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Update Regarding The Elite Transaction
AFRICAN DAWN CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/020520/06)
Share code: ADW
ISIN Code: ZAE000060703
(“Afdawn” or “the Company”)
UPDATE REGARDING THE ELITE TRANSACTION
1. INTRODUCTION
1.1. Shareholders of Afdawn are referred to the announcements released
by the Company on SENS on 7 December 2015 and 22 January 2016
relating to the proposed disposal by Afdawn of its 51% shareholding
in Elite Group Proprietary Limited, a wholly-owned subsidiary of
Afdawn (“Elite”) to Dzothe Finance Solutions Proprietary Limited
(“Dzothe”)(“Original Elite Transaction”). Shareholders are hereby
advised that the parties to the Original Elite Transaction have
entered into a further sale of shares and claims agreement (“New
Agreement”) amending the terms of the Original Elite Transaction
(“New Elite Transaction”).
1.2. In terms of the New Elite Transaction, it is proposed that Afdawn
will -
1.2.1. sell 100% of the issued share capital of Elite, 100% of the
issued share capital of African Dawn Property Transfer 1
Proprietary Limited (“PTF1”) and 100% of the issued share capital
of African Dawn Property Transfer 2 Proprietary Limited (“PTF2”)
(collectively referred to as the “Sale Shares”) to Dzothe; and
1.2.2. cede all claims of whatsoever nature and however arising which
Afdawn may have against Elite, PTF1 and PTF2 (collectively
referred to as the “Sale Claims”) to Dzothe,
with the sale of the Sale Shares and the cession of the Sale Claims
to occur as one indivisible transaction upon payment of the
purchase consideration.
1.3. The New Elite Transaction also entails the cession by PTF2 of all
claims it may have against Almika Investments 81 Proprietary
Limited and Candlestick Park Investments Proprietary Limited to
Afdawn for a consideration amount of R10 900 000 which amount will
be set off against the existing Sale Claims.
2. BUSINESS OF ELITE
Elite is a credit provider company in South Africa, which has been
in operation for over 20 years with offices in Gauteng, North-West
Province, Free State and Kwa-Zulu Natal (“Elite Group”).
The established business units of Elite Group consist of:
- micro and personnel finance through 12 front-offices and pay-
roll loans through its call-center; and
- collections in support of its loan book. Elite Group runs a
collection department which deals with recoveries, tracing,
collections and all related legal work.
3. RATIONALE
The New Elite Transaction will establish a new black empowered
financial services business, Dzothe, with Elite’s technology forming
the basis of its lending platform. The New Elite Transaction allows
Afdawn to exit its investment in Elite in furtherance of Afdawn’s
vision to become an active investment holding company.
The proceeds of the New Elite Transaction will be used to reduce
liabilities, fund ongoing commitments and potential investments of
the Company.
4. EFFECTIVE DATE
In terms of the New Agreement, the effective date will be the 5th
business day following the date upon which the last of the conditions
precedent, as set out in paragraph 5 below, are fulfilled or waived
(“Effective Date”).
5. CONDITIONS PRECEDENT
The New Elite Transaction is subject to the fulfilment, or waiver,
of the following conditions precedent (“Conditions Precedent”),
namely that –
5.1. a new settlement agreement is concluded between Sandown Capital
Proprietary Limited (“Sandown”), Dzothe, Afdawn and Elite on or
before 10 July 2016 (“Sandown Settlement”);
5.2. the shareholders and the board of directors of Dzothe approve the
terms and conditions of the New Agreement and the other
arrangements contemplated in the New Elite Transaction on or before
15 July 2016;
5.3. the board of directors of Afdawn approve the entering onto of the
New Agreement and the other arrangements contemplated in the New
Elite Transaction on or before 15 July 2016;
5.4. the shareholders of Afdawn approve the New Elite Transaction at a
general meeting on or before 15 September 2016; and
5.5. Dzothe provides Afdawn with a letter of comfort, to Afdawn’s
satisfaction, that Dzothe can finance its obligations contemplated
by the New Elite Transaction on or before 15 July 2016.
6. PURCHASE CONSIDERATION
6.1. The purchase consideration payable by Dzothe for the Sale Shares
and Sale Claims amounts to R20 000 000 (“Purchase Consideration”)
which Purchase Consideration shall be secured and paid by Dzothe
as follows –
6.1.1. a deposit in the amount of R2 000 000, of which 30% will be
immediately non-refundable and a further 20% to become non-
refundable after 15 July 2016, shall be paid to Afdawn on or
before 30 June 2016;
6.1.2. an amount of R10 000 000 shall be paid to Afdawn on the Effective
Date; and
6.1.3. the balance of R8 000 000 to remain outstanding in the form of
a vendor loan (“Vendor Loan”).
6.2. In terms of the New Elite Transaction, Dzothe shall provide Afdawn
with a guarantee for the repayment of the Vendor Loan, which loan
shall bear interest at 15% per annum and be repayable by no later
than 12-months from the Effective Date.
7. FINANCIAL INFORMATION
The total value of the net liabilities of Elite, PTF1 and PTF2,
which is the subject of the New Elite Transaction, was R31 446 730
as at 29 February 2016.
The profits attributable to the net assets of Elite, PTF1 and PTF2,
which is the subject of the New Elite Transaction, was R1 881 184
as at 29 February 2016.
8. OTHER RELEVANT INFORMATION
Save for set out in this announcement, the parties have provided
warranties to each other that are standard to a transaction of this
nature.
9. CATEGORISATION
The New Elite Transaction will constitute a category 1 transaction
in terms of the JSE listings Requirements. Accordingly, a circular
will be distributed to Afdawn Shareholders in due course providing
further information relating to the New Elite Transaction and
convening a general meeting of shareholders in order to obtain
shareholder approval (“Circular”).
10. POSTING DATE OF CIRCULAR
Shareholders are advised that the JSE has granted the Company a
further extension in relation to the distribution date of the
Circular until 31 August 2016.
11. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated
27 June 2016 advising shareholders of the further negotiations in
respect of the Original Elite Transaction.
Shareholders are hereby advised that the relevant particulars
relating to the New Elite Transaction have been fully disclosed in
this announcement.
Accordingly, caution is no longer required to be exercised by
shareholders when dealing in their securities.
28 June 2016
Cape Town
Sponsor
PSG Capital
Date: 28/06/2016 02:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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