Brainworks - sale of shares in Getsure
10 May 2018 15:17
The board of directors of Brainworks (“the board”) advised shareholders that Brainworks Capital Management (Pvt) Ltd. (“Brainworks Capital Management”), being a wholly owned subsidiary of the company, has entered into a Share Sale and Purchase Agreement (“the Agreement”) with Nhaka Life Assurance Company (Pvt) Ltd. (“Nhaka”) in terms of which Brainworks Capital Management will dispose of its 100% equity investment in GetSure Life Assurance (Pvt) Ltd. (“GetSure”), comprising 200 000 000 ordinary shares (“Sale Shares”) to Nhaka for a total purchase consideration of USD6 855 043 (“the Transaction”).

The Transaction is classified as a category 2 transaction in terms of the Listings Requirements of the JSE Ltd. and accordingly does not require approval by the company’s shareholders.

Rationale for the Transaction
It is the company’s strategy going forward to focus on and expand its core business in Zimbabwe being hospitality, real estate and related investments, and therefore to exit its investments in the financial services industry, which are considered by the board to be non-core investment areas.

The funds raised pursuant to the Transaction and the liquidation of its other financial services assets will be applied towards reducing short term debt in the company, thereby improving the company’s balance sheet and positioning it for growth going forward.

Overview of GetSure
GetSure is a private company registered in Zimbabwe which is currently licensed as a life insurance company.

GetSure was granted its operating licence in December 2014 by the Insurance and Pension Commission of Zimbabwe (“IPEC”) and commenced operations in August 2015.

GetSure also holds 4.47% shares in GetBucks Microfinance Bank Ltd. (“GetBucks”), being 48 908 810 shares in GetBucks. GetBucks (previously GetBucks Financial Services Ltd.) is a public company registered in Zimbabwe which listed on the Zimbabwe Stock Exchange in January 2016. GetBucks is a technology driven, deposit-taking microfinance bank.

Information relating to Nhaka
Nhaka is a private company registered in Zimbabwe whose address is 9 Exhall Road, Greystone Park, Harare, Zimbabwe. The shareholders and directors of Nhaka are not related to Brainworks or its subsidiaries (“the Group”), or to any directors of the Group.

Conditions precedent
The Transaction is subject, inter alia, to:
• IPEC approval of the terms of the Agreement;
• Nhaka shall have assumed a loan made by GetSure to Brainworks Capital Management to the value of USD USD4 839 657 (“GetSure Liability”); and
• GetSure shall have entered into an off-exchange transaction for the sale of 10 833 333 shares in GetBucks to GetSure (Pty) Ltd. (RSA) in full settlement of the debt due by GetSure to GetSure (Pty) Ltd. (RSA).

Purchase consideration
The total purchase consideration for the Sale Shares is USD6 855 043, to be settled as follows:
• USD200 000 payable on or before 30 June 2018;
• the assumption by Nhaka of the GetSure Liability; and
• a deferred purchase consideration of no more than USD1 815 386, to be settled through the proceeds of the Private Placement (as described below) (“the Deferred Purchase Consideration”).

The Deferred Purchase Consideration will not attract any interest.

Financial information relating to the Transaction
GetSure reported an audited net loss after tax of USD433 725 for the financial year ended 31 December 2017, and net assets of USD3 148 696 as at 31 December 2017, being the last financial year-end of GetSure.

GetBucks reported an audited net profit after tax of USD3.6 million for the financial year ended 30 June 2017, and net assets of USD13.5 million as at 30 June 2017, being the last financial year- end of GetBucks.

The above financial information is based on the audited historical financial information of GetSure and GetBucks, calculated in accordance with International Financial Reporting Standards and the Companies Act (Chapter 24:03).

Effective date
The Effective Date of the Transaction will be deemed to be the date when the conditions precedent set out in the Agreement been met or waived (as the case may be) or such later date as may be agreed in writing between the parties to the Transaction.

Other terms
Warranties that are standard for agreements of this nature are contained in the Agreement.
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