Cape Empowerment Trust (CET) and Dynamic Cables (formerly Conlog Holdings) have agreed to fix the price of Conlog`s acquisition last year of the Dynamic Cables business from CET at R54 million.
In terms of the existing agreement the purchase price is based on a formula, subject to a minimum purchase price of R16 million, to be finally determined after 31 December next year, once Dynamic Cables` profit for 1 January 2001 to 31 December 2002 has been determined.
However, the boards of both companies now propose to fix the purchase price at R54 million, and to accelerate the date of payment.
The companies say the acceleration will create certainty for Dynamic and its stakeholders about the share capital structure of Dynamic and identity of the major shareholders of Dynamic.
The fixing of the purchase price will eliminate any exposure which Dynamic may have, in view of the fact that the purchase price is potentially unlimited, arising from the achievement of profit in excess of the profit anticipated by the parties when they entered into the existing agreement.
They add that the establishment of CET as the controlling shareholder of Dynamic will enhance the existing status of Dynamic and its operating subsidiaries as black economic entities to win further tenders and contracts.
This will in addition benefit CET as the major shareholder in Dynamic.
Dynamic has already paid R16 million, with the balance to be paid before 31 December this year.
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