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AFROCENTRIC INVESTMENT CORPORATION LIMITED - Acquisition of DENIS

Release Date: 13/12/2019 09:00
Code(s): ACT     PDF:  
 
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Acquisition of DENIS

AFROCENTRIC INVESTMENT CORPORATION LIMITED

(Incorporated in the Republic of South Africa)
(Registration number: 1988/000570/06)
JSE Code: ACT
ISIN: ZAE000078416
(“AfroCentric” or “the Company”)

ACQUISITION OF DENTAL INFORMATION SYSTEMS HOLDINGS PROPRIETARY LIMITED
(“DENIS”) BY AFROCENTRIC FROM EOH ABANTU PROPRIETARY LIMITED (“THE SELLER”)

1.     INTRODUCTION

       AfroCentric shareholders (“Shareholders”) are advised that AfroCentric and its subsidiary,
       AfroCentric Healthcare (RF) Proprietary Limited (the “Purchaser”), have entered into a share
       sale agreement (the “Agreement”) with the Seller to acquire all of the shares in Denis at a
       purchase consideration of R170 million on the terms and conditions set out below (the
       “Acquisition”).



2.     RATIONALE AND BACKGROUND TO THE ACQUISITION

       Afrocentric is invested in a number of healthcare services segments in both the public and
       private healthcare markets in South Africa, with expanding operations and related applications
       in wholesale pharmaceutical supply, national chronic medication distribution and disease
       management in addition to its medical scheme administration and managed care services
       division, Medscheme, with its complementary co-ordinating business units.

       Denis provides healthcare technology capabilities that offers dental benefit and dental claims
       risk management solutions and has the following subsidiaries, (collectively “Denis Group”):

       2.1     Dental Information Systems Proprietary Limited;

       2.2    Dental Insurance Administrators Proprietary Limited, which has dental benefit
              management agreements with certain medical schemes (collectively “Insurance
              Agreements”);

       2.3     Denis Underwriting Managers Proprietary Limited; and

       2.4    Riverbend Trade and Invest 38 Proprietary Limited, which owns the following
              properties:

              - Section Number 12 in the scheme known as The Forum, Montague Gardens
                Milnerton Municipality, Cape Town, Western Cape; and
              - Portion 1 of Erf 4172, Garsfontein Extension 3 Township, Registration Division JR,
                Province of Gauteng.

       The Acquisition is consistent with AfroCentric’s growth objectives in the health sector.

3.     THE ACQUISITION

3.1   Effective date of the Acquisition

       The Acquisition will become effective on the completion date, which will be subject to the date
       of fulfilment of the conditions precedent detailed in paragraph 3.4 herein, but shall not be later
       than 31 May 2020, unless the parties so agree (the “Completion Date”).

3.2    The Seller:

       The seller of the Denis Group is EOH Abantu Proprietary Limited, a wholly owned subsidiary
       of EOH Holdings Limited, a company listed on the stock exchange operated by JSE Limited
       (“EOH”).

3.3    The Consideration

      The purchase consideration is the amount of R170 million cash which will be payable as
      follows:
3.3.1 The amount of R153.5 million shall be paid in cash to the Seller on the Completion Date; and
3.3.2 The amount of R16.5 million (the "Escrow Amount") shall be paid into escrow on the
      Completion Date to be paid to the Seller after expiry of a period of 18 months from the
      Completion Date, subject to any claims that may be lodged by the Purchaser against the Seller
      in terms of the Agreement.

3.4   Conditions precedent

       The Acquisition is subject to, inter alia, fulfilment or waiver, on or before 30 April 2020, of the
       following outstanding conditions precedent:


       •      regulatory approvals of the Acquisition including by, and to the extent that such
              approval may be required, the competition authorities;
       •      the consent of the counterparties to certain Insurance Agreements for the Acquisition;
       •      key employees of the Denis Group entering into employment contracts with the
              Purchaser;
       •      full and final settlement of the intra-group loan funding between the Denis Group and
              EOH and its subsidiaries as well as the full and final release of the Denis Group from
              all obligations that each of them may have pursuant to such EOH intra-group loan
              funding;
       •      the entry into an interim services agreement between EOH Abantu and Denis
              regulating the provision of certain shared services (including, inter alia, payroll and IT
              services) by EOH Abantu to the Denis Group for a transitional period of 12 months;
              and
       •      the entry into an escrow agreement between EOH Abantu, AfroCentric and an escrow
              agent governing the terms and conditions upon which the escrow agent shall hold the
              Escrow Amount.

3.5    Warranties and indemnities

       The Seller has given the Purchaser certain warranties and indemnities that are usual in
       transactions of this nature. In terms of the Agreement payment of the purchase consideration
       by the Purchaser in terms of paragraph 3.3 above is guaranteed by AfroCentric.



4.     PROFITS AND NET ASSET VALUE ATTRIBUTABLE TO DENIS

       The post-tax profit attributable to the business of the Denis Group, as extracted from the most
       recent financial results of the Seller for the year ended 31 July 2019, was R34 816 301. The
       value of the consolidated net assets attributable to the Denis Group as at 31 July 2019 was
       R145 424 209.

5.     CATEGORISATION

       The Acquisition constitutes a Category II transaction in terms of the JSE Limited Listings
       Requirements and does not require shareholder approval.




Johannesburg
13 December 2019


Sponsor
Sasfin Capital (a member of the Sasfin Group)


Legal Advisor
Glyn Marais Incorporated

Date: 13-12-2019 09:00:00
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