| Mon 25 Feb 2008, 8:06 | | AUA - Avusa Limited - Announcement to Avusa shareholders |
|
AUA
AUA
AUA - Avusa Limited - Announcement to Avusa shareholders
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")
Announcement to Avusa shareholders regarding:
- the cession of the name "Avusa" by Avusa to Avusa Opco Holdings Limited
("Opco"), which latter entity is consequently to be renamed Avusa Limited
and is a wholly-owned subsidiary of Avusa;
- the change of name of the company to "ElementOne Limited";
- the sale by Avusa of its operating media and entertainment assets to Opco;
- the termination of the Avusa share incentive schemes consequent upon the
cash settlement by Avusa of the obligations arising upon exercise of such
incentives and/or the assumption by Opco of Avusa`s remaining obligations
in respect of unexercised incentives;
- the listing of Opco in the Consumer Services - Publishing sector of the JSE
Limited list; and
- the unbundling by Avusa to its shareholders of all its shares held in Opco
by way of a distribution in specie in terms of section 46 of the Income Tax
Act, 1962 (Act 58 of 1962), as amended, in the ratio of one Opco share for
every one Avusa share held at the close of business on the record date,
collectively (the "transaction").
1. Introduction
Avusa shareholders are referred to the announcement dated 11 April 2007 in
which it was announced that, subject to shareholder and regulatory approval,
the Avusa board intended to unlock further shareholder value through separating
the businesses of the company into two listed entities by the formation of
Opco, a new wholly-owned subsidiary of Avusa, which would acquire and hold
100% of the company`s operating media and entertainment assets.
Shares in Opco would then be listed on the JSE Limited ("JSE") and unbundled to
the company`s shareholders.
In order to implement this strategic decision, the directors have decided,
subject to shareholder approval and the fulfilment of the suspensive conditions
set out in paragraph 7, below to cede the name "Avusa" to Opco, change the
name of the company to ElementOne, sell the company`s operating media and
entertainment assets to Opco, terminate the Avusa share incentive schemes
consequent upon the cash settlement by Avusa of the obligations arising upon
exercise of such incentives and/or the assumption by Opco of Avusa`s remaining
obligations in respect of unexercised incentives, list Opco on the JSE and
unbundle the company`s shares in Opco to the company`s shareholders.
Following the implementation of the transaction, the company`s interest in
Caxton and CTP Publishers and Printers Limited ("Caxton") will be its remaining
major asset. The company will then constitute a dual listing of Caxton and fail
to comply with paragraph 4.28(d) of the Listings Requirements, which states
that a listed company must have control (being 50% plus one of the voting
shares) over the majority of its assets. The JSE has granted the company a
period of 12 months from the date upon which the unbundling becomes effective
to remedy this non-compliance. The directors will pursue the most appropriate
route for all shareholders.
In terms of the Listings Requirements, if Avusa fails to remedy the non-
compliance within 12 months, the JSE has advised that it will terminate Avusa`s
listing.
2. The change of name and cession
The company is proposing to sell its operating media and entertainment assets
to Opco, and to then separately list Opco with the objective of unlocking
shareholder value. The directors believe that it is appropriate that the name
"Avusa" continues to be attributed to the operating media and entertainment
assets and therefore propose, subject to shareholder approval, the cession to
Opco of the name "Avusa".
As a consequence of the cession of name, it is further proposed to
rename the company ElementOne Limited ("ElementOne"). The reason for the name
"ElementOne" is that the company, following implementation of the transaction,
will have a single remaining major asset, being its investment in Caxton.
Avusa changed its name in November 2007 from Johnnic Communications Limited to
Avusa, and will change its name from Avusa to ElementOne on 31 March 2008,
subject to the required resolution being passed at the general meeting.
3. Avusa share incentive schemes
As a result of the transaction, the Avusa share incentive schemes will be dealt
with as set out below:
3.1 The participants will be entitled to elect whether:
3.1.1 Avusa`s obligations towards them in respect of vested incentives are to
be settled by Avusa in cash within 10 (ten) working days from the date of
adoption of the resolutions referred to in paragraph 11 ("resolutions") and at
the fair value of such vested incentives determined in accordance with 3.4;
or
3.1.2 alternatively, to retain their rights in respect of vested incentives
until they are exercised or lapse, with Avusa`s liabilities in respect thereof
to be assumed by Opco and discharged in terms of 3.5 and 3.6 ("unexercised
incentives").
3.2 Notwithstanding 3.1, participants who hold rights which were awarded
after 31 December 2004, will all be treated in accordance with 3.1.1.
3.3 Subject to and conditional upon the adoption of the resolutions, the
conditions for the vesting of all unvested rights of participants in terms of
the Avusa share incentive schemes, will be deemed to have been fully met and
all such unvested rights will be deemed to have vested, on 29 February 2008
("vesting date").
3.4 The amount to be paid by Avusa to each participant in the circumstances
envisaged in 3.1.1 and 3.2, will be the fair value of the relevant vested
incentives on the vesting date, as determined by Alexander Forbes (or other
reputable actuaries), with reference to the 30-day volume weighted average
price at which Avusa shares (and, where applicable, MTN Group shares) traded on
the JSE up until the vesting date.
3.5 With effect from the date upon which the unbundling is effected, Opco
shall assume all of Avusa`s liabilities towards participants in respect of
unexercised incentives. Participants shall be entitled to exercise their
unexercised incentives against Opco, by way of written notice to that effect to
Opco to be given within 10 (ten) years from the date upon which the relevant
unexercised incentives were originally awarded, or within 30 (thirty) days
after the termination of the employment of the relevant participant with Opco
or any of its subsidiaries, whichever occurs first, failing which such
unexercised incentives shall lapse.
3.6 Unexercised incentives shall be settled, at the election of Opco, either
in shares in Opco or in cash, with reference to the price at which Opco and
Avusa shares (and, where applicable, MTN Group shares) close on the JSE on the
day preceding the date of exercise of the relevant unexercised incentives.
3.7 Opco will acquire a hedging instrument as part of the purchased
operating media and entertainment assets which will cover Opco`s exposure to
participants in respect of unexercised incentives.
4. The disposal
Avusa will, immediately prior to the listing and unbundling and on the disposal
date, subject to the satisfaction of the suspensive conditions set out in
paragraph 7 below, dispose of its operating media and entertainment assets to
its wholly-owned subsidiary, Opco, in terms of an assets-for-shares
transaction in accordance with the provisions of section 42 of the Income Tax
Act, 1962 (Act 58 of 1962), as amended ("Income Tax Act"). The effective date
of the disposal will be 28 March 2008.
The consideration for the disposal will be satisfied by the allotment and issue
by Opco to Avusa of 103 821 152 new Opco shares ("Opco distribution shares")
and the assumption by Opco of certain liabilities of Avusa. The net book value
of the operating media and entertainment assets being disposed of by Avusa to
Opco as at 28 March 2008 is approximately R1 billion.
5. The listing
Subject to shareholder approval of the transaction, the JSE has granted Opco a
listing in the Consumer Services - Publishing sector of the JSE list, under the
abbreviated name "Avusa", with effect from the commencement of business on
Monday, 31 March 2008. Avusa will be renamed "ElementOne" with effect from the
commencement of business on Monday, 31 March 2008.
6. The unbundling
Avusa will distribute the Opco distribution shares to its shareholders by way
of a distribution in specie and a reduction in Avusa`s reserves in terms of
section 90 of the Companies Act, 1973 (Act 61 of 1973), as amended and section
46 of the Income Tax Act. Avusa shareholders will receive one Opco share for
every one Avusa share held on the record date.
7. Suspensive conditions to the transaction
The transaction is subject in its entirety to the fulfilment of each of the
following suspensive conditions:
- the shareholders of Avusa in general meeting having adopted resolutions
authorising the following actions, and, to the extent that such resolutions
are special resolutions, the same having been registered with the Registrar
of Companies:
- the cession of the name "Avusa" by Avusa to Opco;
- the change of name of the company to "Element One Limited";
- the disposal by Avusa of its operating media and entertainment assets to
Opco in accordance with the provisions of the disposal and unbundling
agreement;
- the termination of the Avusa share incentive schemes consequent upon the
cash settlement by Avusa of the obligations arising upon exercise of such
incentives and/or the assumption by Opco of Avusa`s remaining obligations
in respect of unexercised incentives;
- the listing of Opco in the Consumer Services - Publishing sector of the JSE
list; and
- the unbundling by Avusa to its shareholders of its shares in Opco by way of
a distribution in specie in terms of section 46 of the Income Tax Act, in
the ratio of one Opco share for every one Avusa share held at the close of
business on the record date.
8. Financial effects of the unbundling
Pursuant to the unbundling, Avusa shareholders will continue holding Avusa
shares, and will also receive Opco distribution shares. Accordingly, after the
unbundling, there will be no material effect on the earnings and underlying net
asset value attributable to each Avusa shareholder. The only financial effect
of the transaction on the shareholders resulting from the transaction will be
due to the estimated expenses of R5 855 000 relating to the transaction as
disclosed in paragraph 20 of the circular to Avusa shareholders.
The pro forma financial effects below are a summary of the complete pro forma
financial information as set out in Annexure 1 to the circular to Avusa
shareholders. The pro forma financial information has been prepared to
illustrate the impact of the unbundling on the reported financial information
of Avusa for the six months ended 30 September 2007, had the unbundling
occurred on 1 April 2007 for income statement purposes and on 30 September 2007
for balance sheet purposes. The pro forma financial information has also taken
into account the effect of the M-Net/SuperSport transaction. The pro forma
financial information has been prepared for illustrative purposes only and,
because of its nature, may not give a fair reflection of Avusa`s financial
position and results of operations after the unbundling.
Before the After the
M-Net/SuperSport M-Net/SuperSport
transaction transaction but
and the before the
unbundling unbundling
Basic earnings per ordinary share (cents) 1 679 4 034
Basic headline earnings per ordinary
share (cents) 1 681 1 487
Net asset value per ordinary share (cents) 4 260 3 233
Net tangible asset value per
ordinary share (cents) 3 807 3 043
Number of shares in issue (`000) 103 821 103 821
Weighted average number of shares
in issue (`000) 103 821 103 821
After the Percentage
unbundling change
Basic earnings per ordinary share (cents) 3 930 134
Basic headline earnings per ordinary share (cents) 1 383 (18)
Net asset value per ordinary share (cents) 2 316 (46)
Net tangible asset value per ordinary share (cents) 2 316 (39)
Number of shares in issue (`000) 103 821 -
Weighted average number of shares in issue (`000) 103 821 -
Notes:
a) The "Before the M-Net /SuperSport transaction and the unbundling"
financial information has been extracted, without adjustment, from Avusa`s
reviewed interim results for the six months ended 30 September 2007.
b) The basic earnings per ordinary share and basic headline earnings per
ordinary share as reflected in the "After the M-Net/SuperSport transaction
but before the unbundling" financial information are based on the assumption
that the M-Net/SuperSport transaction was implemented on 1 April 2007.
c) The net asset value per ordinary share and net tangible asset value per
ordinary share figures as reflected in the "After the M-Net/SuperSport
transaction but before the unbundling" financial information are based on the
assumption that the M-Net/SuperSport transaction was implemented on 30
September 2007.
d) The basic earnings per ordinary share and basic headline earnings per
ordinary share as reflected in the "After the M-Net/SuperSport transaction
but before the unbundling" column were adjusted for:
? the receipt of the consideration (based on a share price of R169,80 per
Naspers N share, which was the closing share price at Friday, 21 December 2007)
in respect of the disposal of the M-Net/SuperSport stake, the disposal by Avusa
of the M-Net/SuperSport stake, and the unbundling to Avusa shareholders of the
Naspers N shares;
- the elimination of the proportionately consolidated results of M-Net and
SuperSport for the six months ended 30 September 2007;
- the reversal of the brand amortisation (which arises on consolidation) of
R2 million for the six months ended 30 September 2007;
- the payment of CGT of R280 million;
- the payment of STC of R231 million on the unbundling of the Naspers N
shares (see note f);
- the payment of STC of R12 million on Avusa`s dividend declared on 19 June
2007.
- the reduction in interest earned, at an average pre-tax rate of 7,5% per
annum, ofR10 million as a result of the utilisation of Avusa`s cash (after
the introduction of the R250 million cash received as part of the purchase
consideration) to fund Avusa`s CGT and STC payments; and
- costs of approximately R5 million relating to the M-Net/SuperSport
transaction.
e) The net asset value per ordinary share and net tangible asset value per
ordinary share as reflected in the "After the M-Net/SuperSport transaction but
before the unbundling" column were adjusted for:
- the receipt of the consideration (based on a share price of R169,80 per
Naspers N share, which was the closing share price at Friday, 21 December
2007) in respect of the disposal of the M-Net/SuperSport stake, the
disposal by Avusa of the M-Net/SuperSport stake, and the unbundling to
Avusa shareholders of the Naspers N shares;
- the elimination of the proportionately consolidated assets and liabilities
of M-Net and SuperSport at 30 September 2007;
- the elimination of the intangible assets (which arise on consolidation)
comprising goodwill of R221 million and brands of R48 million at 30
September 2007;
- the payment of CGT of R287 million;
- the payment of STC of R240 million on the unbundling of the Naspers N
shares (see note f); and
- costs of approximately R5 million relating to the M-Net/SuperSport
transaction.
f) The STC on the unbundling of the Naspers N shares received as consideration
for the M-Net/SuperSport stake is calculated on the basis that:
- R439 million of available STC credits are utilised in respect of the income
statement pro forma financial effects and that R348 million of available
STC credits are utilised in respect of the balance sheet pro forma
financial effects; and
- R796 million of the unbundled Naspers N shares is paid to shareholders by
means of a reduction of share premium.
g) The basic earnings per ordinary share and basic headline earnings per
ordinary share figures as reflected in the "After the unbundling" financial
information are based on the assumption that the unbundling was implemented on
1 April 2007.
h) The net asset value per ordinary share and net tangible asset value per
ordinary share figures as reflected in the "After the unbundling" financial
information are based on the assumption that the unbundling was implemented on
30 September 2007.
i) The basic earnings per ordinary share and basic headline earnings per
ordinary share as reflected in the "After the unbundling" column were adjusted
for:
- the elimination of the results of the operating media and entertainment
assets (excluding share-based payments) for the six months ended 30
September 2007; and
- the estimated costs of R6 million relating to the transaction.
j) The net asset value per ordinary share and net tangible asset value per
ordinary share as reflected in the "After the unbundling" column were adjusted
for:
- the elimination of the assets and liabilities of the operating media and
entertainment assets at 30 September 2007; and
- the estimated costs of R6 million relating to the transaction.
9. Important dates and times
2008
Circular posted to shareholders on Monday, 25 February
Forms of proxy to be received by 08:00 on Friday, 14 March
General meeting to be held at 08:00 on Tuesday, 18 March
Special resolutions in respect of the change of name and
unbundling lodged for registration with the Registrar of
Companies on Tuesday, 18 March
Results of general meeting and finalisation information
released on SENS on Tuesday, 18 March
Results of the general meeting and finalisation
information published in the press on Wednesday, 19 March
Last day to trade in Avusa shares on the JSE in order
to participate
in the unbundling on Friday, 28 March
Opco distribution shares allotted and issued to Avusa,
pursuant to the disposal and in anticipation of
the unbundling, on Friday, 28 March
Last day to trade under the old name "Avusa Limited" on Friday, 28 March
Change of name on the JSE effective from commencement of
business on Monday, 31 March
Avusa shares trade ex-entitlement to the Opco
distribution shares on Monday, 31 March
Listing of Opco from the commencement of business on Monday, 31 March
Opco shares trade under the new name "Avusa Limited"
under the JSE share code "AVU", abbreviated name
"Avusa" and new ISIN code "ZAE000115895" from
commencement of trading on Monday, 31 March
Avusa shares trade under the new name "ElementOne
Limited" under
the JSE share code "ELE", abbreviated name "Element1"
and new ISIN code "ZAE000115887" from commencement
of trading on Monday, 31 March
Record date to participate in the unbundling on Friday, 4 April
Record date for the change of name on Friday, 4 April
New Avusa share certificates posted by registered post
in South Africa, to certificated shareholders on or about Monday, 7 April
Avusa dematerialised shareholders` accounts at their
CSDP or broker credited with the Opco
distribution shares on Monday, 7 April
ElementOne share certificates, reflecting the change of
name, posted by registered post in South Africa,
to certificated shareholders who have surrendered their
documents of title on or before 12:00 on the record date
(see note 4 below) on or about Monday, 7 April
ElementOne dematerialised shareholders` accounts at
their CSDP or broker updated with the new name on Monday, 7 April
Announcement of apportionment of base cost for CGT
purposes on Tuesday, 8 April
Notes:
1. Any changes to the above dates and times will be released on SENS and
published in the press.
2. All times given above are local times in South Africa.
3. Share certificates may not be dematerialised or rematerialised between
Monday, 31 March 2008 and Friday, 4 April 2008, both days inclusive.
4. Certificated shareholders who surrender their existing documents of
title after 12:00 on the record date, will have their new share certificates,
reflecting the change of name, posted (within five business days of receipt of
their surrendered documents) by the transfer secretaries, by registered post in
South Africa, at the risk of the shareholders concerned.
10. Prospects
Subsequent to the unbundling, Avusa`s remaining major asset will be its direct
and indirect investments in Caxton. Avusa will then constitute a dual listing
of Caxton and f ail to comply with paragraph 4.28(d) of the Listings
Requirements, which states that a listed company must have control (being 50%
plus one of the voting shares) over the majority of its assets. The JSE has
granted Avusa a period of 12 months from the date of the unbundling to remedy
this non-compliance. The directors will pursue the most appropriate route for
all stakeholders.
In terms of the Listings Requirements, if Avusa fails to remedy the
non-compliance within the 12 month period, the JSE has advised that it will
terminate Avusa`s listing.
11. Circular to Avusa shareholders and notice of general meeting
A circular, providing information on the transaction, incorporating a
notice of general meeting and a form of proxy ("the circular") will be posted
to Avusa shareholders on Monday, 25 February 2008.
A general meeting, at which all the resolutions contained in the notice
of general meeting forming part of the circular will be considered and, if
deemed fit, approved, has been convened for 08:00 on Tuesday, 18 March 2008 in
the Auditorium, Ground Floor, 4 Biermann Avenue, Rosebank, Johannesburg.
12. Pre-listing statement
A pre-listing statement for Opco, prepared on the assumption that all of the
resolutions proposed in the notice of general meeting forming part of the
circular will be passed, will also be posted to Avusa shareholders on Monday,
25 February 2008. Shareholders are referred to the abridged pre-listing
statement released on SENS, and published in the press.
Johannesburg
25 February 2008
Investment bank and sponsor
NEDBANK CAPITAL
Legal advisers
WERKSMANS ATTORNEYS
Reporting accountants and auditors
Deloitte
Deloitte & Touche
Registered Auditors
Date: 25/02/2008 08:06:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
