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Disposal of African Union Communications Proprietary Limited (“Aucom”) and Repurchase of Shares
ALARIS HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/011142/06)
Share code: ALH
ISIN: ZAE000201554
(“Alaris” or “the Company”)
DISPOSAL OF AFRICAN UNION COMMUNICATIONS PROPRIETARY LIMITED (“Aucom”) AND
REPURCHASE OF SHARES
1. INTRODUCTION
1.1. Shareholders are advised that terms have been agreed between Alaris and
the management team of the Company’s subsidiary, Aucom (“Aucom
Management”), for the sale by Alaris to Aucom Management of the
Company’s entire 100% shareholding in Aucom, in exchange for 30 000 000
Alaris shares held by Aucom Management at a consideration of R2.00 per
share (“Disposal and Repurchase”).
1.2. In addition, it is proposed that the Company repurchases a further
10 000 000 Alaris shares from Aucom Management at a consideration of
R2.00 per share (“Specific Repurchase”).
1.3. The Disposal and Repurchase and the Specific Repurchase (collectively,
the “Transaction”) are subject to the fulfilment of various conditions
precedent, as detailed in paragraph 3 below (“Conditions Precedent”),
including the conclusion of detailed legal agreements.
2. RATIONALE
2.1. In line with its strategy to focus on development, manufacturing and
selling of RF (Radio Frequency) products to global niche markets, the
board has decided to sell its Aucom subsidiary to management.
2.2. The subsidiaries, Alaris Antennas and COJOT, are aligned with the
group’s strategic direction. In contrast to this, the Aucom subsidiary
is a value-added reseller, which provides end-to-end integrated system
solutions to the broadcasting and satellite communication industry in
sub-Saharan Africa.
2.3. Aucom’s business is project-based with long sales cycles and its revenue
is very dependent on project implementation schedules. It is critical
for Aucom to be BBBEE Compliant for business in South Africa and such
structures can be achieved more easily outside a listed environment.
2.4. The Transaction will further align Alaris’ offerings with its value
proposition of continuously evolving its intellectual property base to
design products for specific customer needs.
2.5. Each subsidiary should enjoy fully committed resources to realise their
full potential. With this in mind and based on the assessment of the
available market size, the Alaris board believes that the Transaction
will free up much needed capacity to enable future international growth
and acquisitions aligned to the core strategy. The group intends to
make further acquisitions in due course. Being a client-centric
organisation with clients based worldwide, the group needs to expand
its global footprint in order to be closer to its clients.
3. CONDITIONS PRECEDENT
3.1. The Transaction will be subject to the fulfilment of various Conditions
Precedent, including:
3.1.1. that detailed legal agreements be concluded in relation to the
Transaction;
3.1.2. that, by 20 January 2017, the Transaction be approved by the Alaris
board of directors;
3.1.3. that, by 20 January 2017, Alaris obtains signed written irrevocable
support from its large shareholders;
3.1.4. that Alaris obtains such shareholder and regulatory approvals as may
be required, including those approvals required under the JSE Listings
Requirements and the Companies Act, No. 71 of 2008 (“Companies Act”);
and
3.1.5. that Aucom declares and pays a dividend of R8 million to Alaris.
3.2. Subject to the Conditions Precedent being fulfilled, the Transaction
will take effect, as between the parties, on 1 February 2017.
4. DETAILS REGARDING AUCOM
As indicated above, Aucom is a value-added reseller which provides end-
to-end integrated system solutions to the broadcasting and satellite
communication industry in sub-Saharan Africa. Aucom’s profit after tax
for the previous financial year ended 30 June 2016 amounted to
R18.6 million, while its net asset value as at 30 June 2016 amounted to
R33.6 million.
5. GENERAL
5.1. The proposed sale by the Company of it shareholding in Aucom constitutes
a category 2 related party disposal for Alaris in terms of the JSE
Listings Requirements and will require shareholder approval. In
addition, as the Transaction will involve the acquisition by the Company
of more than 5% of its issued share capital, the repurchases forming
part of Transaction will require shareholder approval in terms of the
Companies Act, by way of a special resolution.
5.2. A circular detailing the Transaction, its terms and its conditions will
be sent to shareholders in due course. The circular will contain a
notice convening a general meeting of shareholders, at which meeting
shareholders will be requested to consider and vote on the resolutions
required to approve and implement the Transaction.
Johannesburg
23 December 2016
Transaction adviser and transaction sponsor
PSG CAPITAL
Sponsor
MERCHANTEC CAPITAL
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