Wrap Text
Lock-in undertaking, profit warranty waiver and withdrawal of cautionary
HUGE GROUP LIMITED
(Registration number 2006/023587/06)
Share code: HUG ISIN: ZAE000102042
(“Huge” or “the Company”)
LOCK-IN UNDERTAKING, PROFIT WARRANTY WAIVER AND WITHDRAWAL
OF CAUTIONARY
1. Introduction
Huge, CNET Empowerment Proprietary Limited, DataWireless
Proprietary Limited, DM Holdco Proprietary Limited, Stephanus
Marius Oberholzer, Unwire Communications Proprietary Limited
(the Relevant Shareholders) and Connectnet Broadband Wireless
Proprietary Limited (Connectnet) concluded a Subscription and
Repurchase Agreement on or about 17 November 2016.
As a consequence of the Subscription and Repurchase
Agreement, Connectnet and its wholly owned subsidiary
company, Sainet Internet Proprietary Limited (Sainet), became
subsidiary companies of Huge. Subsequent to the closing date of
the Subscription and Repurchase Agreement, which was
30 March 2017 (the Closing Date), Connectnet was renamed
Huge Connect and Sainet was renamed Huge Networks.
In terms of the Subscription and Repurchase Agreement, the
Relevant Shareholders warranted in favour of Huge that the
cumulative aggregate operating profit (calculated by taking
reported profit after taxation and adding back interest, taxation
and the after-tax impact of certain extraordinary expenses) of
Huge Connect and Huge Networks (formerly Connectnet and
Sainet, respectively) (the Cumulative Aggregate Operating Profit),
for the years ending on the last day of February 2018, 2019 and
2020 would be equivalent to at least R191 920 000 (the Profit
Warranty), failing which Huge would be able to institute a claim
against the Relevant Shareholders for a breach of the Profit
Warranty.
Subsequent to the Closing Date, the trustees of the Connectnet
Share Incentive Trust, K2017082648 South Africa Proprietary Limited
(K648), K2017038068 South Africa Proprietary Limited (K068),
K2017038129 South Africa Proprietary Limited, K2017038086 South
Africa Proprietary Limited (K086), K2017038099 South Africa
Proprietary Limited (K099) and K2017038154 South Africa
Proprietary Limited (the Subsequent Shareholders) acquired
25 208 333 ordinary shares (the Consideration Shares) in the
authorised share capital of Huge from the Relevant Shareholders
and thereafter have had an interest in the Subscription and
Repurchase Agreement and its provisions.
In terms of the Subscription and Repurchase Agreement,
14 872 915 Consideration Shares (the Pledged Shares) were
subject to a cession and pledge in favour of Huge. The Pledged
Shares have been pledged by the Subsequent Shareholders to
Huge as security for the payment of any claims of Huge instituted
against the Relevant Shareholders for, amongst other things, a
breach of a Subsequent Shareholders’ warranty, including the
Profit Warranty. Huge is able to institute a claim against the
Subsequent Shareholders for any breach of a Subsequent
Shareholders’ warranty at any time on or before 30 March 2020.
The Subsequent Shareholders currently hold 23 677 666
Consideration Shares, of which 14 872 915 represent the Pledged
Shares.
With effect from 30 July 2019 (the Effective Date), each of the
Subsequent Shareholders (each a Lock-in Party and collectively
the Lock-in Parties) have irrevocably undertaken in favour of
Huge that, during the period between the Effective Date and
1 August 2021 (the Lock-in Period), each Lock-in Party shall not
dispose of its Consideration Shares, including its Pledged Shares,
(Lock-in Shares) without the prior written consent of Huge, which
consent Huge may withhold in its discretion (the Lock-in
Undertaking).
With effect from the Effective Date, Huge and the Subsequent
Shareholders have agreed to vary the provisions of the
Subscription and Repurchase Agreement whereby Huge
irrevocably and in perpetuity waives all and any rights it may have
to rely on the Profit Warranty (the Profit Warranty Waiver).
2. Rationale for the Profit Warranty Waiver
Huge is very pleased with the performance of Huge Connect and
Huge Networks subsequent to them becoming subsidiary
companies of Huge. As of the date of this announcement, Huge
estimates that the Cumulative Aggregate Operating Profit of
Huge Connect and Huge Networks for the years ending on the
last day of February 2018, 2019 and 2020 will be exceeded.
3. Future Prospects
Messrs Andre Lessing, the managing director of Huge Connect,
and Marius Oberholzer, the managing director of Huge Networks
are representatives of two of the Subsequent Shareholders,
namely K068 and K648 respectively. Messrs Keven Sinclair, the
commercial director of Huge Connect, and Kurt Schmulian, the
operations director of Huge Connect, are representatives of
another two Subsequent Shareholders, namely K086 and K099
respectively.
Messrs Lessing, Oberholzer, Sinclair and Schmulian have
committed to assisting Huge in achieving the Growing Huge
Strategy, referenced in the 2019 Integrated Report, during and
after the expiry of the Lock-in Period.
4. Withdrawal of cautionary
Shareholders are referred to the cautionary announcement
released on 25 July 2019 and are advised that caution is no longer
required when dealing in the Company’s securities.
The forecast financial information contained in this announcement is the
sole responsibility of the board of directors of Huge and has not been
reviewed or reported on by the Company’s external auditors.
Johannesburg
30 July 2019
Sponsor
Questco Corporate Advisory (Pty) Ltd
Date: 30/07/2019 03:30:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
