| Mon 21 May 2007, 17:33 | | BRC - Brandcorp Holdings Limited - Firm intention |
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BRC
BRC
BRC - Brandcorp Holdings Limited - Firm intention and further cautionary
BRANDCORP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1992/006647/06)
Share code: BRC & ISIN number: ZAE000013611
("Brandcorp")
FIRM INTENTION AND FURTHER CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Further to the cautionary announcement published by Brandcorp on 25 April
2007, shareholders are advised that Ethos Private Equity Fund V ("Ethos"),
acting through Main Street 565(Proprietary) Limited ("Newco"), has
submitted to the board of directors of Brandcorp ("the board") a firm
intention to make an offer ("the offer") to acquire all of the issued
ordinary shares in Brandcorp (other than the treasury shares held by
Brandcorp`s wholly owned subsidiary Interbrand (Proprietary) Limited (the
"excluded shares")) (the "scheme shares") for a cash consideration of 1700
cents per scheme share. The offer is to be implemented, subject to the
conditions set out below, by way of a scheme of arrangement ("the scheme")
in terms of section 311 of the Companies Act, 61 of 1973, as amended ("the
Act"), to be proposed by Newco between Brandcorp and all of its
shareholders other than the holders of the excluded shares.
TERMS AND CONDITIONS OF THE OFFER
The material terms and conditions of the offer will be as follows:
* Offer consideration
The offer will be made at a cash price of 1700 cents per scheme share (the
"offer consideration"). Assuming that all outstanding share options to
acquire 316 658 Brandcorp shares in terms of the Brandcorp share incentive
scheme will be cash settled, it is recorded that the aggregate number of
scheme shares will be 78 349 757 and that the aggregate offer consideration
will, accordingly, be R1 331 945 869.
The offer will be made on the basis that no dividends or similar payments
will be declared or paid to Brandcorp shareholders between 21 May 2007 and
the date of implementation of the scheme. Should Brandcorp declare any such
dividends or make any such payments, the offer consideration will be
reduced by an amount equal to the amount of such dividend or payment per
Brandcorp share including any Secondary Tax on Companies payable by
Brandcorp in respect thereof.
Newco will pay interest on the offer consideration at a rate of 10% per
annum (nominal annual compounded annually in arrear) for the period from 1
September 2007 to the date on which the offer consideration is paid,
including the first day and excluding the last day.
Following the implementation of the scheme, Brandcorp will be a wholly-
owned subsidiary of Newco and the listing of the entire issued share
capital of Brandcorp on the JSE Limited (the "JSE") will be terminated.
* Conditions precedent to the scheme
The scheme will be subject to the fulfilment of the following conditions
precedent:
* an unqualified recommendation from the board (or its independent sub-
committee) to the shareholders of Brandcorp to vote in favour of the
offer;
* an independent financial advisor appointed by the board to advise the
independent minorities of Brandcorp, confirming to the board and the
shareholders of Brandcorp that the offer consideration is fair and
reasonable;
* all regulatory approvals and consents necessary in respect of the
offer being obtained, including but not limited to approvals and
consents from the JSE, the Securities Regulation Panel ("the SRP") and
the South African competition authorities;
* the scheme being approved by a majority representing not less than
three-fourths of the votes exercisable by members of Brandcorp
entitled to attend and vote at the scheme meeting who are present and
voting (either in person or by proxy) at such meeting;
* the High Court of South Africa (Transvaal Provincial Division or
Witwatersrand Local Division) sanctioning the scheme;
* a certified copy of the order of court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Act; and
* no material adverse change having occurred between 21 May 2007 and the
business day immediately before the date on which the scheme is
sanctioned (the "MAC period"), where "material adverse change" means
the occurrence of any event or events during the MAC period which,
individually and/or in aggregate, either (i) has reduced or is
reasonably likely to reduce (within the next succeeding 12 month
period) the earnings of Brandcorp by R20 000 000 or more; and/or (ii)
has resulted or is reasonably likely to result (within the next
succeeding 12 month period) in a loss or liability to Brandcorp in an
amount of 20% or more of Brandcorp`s market capitalisation of R1 331
945 869, as implied by the offer.
FUNDING AND CASH CONFIRMATION
Ethos will underwrite all the funding required to settle the offer
consideration.
In terms of Rule 2.3.2(b) and Rule 21.7 of the SRP Code on Takeovers and
Mergers (the "SRP Code"), Ethos has provided the SRP with the necessary
cash confirmation letter.
GENERAL
At the date of this announcement, neither Ethos nor Newco, directly or
indirectly, own or control any of the issued shares in Brandcorp.
MANAGEMENT PARTICIPATION
Ethos has had in principle discussions with the management team of
Brandcorp regarding executive management`s participation in Newco. Details
of any arrangements with the management team will be disclosed in due
course once they have been finalised.
CO-OPERATION AND RELATED MATTERS
Brandcorp has agreed to co-operate fully with Ethos in the preparation of
the necessary documents, circulars to shareholders, Court applications,
announcements and the like required to implement the scheme.
Brandcorp has agreed to reimburse Newco and/or Ethos, for all reasonable
third party costs incurred by Newco and/or Ethos in relation to or in
connection with the offer if:
* the independent sub-committee of the board withdraws or adversely
modifies its recommendation of the offer after such recommendation has
been made as a result of a proposal in respect of any offer, scheme of
arrangement or similar transaction proposed by a third party which is
not acting in concert with the offeror and the purpose of which is to
enable that third party (or any person other than the offeror) to
acquire all or a substantial portion of the scheme shares or all or a
substantial portion of Brandcorp`s assets or business (a "competing
offer") unless, notwithstanding such withdrawal or adverse
modification of such recommendation, the offer is successfully
implemented; or
* a competing offer is announced while the offer remains open and such
competing offer is successfully implemented.
APPOINTMENT OF INDEPENDENT ADVISOR
The board has established a sub-committee comprising all its non-executive
directors to manage and co-ordinate the offer process from a Brandcorp
perspective and to formulate and make recommendations to Brandcorp
shareholders as required in terms of the SRP Code.
The board has appointed Java Capital (Proprietary) Limited to advise the
board on the offer and as to how the offer affects the holders of all of
Brandcorp`s securities. Pursuant to the requirements of the SRP Code, the
substance of the advice furnished to the board shall be made known to the
holders of Brandcorp securities in a form and manner approved by the SRP.
MARKET AND FINANCIAL INFORMATION
Information regarding the price at which Brandcorp shares traded
immediately prior to the publication of Brandcorp`s cautionary announcement
and this announcement of Newco`s firm intention to make an offer, in
relation to the offer consideration, as well as a comparison of the offer
consideration to the net asset value and tangible net asset value per
Brandcorp share at 30 June 2006, Brandcorp`s financial year end, is set out
in the table below.
Before the The offer Premiu
scheme considerati m (%)
(cents) on (cents)
Market price on 24 April 2007 1 401(1) 1700 21%
30-day VWAP to 24 April 2007 1 308(2) 1700 30%
Market price on 18 May 2007 1 611(3) 1700 6%
30-day VWAP to 18 May 2007 1 443(4) 1700 18%
Net asset value per share 423(5) 1700 302%
Tangible net asset value per share 406(5) 1700 319%
Notes:
(1) Closing price of Brandcorp shares on the JSE on 24 April 2007, being
the last trading day prior to publication of the cautionary
announcement.
(2) the volume weighted average price ("VWAP") at which Brandcorp shares
traded on the JSE for the 30 trading days up to and including 24 April
2007, being the last trading day prior to publication of the
cautionary announcement.
(3) Closing price of Brandcorp shares on the JSE on 18 May 2007.
(4) VWAP at which Brandcorp shares traded on the JSE for the 30 trading
days up to and including 18 May 2007.
(5) Audited net asset value and tangible net asset value per share
attributable to Brandcorp at 30 June 2006
IMPORTANT DATES AND TIMES
Brandcorp shareholders will be advised of important dates and times of the
scheme in due course.
FURTHER ANNOUNCEMENT
Further announcements in respect of the offer will be published in due
course. Until publication of such further announcements, shareholders of
Brandcorp are advised to continue to exercise caution when dealing in
Brandcorp shares.
Rosebank
21 May 2007
Independent advisor, corporate law advisors
and sponsor to Brandcorp
Java Capital (Proprietary) Limited
Corporate advisers to Ethos and Newco
Hyde Park Capital
Attorneys to Ethos and Newco
Webber Wentzel Bowens
Date: 21/05/2007 17:33:01 Produced by the JSE SENS Department.
