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EOH HOLDINGS LIMITED - Strategic disposal of Data World Group

Release Date: 17/10/2019 16:35
Code(s): EOH     PDF:  
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Strategic disposal of Data World Group

(Incorporated in the Republic of South Africa)
(Registration number 1998/014669/06)
JSE share code: EOH ISIN: ZAE000071072
(“EOH” or “the Company”)


1. Introduction

   1.1. The board of directors of EOH is pleased to announce that EOH Mthombo (Pty) Ltd (“EOH
        Mthombo” or the “Seller”), a wholly-owned subsidiary of EOH, has entered into a share
        purchase agreement (“SPA”) with Terra Analytics (Pty) Ltd (“the Purchaser”) on
        16 October 2019, in terms of which EOH Mthombo will dispose of its 100% interest in the issued
        share capital and the corresponding shareholder claims (“Sale Equity”) in each of Data World
        (Pty) Ltd (“Data World”), Xcallibre (Pty) Ltd (“Xcallibre”) and Evaluations Enhanced
        Property Appraisals (Pty) Ltd (“EEPA”) (together “Data World Group”) for a consideration
        consisting of cash and the relief of outstanding liabilities, as further set out in paragraph 3 
        below (“the Transaction”).

   1.2. Data World Group (which was acquired in July 2017) operates mainly in the public sector and
        provides the following services:

        1.2.1. Data World is an ICT company that provides geospatial systems, land administration
               systems and other software solutions to public sector clients.
        1.2.2. EEPA provides property intelligence solutions, including property valuations/appraisals,
               consulting, development and project management services in South Africa.

        1.2.3. Xcallibre is a technology provider, offering data capturing and processing solutions in
               South Africa.

2. Rationale and application of the proceeds

   The Transaction is in line with EOH’s debt restructuring strategy which includes the disposal of a
   select number of businesses which have limited synergies with EOH.

   The cash proceeds received will primarily be utilised to reduce debt. The termination of the
   outstanding liabilities will aid liquidity.

3. Salient terms of the Transaction

   3.1. The aggregate consideration for the Transaction is R101.8 million comprising:
        3.1.1. a cash consideration of R40 million (“Cash Consideration”), payable by the Purchaser as

          R10 million upon the fulfilment or waiver of the suspensive conditions; and

          R30 million in three equal tranches of R10 million on 31 December 2019,
                            31 March 2020 and 30 June 2020, and

        3.1.2. the relief of any outstanding obligations by the Seller carried in the Seller’s accounts 
               in the amount of approximately R59.96 million as at 31 July 2019 and the release of the 
               Seller of any obligation to issue any further shares, being 141 266 EOH ordinary shares 
               as at 31 July 2019 in terms of the initial acquisition agreement concluded in July 2017.

   3.2. Should the Purchaser dispose of Data World Group within three years following the conclusion
        of the Transaction (“Future Disposal”), the Purchaser will pay the Seller an amount equal to
        10% of the net proceeds received by the Purchaser on the Future Disposal in excess of the Cash
        Consideration or R10 million, whichever is the higher. Should the Purchaser make payment in
        full of the amount set out in paragraph above on or before 31 December 2019, this
        obligation will cease to be of any further force or effect.

   3.3. The agreement contains representations and warranties which are standard for a transaction of
        this nature.

4. Suspensive conditions

   4.1. The Transaction is subject to the fulfilment or waiver (if applicable) of the following suspensive
        conditions on or before 31 October 2019 with a long stop date of 18 December 2019 to the extent
        that an extension is required:

        4.1.1. the Seller obtaining the written unconditional and irrevocable consent of its lenders to
               implement the Transaction, as required in terms of any loan facility agreements entered into
               between the Seller and its lenders;

        4.1.2. EOH (or any of its group companies) entering into a sub-lease agreement for certain
               premises occupied by Data World Group for the period until May 2020;

        4.1.3. the Seller executing a cession in securitatem debiti in favour of the Purchaser, in terms of
               which it cedes and assigns, in security all of its rights, title and interest in and to all 
               shares in, and claims against, Data World Group, in security for the performance of its 
               obligations to the Seller in terms of the SPA; and

        4.1.4. the declaration and payment by Data World Group to the Seller of a dividend in the amount
               of R15 000 000.

   4.2. The completion date of the Transaction is with reference to the date on which the last suspensive
        condition is fulfilled or waived (“Fulfilment Date”). If the Fulfilment Date occurs on or before
        the 25th calendar day of any calendar month, the completion date will be the last business day
        of such calendar month. If the Fulfilment Date occurs after the 25th calendar day of any calendar
        month, the completion date will be the fifth business day after the Fulfilment Date.

5. Financial information

   5.1. The value of the net assets of Data World Group as at 31 July 2019 was R87 791.

   5.2. The net profit after tax for Data World Group for the 12 months ended 31 July 2019 was
        R13 279 971.

   The above financial information has been extracted from the provisional reviewed condensed
   consolidated results of EOH for the year ended 31 July 2019 which was published on
   15 October 2019. The financial information was prepared in terms of the Company’s accounting
   policies and IFRS.

6. Categorisation

   The Transaction is classified as a Category 2 transaction in terms of the JSE Listings Requirements
   and is, accordingly, not subject to the approval of EOH shareholders.

17 October 2019

Java Capital

Corporate Advisor
Delta Partners

Legal Advisor
Webber Wentzel

Overall strategic and lead advisor

Date: 17/10/2019 04:35:00
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