Further to the cautionary announcement released on the Stock Exchange News Service of the JSE Ltd. ("JSE") on 14 April 2014 ("the Announcement"), Reunert shareholders are hereby advised that Nashua Mobile (Pty) Ltd. ("Nashua Mobile"), a wholly-owned subsidiary of Reunert, has entered into a sale agreement ("Sale Agreement") with Altech Autopage Cellular (Pty) Ltd. ("Autopage") on 26 May 2014 in terms of which, inter alia, Nashua Mobile will dispose of its Cell C subscriber base to Autopage ("the Autopage Transaction" or "the Disposal"), on the terms and conditions set out below.
Autopage's business is that of a mobile cellular service provider for South African mobile network operators, including Mobile Telephone Networks (Pty) Ltd. ("MTN"), Vodacom (Pty) Ltd. ("Vodacom") and Cell C (Pty) Ltd. ("Cell C").
Autopage is a subsidiary of Allied Electronics Corporation Ltd., a public company listed on the JSE.
Business of Nashua Mobile
As indicated in the Announcement, Nashua Mobile's business is that of a mobile cellular service provider for South African mobile network operators, including Cell C.
Nashua Mobile currently has a service provider agreement with Cell C in relation to its Cell C subscriber base.
Rationale for the transaction
Reunert shareholders are referred to the Announcement wherein Reunert disclosed that Nashua Mobile had entered into sale agreements with each of MTN ("MTN Transaction") and Vodacom ("Vodacom Transaction") for the disposal of its MTN and Vodacom subscriber bases.
The rationale for the Autopage Transaction is the same as for the MTN Transaction and the Vodacom Transaction set out in the Announcement.
The effective date of the Transaction
In terms of the Sale Agreement, Nashua Mobile's Cell C subscriber base will transfer to Autopage on the third day after the second bill run after the date of fulfilment or waiver, as the case may be, of the last of the conditions precedent to the Autopage Transaction ("Take- On Date").
Disposal consideration
The consideration to be received by Nashua Mobile from Autopage for the Disposal is approximately R91.5 million plus VAT (the "Autopage Disposal Consideration").
The Autopage Disposal Consideration is subject to a formula-based adjustment. An adjustment will be made in the event that the revenue associated with Nashua Mobile's Cell C subscriber base, upon the expiry of a six calendar month period after the Take-On Date, is materially different from the revenue attributed to it by Autopage in its valuation of this base. The Autopage Disposal Consideration will not, however, exceed R95.75 million plus VAT.
The Autopage Disposal Consideration will be payable by Autopage to Nashua Mobile as follows:
50% of the Autopage Disposal Consideration will be payable on the Take-On Date; and
the balance of the Autopage Disposal Consideration will be payable within 5 business days after the expiry of a six calendar month period after the Take-On Date.
Conditions precedent
The Autopage Transaction is subject to the fulfilment or waiver of the following conditions precedent:
the unconditional approval of the Competition Authorities having been granted in terms of the Competition Act, 1998 or, if such approval is subject to any conditions, on conditions acceptable to Nashua Mobile, insofar as the conditions may affect Nashua Mobile, and acceptable to Autopage, insofar as the conditions may affect Autopage;
the MTN Transaction becoming unconditional in accordance with its terms; and
the Vodacom Transaction becoming unconditional in accordance with its terms.
Application of the disposal proceeds
Similar to the MTN Transaction and the Vodacom Transaction, the Autopage Disposal Consideration will be applied as follows:
to settle liabilities of Nashua Mobile;
thereafter, to support the growth strategy of Reunert; and
thereafter, for the payment of dividends and/or the repurchase of Reunert shares.
Pro forma financial effects of the Autopage Transaction on Reunert
The pro forma financial effects of the Autopage Transaction are be less than 3% (and therefore not significant) and are therefore not required to be disclosed in terms of the JSE Listings Requirements. In light of paragraph below, Reunert shareholders are referred to Reunert's pro forma financial results as disclosed in the Announcement (as corrected by the subsequent announcement released by Reunert on 15 April 2014).
Categorisation of the disposal and shareholder approval
Sections 9.11 to 9.13 of the JSE Listing Requirements require aggregation of the disposal considerations receivable in respect of the MTN Transaction, the Vodacom Transaction and the Autopage Transaction ("the Combined Transaction") when determining the percentage ratio for the purposes of categorising the Autopage Transaction.
On an aggregated basis, the Combined Transaction is classified as a Category 2 transaction in terms of Section 9 of the JSE Listings Requirements and does not require shareholder approval.
Further announcement
Shareholders will be notified once the last of the conditions precedent to the Autopage Transaction has been fulfilled or waived, as the case may be.
Reunert Limited is a diversified group organized around 3 areas of activity:
- electric engineering services (51.9% of net sales): design, manufacturing, installation and maintenance of electric cables, fiber optics, transformers, low, medium and high voltage switching systems, etc. primarily for the public services, mining industry and real estate construction sectors;
- telecommunication services (22.2%): design and development of office solutions and vocal communication systems, and networking of data for professionals, individuals, government administrations and parastatal companies;
- design and manufacturing of defense systems and equipment (25.8%): communication tactic systems, terrestrial and naval research systems, fuses, artillery products, etc.;
- other (0.1%).
Net sales are distributed geographically as follows: South Africa (70.8%), Africa (15.1%), Asia (5.6%), Europe (4.9%), Australia (1.9%) and Americas (1.7%).
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