| Thu 28 Jun 2007, 14:46 | | GMB - Glenrand M I B - Sale of Glenrand M I B Bene |
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GMB
GMB
GMB - Glenrand M I B - Sale of Glenrand M I B Benefit Services (Proprietary)
Limited and renewal of cautionary announcement
GLENRAND M I B LIMITED
(a Licensed Financial Services Provider)
(Incorporated in the Republic of South Africa)
(Registration number 1997/008001/06)
Share code: GMB ISIN: ZAE000078010
("Glenrand M I B" or "the Company")
SALE OF GLENRAND M I B BENEFIT SERVICES (PROPRIETARY) LIMITED AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Glenrand M I B shareholders are referred to the cautionary announcement issued
by the Company, which announcement appeared on the Securities Exchange News
Service ("SENS") on Wednesday, 16 May 2007.
Glenrand M?I?B is pleased to announce the conclusion of a sale of shares
agreement, dated 27 June 2007, which incorporates the sale by the Company of
100% of the issued share capital in Glenrand M I B Benefit Services
(Proprietary) Limited ("Benefit Services") (the "Shares") and the Sale Claims to
Canyon Springs Investments 12 (Proprietary) Limited ("Canyon Springs"), for a
cash consideration of R1 ("the Disposal"). The "Sale Claims" comprise all
amounts owing by Benefit Services to Glenrand M I B on the Completion Date and
all claims of Glenrand M I B against Benefit Services as at the Completion Date
other than claims due to Glenrand M I B arising from the provision of services
by Glenrand M?I?B to Benefit Services on or prior to the Completion Date.
The effective date of the Disposal (the "Completion Date") is the first business
day after the day on which the last remaining suspensive condition, as set out
in paragraph 5 below, has been satisfied.
RATIONALE FOR THE DISPOSAL
Benefit Services, which is a provider of consulting, healthcare, actuarial and
administration services within the retirement fund industry, has for a continued
period of time made losses, despite several attempts by Glenrand M I B to return
the business to profitability.
The Glenrand M I B Board undertook a strategic review in terms of which it
considered all the options available to it in relation to Benefit Services to
ensure it acts in the best interest of Glenrand M I B, Benefit Services, the
employees of Benefit Services as well as the client base of Benefit Services.
After careful consideration, the Glenrand M?I?B Board resolved to dispose of its
interest in Benefit Services.
The Disposal will result in the following benefits to all parties interested in
the Disposal:
- enable the executive of Glenrand M?I?B to focus their efforts on Glenrand
M I B`s main profit contributor, being Risk Services;
- increase the profitability of Glenrand M I B;
- provide a platform for returning the Benefit Services business to
profitability;
- preserve the employment of Benefit Services staff; and
ensure the continuity of services currently delivered to the Benefits Services
clients.
INTENTION OF CANYON SPRINGS RELATING TO BENEFIT SERVICES
Canyon Springs is a majority shareholder in a consortium comprising of Labour,
management and staff who together with experienced practitioners in the
financial services sector bring an in depth understanding of the industry
dynamics.
The business will adopt a client (member) centric approach which will attract
critical mass and it has an expert understanding of the administration
environment and systems that are required to support its business strategy.
FINANCIAL EFFECTS OF THE DISPOSAL
Based on the reviewed results of Glenrand M?I?B for the six months ended 31
December 2006, the unaudited pro forma financial effects of the Disposal on
earnings per share ("EPS"), headline earnings per share ("HEPS"), fully diluted
earnings per share ("FDEPS"), fully diluted headline earnings per share
("FDHEPS"), net asset value per share ("NAV") and net tangible assets per share
("NTAV") are set out below. This unaudited pro forma financial information has
been prepared for illustrative purposes only and because of its nature may not
give a fair reflection of Glenrand M I B`s financial position and results of
operations, nor of the effect and impact of the Disposal on Glenrand M I B. The
preparation of the pro forma financial information is the responsibility of
Glenrand M?I?B`s directors.
Before the After the % Change
Disposal (1) Disposal
(2)
EPS and FDEPS (cents) 24.9 22.8(3,4) (8)
HEPS and FDHEPS (cents) 1.6 4.9(3,4) 206
NAV (cents) 73.2 68.7(4) (6)
NTAV (cents) 32.3 31.3(4) (3)
Weighted average shares
in issue for calculating 226 526
EPS and HEPS (`000)
Weighted average fully
diluted shares in issue 226 526
for calculating FDEPS
and FDHEPS (`000)
Shares in issue for 226 526
calculating NAV and NTAV
(`000)
Notes:
Based on the published interim condensed results of Glenrand M?I?B for the six
months ended 31 December 2006.
Based on the assumption that the Disposal occurred on 1 July 2006 for income
statement purposes and on 31 December 2006 for balance sheet purposes.
EPS, HEPS, FDEPS and FDHEPS have been adjusted to exclude the income
attributable to the Disposal for the six months ended 31 December 2006.
After taking into account the loss on disposal of the NAV of Benefit Services as
at 31 December 2006.
SUSPENSIVE CONDITIONS
The Disposal is subject to the following conditions being fulfilled, or waived,
as the case may be:
- the approval by the Competition Commission (insofar as may be required);
- the approval by the Registrar of Long-Term Insurance of the change of
control of Ten-50-Six Life Limited, which is a subsidiary of Benefit Services;
- the approval by the Registrar of Pension Funds of the change of control in
respect of the section 13B licence held within Benefit Services and/or its
subsidiaries; and
- the obtaining of such approval as may be required in terms of the JSE
Limited ("JSE") Listings Requirements.
OTHER KEY TERMS OF THE DISPOSAL
The following are some of the key terms of the Disposal:
- Glenrand M I B will assume liability arising out of any breach by Benefit
Services or its subsidiaries of any regulatory obligations under any applicable
law which arose prior to the Completion Date;
- Glenrand M I B will ensure that at Completion Date the realisable value of
the assets of Benefit Services equals or exceeds the liabilities, excluding the
Sale Claims but including all provisions in the Transaction Accounts and the
Management Accounts. (The "Transaction Accounts" are the most recent annual
signed unqualified, audited financial statements of Benefit Services and its
subsidiaries. The "Management Accounts" are the unaudited management accounts
of Benefit Services and its subsidiaries for the period from the date of the
Transaction Accounts prepared in all material respects on the same accounting
basis as the Transaction Accounts);
- Glenrand M I B shall be responsible for all claims, litigation and related
costs in connection with certain franchise agreements and in connection with any
agreements with or claims by former employees and/or directors of Benefit
Services and/or Glenrand M I B (all of which arise in circumstances existing
prior to the Completion Date);
- Glenrand M I B shall from the Completion Date assume responsibility for all
known Professional Indemnity ("PI") claims over and above the existing PI
provision for known PI claims;
- The obligation to fund and purchase insurance cover for ongoing PI claims
and retrospective claims of a PI nature in Benefit Services (other than claims
in respect of which Benefit Services and/or Glenrand M I B failed to notify
claims or circumstances which may give rise to claims under the relevant
insurance policies prior to the Completion Date, where such claims were or
should reasonably have been known by Benefit Services and/or Glenrand M?I?B and
claims falling within the scope of known PI claims which are rejected by the
insurer in question or which are not covered by the insurance and analogous
arrangements applicable to Benefit Services and its subsidiaries) (referred to
respectively as "Insurance Excluded Claims" and "Rejected PI Claims") shall be
borne fully by Benefit Services and/or Canyon Springs; and
Save for the obligations to fund the known PI claims cover referred to above and
save in respect of any potential Insurance Excluded Claims or Rejected PI
Claims, Glenrand M I B shall have no further liability of any nature relating to
PI claims after the Completion Date.
RENEWAL OF CAUTIONARY
Glenrand M?I?B shareholders are referred to the renewal of cautionary
announcement dated 16 May 2007 and are advised that, notwithstanding this
announcement, the Company is still in other discussions which, if successfully
concluded, could have an impact on the price at which the Company`s ordinary
shares trade on the JSE Limited. Accordingly, shareholders are advised to
continue to exercise caution when dealing in the Company`s securities until a
further announcement is made.
Randburg
28 June 2007
Investment Bank and Sponsor
Nedbank Capital
Date: 28/06/2007 14:46:01 Produced by the JSE SENS Department.
