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DVT announces merger plans with USC Strong profita

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    DVT announces merger plans with USC 13/6/02 5:40:32 PM
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    DVT HOLDINGS LIMITED 2002-06-13 ASX-SIGNAL-G
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    HOMEX - Melbourne
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    +++++++++++++++++++++++++
    The Boards of Utility Services Corporation Limited ("USC") and DVT
    Holdings Limited ("DVT") have announced plans to merge the two
    companies.
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    Features of the merged company would include:
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    * A cohesive strategy in technology solutions for the utilities
    market and e-business;
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    * A strong management team;
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    * Budgeted annual turnover in excess of $150 million;
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    * Strong profitability;
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    * Cash and convertible notes in excess of $40 million;
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    * No bank debt;
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    * Expected dividends of at least 4 cents per share per annum (post
    reconstruction);
    ---------------------------------------------------------------------* Approximately 125 million shares on issue (post reconstruction);
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    * Market capitalisation of over $80 million based on current pricing.
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    The boards of USC and DVT expect a re-rating of the merged entities
    based on increased scale, underlying earnings per share, asset
    backing and yield.
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    THE BUSINESSES OF DVT AND USC
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    Attachment A to this announcement provides a fuller understanding of
    the operations of each company. Further information can be obtained
    on the companies' web sites at:
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    www.dvtholdings.com.au
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    www.utlityservices.com.au
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    HOW THE MERGER WILL BE EFFECTED
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    USC shareholders will be offered 18.6 DVT shares in exchange for each
    USC share. This translates to 67-72 cents for each USC share based on
    recent DVT share prices.
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    BOARD AND MANAGEMENT
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    It is proposed that, following the merger, the Board of DVT will
    consist of seven directors, being five members of the current USC
    Board and two members of the current DVT Board. The present executive
    chairman of USC, Mr Geoff Lord, will be appointed executive chairman
    of the merged entity. Management of the new merged entity will
    comprise the existing management team of both groups.
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    THE BOARD'S INTENTIONS FOLLOWING THE MERGER
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    As soon aspracticable following the merger, DVT intends to hold a
    general meeting (which may be the Annual General Meeting) and put to
    that meeting certain resolutions for consideration by shareholders to:
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    * Approve the reconstruction of capital to consolidate the shares and
    options on a 1 for 18.6 basis;
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    * Reconstruct the retained earnings to eliminate accumulated losses;
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    * Change the name of the company to USC Limited or such other name as
    the Board may decide;
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    * Ratify a final fully franked dividend of 2 cents per reconstructed
    share.
    ---------------------------------------------------------------------
    The Board also intends to introduce a buyback or otherwise deal with
    unmarketable shares, and consider a wider buyback programme. In
    addition, it is intended that an annual dividend policy will be put
    in place on similar terms to that currently in place for USC. This is
    anticipated to be at least 4 cents per annum per share(post
    reconstruction).
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    WHAT THE MERGER PROPOSAL IS DEPENDENT UPON
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    * Approval of DVT shareholders to the proposed merger;
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    * 90% of USC shareholders accepting the offer;
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    Full conditions of the proposed share offer are set out in Attachment
    B.
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    PROCESS AND TIMING
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    The merger will be implemented by way of an off-market takeover bid
    as governed by Chapter 6 of the Corporations Act. DVT will prepare a
    tons] Offer and a Bidder's Statement within the next few weeks for
    lodgement with USC, the Australian Securities and Investments
    Commission, and the Australian Stock Exchange. Following the DVT
    shareholders' meeting, the Bidders Statement will be dispatched to
    USC shareholders for consideration. The USC Board will prepare a
    Target's Statement containing its recommendation to USC shareholders.
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    USC option holders will be offered options in DVT on terms equivalent
    to their USC options in replacement of these options. These offers
    will be conditional upon the successful completion of the proposed
    merger.
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    The takeover documentation will contain all necessary information to
    allow USC shareholders to consider the merits of the Offer, and will
    be made available publicly within the next few weeks.
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    The formal offer process affects USC shareholders and, accordingly,
    the Offer and associated documentation will be sent to USC
    shareholders, but will not be despatched to DVT shareholders. DVT
    shareholders need not take any action in regard to the formal offer
    process. In view of the DVT shareholder approval condition, a notice
    of meeting incorporating the required resolutions will be forwarded
    to DVT shareholders shortly, and it is anticipated the DVT
    shareholder meeting will be held on or about 19 July. The meeting
    date will be after the Bidders Statement is lodged with USC, the
    Australian Securities and Investments Commission, and the Australian
    Stock Exchange, and before the takeover offer period commences.
    ---------------------------------------------------------------------
    Should the necessary DVT Shareholders' approval with respect to the
    transaction not beforthcoming, the transaction will not proceed. In
    such an event, the parties have agreed that DVT will meet USC's costs
    in the matter to a maximum of $300,000. Similarly, should offer
    condition (b) attached, not be satisfied or waived by DVT the parties
    have agreed that USC will meet DVT's costs in the matter to a maximum
    of $300,000.
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    In the meantime shareholders are advised to DO NOTHING with their
    shares in relation to the proposed merger and await documentation as
    contemplated in this announcement.
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    Enquiries should be directed to
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    Jean-Made Simart Geoff Lord
    Chairman of DVT Executive Chairman of USC
    (02) 9262 9600 (03) 9941 3100
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    Mark Hubbard Jim Walsh
    Executive Director & Finance Director &
    Company Secretary Company Secretary
    DVT Holdings Limited Utility Services Corporation
    (02) 9262 9140 (03) 9224 5777
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    Peter Fraser Jim Richards
    Baron Partners Limited, Terrain Capital
    Corporate Advisers to DVT Corporate Advisers to USC
    (02) 9232 5500 (03) 9620 7555
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    ABOUT UTILITY SERVICES CORPORATION
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    Utility Services Corporation (USC) is listed on the Australian Stock
    Exchange with market capitalisation in excess of $60 million and cash
    reserves andconvertible notes of $30 million.
    ---------------------------------------------------------------------
    USC operates through three business groups:
    ---------------------------------------------------------------------
    1. Utility Group comprising construction, inspection and maintenance
    of utility power distribution assets, meter installation, meter
    reading, data management and related services.
    ---------------------------------------------------------------------
    2. e-Business comprising e-business consulting, solutions and
    applications, telecommunications consulting and voice and data
    network solutions and services.
    ---------------------------------------------------------------------
    3. Intellectual Property Ventures which holds venture capital-style
    interests in strategic technology businesses.
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    USC currently has budgeted turnover of approximately $10 million per
    month from its existing businesses (including associated entities).
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    Attachment B
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    DVT OFFER CONDITIONS
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    The Offer is subject to the following conditions:
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    (a) During, or at the end of, the Offer period DVT becomes entitled
    to proceed to compulsory acquisition of all USC's issued shares;
    ---------------------------------------------------------------------
    (b) No person having, or being entitled to have as a result of any
    change in control event in respect of any USC Group company, any
    right to:
    ---------------------------------------------------------------------
    (i) Terminate or alter any contractual relations between any person
    and any USC Group company; or
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    (ii) Require the sale of any shares in a USC Group company;
    ---------------------------------------------------------------------
    or such right is unconditionally waived in favour of the relevant USC
    Group company and DVT.
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    (c) DVT shareholders at general meeting approving the merger.
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    (d) No announcement of another superior bid or similar transaction (or
    intention to do so) between the date of this announcement and the
    expiration of the Offer period. This includes:
    ---------------------------------------------------------------------
    i) no off market takeover offer or on-market takeover for USC's
    shares
    ---------------------------------------------------------------------
    ii) no transaction to acquire or merge with USC (whether by way of
    joint venture, dual listed structure or otherwise);
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    (e) None of the events set out in subsections 652C(l) or (2) of the
    Corporations Act 2001 occurs in relation to USC during the period
    commencing at the date of this announcement and endingat the
    expiration of the Offer period;
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    (f) Without the prior written consent of DVT during the period
    commencing at the date of this announcement and ending at the
    expiration of the Offer period, USC does not other than in the
    ordinary course of business;
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    i) acquire or agree to acquire a substantial business, asset, or
    undertaking, or is subjected to a substantial new liability;
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    ii) dispose of or agree to dispose of a substantial business, asset
    or undertaking;
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    iii) enter into any substantial contract in relation to the operation
    or maintenance of its assets;
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    (g) After the date of this announcement, USC or a subsidiary of USC
    does not declare, pay or distribute any dividend, bonus or other
    share of its profits or assets other than a dividend, bonus or other
    distribution previously publicly announced;
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    (h) After the date of this announcement, no material adverse change
    occurs to, or is threatened or announced in relation to the
    structure, business, financial or trading position or condition,
    assets or liabilities, profitability, or prospects of USC or any of
    its subsidiaries;
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    (i) No government or governmental, semi-government or judicial entity
    or authority or regulatory authority takes any action which restrains
    or prohibits the Offer or the acquisition of shares by DVT commences
    or threatens to commence proceedings to do so or seeks to require the
    divestiture by DVT of shares or assets of USC or any of its
    subsidiaries.
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    A USC Group company means USC, a subsidiary of USC, and any
    associated company of USC.
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    http://www.utilityservices.com.au/
    ----------------------------------------------------------------------
    ASX ANNOUNCEMENT - USC and DVT Agree to Merge

    13 June 2002

    The Boards of Utility Services Corporation Limited ("USC")
    and DVT Holdings Limited ("DVT") have announced plans to merge
    the two companies.


    Features of the merged company would include:

    ¨ A cohesive strategy in technology solutions for the utilities market
    and e-business;

    ¨ A strong management team;

    ¨ Budgeted annual turnover in excess of $150 million;

    ¨ Strong profitability;

    ¨ Cash and convertible notes in excess of $40 million;

    ¨ No bank debt;

    ¨ Expected dividends of at least 4 cents per share per annum (post
    reconstruction);

    ¨ Approximately 125 million shares on issue (post reconstruction);

    ¨ Market capitalisation of over $80 million based on current pricing.


    The boards of USC and DVT expect a re-rating of the merged entities based
    on increased scale, underlying earnings per share, asset backing and yield.


    The Businesses of DVT and USC

    Attachment A to this announcement provides a fuller understanding of the
    operations of each company. Further information can be obtained on the
    companies' web sites at:


    www.dvtholdings.com.au

    www.utlityservices.com.au


    How the merger will be effected

    USC shareholders will be offered 18.6 DVT shares in exchange for each
    USC share. This translates to 67-72 cents for each USC share based on
    recent DVT share prices.


    Board and Management

    It is proposed that, following the merger, the Board of DVT will consist
    of seven directors, being five members of the current USC Board and two
    members of the current DVT Board. The present executive chairman of USC,
    Mr Geoff Lord, will be appointed executive chairman of the merged entity.
    Management of the new merged entity will comprise the existing management
    team of both groups.


    The Board's Intentions following the Merger

    As soon as practicable following the merger, DVT intends to hold a general
    meeting (which may be the Annual General Meeting) and put to that meeting
    certain resolutions for consideration by shareholders to:

    ¨ Approve the reconstruction of capital to consolidate the shares
    and options on a 1 for 18.6 basis;

    ¨ Reconstruct the retained earnings to eliminate accumulated losses;

    ¨ Change the name of the company to USC Limited or such other name
    as the Board may decide;

    ¨ Ratify a final fully franked dividend of 2 cents per reconstructed
    share.



    The Board also intends to introduce a buyback or otherwise deal with
    unmarketable shares, and consider a wider buyback programme. In addition,
    it is intended that an annual dividend policy will be put in place on
    similar terms to that currently in place for USC. This is anticipated
    to be at least 4 cents per annum per share (post reconstruction).



    What the Merger Proposal is Dependent Upon

    ¨ Approval of DVT shareholders to the proposed merger;

    ¨ 90% of USC shareholders accepting the offer;

    Full conditions of the proposed share offer are set out in Attachment
    B.


    Process and Timing

    The merger will be implemented by way of an off-market takeover bid as
    governed by Chapter 6 of the Corporations Act. DVT will prepare a formal
    Offer and a Bidder's Statement within the next few weeks for lodgement
    with USC, the Australian Securities and Investments Commission, and the
    Australian Stock Exchange. Following the DVT shareholders' meeting, the
    Bidder's Statement will be dispatched to USC shareholders for consideration.
    The USC Board will prepare a Target's Statement containing its recommendation
    to USC shareholders.


    USC option holders will be offered options in DVT on terms equivalent
    to their USC options in replacement of these options. These offers will
    be conditional upon the successful completion of the proposed merger.


    The takeover documentation will contain all necessary information to
    allow USC shareholders to consider the merits of the Offer, and will be
    made available publicly within the next few weeks.


    The formal offer process affects USC shareholders and, accordingly, the
    Offer and associated documentation will be sent to USC shareholders, but
    will not be despatched to DVT shareholders. DVT shareholders need not
    take any action in regard to the formal offer process. In view of the
    DVT shareholder approval condition, a notice of meeting incorporating
    the required resolutions will be forwarded to DVT shareholders shortly,
    and it is anticipated the DVT shareholder meeting will be held on or about
    19 July. The meeting date will be after the Bidder's Statement is lodged
    with USC, the Australian Securities and Investments Commission, and the
    Australian Stock Exchange, and before the takeover offer period commences.


    Should the necessary DVT Shareholders' approval with respect to the transaction
    not be forthcoming, the transaction will not proceed. In such an event,
    the parties have agreed that DVT will meet USC's costs in the matter to
    a maximum of $300,000. Similarly, should offer condition (b) attached,
    not be satisfied or waived by DVT the parties have agreed that USC will
    meet DVT's costs in the matter to a maximum of $300,000.



    In the meantime shareholders are advised to DO NOTHING with their shares
    in relation to the proposed merger and await documentation as contemplated
    in this announcement.



    Enquiries should be directed to:



    Jean-Marie Simart

    Chairman of DVT

    (02) 9262 9600



    Geoff Lord

    Executive Chairman of USC

    (03) 9941 3100



    Mark Hubbard

    Executive Director & Company Secretary,

    DVT Holdings Limited

    (02) 9262 9140



    Jim Walsh

    Finance Director & Company Secretary

    Utility Services Corporation

    (03) 9224 5777



    Peter Fraser

    Baron Partners Limited,

    Corporate Advisers to DVT

    (02) 9232 5500



    Jim Richards

    Terrain Capital

    Corporate Advisers to USC

    (03) 9620 7555




    DESCRIPTION OF BUSINESSES




    About Utility Services Corporation


    Utility Services Corporation (USC) is listed on the Australian Stock
    Exchange with market capitalisation in excess of $60 million and cash
    reserves and convertible notes of $30 million.


    USC operates through three business groups:

    1. Utility Group comprising construction, inspection and maintenance of
    utility power distribution assets, meter installation, meter reading,
    data management and related services.

    2. e-Business comprising e-business consulting, solutions and applications,
    telecommunications consulting and voice and data network solutions and
    services.

    3. Intellectual Property Ventures which holds venture capital-style interests
    in strategic technology businesses.


    USC currently has budgeted turnover of approximately $10 million per
    month from its existing businesses (including associated entities).




    About DVT


    DVT provides services and solutions in data storage and management through,
    its Data Solutions subsidiary. This business is a market leader and is
    run by an experienced management team led by Max Goldsmith. The Data Solutions
    subsidiary currently generates revenues of approximately $2.5 million
    per month, with strong growth expectations. DVT has a market capitalisation
    of approximately $20 million, has substantial cash reserves, and no bank
    debt. DVT currently has 550 million shares on issue (equivalent to 29.6
    million shares on a reconstructed basis), and has tax losses.


    Since August last year, the new board and management appointed at that
    time have enabled the company to sell its main asset in January this year
    for cash, settle its legal dispute with Cisco Systems and complete a significant
    bolt-on acquisition within its Data Solutions business.


    Having successfully dealt with a range of legacy issues, the DVT board's
    publicity expressed intention has been to seek growth through a merger
    such as that now proposed with USC.















    DVT OFFER CONDITIONS




    The Offer is subject to the following conditions:

    (a) During, or at the end of, the Offer period DVT becomes entitled to
    proceed to compulsory acquisition of all USC's issued shares;

    (b) No person having, or being entitled to have as a result of any change
    in control event in respect of any USC Group company, any right to:

    (i) Terminate or alter any contractual relations between any person and
    any USC Group company; or

    (ii) Require the sale of any shares in a USC Group company;

    or such right is unconditionally waived in favour of the relevant USC
    Group company and DVT.

    (c) DVT shareholders at general meeting approving the merger.

    (d) No announcement of another superior bid or similar transaction (or
    intention to do so) between the date of this announcement and the expiration
    of the Offer period. This includes:

    i) no off market takeover offer or on-market takeover for USC's shares

    ii) no transaction to acquire or merge with USC (whether by way of joint
    venture, dual listed structure or otherwise);

    (e) None of the events set out in subsections 652C(1) or (2) of the Corporations
    Act 2001 occurs in relation to USC during the period commencing at the
    date of this announcement and ending at the expiration of the Offer period;

    (f) Without the prior written consent of DVT during the period commencing
    at the date of this announcement and ending at the expiration of the Offer
    period, USC does not other than in the ordinary course of business;

    i) acquire or agree to acquire a substantial business, asset, or undertaking,
    or is subjected to a substantial new liability;

    ii) dispose of or agree to dispose of a substantial business, asset or
    undertaking;

    iii) enter into any substantial contract in relation to the operation
    or maintenance of its assets;

    (g) After the date of this announcement, USC or a subsidiary of USC does
    not declare, pay or distribute any dividend, bonus or other share of its
    profits or assets other than a dividend, bonus or other distribution previously
    publicly announced;

    (h) After the date of this announcement, no material adverse change occurs
    to, or is threatened or announced in relation to the structure, business,
    financial or trading position or condition, assets or liabilities, profitability,
    or prospects of USC or any of its subsidiaries;

    (i) No government or governmental, semi-government or judicial entity
    or authority or regulatory authority takes any action which restrains
    or prohibits the Offer or the acquisition of shares by DVT commences or
    threatens to commence proceedings to do so or seeks to require the divestiture
    by DVT of shares or assets of USC or any of its subsidiaries.


    A USC Group company means USC, a subsidiary of USC, and any associated
    company of USC.
 
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