Further to the cautionary announcements published on 28 May 2002, 3 July 2002, 14 August 2002 and 25 September 2002, Prism shareholders are advised that Prism has entered into a heads of agreement with Allied Technologies Limited (Altech) in terms of which, subject to the fulfilment of the conditions precedent listed below. Prism will dispose of its shares in and shareholders` claims against PTSS to Altech ("the disposal").
Terms of the disposal Prism has disposed of its wholly owned subsidiary PTSS for a consideration of R47 000 000 to be settled in cash. The effective date of the disposal is 1 December 2002, subject to the conditions precedent.
The formal sale agreement will incorporate such terms and warranties as are usual for a transaction of this nature.
Nature of business sold
PTSS is SA`s leading electronic funds transfer and bill payment processing services company. PTSS switches over 150 million transactions per annum on behalf of major retailers, utilities and financial institutions. PTSS provides services to Pick `n Pay, Shoprite, Edcon, Eskom, Telkom and BP, among others.
Rationale for the disposal
Prism has undertaken a process of restructuring its operations and reducing the company`s debt. As part of this process Prism intends to narrow its focus to its core competitive advantage in software product development and sales. PTSS is primarily a services business and as such is considered a non-core asset for Prism. The proceeds received from the disposal will result in a substantial decrease in the gearing of Prism.
Application of the sale proceeds
The proceeds from the disposal will be used to strengthen the balance sheet of Prism by reducing debt and enhancing working capital.
Financial effects
The table below sets out the pro forma financial effects of the disposal, based on the results of Prism for the year ended 30 June 2002.
1. The pro forma earnings of PTSS are based on management`s estimates of what PTSS`s earnings would have been on a standalone basis, based on costs incurred by Prism relating to PTSS.
2. Based on 290 193 822 Prism shares in issue as at 30 June 2002 and the net asset value of the company as at 30 June 2002.
3. Based on a weighted average of 242 331 000 Prism shares in issue for the 12 months ended 30 June 2002 and headline loss per share and loss per share for the 12 months ended 30 June 2002.
4. The effect on the net asset value per share, headline loss per share and loss per share is based on the assumption that:
* The disposal was effective on 1 July 2001; and
* The cash consideration of R47 000 000 earned interest at an after tax interest rate of 7% from 1 July 2001.
Condition precedent
The implementation of the disposal is subject to the fulfilment of certain conditions precedent by 30 November 2002, which include, inter alia:
* The finalisation of legal agreements reflecting the heads of agreement between Prism and Altech;
* The approval of the disposal by Prism shareholders in general meeting in terms of the requirements of the JSE Securities Exchange South Africa ("the JSE");
* The approval by the necessary regulatory authorities, including the Competition Commission South Africa, the JSE and the Securities Regulation Panel; and
* The release of PTSS as security for any obligations that Prism has to third-parties for the indebtedness of Prism.
Circulars to Prism shareholders
A circular, containing full details of the disposal and convening a general meeting to consider and, if deemed fit, approve the resolutions relating to the disposal, will be posted to Prism shareholders in due course.
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