Simeka rethinks SAB&T Ubuntu price

Johannesburg, 04 Jun 2009

Investment holding company Simeka has received a discount on its purchase of SAB&T Ubuntu, as a result of warranties that have not been met.

The company says it bought all the shares in SAB&T Ubuntu after its 2008 announcement that it would buy out the company - for 150 million Simeka shares, at 82c a share. This took the total payment to R123 million.

At the time of the deal, there was a warranty that dealt with recovery of claims by SAB&T Ubuntu against some of its vendors, including SAB&T Incorporated. At the end of May, the amount owing was about R31.7 million, which included R10.5 million owed by SAB&T Incorporated after the sale of a debtors` book relating to the Entrepreneurial Business Solutions business, which has since been discontinued.

In terms of the warranties, an amount equal to the outstanding claim has reduced the amount payable and about 53.2 million shares will be returned to Simeka, calculated at a value of 59.5c a share.

When Simeka announced the deal last year, it said the rationale was based on synergies in the business support services sector, as well as public sector opportunities, which could be better realised by the combined company.

Mint unconditional

Simeka`s deal to sell Mint Net has become unconditional. The company says the Competition Commission has approved the deal, which has now been implemented.

Last April, Simeka acquired 50% of Adcheck, for R5 million in shares and three additional annual payments of up to a maximum amount of R45 million in total, depending on Adcheck`s after tax profit.

After a restructuring process, which saw Adcheck being partially unwound, Mint Net - previously a subsidiary of Simeka - was sold to Adcheck. Simeka sold Mint to Adcheck for R20 million through shares in Adcheck, leaving Simeka with a controlling stake in Adcheck.

The deal was intended to realise synergies between the two business units. In addition, because of the deal, Simeka reduced its payment to Adcheck to R40 million, instead of the R45 million it could have paid.