Black-owned ICT company Gijima Info Technologies Afrika is acquiring a 32% to 36.7% stake in AST Group.
The market has been awaiting the details of the deal since AST CEO John Miller announced in September that an agreement had been struck that would see Gijima Info Technologies Afrika reverse some of its IT assets into AST for the issue of new shares, resulting in Gijima owning at least 30% of the merged entity.
In terms of the deal, AST subsidiary AST-A will acquire certain IT businesses and interests from various Gijima subsidiaries for the issue of about 308.76 million AST shares at 35c a share, amounting to about R108.07 million.
AST will undertake a partially underwritten rights offer for R160 million, of which a maximum of R116.75 million will be underwritten by existing lenders Iscor Pension Fund, Kumba Resources, Cadtech and Standard Bank.
The group says it will also approach other parties to increase the underwritten portion of the proposed rights offer, which will be carried out at 35c a share.
"The creation of a financially stable and black-empowered AST required an underwritten rights offer to reduce AST`s debt prior to implementing the merger agreement, to position the merged business to focus on growth," AST says in a notice issued late yesterday.
The first R43.25 million of capital raised from shareholders other than the underwriters will be retained to fund working capital. The remaining underwritten R116.75 million will be used to repay debt.
"Should the minimum of the underwritten amount of R116.75 million be raised by way of the proposed rights offer, Gijima will directly or indirectly hold 36.7% of AST`s issued share capital after the proposed transaction," it says.
"Should the maximum of R160 million be raised by way of the proposed rights offer, Gijima will directly or indirectly hold approximately 32% of AST`s issued share capital after the proposed transaction."
The deal is subject to several conditions, including regulatory and shareholder approval.
The AST share lost 13c or 18.6% to close at 57c on the JSE yesterday.
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