Alternative Exchange-listed Simeka BSG will change the way it will pay for two of its acquisitions.
While the variations affect its net tangible asset value, changes to earnings per share, headline earnings per share and net asset value per share for its most recent financial year are immaterial, it says.
Simeka will still pay R30 million for Spec Systems, the acquisition of which was announced in September last year, but the instalments have been restructured, it says. On implementation of the acquisition, an initial amount of R7.5 million was paid. Of this, R5 million was cash and R2.5 million was paid by the delivery of shares issued at 50c each, the company told shareholders on Friday.
On 17 March 2006, a further payment was made comprising R4.375 million in cash and delivery of 8.75 million shares issued at 50c per share. Simeka says future payments to be made will now see R4.375 million being paid in cash, and 2 million shares being issued at 67c a share.
All, or part, of the balance of payments, up to R8 million, will be paid in cash and shares. This depends on Spec`s earnings for the years ending 31 May 2006, 2007, 2008 and 2009.
Under the original terms, there would have been a cash payment of R2.5 million due in August 2007, and the balance of the purchase price would have been payable in cash and shares, dependent on the earnings of the Spec business for the years ending 31 August 2005, 2006 and 2007.
These changes are expected to enhance Simeka`s net tangible asset value per share, taking it from negative 3.71c a share to negative 2.99c a share, it says. Simeka prepared the revised pro forma financial effects of the Spec acquisition for illustrative purposes.
The value of negative 3.71c a share was calculated on the basis that the changes to the transaction did not take place, while the negative 2.99c a share calculation is its net tangible asset value as disclosed in its results to end May.
Cash, not shares
Simeka has also agreed to vary the pricing and payment terms of its acquisition of Waymark Consulting. However, the changes only pertain to an agreement with E Scholtz, who sold 25% of the issued shares in Waymark to the company.
Payments still owing to Scholtz will now see the company make a cash payment of R1.8 million, due at the end of this month. Interest-free cash payments of R1.2 million will be paid over 12 months in instalments of R100 000 each, and will be made on the last day of each calendar month from January next year.
A cash payment of R500 000 has already been made. Before the changes, a cash payment of almost R2 million and several tranches of shares were owing. Simeka was to issue 1.175 million shares at 65c a share at the end of this month, 750 000 shares at 70c a share at the end of August next year and 895 000 shares at 75c a share at the end of August 2008. Simeka acquired 51% of the shares in Waymark with effect from March last year. The remaining shares were acquired effectively nine months later.
On an illustrative basis, before the variation, the company`s net tangible asset value would have been negative 2.7c a share. After the changes, it moved down slightly to negative 2.99c a share.
The company`s shares closed at 54c a share on Friday, up from Thursday`s close of 52c a share. Its 12-month high is 61c a share.
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