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PNC
PNC
PNC - Pinnacle Technology Holdings Limited - Repurchase of Pinnacle shares from
Amabubesi Technology Holdings (Proprietary) Limited ("Amabubesi") and withdrawal
of cautionary announcement
PINNACLE TECHNOLOGY HOLDINGS LIMITED
Registration number 1986/000334/06
Share Code: PNC
ISIN: ZAE000022570
("Pinnacle" or "the Company")
REPURCHASE OF PINNACLE SHARES FROM AMABUBESI TECHNOLOGY HOLDINGS (PROPRIETARY)
LIMITED ("AMABUBESI") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement released on SENS on Wednesday, 13
April 2011 and in the press on Thursday, 14 April 2011, shareholders are
advised that Pinnacle has entered into an agreement with Amabubesi on 3 May
2011 ("the Agreement"), in terms of which Pinnacle will repurchase 5 815
363 of its own ordinary shares at R5.50 per share out of its available
share premium and Pinnacle Holdings Limited, a subsidiary of Pinnacle will
acquire 14 184 637 ordinary shares in Pinnacle at R5.50 per share, both
from Amabubesi, in terms of section 48 of the Companies Act, 71 of 2008
("the Act"), amounting to a total of 20 million shares ("Sale Shares")
purchased for and on behalf of the Pinnacle Group of Companies ("the
Group"), subject to the conditions precedent below (collectively "the
Transaction"). The effective date of the Transaction will be the first
business day after the date on which the last of the conditions precedent
in the Agreement are fulfilled or waived, as the case may be. This is
expected to occur once the shareholders have approved the Transaction by
way of special resolution in a shareholders` meeting to be held on or about
24 June 2011.
2. RATIONALE FOR THE TRANSACTION
Amabubesi is desirous of selling its entire holdings of 37 281 647 ordinary
shares in Pinnacle due to the fund in which these shares were owned having
reached its investment horizon. Pinnacle holds a pre-emptive right over
these shares giving it an effective right of first refusal should Amabubesi
decide to sell these shares. Amabubesi has offered a price of R5.50 per
share which is 19.9% below its average traded price over the 30 business
days prior to concluding the Agreement. If the Group was to have
completed this transaction on 1 July 2010 the resultant reduction in issued
shares (net of treasury shares) would have had the effect of increasing the
pro-forma earnings per share by 7.4% for the six months ended 31 December
2010. For these reasons the board of directors of Pinnacle ("the Board")
decided to acquire as much of Amabubesi`s offer that could be funded out of
the Group`s current funding capacity without restricting the Group`s
funding needs that are expected to arise out of future growth. The Board
accordingly decided to repurchase 20 million shares after considering cash
flow and balance sheet forecasts prepared by each of its subsidiaries and
consolidated to Group level.
The Board also decided to retain so much of the shares as treasury shares
as will increase the quantity of shares in Pinnacle that the Group owns
after the Transaction to 10% of Pinnacle issued share capital after the
Transaction and to cancel the remainder out of share premium. The treasury
shares so acquired will be retained for strategic purposes including the
possibility of securing a new Black Equity Empowerment partner in the
future.
An independent rating agency has calculated the effect of the loss of
Amabubesi as a black shareholder to Pinnacle upon the Group`s level 4 B-
BBEE rating and the Company is confident that improvements already achieved
in other B-BBEE scorecard elements will ensure that the Group`s Level 4
rating will be maintained at the next audit.
3. TERMS OF THE TRANSACTION
The purchase consideration for the Transaction amounts to R110 000 000 of
which R78 015 503.50 will be guaranteed by Pinnacle ("the Guarantee
Agreement") in respect of the 14 184 637 shares that are being purchased by
Pinnacle Holdings Limited. A repurchase price of R5.50 per ordinary share
has been agreed for the Transaction, which represents a discount of 19.9%
to the 30 business day volume weighted average price of R6.87 up to and
including 29 April 2011, being the last business day prior to the signature
date of the Agreement.
The Transaction is subject to the following unfulfilled conditions
precedent:
3.1 by not later than 17h00 on 20 May 2011, the members of Amabubesi have
passed all such resolutions as may be required to approve and
implement the Transaction, including such special resolutions as may
be required in terms of the Act, and such resolutions have, to the
extent legally necessary, been filed with the Companies and
Intellectual Property Commission;
3.2 by not later than 17h00 on 4 May 2011, the Board has approved and
ratified the entering into of the Agreement;
3.3 by not later than 17h00 on 4 May 2011, the board of directors of
Pinnacle Holdings Limited has approved and ratified the entering into
of the Agreement;
3.4 by no later than 17h00 on the 4 May 2011, 45% (forty-five percent) of
the shareholders of the Company have signed irrevocable undertakings
to vote in favour of any resolutions as may be required to approve and
implement the Transaction;
3.5 by not later than 30 June 2011, the members of Pinnacle have passed
all such resolutions as may be legally necessary to, approve and
implement the Transaction, approve and/or authorise the provision by
Pinnacle of financial assistance to Pinnacle Holdings Limited in terms
of the Agreement and/or the Guarantee Agreement in connection with
and/or for purposes of the Transaction, approve and/or authorise the
acquisition by the Group of the Sale Shares, including such special
resolution as may be required in terms of the Act; and
3.6 by no later than 30 June 2011, the resolutions referred to in
paragraph 3.5 above, to the extent legally necessary, have been filed
with the Companies and Intellectual Property Commission.
It is intended that the Transaction will be funded out of existing cash
resources.
Following the implementation of the Transaction, application will be made
to the JSE Limited for the cancellation and delisting of the 5 815 363
shares repurchased by Pinnacle.
Pinnacle Holdings Limited and the Group controlled Pinnacle Share Purchase
Scheme Trust will hold a total of 18 131 645 shares in Pinnacle as treasury
shares after the Transaction. At that point in time this will represent
10% of the reduced number of issued shares in Pinnacle, after the
repurchase and cancellation of the 5 815 363 shares repurchased by
Pinnacle.
4. PRO-FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the
Transaction on Pinnacle. These pro forma financial effects are the
responsibility of the Company`s directors and are presented for
illustrative purposes only to show how the Transaction may have affected
Pinnacle`s financial performance and position for the six months ended 31
December 2010. The accounting policies of Pinnacle have been used in
calculating the pro-forma financial effects.
The pro forma financial effects which, due to their nature, may not provide
a fair reflection of Pinnacle`s financial performance or position after the
Transaction, are based on the assumptions that:
- For the purpose of calculating earnings per share, headline earnings
per share and fully diluted headline earnings per share, the
Transaction was implemented at start of business on 1 July 2010; and
- For the purpose of calculating net asset value per share and net
tangible asset value per share, the Transaction was implemented on 31
December 2010.
Before the After the %
Transaction Transaction Change
Earnings per share (cents per share) 48.0 51.5 7.4.
Headline earnings per share (cents per 48.0 51.5 7.4.
share)
Fully diluted headline earnings (cents 48.0 51.5 7.4.
per share)
Net asset value per share (cents per 331.08 303.67 (8.3)
share)
Net tangible asset value per share 286.94 254.12 (11.4)
(cents per share)
Number of shares in issue net of 183 328 163 328 (10.9)
treasury shares (`000)
Weighted average shares in issue 180 949 160 949 (11.1)
(`000)
Notes and assumptions:
a. The "Before" information has been extracted, without adjustment, from
Pinnacle`s published unaudited results for the six months ended 31
December 2010.
b. The Transaction is expected be funded fully out of existing cash
resources. An interest rate of prime rate minus 4% has been assumed
for interest forfeited on the cash resources, which is expected to be
of a continuing nature.
c. Dividends payable on the 14 184 637 shares purchased by Pinnacle
Holdings Limited as treasury shares will be retained in the Group and
which means that on a consolidated basis effectively no dividend will
have been paid on these shares.
d. R289 200 has been provided as estimated Transaction costs in respect
of the shares that Pinnacle will repurchase, cancel and delist.
Transaction costs estimated at R705 300 in respect of the shares to be
purchased by Pinnacle Holdings Limited and retained as treasury shares
will be capitalised as costs of the acquisition of those shares.
Both are once off by nature.
5. CATEGORY
The Transaction is classified as a specific repurchase of securities in
terms of section 5.67 of the JSE Listing Requirements from a related party
as defined in section 10.1(b) of the JSE Listings Requirements, as
Amabubesi is a material shareholder holding 19.9% of the issued share
capital of the Company before the Transaction. As the price at which the
securities are purchased is not at a premium to the average traded price
over the 30 days prior to concluding the Agreement, a fairness opinion is
not required in terms of the JSE Listings Requirements.
6. CIRCULAR
A circular, providing further information on the Transaction and containing
a notice of general meeting and a form of proxy will be posted to
shareholders on or about 25 May 2011.
7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
As details of the Transaction have been provided in this announcement,
shareholders are advised that they no longer need to exercise caution when
dealing in their Pinnacle securities.
Midrand
3 May 2011
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Attorneys for the Group
Tugendhaft Wapnick Banchetti and Partners
Attorneys for Amabubesi
Cliffe Dekker Hofmeyr Inc
Reporting Accountants
BDO South Africa Inc
Date: 03/05/2011 16:30:02 Produced by the JSE SENS Department.
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howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS. |
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