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Sale of 51.1% in Tellumat (Pty) Ltd to Masimong Technologies (Pty) Ltd
STELLAR CAPITAL PARTNERS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/015580/06)
Share code: SCP ISIN: ZAE000198586
("Stellar Capital" or the "Company")
SALE OF 51.1% IN TELLUMAT (PTY) LTD TO MASIMONG TECHNOLOGIES (PTY) LTD
1. INTRODUCTION AND RATIONALE
Stellar Capital is pleased to advise shareholders that it has entered into an agreement on 19 May 2016
(“the Agreement”) to dispose of 51.1% of the ordinary issued shares in Tellumat (Pty) Ltd (“Tellumat”),
its diversified electronics and communications subsidiary, to Masimong Technologies (Pty) Ltd
(“Masimong Technologies”) for an aggregate consideration of R180 352 941 (the “Transaction”).
Tellumat is rated under the ICT Sector Codes for BEE purposes which Sector Codes specifically encourage
51%+1 ownership. Tellumat’s key government and parastatal customers have also indicated their
intended additional support for Tellumat subsequent to obtaining this ownership level.
Masimong Technologies, a wholly-owned subsidiary of Masimong Group Holdings (Pty) Ltd (“Masimong
Group”), have a dual strategy of value growth and empowerment and are able to provide empowered
strategic and operational leadership to support growth and sustainability. The Transaction will
accordingly enhance the BEE status of Tellumat, allowing the company to unlock contracts and improve
profitability.
The Transaction is expected to be implemented on the first business day after the fulfilment of the
conditions precedent set out in paragraph 5 below (the “Effective Date”).
2. TERMS OF THE TRANSACTION
The terms of the Transaction are as follows:
2.1. Masimong Technologies will acquire 99 253 unencumbered and freely transferable Tellumat
shares from Stellar Capital for a total consideration of R180 352 941 (the “Consideration”).
2.2. The Consideration is subject to a proportionate downward adjustment in the event that the entry
valuation exceeds 7x the normalized EBITDA of Tellumat for the 12 month period ending 30 June
2017.
2.3. The Consideration will be vendor funded by Stellar Capital via the subscription for 180 353
redeemable preference shares in Masimong Technologies with a face value of R1 000 per
preference share (“Vendor Funding”). Masimong Technologies will actively seek to refinance the
Vendor Funding as soon as possible after the Effective Date.
3. THE BUSINESS OF TELLUMAT
Tellumat provides innovative technology solutions and services to the ICT, defence, energy and
transportation sectors. Tellumat has offices in Cape Town and Gauteng, with core capabilities in the
following four areas:
- Integrated ICT solutions;
- Defence and security;
- Air traffic management; and
- Advanced manufacturing.
4. THE BUSINESS OF MASIMONG
Masimong Technologies is a newly formed company which is a wholly-owned subsidiary of Masimong
Group. Masimong Group is a diversified, black-controlled investment company which owns a range of
interests across various sectors including mining and mining services, mineral agglomeration, industrial
chemicals, environmental solutions, financial services, agriculture and media. Masimong Group’s
strategic investments include, amongst others, Anchor Capital Ltd, Liviero (Pty) Ltd and Rolfes Ltd.
Masimong Group focuses on value growth and empowerment – identifying, investing in and supporting
compelling business opportunities as well as providing empowered, strategic and operational leadership
to support the growth and sustainability of its investments.
Masimong Group is owned and controlled by Mike Teke. Neither Masimong Technologies nor Masimong
Group are related parties to Stellar Capital.
5. CONDITIONS PRECEDENT
The Transaction is subject to and conditional upon the following conditions being fulfilled or waived, if
applicable, within 60 days from 18 May 2016 or such extended period as may be agreed between the
parties:
5.1. Stellar Capital board approval;
5.2. Masimong Technologies board approval;
5.3. The Vendor Funding becoming unconditional in accordance with its terms;
5.4. The parties adopting, by way of a special resolution, a new Tellumat memorandum of
incorporation;
5.5. The parties entering into a new Tellumat shareholders agreement; and
5.6. The Competition Authorities unconditionally (or on conditions that are acceptable to Stellar
Capital) and irrevocably approving the Transaction in terms of the Competition Act 89 of 1998.
6. WARRANTIES AND RESTRAINTS
In addition to warranties that are usual for a transaction of this nature, the Transaction requires that
Masimong Technologies is, as at the Effective Date and on an ongoing basis thereafter, black owned and
controlled.
In terms of the Transaction, Masimong Group and Masimong Technologies undertake that they will not
invest into, carry out any activity or engage in any undertaking that competes with Tellumat without
obtaining prior written consent from Tellumat.
7. FINANCIAL INFORMATION OF TELLUMAT
As per Tellumat’s audited annual financial statements as at 30 September 2015, Tellumat had recorded
the following:
- Revenue of R550 946 000;
- Profit before interest, equity accounted investments and tax of R30 035 000; and
- Net assets of R368 834 000.
8. JSE IMPLICATIONS
The Transaction is regarded a Category 2 transaction in terms of the Listings Requirements of the JSE
Limited.
Johannesburg
20 May 2016
Sponsor: Rand Merchant Bank (A division of First Rand Bank)
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