and Exchanges Act, No. 9 of 1933);

5.2.1.8     that an independent expert, appointed by the Independent
            Board, furnishes an independent expert report and “fair
            and reasonable opinion” in relation to the Scheme and the
            Substitute Offer, as required by and in compliance with
            the Takeover Regulations, confirming, among other things,
            that the Scheme Consideration to be discharged in terms
            thereof is fair and reasonable to Shareholders and that,
            if a “Comparable Offer” as contemplated in the Takeover
            Regulations is required to be made in respect of the
            Employee Options, the arrangements in respect of holders
            of Employee Options are fair and reasonable; and

5.2.1.9     that, upon receipt of the independent expert report and
            opinion contemplated in paragraph 5.2.1.8, the
            Independent Board forms the requisite opinion as required
            by and in compliance with the Takeover Regulations, on
            the basis of which the Independent Board resolves
            unanimously to recommend to Shareholders to vote in
            favour of the Scheme and (if applicable) to holders of
            Ordinary Shares to accept the Substitute Offer and, if a
            Comparable Offer is required to be made in respect of the
            Employee Options, for the holders of Employee Options to
            accept the Employee Option Offer.

5.2.2     Novatel shall be entitled in writing to Digicore to waive
          (in whole or in part), or defer fulfilment (in whole or in
          part) of the Pre-Conditions referred to in
          paragraphs 5.2.1.1, 5.2.1.2, 5.2.1.3, 5.2.1.4, 5.2.1.5,
          5.2.1.6, 5.2.1.8 or 5.2.1.9. The Pre-Condition in
          paragraph 5.2.1.7 is not capable of waiver or deferral.

5.2.3     If and to the extent Novatel should in writing defer
          fulfilment of any Pre-Condition (or part thereof), such
          Pre-Condition shall, to that extent, be a Condition of the
          Scheme as if specifically set out as such in paragraph 6
          and shall no longer be a Pre-Condition.

6.    THE SCHEME CONDITIONS

6.1     The Scheme (and to the extent applicable, subject to
        paragraph 8, the Substitute Offer) is subject to the
        fulfilment or waiver, as applicable, of the following
        Conditions by no later than the date falling on the 180th day
        after the Signature Date, or such later date as Digicore and
        Novatel agree in writing on or before the arrival of that
        day, or such other date as specified in the specific
        Condition:

6.1.1     the fulfilment of each such Conditions that arises by
          virtue of the deferral of fulfilment of a Pre-Condition(or
          part thereof) by Novatel as described in paragraph 5.2.2
          above, if any;

6.1.2     the provision by Digicore of a written certificate, signed
          by a duly authorised director of Digicore, to Novatel that,
          to Digicore’s knowledge, no Company Material Adverse Change
          has occurred, as at the date immediately prior to the
          Scheme Meeting, provided that if, to Digicore’s knowledge,
          no Company Material Adverse Change has occurred as at that
          date,   Digicore  shall   be   obliged   to  deliver   such
          certificate;

6.1.3     the approval by the requisite majority of Shareholders of
          the Transaction Resolution at the Scheme Meeting in terms
          of the Companies Act and, if the provisions of section
          115(2)(c) of the Companies Act become applicable:

6.1.3.1     the approval of the Scheme by the court; and

6.1.3.2     if applicable, Digicore not treating the Transaction
            Resolution as a nullity as contemplated in section
            115(5)(b) of the Companies Act (and Digicore agrees that
            it shall not treat the Transaction Resolution as a
            nullity without the prior written consent of Novatel);

6.1.4     in relation to any objection to the Scheme by Shareholders,
          either:

6.1.4.1     no Shareholders give notice objecting to the Scheme as
            contemplated in section 164(3) of the Companies Act and
            vote against the Transaction Resolution at the Scheme
            Meeting; or

6.1.4.2     if Shareholders do give notice objecting to the Scheme as
            contemplated in section 164(3) of the Companies Act and
            vote against the Transaction Resolution at the Scheme
            Meeting, Shareholders holding no more than 5% of all of
            the Ordinary Shares give such notice objecting to the
            Scheme as contemplated in section 164(3) of the Companies
            Act and vote against the Transaction Resolution at the
            Scheme Meeting; or

6.1.4.3     if Shareholders do give notice objecting to the Scheme as
            contemplated in section 164(3) of the Companies Act and
            vote against the Transaction Resolution at the Scheme
            Meeting in respect of more than 5% of all the Ordinary
            Shares, such Shareholders have not exercised appraisal
            rights, by giving valid demands in terms of sections
            164(5) to 164(8) of the Companies Act, in respect of more
            than 5% of all the Ordinary Shares within 30 Business
            Days following the Scheme Meeting;

6.1.5     the following regulatory approvals, clearances and
          permissions (“Clearances”) to effect and implement the
          Scheme, the Substitute Offer and the Employee Option Offer
          (collectively the “Transaction”) and to implement the
          Implementation Agreement are granted:

6.1.5.1     the approval of the Scheme Documents by the TRP and the
            issue by the TRP of a compliance certificate with respect
            to the Scheme and (as applicable) the Substitute Offer in
            terms of section 121(b) of the Companies Act;

6.1.5.2     approval of the competition authorities in terms of the
            South African Competition Act, No. 89 of 1998 (and such
            approval is no longer capable of appeal, in the absence
            of condonation);

6.1.5.3     approval of the Financial Surveillance Department of the
            South African Reserve Bank in terms of the South African
            Exchange Control Regulations (promulgated in terms of the
            South African Currency and Exchanges Act, No. 9 of 1933);

6.1.5.4     approval of the JSE, if and to the extent required;

        provided that if any condition or qualification is attached
        to such Clearance, Novatel may, by written notice to Digicore
        within 5 Business Days of the imposition of the condition or
        qualification, consent to the imposition of such condition or
        qualification, whereupon the Condition shall be deemed to
        have been fulfilled, and failing which the Condition shall be
        deemed not to have been fulfilled;

6.1.6     the Implementation Agreement has not been terminated in
          accordance with its provisions at any time prior to the
          date of the fulfilment or waiver of all the remaining
          Conditions set out in paragraphs 6.1.1 to 6.1.5 above.

6.2     Novatel shall be entitled to waive (in whole or in part) in
        writing each Condition stipulated in paragraphs 6.1.1, 6.1.2
        and 6.1.4.

6.3     The Conditions stipulated in paragraphs 6.1.3 and 6.1.6 are
        not capable of waiver.

6.4     Digicore and Novatel by agreement may waive in writing, in
        whole or in part, any Condition contemplated in clause 6.1.5,
        save for any Condition which is required to be fulfilled in
        terms of South African law or United States federal or state
        law for the implementation of the Transaction.

7.    SHAREHOLDING IN DIGICORE AND ACTING AS PRINCIPAL

7.1     Novatel currently does not hold, directly or indirectly, any
        beneficial interest in the issued share capital of Digicore
        and that it does not hold any option to purchase any shares
        in Digicore.

7.2     Novatel confirms that it (or its nominated subsidiary) is the
        ultimate prospective purchaser of the Scheme Shares and is
        acting alone and not in concert with any party.

8.    SUBSTITUTE OFFER

8.1     Should the Condition in paragraph 6.1.3 not be fulfilled or
        should the Condition in paragraph 6.1.4 not be fulfilled nor
        waived, then the Scheme will not become effective. The
        Substitute Offer will, immediately on failure of the first of
        such Conditions to fail, be deemed to have been made by
        Novatel to the holders of Ordinary Shares (other than the
        Excluded Shares) for Novatel or its nominated subsidiary to
        acquire their Ordinary Shares for a consideration of R4.40,
        subject to the maximum referred to in 5.1.1.2 (“Substitute
        Offer Consideration”) by way of an offer in terms of the
        Companies Act and Companies Regulations on the same terms and
        conditions, mutatis mutandis, as the terms and conditions of
        the Scheme and the Implementation Agreement, save that the
        Substitute Offer (if made) will not be subject to the
        Conditions set out in paragraphs 6.1.3 or 6.1.4, but shall be
        subject to an additional condition that holders of Ordinary
        Shares accept the Substitute Offer in respect of that number
        of Ordinary Shares which would result in Novatel holding 90%,
        or such lower percentage as Novatel may specify in writing to
        Digicore from time to time, of the issued and outstanding
        Ordinary Shares, which additional condition Novatel shall be
        entitled to waive (“Substitute Offer Conditions”).

8.2     The obligation of Novatel to implement the Substitute Offer
        (if it is made) is subject to the fulfilment or where
        permissible, waiver of the Substitute Offer Conditions.

8.3     The Substitute Offer, if made, will be an affected
        transaction as defined in section 117 of the Companies Act.
        The Substitute Offer will be implemented in accordance with
        the Companies Act, the Companies Regulations and will be
        regulated by the TRP.

9.    EMPLOYEE OPTION OFFER

9.1     Novatel shall, if the Pre-Conditions referred to in 5.2.1.2
        and in 5.2.1.3.1 are fulfilled, make an offer, subject to
        fulfilment of the Conditions, to holders of Employee Options
        concurrently with the Scheme or the Substitute Offer (if it
        is made) (“Employee Option Offer”) in terms of which:

9.1.1     in respect of all unvested Employee Options in respect of
          which the strike price is less than the Scheme
          Consideration or the Substitute Offer Consideration (“In
          the Money Options”) as at the date on which the Scheme is
          implemented, or if applicable, the date of final payment
          under the Substitute Offer, Novatel shall grant replacement
          share options in respect of shares in Novatel on terms
          consistent with the pricing and exchange formulae set out
          in the Implementation Agreement and which will be set out
          in the Scheme Documents; and

9.1.2     on the date on which the Scheme is implemented (or, if the
          Substitute Offer is made, the earliest date of payment
          under the Substitute Offer), Novatel shall pay for the
          benefit of each holder of an Employee Option, in respect of
          each vested In The Money Option which it holds on that
          date, an amount in cash equal to the Scheme Consideration
          or Substitute Offer Consideration less the exercise price
          of the relevant In The Money Option (with the consequence
          that no payment shall be due to such holders of an Employee
          Option, whenever exercisable, in respect of which the
          strike price is greater than the Scheme Consideration or
          the   Substitute  Offer   Consideration  (“Out  the   Money
          Options”));

9.1.3     and as a consequence of the waivers contemplated in
          5.2.1.2, all Out the Money Options shall fall away without
          compensation,

        provided that if the parties so agree, the offer contemplated
        by this paragraph 9.1 shall be made by the Company.

9.2     If the Pre-Conditions in 5.2.1.2 and 5.2.1.3.1 are not
        fulfilled but the Pre-Condition in 5.2.1.2 is waived by
        Novatel in its discretion, Novatel shall be entitled to elect
        by notice to Digicore either –

9.2.1     to grant, in respect of all the Employee Options,
          replacement share options in respect of shares in Novatel
          on terms consistent with the pricing and exchange formulae
          set out in the Implementation Agreement and which will be
          set out in the Scheme Documents and in accordance with the
          requirements of clause 25.3.2 of the Employee Option Deed,
          as a consequence of which all the Employee Options shall
          lapse; or

9.2.2       to make a Comparable Offer in respect of the Employee
            Options, on such terms as Novatel may propose and which
            are consistent with the confirmation by the TRP
            contemplated in paragraph 5.2.1.3.2.2,

      in each case subject to the fulfilment of the Conditions, and if
      either of the approaches in 9.2.1 or 9.2.2 is elected, that
      shall comprise the Employee Option Offer.

10. CASH CONFIRMATION

      The TRP has been given appropriate written confirmations as
      contemplated in Regulation 111(4) of the Companies Act
      Regulations, by way of a guarantee issued by The Standard Bank
      of South Africa Limited up to the maximum amount stated in
      5.1.1.2, that Novatel has sufficient cash resources and/or
      facilities available to meet its cash commitments to
      Shareholders in relation to the Scheme Consideration or (if
      applicable) the Substitute Offer Consideration.

11. NON-SOLICITATION AND OTHER UNDERTAKINGS

      Digicore has undertaken to Novatel that from the date of
      signature of the Implementation Agreement and ending on the date
      of implementation of the Scheme or date of payment in full under
      the Substitute Offer, or the date on which the Implementation
      Agreement or the Scheme or (if applicable) the Substitute Offer
      lapses or terminates, whichever occurs earliest (“Exclusivity
      Period”), it shall (and shall procure that all its Group
      Companies shall) –

11.1     subject to compliance by the Company with applicable law and
         regulation, negotiate and deal on an exclusive basis with
         Novatel, and refrain from soliciting, encouraging,
         initiating, entering into or continuing any talks,
         discussions, negotiations and other communications
         (“Discussions”), agreement or arrangement relating to, or
         which might reasonably be expected to lead to, a Competing
         Proposal* (for the avoidance of doubt the Company shall not
         be in breach of the provisions of this undertaking if the
         Directors engage in Discussions at any time in relation to an
         unsolicited Competing Proposal to the extent required in
         order to meet any statutory or other binding legal
         obligation, including a) those obligations set out in
         Regulation 92 or Regulation 99(4), and b) a fiduciary duty of
         directors in the context of an offer as defined in section
         117(1) of the Companies Act);

11.2     within 2 Business Days after receipt of any Competing
         Proposal, notify Novatel in writing of the details thereof
         (including details of the salient terms and conditions of,
         and the identity of the person and where applicable the
         identity of the holding company or controlling shareholders
         of that person making, the Competing Proposal, if known or
         reasonably ascertainable) and Novatel shall be entitled but
         not obliged by notice in writing to the Company to increase
         or revise its most recent offer to holders of Ordinary Shares
         so as to match or better the Competing Proposal. The Company
         shall further notify Novatel in writing within 1 Business Day
         after the date on which the Company decides for the first
         time to make any information available to a particular bona
         fide offeror or potential offeror;

11.3     conduct their operations in the ordinary course of business,
         and in this regard Digicore has provided a number of related
         undertakings in relation to the conduct of its business
         during the Exclusivity Period.

       *For purposes of the provisions of the Implementation Agreement
       referred to herein, a “Competing Proposal” is defined as “any
       approach, indication of interest, proposal or offer (whether or
       not subject to suspensive conditions and whether or not legally
       binding) i)made by a third party which is not "acting in
       concert" (as defined in the Companies Act and as determined in
       terms of the Takeover Regulations) with Novatel; and ii) which
       involves or possibly involves the acquisition of, or
       subscription for, shares comprising, or which will comprise, 5%
       or more of the issued and outstanding Ordinary Shares, or a
       change of control of any Group Company, or which involves or
       possibly involves a disposal of a material part of the business
       or assets of any Group Company, which disposal is material in
       relation to the Company on a consolidated basis”.

12. TERMINATION AND LIQUIDATED DAMAGES

12.1     The Implementation Agreement is subject to termination in
         certain circumstances set out in that agreement including but
         not limited to the non-fulfilment of the Pre-Conditions or
         the Conditions, the occurrence of a Company Material Adverse
         Change, or a material breach of the Implementation Agreement,
         provided that neither party shall be entitled to terminate
         the Implementation Agreement after the date on which the
         “finalisation date announcement” required under the JSE
         Listings Requirements is released on SENS, once all the
         Conditions are fulfilled or waived.

12.2     If Novatel should terminate the Implementation Agreement
         pursuant to certain specified breaches by Digicore, including
         a breach of the undertakings referred to in 11.1 and 11.2
         above, at a time that a Competing Proposal has been made,
         which Competing Proposal is successfully implemented, Novatel
         shall be entitled to payment by Digicore in an amount of
         R9 500 000(without prejudice to its other rights and its
         rights to prove direct damages in excess of that amount).
         This amount represents less than 1% of the aggregate Scheme
         Consideration.

13. IRREVOCABLE UNDERTAKINGS

       Irrevocable undertakings have been given to vote in favour of
       the Transaction Resolution and to accept the Substitute Offer
       (if made) by the following Shareholders:

         Shareholder       Number       of Ordinary         Ordinary
                           Ordinary Shares Shares    held   Shares
                           held            as a % of the    held as a
                                           Scheme Shares    % of the
                                                            aggregate
                                                            issued
                                                            Ordinary
                                                            Shares

         Stellar Capital   47 692 770       19.81%          19.18%
         Partners
         Limited

         Riviera Trust /   38 631 842       16.04%          15.53%
         NH Vlok

         An undisclosed    24 729 425       10.27%          9.94%
         Shareholder

         Investec Wealth   7 000 000        2.91%           2.81%
         and Investment
         (a division of
         Investec
         Services
         Proprietary
         Limited)

         Rational          26 021 776       10.81%         10.46%
         Expectations
         Proprietary
         Limited

         Total             144 075 813      59.84%         57.92%


14. INDEPENDENT BOARD, OPINION AND RECOMMENDATIONS

14.1   In accordance with the Companies Regulations, the Independent
       Board, comprised of independent non-executive directors, has
       been established by the Digicore Board to evaluate the
       Scheme.

14.2   The Independent Board will appoint an independent expert
       acceptable to the TRP to provide the Independent Board with
       external advice in connection with the Scheme and the
       Substitute offer, in the form of a fair and reasonable
       opinion as required by and in compliance with the Takeover
       Regulations. The substance of the external advice and the
       opinion of the Independent Board on the Scheme will be set
       out in the Scheme Documents.

15. FURTHER DOCUMENTATION AND SALIENT DATES

15.1   Further details of the Transaction will be included in the
       Scheme Documents that will, subject to the fulfilment of the
       Pre-Conditions, be posted in due course to Shareholders. The
       Scheme Documents will, inter alia, also contain a notice of
       the Scheme Meeting, a form of proxy and a form of surrender
       and transfer.

15.2   The Scheme will become effective and be implemented following
       the fulfilment of the Pre-Conditions and the Conditions. The
       parties estimate that the date on which the Scheme Documents
       will be posted to Shareholders will be 31 July 2015. The
       salient dates in relation to the Scheme will be published in
       due course.

16. INDEPENDENT BOARD RESPONSIBILITY STATEMENT

    The Independent Board accepts responsibility for the information
    contained in this announcement which relates to Digicore and
    confirms that, to the best of its knowledge and belief, such
    information which relates to Digicore is true and the
    announcement does not omit anything likely to affect the
    importance of such information.

17. NOVATEL BOARD RESPONSIBILITY STATEMENT

    The board of directors of Novatel accepts responsibility for the
    information contained in this announcement which relates to
    Novatel and confirms that, to the best of its knowledge and
    belief, such information which relates to Novatel is true and
    the announcement does not omit anything likely to affect the
    importance of such information.

18. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS

    Shareholders are referred to Digicore’s cautionary announcement
    dated 7 May 2015 and to its subsequent updated detailed
    cautionary announcement dated 5 June 2015, and are advised that,
    whereas the terms of the Scheme and Substitute Offer have now
    been announced, caution is no longer required to be exercised by
    Shareholders when dealing in their Digicore securities.

Centurion
19 June 2015

PSG Capital Proprietary Limited: Transaction Advisor and Sponsor to
Digicore

Cliffe Dekker Hofmeyr: Legal Advisor to Digicore

Reed Hope Philips Thomas & Cadman Inc: Legal Advisors to Novatel in
South Africa

Paul Hastings LLP: Legal Advisor to Novatel

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