Xantium - Update on the merger between Xantium and MICT, update on the
acquisition of Waymark and further cautionary
Xantium Technology Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2003/012583/06)
Share code: XAN & ISIN code: ZAE000057386
("Xantium" or "the company")
UPDATE ON THE MERGER BETWEEN XANTIUM AND MICT SOLUTIONS GROUP (PROPRIETARY)
LIMITED, UPDATE ON THE ACQUISITION OF THE REMAINING 49% OF WAYMARK CONSULTING
(PROPRIETARY) LIMITED, AND FURTHER CAUTIONARY ANNOUNCEMENT
UPDATE ON THE MERGER
As referred to in Xantium"s SENS announcement of 3 October 2005, Xantium
proposes, subject to conditions, to merge with MICT Solutions Group
(Proprietary) Limited ("MICT") by acquiring all its issued shares and to acquire
a majority shareholding in Motoma Mithratech (Proprietary) Limited
("Mithratech").
The MICT merger agreement has been amended so that Xantium will not acquire an
existing shareholder loan account against MICT and additional debt of R3 million
will be raised in MICT, in consideration for which the purchase price payable by
Xantium will be reduced by 5 million shares. Xantium has now further agreed to
purchase the remaining minority interest in Mithratech from ES3 Corporate
Finance (Proprietary) Limited, Leonidas Skylakis, the Suikerbos Trust and
Pharoah Limited.
Accordingly, Xantium now proposes to acquire the entire issued share capital of
MICT for R78 million to be settled by the delivery of 130 million Xantium shares
at 60 cents a share and the entire issued share capital of Mithratech for a
price not exceeding R18 million, to be determined on an earn-out formula and to
be settled by the delivery of up to 30 million Xantium shares at 60 cents per
share. In terms of the earn-out formula:
* on implementation, Xantium will issue 15 million shares to the Mithratech
vendors, provided that if the profit after tax ("PAT") of Mithratech for the
twelve months ending June 2006 is less than R3 million, the Mithratech vendors
will be obliged, for every rand of such shortfall, to return five of the
consideration shares received to Xantium or its nominee;
* Xantium will issue 7.5 shares to the Mithratech vendors for every rand by
which Mithratech"s PAT for the twelve months ending June 2007 is greater than
R3.6 million, up to a maximum of 15 million additional consideration shares.
All consideration shares are subject to trading restrictions and pre-emptive
rights in favour of Xantium.
The implementation of the merger remains subject to the fulfilment of the
following conditions:
* the requisite regulatory approvals including that of the JSE Limited, the SRP
and the Competition authorities;
* approval by shareholders of Xantium and a waiver of any mandatory offer which
would otherwise be required to be made as a result of the merger;
* the conclusion of employment and restraint of trade agreements by key
executives of MICT and Mithratech.
In compliance with the requirements of the SRP, the board has obtained
appropriate external advice from PKF (Jhb) Inc. ("PKF") in regard to the terms
of the merger. The report from PKF concludes that the terms of the merger are
both fair and reasonable to shareholders.
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE MERGER
The unaudited pro forma financial effects of the merger are provided for
illustrative purposes only to illustrate the effects of the merger on the groups
published results for the year ended 31 May 2005. The unaudited pro forma
financial effects are the responsibility of the company"s directors. Due to the
nature of the unaudited pro forma financial information, it may not give a fair
picture of the group"s financial results and position after the merger.
Year end Pro forma Percentage
results year end change
before the results (%)
merger after the
(cents) merger
(cents)
Headline earnings per share 7.1 5.5 (22.5)
Earnings per share 7.2 5.6 (22.2)
Net asset value per share 36.32 49.17 35.4
Net tangible asset value per (16.18) (15.87) 1.9
share
Number of shares in issue and 150 664 280 664
to be issued (`000)
Notes:
1. the "Year end results before the merger" column reflects Xantium"s earnings
per share, headline earnings per share, net asset value per share and net
tangible asset value per share as published in the year end results.
2. the "Pro forma year end results after the merger" column reflects the effects
of the merger on the earnings per share and headline earnings per share based on
the following assumptions:
* the merger was effective 1 June 2004;
* the inclusion of MICT"s profit after tax based on MICT"s audited results for
the twelve month period ended 28 February 2005;
* the inclusion of Mithratech"s loss after tax for a twelve month period based
on Mithratech"s audited results for the 14 month period ended 28 February 2005
on the assumption that the loss was earned evenly over the 14 month period;
* interest would have been incurred at a rate of 10,5% on R5.5 million of debt
being raised in MICT and paid to Motoma prior to the implementation of the
merger;
* taxation at the rate of 29%;
* the issue 130 million shares in respect of the acquisition of MICT and no
additional shares for the acquisition of Mithratech as calculated in terms of
the agreed earn out formula.
3. the "Pro forma year end results after the merger" net asset value per share
and net tangible asset value per share are based on the following assumptions:
* the merger was effective 31 May 2005;
* settlement of the purchase consideration by the issue of 160 million shares at
60 cents per share, equating to R96 million;
* the raising of R95 million of goodwill based on the difference between the
purchase consideration and the net assets acquired and after taking into account
R1.85 million of advisors costs; and
* 295 million shares in issue.
ACQUISITION OF THE REMAINING 49% OF WAYMARK CONSULTING (PTY) LIMITED
As Xantium"s acquisition of the remaining 49% of Waymark Consulting
(Proprietary) Limited, referred to in its SENS announcement of 3 October 2005,
is a related party transaction, it is subject to the approval of shareholders
(excluding the related parties) to be sought at a general meeting referred to
below.
The board briefed PKF to analyse the terms of the Waymark acquisition and to
prepare a report on whether or not it considers such terms to be fair and
reasonable insofar as Xantium shareholders are concerned. The report from PKF
concludes that the terms of the Waymark acquisition are both fair and reasonable
to shareholders.
CIRCULAR AND REVISED LISTINGS PARTICULARS
A circular containing details of these transactions and related matters and
incorporating a notice of general meeting of shareholders, together with a
revised listings particulars, will be posted to shareholders shortly.
CHANGES TO THE BOARD OF DIRECTORS
Subject to the approval of shareholders, on implementation of the MICT merger
and on implementation of the acquisition of Simeka Consulting (Proprietary)
Limited (as announced on SENS on 30 September 2005), the following appointments
to the Xantium board will be made:
* Robinson Ramaite, Barry Henry Fraser and Tozamile Botha will be appointed non-
executive directors;
* Mohammed Varachia will be appointed as an executive director and joint chief
executive officer alongside James Murray;
* Surendranath Singh will be appointed as an executive director and chief
financial officer;
* Madoda Papiyana will be appointed as an executive director and head of group
human resources; and
* Kamal Ramsingh will be appointed as an executive director.
These appointments bring to the board significant business skills and expertise
in the IT industry.
FURTHER CAUTIONARY
With reference to the cautionary announcement of 30 September 2005, shareholders
are advised that the due diligence investigation of Sifikile Procurement
Services (Proprietary) Limited is on-going. Accordingly, shareholders are
advised to continue to exercise caution when dealing in the company"s shares,
pending further announcements in this regard.
Warning: The listing of the ordinary shares in the company is on the ALTX.
Shareholders are advised of the risks of investing in a company listed on the
ALTX. Shareholders are advised that the JSE does not guarantee the viability or
the success of a company listed on the ALTX. In terms of the JSE Listings
Requirements a designated advisor has to be retained by the company. The
designated advisor is required to, inter alia, attend all board meetings held by
the company to ensure that all JSE Listings Requirements and applicable
regulations are complied with, approve the financial director of the company and
guide the company in a competent, professional and impartial manner. If the
company fails to retain the designated advisor it must make arrangements to
appoint a new designated advisor within 10 business days, failing which the
company faces suspension of trading of its securities. If a designated advisor
is not appointed within 30 days of its suspension the company faces the
termination of its listing without an offer to minority shareholders.
Rosebank
21 November 2005
Designated advisor, corporate advisor and legal advisor to Xantium
Java Capital (Proprietary) Limited
Corporate advisor to MICT and Mithratech
Java Capital (Proprietary) Limited
Independent Expert
PKF (Jhb) Inc.
Auditors and reporting accountants to Xantium
PKF (Jhb) Inc.
Reporting accountants to Mithratech
PKF (Jhb) Inc.
Legal advisor to MICT and Mithratech
Alex Evan Attorneys Inc
Reporting accountants to MICT
Gobodo Inc.
Date: 21/11/2005 01:46:30 PM Produced by the JSE SENS Department
|
Back to SENS list
