Wrap Text
Disposal Of Shareholding In Btsa And Withdrawal Of Cautionary Announcement
AFRICAN EQUITY EMPOWERMENT INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: AEE ISIN: ZAE000195731
("AEEI" or "the Company")
DISPOSAL OF SHAREHOLDING IN BTSA AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
Shareholders of AEEI (“Shareholders”) are advised that on
26 September 2023, Kilomix Investments Proprietary Limited
(“Kilomix”), a wholly-owned subsidiary of AEEI, entered into a share
repurchase agreement (“Disposal Agreement”) with BT Communications
Services South Africa Proprietary Limited ("BTSA"), a subsidiary of
BT Limited (“BT”), in terms of which BTSA will acquire 30 000 ordinary
shares, constituting 30% of the issued share capital of BTSA owned
by Kilomix (“BTSA Shares”), for an aggregate amount of R290 million
(“Repurchase Price”) (“the Disposal”).
2. Background to and rationale for the Disposal
Shareholders are referred to the announcements released on SENS on
5 November 2008 and 18 December 2008 regarding the acquisition by
AEEI of the BTSA Shares.
BT and Kilomix own 70% and 30%, respectively, of the issued share
capital of BTSA.
In terms of the shareholders agreement entered into on or about
4 November 2008 between BT, BTSA, Kilomix and AEEI (“Shareholders
Agreement”), BT has an option (“BT Call Option”) for it or its nominee
to purchase the BTSA Shares held by Kilomix upon the occurrence of
certain events.
Shareholders are further referred to the cautionary announcement
released on SENS on 4 June 2021, and to the subsequent renewal of
cautionary announcements, the last of which was published on
21 September 2023, regarding the dispute between Kilomix and BT over
the BT Call Option and which dispute has been the subject matter of
an arbitration under the rules of the International Chamber of
Commerce International Court of Arbitration (“ICC Arbitration”).
The board of directors of AEEI (“the Board”) is of the view that,
regardless of Kilomix’s prospects of success in the ICC Arbitration,
the shareholder relationship with BT has broken down irretrievably
and, being a minority shareholder in BTSA, Kilomix (and, indirectly,
AEEI) would have minimal influence over the business of BTSA going
forward. Therefore, a decision was taken to preserve Shareholder
value by unlocking cash reserves for growth, and to limit further
advisory and legal costs.
Accordingly, Shareholders are hereby advised that BT, BTSA, Kilomix
and AEEI (“the Parties”) have agreed to settle the dispute
(“Settlement”) and consequently, on 26 September 2023, entered into
a settlement agreement (“Settlement Agreement”), the salient terms
of which are set out in paragraph 3 below.
3. Settlement Agreement
The Parties have agreed to the Settlement on the basis that BTSA will
repurchase, and Kilomix will sell, the BTSA Shares held by Kilomix
(“Repurchase Shares”) for the Repurchase Price, subject to the
Disposal Agreement becoming unconditional in accordance with its
terms by not later than 19 December 2023, or such later date as the
Parties may determine in writing (“Settlement Condition Precedent
Fulfilment Date”), in accordance with the terms and subject to the
conditions set out in the agreement (“Settlement Condition
Precedent”).
The effective date of the Disposal will be immediately following the
fulfilment of the Settlement Condition Precedent.
The Settlement Agreement constitutes the full and final settlement
of any and all claims and disputes between the Parties, including
any other company in either the Sekunjalo Group (“Sekunjalo”) or the
BT Group (“BT Group”), of whatsoever nature and howsoever arising
between the Parties.
In terms of the Settlement Agreement, amongst other things:
- Kilomix undertakes to withdraw the action instituted in the High
Court of South Africa, Gauteng Local Division, Johannesburg, under
case no. 2023/066603, against BTSA, BT and certain other
parties(“High Court Litigation”); and
- each Party, undertakes (and each Party shall procure that each
company in the BT Group and the Sekunjalo Group, respectively,
undertakes) not to institute any further claims of whatsoever
nature against the other Party (which includes reference to the
BT Group and the Sekunjalo Group, and their respective employees,
directors and prescribed officers) arising from or relating to the
subject matter of the ICC Arbitration and/or the High Court
Litigation and/or matters related thereto.
4. Nature of the BTSA business
BTSA is the main operating entity of multinational, BT, in South
Africa and the regional head office for the Sub-Sahara Africa
region. BTSA supports multi-national ICT outsourcing contracts and
provides local data and voice outsourcing solutions, global frame
and mulitiprotocol label switching services.
5. Conditions Precedent to the Disposal and effective date
The Disposal is subject to the fulfilment by not later than
19 December 2023, or such later date as the parties to the Disposal
Agreement may determine in writing (“Disposal Condition Precedent
Fulfilment Date”), of the requisite regulatory and shareholder
approvals (“Disposal Condition Precedent”).
The effective date of the Disposal will be the second business day
following the fulfilment of the Disposal Condition Precedent
(“Disposal Effective Date”).
6. Financial Information
The value of the net assets of BTSA as at 28 February 2023, being
the date of the Company’s most recent interim financial results, was
R1 344 656 000.
The profits attributable to BTSA for the six months ended 28 February
2023 was R141 710 000, based on the interim financial results for
the Company.
The aforementioned interim financial statements are unreviewed and
unaudited, and were prepared in terms of IFRS.
7. Application of the sale proceeds
The Board is yet to decide on how the sales proceeds will be utilised.
Currently, various applications of the proceeds are being considered
which include but are not limited to the declaration of a special
dividend. Shareholders will be updated on how the proceeds will be
utilised once the Board has made a definitive decision.
8. Classification of the Disposal and further documentation
The Disposal constitutes a category 1 transaction as contemplated
in section 9 of the Listings Requirements of the JSE Limited.
Accordingly, a circular containing full details of the Disposal
including, inter alia, a notice to convene a general meeting of
Shareholders in order to consider and, if deemed fit, to pass, with
or without modification, the resolutions necessary to approve and
implement the Disposal, will be distributed to Shareholders in due
course.
The Disposal is not regarded as a disposal of the greater part of
the assets or undertaking of the Company in terms of section 112 of
the Companies Act, 2008 (Act 71 of 2008), as amended (“Companies
Act”), and therefore does not constitute an "affected transaction"
as defined in section 117(1)(c)(i) of the Companies Act.
9. Withdrawal of cautionary announcement
Shareholders are hereby advised that as the particulars of the
Disposal have been set out in this announcement, caution is no longer
required to be exercised by Shareholders when dealing in the
Company’s securities.
Cape Town
28 September 2023
Joint Sponsor
Vunani Sponsors
Joint Sponsor
Merchantec Capital
Date: 28-09-2023 10:45:00
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