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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
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capital of Cell C for a purchase
consideration of R5.5 billion. In
part settlement of this amount,
183 333 333 ordinary shares in Blue
Label were subscribed for by third
parties at an issue price of R15.00 per
share, equating to R2.75 billion.
On the same date, The Prepaid
Company concluded an agreement
to purchase 100% of the issued
share capital in 3G Mobile from
its shareholders for a purchase
consideration of R1.9 billion. The
acquisition has been structured in
two stages, whereby 47.37% of
the issued share capital was initially
acquired for a purchase consideration
of R900 million. The remaining
52.63% of the issued share capital
will be acquired for a further
R1.0 billion, subject to the
fulfilment of conditions precedent.
Of the initial purchase of 47.37%,
16 666 666 ordinary shares were
issued to the vendors at R15.00 per
share, equating to R250 million.
The balance of R650 million will be
payable on 28 February 2018.
As part of the restructure of the debt
within Cell C by third-party lenders,
The Prepaid Company will be required
to provide liquidity support to
Magnolia Cellular Investment 2 (RF)
Proprietary Limited (SPV2), which is
100% held by 3C Telecommunications
Proprietary Limited (3C), of up to
USD80 million, which liquidity support
will be provided over 24 months and
will be in the form of subordinated
funding to SPV2. Oger Telecoms
contributed USD20 million of the
aforesaid USD80 million thus
reducing The Prepaid Company’s
obligation in this regard to a
maximum of USD60 million. In
addition, to the extent that certain
assets of Oger Telecoms are realised
within the aforesaid 24-month
period, a portion of such realisation
shall further reduce The Prepaid
Company’s obligation. In this regard,
USD16 million has been realised to
date, thereby reducing its current
exposure to a maximum of
USD44 million.
The Prepaid Company, with effect
from 2 August 2017, purchased
Bond notes, issued by Cedar Cellular
Investments 1 Proprietary Limited
(SPV1), which is 100% held by 3C,
from Saudi Oger Limited with a
capital redemption value of
USD18 million and with a coupon
rate of 8.625% per annum for a
purchase consideration of
USD18 million, of which USD6 million
has been paid, USD3 million will be
paid imminently and USD9 million will
be payable on 30 November 2017.
The Prepaid Company is entitled to
assign its rights and obligations, in
whole or in part, to a nominee.
Accordingly, it has assigned such
rights and obligations in respect of
50% of the Bond notes, which
assignment has been accepted by
the assignee.
The Prepaid Company concluded an
agreement with Cell C on 2 August
2017 in terms of which it has
undertaken to advance R1.34 billion
on a piecemeal basis for the purpose
of applying such funds towards capital
expenditure. This advance, which is
interest bearing, will be repayable in
full by the end of July 2018.
Subsequent to year-end, dividend
number 8 was declared and approved
by the Board.
Appreciation
I wish to express my gratitude to
the Group’s finance team for their
professional input and dedication
throughout the year.
Dean Suntup
Financial Director
23 November 2017