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SEBATA HOLDINGS LIMITED - Disposal of Interest in Subsidiaries

Release Date: 15/05/2020 16:48
Code(s): SEB     PDF:  
 
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Disposal of Interest in Subsidiaries

Sebata Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/003821/06)
Share code: SEB ISIN: ZAE000260493
(“Sebata” or “the Group”)


DISPOSAL OF INTEREST IN SUBSIDIARIES


1. INTRODUCTION

   The board of directors of Sebata (“the Board”) is pleased to inform shareholders that Sebata has
   entered into a sale of shares and claims agreement (“Agreement”) with Growth Capital Partners
   Proprietary Limited (“Growth Capital” or “the Purchaser”), the “Management Sellers” (being Colin
   Thomas Thornton (“Colin”), Brian Philip Timperley (“Brian”), Louis Alberto Jardim (“Louis”) and Aaron
   John Thornton (“Aaron”), the “Exiting Sellers” (being David William John Collins (“David”) and James
   Harold Roney (“James”)), Nerdworks Proprietary Limited (“Nerdworks”) and Turrito Networks
   Proprietary Limited (“Turrito”) for the disposal of the “Sale Shares” and “Sale Claims” to the Purchaser
   for the purchase price detailed in paragraph 2.3 below (“Disposal”).
   
   The Management Sellers, Exiting Sellers and Sebata are collectively referred to hereinafter as the
   “Sellers”.

   The “Sale Shares” comprise:

   o   the “Nerdworks Sale Shares” being 6 457 ordinary no par value shares in the issued share capital
       of Nerdworks representing 100% of its issued share capital; and
   o   the “Turrito Sale Shares” being 1 200 ordinary no par value shares in the issued share capital of
       Turrito representing 100% of its issued share capital,
       each owned by the Sellers in the following proportions:

      Seller             Percentage of Sale Shares          Nerdworks Sale Shares      Turrito Sale Shares
      Sebata                                73.20%                          4 727                      880
      Colin                                 10.31%                            665                      124
      Brian                                  6.50%                            420                       78
      Louis                                  6.70%                            433                       80
      Aaron                                  1.72%                            111                       21
      David                                  1.21%                             78                       13
      James                                  0.35%                             23                        4
                                           100.00%                           6 457                   1 200

   The “Sale Claims” comprise any and all claims which the Sellers may have against Nerdworks and
   Turrito (collectively referred to as the “Companies”) howsoever arising.

   The directors of Growth Capital are Ronald den Besten and Timothy Page.

   Notwithstanding the “Completion Date” of the Disposal being the later of the first business day after the
   fulfilment of the condition precedent detailed in paragraph 2.4 below or 25 May 2020, the effective date
   of the Disposal is 1 April 2020 (“Effective Date”).

2. THE DISPOSAL

   2.1   Nature of the businesses of the Companies

         2.1.1    Nerdworks trading as Dial a Nerd is primarily focused on small businesses, professional
                  practices and educational institutions, while simultaneously assisting end
                  consumers/home users with on-site and off-site support. With over 20 years’ experience
                  in the managed services space, Dial a Nerd provides a vast range of products and
                  services including network architecture design, fully managed IT services, backup
                  disaster recovery, cloud services, security and anti-virus solutions. The company also
                  offers remote monitoring and service level agreements, providing unlimited remote and
                  telephonic support.

         2.1.2    Turrito is an aggregator of every Tier1 telecommunication network in South Africa and
                  Africa, capable of delivery of all networks, and all solutions, from a single provider.
                  Customers enjoy open access to every connectivity network, hosting facility, cloud
                  solution and related telecommunication service from a single provider. As a significant
                  partner to the major network providers throughout South Africa, Turrito is able to deliver
                  vast economies of scale and competitive pricing through to customers.

   2.2   Rationale for the Disposal

         Nerdworks and Turrito have been part of the Group for a number of years and have added
         tremendous value both in terms of growth and services offered within the Group. While the Board
         had not actively been looking for a buyer, it was approached by the Purchaser, and the
         Management Sellers, with the offer to purchase the respective shareholdings in Nerdworks and
         Turrito. The Board believes that the transaction unlocks value in the assets which do not fit into
         the current portfolio of investments and believes that the management team and the Purchaser
         are best placed to take over the assets.

   2.3   Purchase Price

         2.3.1    The Purchase Price payable by the Purchaser to the Sellers for the Sale Shares and the
                  Sales Claims is the aggregate of the amounts set out in paragraphs 2.3.1.1, 2.3.1.2 and
                  2.3.1.3 below subject to adjustment and payable in cash as follows:

                  2.3.1.1    to Sebata, the purchase price of R24 132 185.00, payment of which will be
                             reduced by setting off the money owed by Sebata to the Companies, being an
                             amount of R9 614 339.77;

                  2.3.1.2    to the Management Sellers, R8 055 050.00 payable to the Escrow Agent, being
                             attorneys Girard Hayward Inc.;

                  2.3.1.3    to the Exiting Sellers, R484 950.00.

         2.3.2    The amounts comprising the Purchase Price will be paid into the relevant bank accounts
                  of the Sellers, save for the Management Sellers, whose amount will be paid into the
                  Escrow Agent’s trust account and dealt with in accordance with the escrow agreement to
                  be entered into between the Purchaser and the Management Sellers.

         2.3.3    The Purchase Price shall be allocated as follows:

                  2.3.3.1    as to the Sale Claims, the face value thereof; and

                  2.3.3.2    as to the balance, the Sale Shares.

   2.4   Condition Precedent

         The Disposal is subject to the fulfilment, by the later of 22 May 2020 or the day falling three days
         after the delivery by the auditors of the Companies of the unqualified audited consolidated annual
         financial statements of each of the Companies for the year ended 31 March 2020 (“Effective
         Date Accounts”) to the Sellers and the Purchaser, and the Purchaser being satisfied, and having
         notified the Sellers in writing within the aforementioned period, that it is satisfied with the result of
         its due diligence investigations of the Companies.

    2.5   Application of the sale proceeds

          It is intended that net proceeds of the Disposal will be used to reduce Group debt.

    2.6   Restraint

          In accordance with the Agreement, the Sellers have undertaken to the Companies and the
          Purchaser and their successors-in-title that they will not, during a period of two years from the
          Completion Date, offer employment to, or employ, or cause employment to be offered, in a
          competitive activity, to any person who is employed in the businesses conducted by the
          Companies as at the Completion Date.

3. FINANCIAL INFORMATION

   The audited value of the net assets of Nerdworks as at 31 March 2019 is R7.2 million. The audited profit
   after tax for Nerdworks for the year ended 31 March 2019 is R1.4 million.
   The audited value of the net assets of Turrito as at 31 March 2019 is R22.1 million. The audited profit
   after tax for Turrito for the year ended 31 March 2019 is R2.8 million.
   The financial statements were prepared in accordance with International Financial Reporting Standards
   and the Companies Act, 2008 (Act 71 of 2008), as amended.

4. CLASSIFICATION OF THE TRANSACTION

   The Transaction is categorised as a Category 2 transaction in terms of the Listings Requirements of the
   JSE Limited.


Johannesburg
15 May 2020

Sponsor
Merchantec Capital

Date: 15-05-2020 04:48:00
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