| Thu 6 Mar 2008, 12:37 | | BFS - Blue - Formation Of A Subsidiary In Nigeria |
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BFS
BFS
BFS - Blue - Formation Of A Subsidiary In Nigeria And Withdrawal Of
Cautionary Announcement
BLUE FINANCIAL SERVICES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/006595/06
JSE Code: BFS
ISIN: ZAE000083655
("Blue")
FORMATION OF A SUBSIDIARY IN NIGERIA AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
An agreement, dated 6 March 2008, has been entered into between Blue
Employee Benefits (Pty) Limited - Botswana ("BEB"), Blue, Intercontinental
Bank plc ("ICB") and AIG Capital Partners, Inc ("AIG")("the parties") in
terms of which Blue will introduce its products to Nigeria and ICB will
expand its product offering to its clients to include Blue`s products. A
company, Blue Intercontinental Micro Finance Bank ("BIMFB") ("the new
project"), will be established for this purpose ("the Agreement")
(collectively "the transaction").
2. BACKGROUND INFORMATION
BEB is a wholly owned subsidiary of Blue.
ICB is a public company registered as a bank and duly incorporated as such
in accordance with the laws of the Federal Republic of Nigeria.
AIG is an investment fund which is a major shareholder in Blue and
therefore a related party to Blue.
BIMFB will be a newly formed entity, established by BEB for the purpose as
set out in paragraph 1 above and will have no prior operations. BIMFB will
not have any liabilities, indebtedness or obligations other than in terms
of the Agreement. BIMFB will be registered in such a manner that its legal
structure meets the requirements of the Central Bank of Nigeria to qualify
for a Micro Finance Banking License ("MFB license"). In order to obtain a
MFB license, it is a requirement of the Central Bank of Nigeria, that an
amount of one billion Nigerian Naira (approximately US$8.7 million) be
deposited into an account as designated by the Central Bank of Nigeria
("the deposit"). BEB will be responsible for all actions required to
obtain the MFB license. BEB and ICB will provide the funding for the
deposit via the initial capital contributions as set out in paragraph 5
below.
3. RATIONALE
Through its various subsidiaries, Blue provides micro finance and related
products to its clients in a number of African countries, including South
Africa, Namibia, Malawi, Lesotho, Botswana, Zambia, Tanzania, Uganda and
Kenya. Blue has developed various innovative business methodologies and
wishes to make these available to BIMFB in order to establish a successful
operation in Nigeria. ICB provides a wide range of banking products to its
numerous clients in Nigeria.
BEB and ICB have agreed to assist each other in establishing a successful
micro-lender in Nigeria through the formation of BIMFB, in which BEB and
ICB will be shareholders. AIG is an investor in both Blue and ICB. BEB
and ICB have agreed that AIG should participate in the new project in
accordance with certain terms and conditions.
4. CONDITIONS PRECEDENT
The subscription for shares in BIMFB by ICB (refer paragraph 5 below) is
subject to fulfilment, inter alia, of the following conditions precedent by
31 July 2008 ("the ICB conditions precedent"):
- approval of the Agreement by the boards of the parties involved;
- any approvals required by the JSE Limited and the Nigerian Stock
Exchange;
- the proper incorporation of BIMFB and approval of its Articles of
Association by ICB;
- BIMFB being granted a MFB license;
- the enforcement of the Agreement in terms of Nigerian law;
- any relevant approvals required by the South African Reserve Bank; and
- the approval of a business plan for BIMFB by ICB and BEB.
Subject to written agreement between BEB and ICB, the ICB conditions
precedent may be waived, however, if the conditions precedent are not
fulfilled and/or waived by the close of business on 31 July 2008, the
Agreement shall lapse and be of no force or effect unless an extension is
agreed to by the parties.
AIG`s obligation to acquire shares in BIMFB (refer paragraph 5 below) is
subject to fulfilment, inter alia, of the following conditions by 31 July
2008 ("the AIG conditions precedent"):
- approval by AIG`s investment committee of the terms of the Agreement
and the Articles of Association of BIMFB;
- receipt of any Government authority required for AIG to participate in
the transaction; and
- the appointment of an AIG director to the board of directors of BIMFB.
5. SUBSCRIPTIONS FOR BIMFB SHARES
Subject to the ICB conditions precedent, the following initial
subscriptions will be made for BIMFB shares:
- 520 000 shares by BEB for a total subscription price of US$1 million;
and
- 280 000 shares by ICB for a total subscription price of US$10.8
million.
Subject to the AIG conditions precedent, AIG will purchase from BEB that
number of shares which will result in AIG holding 10% of BIMFB for US$5
million.
At the same time as the shares are sold to AIG, further BIMFB shares will
be subscribed for as follows:
- 130 000 shares by BEB for a total subscription price of US$6 million;
and
- 70 000 shares by ICB for a total subscription price of US$3.2 million.
The resulting shareholding in BIMFB will be as follows:
Shareholder %
shareholding
BEB or another member of the Blue 55
group of companies ("the BEB shares")
ICB (the ICB shares") 35
AIG ("the AIG shares") 10
100
6. FUNDING OF THE NEW PROJECT
ICB has agreed to make available a revolving credit facility for purposes
of growing the debtors` book and to fund the operational requirements of
BIMFB to the extent of US$60 million ("the facility"). The facility will
be in the form of an open line of credit and will remain in place for a
minimum period of 10 years. BIMFB shall be entitled to secure additional
funding from any other source provided that ICB will have first right of
refusal to match the terms and conditions of any such additional funding.
7. WARRANTIES
Warranties as are normal in agreements of this nature have been furnished,
including BEB being required to ensure that BIMFB is duly organised,
validly existing and in good standing under the laws of Nigeria.
8. CONVENANTS REGARDING BIMFB SHARES
BEB and/or ICB shall not dispose of all or a lesser portion of their shares
to a third party without first offering to sell such shares to the other
one of them and/or to AIG. AIG, however, will be permitted to sell its
shares without restriction.
It is anticipated that BIMFB will, in due course, be listed on the Nigerian
Stock Exchange or another international stock exchange via an initial
public offer ("IPO"). If BIMFB has not consummated an IPO by the fourth
anniversary of the Agreement, AIG has the right to insist that BEB and ICB
purchase its BIMFB shares for cash at a price to be calculated in
accordance with the Agreement.
9. BOARD OF DIRECTORS OF BIMFB
The board of directors of BIMFB shall consist of seven directors, four of
whom will be appointed by the holders of the majority of the BEB shares,
two appointed by the holders of the majority of the ICB shares and one
director by the holders of a majority of the AIG shares.
10. EFFECTIVE DATE
It is expected that the Agreement will be implemented by no later than 31
July 2008.
11. FINANCIAL EFFECTS
No financial effects are presented as BIMFB will be a newly formed entity.
12. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement, which was renewed on 28 February 2008, is
hereby withdrawn.
PRETORIA
6 March 2008
DESIGNATED ADVISOR
Ernst & Young Sponsors (Pty) Ltd
(Registration Number: 2000/031843/07)
Date: 06/03/2008 12:37:54 Produced by the JSE SENS Department.
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