RNS Number : 1161H
PME African Infrastructure Opps PLC
15 February 2010
 

15 February 2010

 

PME AFRICAN INFRASTRUCTURE OPPORTUNITIES PLC

("PME" or "the Company")

(AIM: PMEA.L; PMEW.L)

 

Investment Update and Special Dividend Payment

 

 

PME African Infrastructure Opportunities plc, the AIM listed fund investing in infrastructure projects across sub-Saharan Africa, announces an update on progress with its investments.

 

Summary Information

 

·             PME has committed a total of US$93.5 million to its portfolio (including the Econet Burundi investment)

 

·              On 29 December 2009, PME realised its investment in Econet Burundi, yielding an annual return of approximately 40 per cent. on its original investment of US$10 million

 

·              As at 31 December 2009, cash reserves were approximately US$83.8 million

 

·             Dovetel, a telecommunications company with a unified national licence in Tanzania (US$26 million committed), has been successfully established as a leading broadband provider in Dar es Salaam, under the brand "Sasatel", with plans underway to expand into other major urban centres across Tanzania

 

·             TMP Uganda, a telecommunications company with a unified national licence in Uganda (US$18.5 million committed), has been successfully established as a broadband and data provider to corporate and high-end residential customers, with plans to expand to two further urban centres underway

 

·              Sheltam, a South African company providing, principally, engineering, management and operations of railway locomotives and privately owned track (US$8.0 million committed), has reached an agreement with PME Locomotives to defer rental payments (which could increase PME's interest in the company to above 50 per cent.) and is continuing to review opportunities to expand outside South Africa

 

·              PME Locomotives (US$31.0 million committed) owns 12 GE 30 locomotives that are the subject of a finance lease purchase agreement between it and Sheltam

 

·             The recent economic recovery has seen a strengthening in the Company's pipeline of investment opportunities, with prospects in the African water, renewable energy and waste sectors, in particular

 

·              2.25 million ordinary shares in the Company were repurchased in December 2009 and January 2010 at an average price of US$0.67 per share

 

Outlook

 

The recession in South Africa which, because of the lag effect, had lasted longer than in other economies is now officially over and this, coupled with rising commodity prices, creates a positive outlook for many African economies. This has had the effect of strengthening PME's pipeline further with a number of opportunities potentially able to complete within the next six to nine months.

 

The Company is eager to take advantage of the recovering economic environment to deploy the remaining funds as quickly as possible to create a diversified portfolio that will generate attractive returns for shareholders as demonstrated with the exit from Econet Burundi.

 

The Company has entered into a close period prior to the release of its preliminary results for the year ended 31 December 2009 in the first week of April 2010.  During this close period, there will be no share buy backs effected by the Company.

 

Special Dividend Payment

 

The Company also announces that following the realisation of the Econet Wireless Global Limited investment, the board of Directors of PME confirm that a special dividend of 2.6 cents per ordinary share will be declared and will be payable representing the profit after payment of the Manager's performance fee arising from the realisation of this investment.  The relevant dates for the special dividend are set out below:

 

Ex dividend date:           24th February 2010

Record date:                  26th February 2010

Payment date:               24th March 2010      

 

The Company is currently in discussions with its auditors, PricewaterhouseCoopers, Isle of Man, regarding the adjustment to the exercise price per warrant as a result of the special dividend payment.  Details of adjustments to the warrant exercise price will be announced when determined.

 

A detailed update on PME's investee companies and pipeline opportunities is set out below in the "Notes to Editors".

 

For further information on the Company, please refer to the website at www.pmeinfrastructure.com.

 

Further enquiries:

 

PME Infrastructure Managers Limited

Richard Bouma

+41 22 908 1190

Smith & Williamson Corporate Finance Limited

Azhic Basirov / Siobhan Sergeant

+44 20 7131 4000

Fairfax I.S. PLC

James King

+44 20 7598 5368

Bell Pottinger

Dan de Belder

+44 20 7861 3232

On behalf of

Helvetica (Isle of Man) Company Limited

Clara Parisot

+41 798 249 788

Principle Capital

Mark Whitfeld

+44 20 7240 3222

 

Note to Editors:

 

-        PME African Infrastructure Opportunities plc ('PME') is a company investing in sub-Saharan African infrastructure and infrastructure related industries. Its shares were admitted to AIM in July 2007 raising US$180 million.

 

-        PME was established to invest in sub-Saharan African infrastructure and infrastructure related industries with a view to generating attractive returns, principally through capital growth. It is targeting opportunities arising from years of under investment in sub-Saharan African infrastructure where that infrastructure will be instrumental in allowing the continent's economic development to continue to grow.

 

-        The Investment Manager is PME Infrastructure Managers Limited ('PMEIM'). The Investment Manager is responsible for identifying new investment opportunities.

 

-        PMEIM is a joint venture between Principle Capital Holdings S.A. (AIM: PCX.L), Unicos Partners LLP (holding company of the Helvetica Group of companies), Masazane Capital (Pty) Limited and the interests of Richard Bouma, CEO of PMEIM.

 

 

Detailed Update Information

 

Introduction

 

The Company has continued to demonstrate solid performance. It has committed US$93.5 million in its portfolio of which US$88.6 million has been drawn down. We are pleased to report that on 29 December 2009, the Company formally exited from its investment in Econet Wireless Burundi realising some US$15 million and representing an annual return of approximately 40% on its original US$10 million investment.

 

Portfolio Companies

 

Dovetel (T) Limited ("Dovetel"):  Dovetel is a telecommunications company with a unified national licence in Tanzania. Dovetel is rolling out a 3G wireless (based on CDMA) national network in order to benefit from the demand for data and broadband services to both high-end residential and corporate customers. Dovetel bundles its broadband offering with fixed voice services and offers limited mobility voice services to the low-end of the residential market in order to increase penetration beyond the traditional GSM target market for mobile voice.

 

Having launched its full suite of services to the market in Dar es Salaam under the "Sasatel" brand during June and July last year, Dovetel ended 2009 as an established leading broadband provider with full coverage across the capital.

 

Dovetel is continually refining and broadening its product offering to optimise customer uptake while focusing on the corporate market. It is now connected to the "Seacom" undersea cable, connecting to the Gulf and Europe, which increases capacity and reduces the costs of international traffic and, in addition to CDMA modems and routers, is now offering its corporate clients WiMAX solutions which provide even greater bandwidth.

 

The full US$26 million that was initially approved for this investment has now been fully drawn down and due diligence has been commenced by a financial institution with whom a term sheet has been signed to provide a US$35 million facility. This funding would finance the consolidation of the network in Dar es Salaam and Dovetel's expansion into the major urban centres across the country. In the interim, it is likely that further funding of some US$2.6 million will be required and it is anticipated that this will be financed through the acquisition, by PME, of the building that Dovetel occupies and which it acquired when the developer encountered financial difficulties.  The Company believes that Dovetel should utilise its available capital to focus on its core business.  Therefore, PME has agreed that the acquisition of the building, in the context of the Dovetel transaction, is the most secure approach to providing further funding to Dovetel and in itself should prove an attractive investment.

 

TMP Uganda Limited ("TMP"): TMP Uganda is a telecommunications company with a unified national licence in Uganda. TMP is rolling out a 4G wireless (based on WiMAX) national network in order to address the demand for data and broadband services to high-end residential and the corporate sector of the market. TMP will also provide voice services to its customer base (VOIP).

 

TMP launched its services to the market in Kampala in July last year branded as "BroadBand Company" and almost immediately experienced greater demand for its dedicated high-end broadband solutions for larger corporate customers than anticipated.

 

The constraints this demand placed on the network have now been addressed by increasing the capacity on the affected base stations and acquiring capacity on the recently laid TEAMS (The East African Marine Service) cable in Mombasa which links to the Gulf and onto Europe. This latter initiative is significantly cheaper than satellite and allows TMP Uganda to offer much greater bandwidth to its clients.

 

The evident demand for true broadband services has encouraged the company to extend its network to Entebbe and Jinja, taking the total number of base stations to 30 and these should be in operation by the end of March 2010. Currently, there are no other urban centres of sufficient size in Uganda to warrant their own network but there are a number of large corporations with operations in remote areas, such as those involved in commercial activity relating to the discovery of oil on Lake Albert, and these will be connected to the existing network via a satellite link.

 

TMP Uganda has employed the latest version of WiMAX technology and, as a result, there are continuing innovations that are being introduced, such as auto-installing, "plug and play" products and condominium "hotspots" that allow all the occupants of one block of apartments to obtain access to the network via one equipment link to the building. Such innovations should improve subscriber growth.

 

To date TMP Uganda has utilised US$13.6 million of the US$18.5 million approved for this investment. It is anticipated that the balance of this capital will be drawn down over the next six months but that further growth will be funded through debt.

 

Econet Wireless Burundi ("EWB"): PME was invested in the expansion of a GSM telecommunications network in Burundi. However, following the issuance of a notice by Econet Wireless Global Limited ("Econet Wireless") that it wished to exercise its option to purchase the loan note and shares held by the Company, via its subsidiary PME Burco (Mauritius) Limited ("PME Burco"), in Econet Wireless Ventures Global Limited, the joint venture that the two parties formed in September 2008, PME Burco received a total of US$15,053,157 by the end of December 2009 representing an annual return to the Company of just under 40 per cent. on its US$10 million investment.

 

PME has, therefore, successfully exited from its joint venture with Econet Wireless which holds a majority interest in the GSM operator, EWB. PME's investment in the joint venture provided EWB with the cash funding that enabled EWB to relaunch commercial operations and expand its network coverage on a national scale. EWB's high quality voice and data network and its national footprint in Burundi position EWB as a leading operator driving growth in the sector.

 

This investment in EWB was a short/medium term investment for PME, based on the premise that Burundi's mobile voice market needed the impetus from a well capitalised operator in order to allow the market for mobile voice services to embark on the same significant growth path which its neighbouring countries are currently experiencing. This premise has largely been borne out and PME is happy that its investment has proven successful to EWB and to PME's shareholders. We are convinced that EWB will continue to achieve great success in the Burundi mobile voice market.

 

Sheltam Holdings (Pty) Limited ("Sheltam"): Sheltam is a South African company providing engineering, management and operations of railway locomotives and privately owned track. It also owns and charters small aircraft and repairs and maintains marine engines and generators.

 

PME's strategy in acquiring Sheltam was to assist it in growing and consolidating its business in South Africa and the region. It currently has operations in the Democratic Republic of Congo and Mozambique and is at an advanced stage of negotiations in a third country to overhaul its locomotive fleet, lease additional tractive power and provide maintenance services.

 

In South Africa, the lease to Sheltam by a PME subsidiary of 12 new GE C30 locomotives has enabled it to consolidate its position by offering a superior package to mining companies that includes the benefits of increased haulage capacity as well as fuel and other efficiency savings. However, the global financial crisis resulted in a fall in demand for commodities which in turn reduced demand for rail capacity. As a consequence, only seven of the locomotives leased to Sheltam are in operation although with the improving economic climate, negotiations are ongoing to place the balance.

 

In order that Sheltam is not pressured by its lease obligations to PME, PME Locomotives (Mauritius) Limited has agreed to defer rental payments on up to 5 of the unplaced locomotives for each of the first 6 months of 2010 (and any outstanding as at 31 December 2009) through a loan note structure that will be repayable by the end of September 2010 ("Maturity Date"). Although it is anticipated that most of the loan notes will be redeemed in the interim period, any outstanding liability at the Maturity Date will convert to shares, increasing PME's shareholding in Sheltam.

 

In a separate development, and in line with its strategy to expand its services to the public domain in South Africa, Sheltam is in late stage discussions with a preferred Black Economic Empowerment ("BEE") joint venture partner. The partner has extensive transportation domain expertise and the transaction will enable Sheltam's core business of railway services to enter an entirely new sector and bring additional opportunities offered by the partnership.

 

PME Locomotives (Mauritius) Limited ("PME Locomotives"): As mentioned above, the 12 GE General Electric C30 Locomotives have been leased to Sheltam for placement with their clients in South Africa and throughout sub Saharan Africa. Generally, Sheltam will supply these locomotives on a fully serviced basis including crew, maintenance and insurance.

 

Transactions in the pipeline

 

Water:  PME is pursuing a water desalination, solar energy and wind power project in a country on the east coast of Africa, having recently signed a term sheet. The Company is in the process of renegotiating that term sheet to accommodate a third party provider of equity and plant.

 

Energy:  PME is pursuing a number of opportunities to provide a relatively new innovation in low cost interim power that can be offered in containerised, mobile units. It has received indicative terms for a partnership with a supplier of these units.

 

PME is in discussion with two groups that are focused on waste-to-energy opportunities in Africa. African governments are paying increased attention to the management of their municipal landfills many of which have reached capacity and are creating an environmental hazard. In many countries where the cost of electricity production is high and depends on imported fuel, waste-to-energy projects provide an attractive solution to both an energy production deficit and the problem of waste management.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCSFEFWEFSSEIE