Allied Electronics Corporation Limited : Altron disposal by Altech of interest in Liquid
January 20, 2014 at 09:31 am
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Altron disposal by Altech of interest in Liquid
10 January 2014 16:41
Effective 28 February 2013 Altech concluded an agreement with Liquid, in terms of which Altech acquired 8.6% of Liquid's issued share capital in exchange for Altech's interests in its East African network assets and the cash subscription of USD16.5 million. At that time, the 8.6% equity stake was valued at USD50 million (R454 million at an exchange rate of R9.07 to the USD).
Altron shareholders are advised that Altech, an indirectly wholly owned subsidiary of Altron, has exercised its put option and has entered into an agreement with, inter alia, Econet Wireless Global Ltd. ("Econet") to dispose of its 8.6% equity interest in Liquid for a cash consideration of USD55 million (the "disposal"). The disposal is subject to approval by the Altron board.
Notwithstanding the disposal by Altech of its 8.6% equity interest in Liquid and the subsequent termination of the Liquid shareholders' agreement between, inter alia, Altech and Econet, those provisions of the shareholders and other agreements which were intended to survive the termination of the Liquid shareholders' agreement will remain in full force and effect.
Nature of business
Liquid is an independent telecommunications provider for international, voice, internet and data traffic, supplying fibre, satellite and international carrier services to fixed and mobile telecommunications operators, internet service providers and enterprises in developing countries. Liquid operates and owns one of Africa's most extensive fibre optic networks spanning over 13,000 kilometres, which provides services to customers in Kenya, Uganda, Rwanda, Zambia, Zimbabwe, Botswana, Democratic Republic of Congo, Lesotho and South Africa.
Rationale for the disposal
Following the delisting of Altech and the creation of the Altron Telecommunications, Multi- media and Information Technology division (Altron tmt), both the Altron and Altech boards no longer consider Altech's 8.6% equity interest in Liquid to be core to the ongoing operations of the Altron group;
The cash consideration from the disposal will be used to reduce the Altron group's net debt position following the scheme of arrangement between Altron and Altech, completed on 19th August 2013; and
Notwithstanding the disposal, the Altron group will continue to explore areas of common commercial interest and co-operation with the Econet/Liquid group in Africa.
Consideration
The disposal consideration is a cash consideration of USD55 million (R588 million at an exchange rate of R10.69 to the USD) payable by Econet to Altech on 28 February 2014, subject to Altron board approval. This consideration will give rise to a profit on disposal of R134 million before tax, which will be treated as a capital item and will fall outside of headline earnings.
Condition precedent to the disposal
The disposal is subject to approval by the Altron board by 21 January 2014 (or such later date as may be agreed by the parties in writing).
Financial effects
Before and After the disposal
Basic EPS from total operations (cents) -- 82; 119
Diluted basic EPS from total operations (cents) -- 81; 118
HEPS (cents) -- 8;2 85
DHEPS (cents) -- 81; 84
NAVPS (cents) -- 1 131; 1 154
NTAVPS (cents) -- 608; 631
Categorisation of the disposal
The disposal has been categorised as a category 2 transaction in terms of section 9.5(a) of the JSE Listings Requirements.
Altron Limited is a holding company organized around 4 areas of activity:
- design and manufacturing of electronic systems: stolen vehicles location systems, electronic payment systems, security systems, smart cards, etc. The group also provides Internet services;
- computing services: outsourcing services, computing systems integration, medical practice management software development, etc.;
- manufacturing and sale of electric products: energy cables, telecom cables, reactors, transformers, switches, batteries, solar systems, energy management systems, etc.;
- other: primarily financial services.