| Fri 21 Dec 2007, 15:00 | | AUA - Avusa Limited - Tax consequences of the unbundling of the Naspers N shares |
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AUA
AUA
AUA - Avusa Limited - Tax consequences of the unbundling of the Naspers N shares
Avusa Limited
(Formerly Johnnic Communications Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1889/000352/06)
Share code: AUA ISIN: ZAE000107090
("Avusa" or "the company")
Tax consequences of the unbundling of the Naspers N shares
1. Introduction
In the announcement dated 30 November 2007, shareholders were notified of the
salient dates pertaining to the unbundling of the Naspers N shares. The record
date to participate in the unbundling is today, Friday, 21 December 2007 ("the
record date"). Shareholders holding shares in both materialised and
dematerialised form will be receiving their Naspers N shares in terms of the
unbundling on or about Monday, 24 December 2007.
Set out below is a summary of the tax consequences of the unbundling of the
Naspers N shares. The summary is a general guide and is not intended to
constitute a complete analysis of the tax consequences of the unbundling under
South African tax law. It is not intended to apply to certain classes of
shareholders, such as brokers or dealers. It is not intended to be, nor should
it be considered to be, legal or tax advice. Avusa shareholders should
therefore consult their own tax advisers on the tax consequences to them of
the unbundling, for which Avusa and its advisers will not be held responsible.
2. Tax consequences for the company
2.1 Capital Gains Tax ("CGT")
Avusa has a disposal for CGT purposes of the Naspers N shares on the record
date for an amount equal to the market value of the Naspers N shares on that
date. The market value of the Naspers N shares on the record date is the
ruling price of 16 170 cents per Naspers N share at the close of business on
the business day before that date, being Thursday, 20 December 2007.
2.2 Secondary Tax on Companies ("STC")
The unbundling of the Naspers N shares is effected partly through the
reduction of the company`s share premium account to the value of R795 779 181.
As the share premium is not "tainted" as profits available for distribution it
does not constitute a dividend, and STC is therefore not payable in this
regard. The remainder of the distribution is out of profits. This constitutes
a dividend and is subject to STC (net of STC credits) in the hands of the
company.
3. Tax consequences for Avusa shareholders
As the unbundling of the Naspers N shares does not qualify as an "unbundling
transaction" for the purposes of section 46 of the Income Tax Act, there is no
apportionment to be made of the base cost between the Avusa shares and the
Naspers N shares. Rather, the tax implications are as follows:
For CGT purposes, Avusa shareholders will be treated as having acquired the
Naspers N shares on the record date for expenditure equal to the ruling price
at the close of business on Thursday, 20 December 2007, being 16 170 cents per
Naspers N share.
The portion of the unbundling of the Naspers N shares that is effected through
the reduction of the company`s share premium account is a capital distribution
for CGT purposes. Avusa shareholders are deemed for CGT purposes to have
disposed of a part of their Avusa shares on the date of receipt or accrual of
the capital distribution (the record date) for an amount equal to the capital
distribution accruing to them. The base cost of the part of the Avusa shares
deemed to have been disposed of is determined by apportioning the base cost of
the Avusa shares held by an Avusa shareholder in the ratio of the capital
distribution accruing to that shareholder to the market value of the Avusa
shares held by that shareholder immediately prior to the receipt or accrual of
the capital distribution (based on the ruling price at the close of business
on Thursday, 20 December 2007, the business day before the record date). The
capital distribution is an amount of 766,49 cents per share and the ruling
price of Avusa shares at the close of business on Thursday, 20 December 2007
was an amount of 5 500 cents per share. The ratio of the capital distribution
to the market value of the Avusa shares immediately prior to the distribution
is therefore 13,94%.
4. Uncertificated securities tax/stamp duties
Uncertificated securities tax, in the case of Avusa dematerialised
shareholders, and stamp duties, in the case of Avusa certificated
shareholders, will be payable by Avusa shareholders at a rate of 0,25% of the
closing price of the Naspers N shares on the record date.
Johannesburg
21 December 2007
Investment bank and sponsor
Nedbank Capital
Legal advisers
Werksmans Attorneys
Date: 21/12/2007 15:00:05 Produced by the JSE SENS Department.
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