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Disposal of Dental Information Systems Holdings Proprietary Limited
EOH HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/014669/06)
JSE share code: EOH ISIN: ZAE000071072
(“EOH”)
DISPOSAL OF DENTAL INFORMATION SYSTEMS HOLDINGS PROPRIETARY LIMITED
1. Introduction
1.1. Shareholders are advised that EOH Abantu Proprietary Limited (“EOH Abantu”), a wholly-
owned subsidiary of EOH, has entered into a sale of shares agreement
(“Sale of Shares Agreement”) with Afrocentric Health (RF) Proprietary Limited (“the
Buyer”), a subsidiary of AfroCentric Investment Corporation Limited (“AfroCentric”), in
terms of which EOH Abantu will dispose of all of its shares in Dental Information Systems
Holdings Proprietary Limited (“Denis”) to the Buyer on such terms that it will receive total value
of R250,000,000 (“the Transaction”).
1.2. Denis, together with its subsidiaries (“the Denis Group”) was acquired by EOH in 2012 to
provide EOH with healthcare technology capability and dental claims risk management as well
as dental insurance intellectual property.
2. Rationale for the Transaction and application of proceeds
2.1. The sale of The Denis Group is in line with EOH’s stated strategic intent of selling non-core
assets as it seeks to right-size the organisation. AfroCentric is a black-owned, diversified
investment holding company with a presence in the healthcare industry through a number of
healthcare assets, including its ownership of Medscheme, a medical scheme administrator and
managed care organisation. The Denis Group business is aligned with AfroCentric’s strategic
growth objectives and the Transaction is considered a compelling opportunity for Denis
employees.
2.2. The cash consideration received by EOH Abantu will primarily be utilised to reduce debt which
is consistent with EOH’s objective of creating a fit-for-purpose capital structure.
3. Salient terms of the Transaction
3.1. EOH Abantu is disposing all of its shares in Denis to the Buyer for a purchase consideration of
R170,000,000 (the “Purchase Price”).
3.2. Prior to the completion date of the Transaction (as determined in accordance with paragraph 4.2
below), Denis shall be entitled to distribute a cash dividend of R80 000 000 to EOH Abantu, in
its capacity as the sole shareholder of Denis (“the Permitted Dividend”). The Purchase Price,
together with the Permitted Dividend, will result in EOH Abantu receiving total value of R
250,000,000.
3.3. The payment of the Purchase Price by the Buyer to EOH Abantu (including the Escrow Amount)
is guaranteed by AfroCentric.
3.4. An amount equal to R16,500,000 (“Escrow Amount”) (being a portion of the Purchase Price)
shall be held in escrow by an escrow agent as security for the payment by EOH Abantu to
AfroCentric for any claim which AfroCentric may have against EOH Abantu for a breach of the
warranties given by EOH Abantu to AfroCentric in terms of the Sale of Shares Agreement.
3.5. The Escrow Amount will be held by the escrow agent for the above mentioned purpose for a
period of 18 months from the completion date (“Escrow Period”).
3.6. All interest accrued on the Escrow Amount during the Escrow Period shall be for the benefit of
EOH Abantu, and upon expiry of the Escrow Period (provided that no claim has been made by
AfroCentric) the Escrow Amount and all interest accrued thereon, shall be paid by the escrow
agent to EOH Abantu.
3.7. The Sale of Shares Agreement contains warranties and indemnities that are customary 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 30 April 2020, or such later date as EOH Abantu and AfroCentric may
agree to:
4.1.1. the applicable Competition Authority unconditionally approving the Transaction, or, if
any conditions are imposed, that the party on whom such conditions are imposed accepts
such conditions;
4.1.2. the counterparties to Denis’s material agreements providing written and unconditional
consent to the Transaction (and the resultant change of control of the Denis Group) in
accordance with the provisions of the material agreements to which they are parties to;
4.1.3. the settlement of all intra-group loan funding between the Denis Group and EOH Group,
as well as the release of the Denis Group from all obligations arising from such intra-
group loan funding;
4.1.4. the termination of all suretyships provided by the Denis Group to EOH Group lenders in
respect of loans granted by EOH's lenders to the EOH Group;
4.1.5. new employment contracts being entered into by three key employees of Denis;
4.1.6. the Buyer delivering copies of resolutions of its shareholders authorising it to enter into
the Transaction, as required in terms of the Buyer’s memorandum of incorporation;
4.1.7. the entry into an interim services agreement between EOH Abantu and Denis regulating
the provision of certain shared services by EOH Abantu to the Denis Group for a
transitional period of 12 months. These include inter alia, payroll, IT and insurance
services;
4.1.8. EOH Abantu providing AfroCentric with copies of updated tax clearances certificates in
respect of each member of the Denis Group; and
4.1.9. 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.
4.2. The completion date of the Transaction is determined 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 last business day of the month
following the calendar moth in which the Fulfilment Date occurred.
5. Financial information
5.1. The value of the consolidated net assets of the Denis Group at 31 July 2019 was R145,424,209.
5.2. The profit after tax attributable to the net assets of the Denis Group for the 12 months ended
31 July 2019 was R34,816,301.
5.3. The above financial information has been extracted from the audited results of EOH for the year
ended 31 July 2019 which were prepared in terms of EOH’s accounting policies and
International Financial Reporting Standards.
6. Update on EOH 2019 disposal processes
The Group set a target of achieving R1 billion in consideration from disposals for the 2019 calendar
year. EOH has exceeded this target and as at 13 December 2019, has entered into agreements with a
cumulative value in excess of this amount.
7. Categorisation
The Transaction is classified as a Category 2 transaction in terms of the Listings Requirements of the
JSE Limited and is, accordingly, not subject to the approval of EOH shareholders.
13 December 2019
Sponsor
Java Capital
Financial Advisor and Transaction Sponsor
The Standard Bank of South Africa Limited
Legal Advisor
Webber Wentzel
Overall Strategic and lead advisor to EOH
Rothschild & Co
Date: 13-12-2019 09:00:00
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