| Mon 17 Mar 2008, 7:04 | | CLE/CLI - Clientele Life / Clientele Limited - Restructuring announcement |
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CLE
CLE
CLE/CLI - Clientele Life / Clientele Limited - Restructuring announcement
Clientele Life Assurance Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1973/016606/06)
Share code: CLE ISIN: ZAE000013397
("Clientele Life")
Clientele Limited
(Formerly, Newshelf 901 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2007/023806/06)
Share code: CLI
("Clientele")
Announcement regarding the restructuring of
Clientele Life by way of:
- a scheme of arrangement in terms of section 311 of the companies act, 1973
(act 61 of 1973), as amended ("the companies act"), to be proposed by Clientele
between Clientele life and its shareholders ("the scheme"); and
- the listing of the shares of Clientele on the Jse Limited ("the Jse")
1. Introduction
Clientele Life is a company that conducts long-term insurance business and, as
such, operates within clearly defined and regulated parameters. Whereas the
board of directors of Clientele Life ("the Board") wishes to pursue
opportunities other than those that fall strictly within the field of long-
term insurance, particularly in the financial services arena, Clientele Life
does not have sufficient flexibility to do so. The Board considers that it is
an opportune time to lever off two highly regarded brands, namely, "Clientele"
and "IFA", and pursue such opportunities, thus being able to offer alternative
but complementary products. Furthermore, combining the efficiencies and
distribution know-how to new businesses should add value to the group and its
stakeholders.
The Board, together with its external advisers, embarked upon a careful and
thorough analysis of the best mechanism to achieve these objectives. The Board
considers that these objectives would best be achieved by way of a
restructuring by means of the proposed scheme which will entail the utilisation
of a new limited liability public company, namely Clientele, as the new JSE -
listed holding company of Clientele Life. There are a variety of benefits that
are expected to flow from the implementation of the scheme:
- it will provide the group with flexibility to pursue opportunities that are
not strictly related to long-term insurance and thus should not or cannot be
pursued in a life insurance company;
- it will facilitate the establishment of a short-term insurance business
on a selective basis, an objective that the Board wishes to pursue. Due to
regulatory and other constraints, a subsidiary company holding a licence
to conduct short-term insurance business cannot be undertaken within
Clientele Life;
- long-term insurance companies have limited ability to secure debt funding.
Additionally, raising capital within Clientele Life has an impact on capital
adequacy requirements and consequently the ability of the company to pay
dividends. Implementation of the scheme will assist in alleviating these
constraints should the new initiatives require additional capital in due
course;
- a long-term insurance company has certain asset spreading requirements that
limit its ability to fully reflect the value of its subsidiaries. This will not
be a constraining factor following the scheme;
- potential risks that may accompany new business initiatives outside the
long-term insurance sector can be ring-fenced and will not affect Clientele
Life and its policyholders.
2. The scheme
In order to effect the restructuring, the scheme will be proposed which, if
implemented, will:
- result in:
- Clientele acquiring and holding the entire issued share capital of Clientele
Life and Clientele Life shareholders receiving, in consideration for their
Clientele Life shares, ten new shares in Clientele for each one share
previously held in Clientele Life ("scheme consideration");
- the listing of the shares of Clientele Life on the JSE being terminated and
the shares of Clientele being listed on the JSE;
- establish Clientele as the group`s new holding company and shareholder entry
point on the JSE; and
- give Clientele the flexibility to pursue new business opportunities in
existing or newly established subsidiaries.
3. Conditions precedent
The implementation of the scheme is subject to the fulfilment of the following
conditions precedent:
3.1 the scheme being approved by a majority representing not less than three-
fourths of the votes exercisable by the scheme members present and voting,
either in person or by proxy, at the scheme meeting;
3.2 the High Court of South Africa ("the Court") sanctioning the scheme;
3.3 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies;
3.4 the Registrar of Insurance approving the implementation of the scheme; and
3.5 all other legal and necessary regulatory approvals and consents to the
implementation of the scheme being obtained.
The approval of the South African Reserve Bank has already been obtained for
the restructuring.
4. Irrevocable undertakings
Irrevocable undertakings to vote in favour of the scheme have been received
from the following shareholders of Clientele Life:
Number of Percentage of
Shareholder shares scheme shares
Hollard Holdings (Proprietary) Limited* 19 806 250 61.22
The Hollard Insurance Company Limited 3 437 590 10.63
Hollard Life Assurance Company Limited 2 829 828 8.75
*Hollard Holdings (Proprietary) Limited has the right to exercise the voting
rights attaching to the shares in Clientele Life owned by River Lily
Investments (Proprietary) Limited and Newshelf 702 (Proprietary) Limited.
5. Financial effects
The following unaudited pro forma financial effects, which have been prepared
by and are the responsibility of the Board, are presented for illustrative
purposes only to show the effects of the scheme and because of their nature,
may not give a fair reflection of the financial position or the effect of
future earnings on Clientele Life.
Before After
(before scheme (after scheme
and de facto sub- and de facto sub- Percentage
division)5 division)5 change
Market value per
share (cents) 8 400.00(2) 840.00(3) N/A
Embedded value per
share (cents) 3 262.20(1) 324.67(4) (0.5)
Headline earnings
per share (cents) 199.45(1) 18.40(4) (7.7)
Earnings per share (cents) 199.45(1) 18.40(4) (7.7)
Net asset value per
share (cents) 430.81(1) 41.54(4) (3.6)
Net tangible asset
value per share (cents) 430.81(1) 41.54(4) (3.6)
Notes:
1. Extracted from the published summarised unaudited group results of Clientele
Life for the six months ended 31 December 2007.
2. The price of the shares of Clientele Life on the JSE at the close of
trading on the JSE on the last practicable date for purposes of this
announcement, namely 29 February 2008.
3. Taking account of the de facto sub-division referred to in note 5 below and
the price of Clientele Life shares at the close of trading on the JSE at the
last practicable date for purposes of this announcement, the illustrative share
price (all other things being equal) at which the shares of Clientele could be
expected to commence trading on the JSE assuming that the listing of the shares
of Clientele was to take place too on 29 February 2008.
4. Following the illustrative de facto sub-division of Clientele Life shares
referred to in note 5 below and expensing of estimated restructuring costs.
5. Subject to implementation of the scheme and in terms thereof, shareholders
of Clientele Life will effectively have exchanged their shares in Clientele
Life for new shares in Clientele in the ratio of ten new Clientele shares for
every one Clientele Life share previously held. Their shares in Clientele Life
will have been subjected to a de facto sub-division. Clientele Life
shareholders will thus retain proportionately the same percentage interest in
Clientele as they did in Clientele Life.
One effect of the scheme is that the JSE market price of a Clientele share (all
other things being equal) can be expected to trade at one-tenth of the last
recorded price of a Clientele Life share prior to the suspension of the listing
of the shares of Clientele Life on the JSE, expected to take place at the
commencement of trading on the JSE on Monday, 19 May 2008. This is due to the
fact that each Clientele Life shareholder will have ten times the number of
shares in Clientele as previously held in Clientele Life.
6. Cash confirmation
No cash confirmation has been provided to the Securities Regulation Panel ("the
SRP") as the scheme consideration comprises the allotment and issue of new
shares in Clientele.
7. Opinions and recommendations
7.1 The Board has considered the terms of the scheme and is of the unanimous
opinion that the terms and conditions of the proposed scheme are fair and
reasonable to all shareholders. Those directors of Clientele Life who own
shares in their own right intend to vote such shares in favour of the proposed
scheme at the scheme meeting. Accordingly, the Board recommends that
shareholders vote in favour of the scheme at the scheme meeting. The interests
of the Board will be disclosed in the circular referred to in paragraph 9 below.
7.2 The scheme is an "affected transaction" as defined by the Rules of the
SRP. However, as the substance of the scheme is to facilitate the restructuring
of Clientele Life by shareholders, in effect simply "exchanging" their shares
in Clientele Life for shares in Clientele, dispensation from the need to
appoint an independent financial adviser to advise the Board on whether the
terms and conditions of the proposed scheme are fair and reasonable to
shareholders has been sought and obtained from the SRP.
8. Important dates and times
At the date of this announcement, the following are the expected important
dates and times pertinent to the scheme and the restructuring:
2008
Document comprising the scheme and the Pre-listing
Statement of Clientele,
posted to shareholders of Clientele Life on Friday, 4 April
Last day to trade shares of Clientele Life on the JSE
in order to vote at the scheme meeting on Thursday, 17 April
Voting record date for purposes of being entitled to
vote at the scheme meeting on Thursday, 24 April
Last day for receipt of proxies for the scheme meeting,
by 09:00 (see note 3 below) on Friday, 25 April
Scheme meeting to be held at 09:00 on Wednesday, 30 April
Results of scheme meeting released on SENS on Wednesday, 30 April
Results of scheme meeting published in the press on Friday, 2 May
Court hearing to sanction the scheme on Tuesday, 13 May
Fulfilment of conditions precedent released on SENS on Wednesday, 14 May
Fulfilment of conditions precedent published in the
press on Wednesday, 14 May
Expected last day to trade on the JSE for shareholders
of Clientele Life to be eligible to receive the
scheme consideration on Friday, 16 May
Expected suspension of listing of Clientele Life shares
on the JSE from the commencement of trading on the JSE on Monday, 19 May
Expected commencement of the listing of the shares of
Clientele on the JSE from the commencement
of trading on the JSE on Monday, 19 May
Expected scheme consideration record date on which
shareholders of Clientele Life must be recorded
in the register in order to receive the scheme
consideration on Friday, 23 May
Expected operative date of the scheme at the
commencement of trading on the JSE on Monday, 26 May
Expected termination of the listing of the shares of
Clientele Life on the JSE from the commencement of
trading on the JSE on Monday, 26 May
Scheme consideration expected to be posted by
registered post to certificated scheme participants
(if documents of title are received by the transfer
secretaries on or before 12:00 on the scheme
consideration record date) on Monday, 26 May
or
failing receipt of documents of title on or before
12:00 on the scheme consideration record date,
within five business days of receipt thereof by the
transfer secretaries of Clientele Life
Dematerialised scheme participants expected to have
their accounts held at their Central Securities
Depository Participant or broker credited with the
scheme consideration on Monday, 26 May
Notes:
1. All or any of the above dates and times are subject to change. Any such
change will be released on SENS and published in the press.
2. Shareholders of Clientele Life are advised that as trading in shares is
settled within the Strate environment five business days following a trade,
shareholders acquiring shares after Thursday, 24 April 2008 will not be
eligible to vote at the scheme meeting.
3. If a form of proxy for the scheme meeting is not received by the time and
date shown above, it may be handed to the chairperson of the scheme meeting not
less than 10 minutes before the scheduled time for the commencement of the
scheme meeting.
4. No dematerialisation or rematerialisation of Clientele Life share
certificates may take place after Friday, 16 May 2008.
9. Further announcement and circular
A further announcement is expected to be made on or about Thursday, 3 April
2008 confirming the important dates and times referred to in paragraph 8 above
as well as any updates pertinent to the scheme.
A circular containing full details of the scheme and a Pre-listing Statement of
Clientele is presently in the course of preparation and will subject to the
required approvals of the SRP and the JSE, be posted to shareholders of
Clientele Life on or about Friday, 4 April 2008.
Johannesburg
17 March 2008
Corporate adviser and sponsor
PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Attorneys
Edward Nathan Sonnenbergs
Edward Nathan Sonnenbergs Inc.
Registration number 2006/018200/21
Auditors and reporting accountants
PRICEWATERHOUSECOOPERS
PricewaterhuseCoopers Inc
Chartered Accountants (SA)
Registered Accountants and Auditors
(Registration number 1998/012055/21)
Date: 17/03/2008 07:04:47 Produced by the JSE SENS Department.
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