| Wed 19 Mar 2008, 17:43 | | IPL - Imperial Holdings - Financial Effects And Salient Dates And Withdrawal Of |
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IPL IPLP
IPL
IPL - Imperial Holdings - Financial Effects And Salient Dates And Withdrawal Of
Cautionary Announcement
Imperial Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1946/021048/06)
Ordinary share code: IPL & ISIN number: ZAE000067211
Preference share code: IPLP ISIN number: ZAE000088076
("Imperial" or "the Company" or "the Group")
Financial effects and salient dates announcement relating to the proposed
listing on the main board of the JSE Limited of Imperial`s Leasing and Capital
Equipment division, the unbundling of Imperial`s interest in the Leasing and
Capital Equipment division, the proposed buy-out of MCC minority shareholding
and withdrawal of cautionary announcement
1. Introduction
Further to the detailed cautionary announcement released on SENS on
Wednesday, 27 February 2008 ("detailed cautionary announcement"), Imperial
is pleased to advise shareholders of the financial effects and the salient
dates relating to:
- the proposed listing on the JSE Limited ("JSE") of its Leasing and
Capital Equipment division which will be incorporated under a single
entity, Eqstra Holdings Limited ("Eqstra"), followed by the unbundling
of Imperial`s interest in Eqstra ("the unbundling"); and
- the proposed buy-out of the MCC group of companies ("MCC") minority
shareholding in exchange for shares in Eqstra ("MCC minority
transaction") (collectively "the transactions").
In addition to the conditions precedent disclosed in the detailed
cautionary announcement, the listing of Eqstra will be subject to the
articles of association of Eqstra and its subsidiaries being approved by
the JSE at least six days prior to the last day to trade ("LDT") (LDT being
Friday, 9 May 2008 as per the salient dates and times included in paragraph
4 below). Other than this additional condition precedent, shareholders are
advised that there has not been any material change in the terms of the
transactions since the publishing of the detailed cautionary announcement
and that all substantive agreements in relation to the transactions have
now been concluded.
Eqstra will, subject to the fulfilment of the suspensive conditions of the
unbundling, be listed on the JSE on or about 12 May 2008, upon which
Imperial will unbundle its interest in Eqstra to all Imperial shareholders.
Each Imperial ordinary shareholder will receive one Eqstra share for each
Imperial ordinary share held on the record date of the unbundling.
The unbundling and listing of Eqstra will be accompanied by the replication
of the existing Imperial Black Economic Empowerment ("BEE") ownership
structure, consisting of two BEE partners, namely Ukhamba Holdings
(Proprietary) Limited ("Ukhamba") and Lereko Mobility (Proprietary) Limited
("Lereko Mobility"). Furthermore, through the MCC minority transaction,
Nozala Investments (Proprietary) Limited will become a direct shareholder
in Eqstra.
Shareholders are encouraged to read this announcement in conjunction with
the detailed cautionary announcement.
2. Pro forma financial effects
2.1. Pro forma financial effects of the unbundling on Imperial
The table below sets out the unaudited pro forma financial effects of the
unbundling on Imperial`s unaudited basic earnings per share ("EPS"), fully
diluted basic EPS, headline earnings per share ("HEPS"), fully diluted
HEPS, net asset value ("NAV") per ordinary share and tangible NAV ("TNAV")
per ordinary share based on the unaudited results of Imperial for the six
months ended 31 December 2007.
The unaudited pro forma financial effects are the responsibility of the
Imperial directors and have been prepared for illustrative purposes only to
provide information about how the Imperial unbundling may have affected the
financial position of Imperial on the relevant reporting date. Due to the
fact that the unaudited pro forma financial effects are based on the
unaudited interim results, this may not be a fair reflection of Imperial`s
financial position after the implementation of the unbundling.
Cents Imperial Imperial Change
before after the (%)
the unbundlin
unbundlin g
g
EPS (39.0)
(289.6) (402.6)
Fully diluted EPS (42.1)
(246.3) (349.9)
HEPS (17.8)
535.5 440.1
Fully diluted HEPS (17.2)
510.0 422.5
NAV per share (13.8)
5,569.0 4,799.3
TNAV per share (14.6)
5,077.4 4,337.3
Notes:
1. The pro forma financial effects are based on the unaudited results of
Imperial for the six months ended 31 December 2007. The financial impact on
the earnings of Imperial is illustrated as if the unbundling had been
completed at the beginning of the 2008 financial year, (being 26 June
2007), while the impact on the net assets of Imperial is shown as if the
unbundling had been implemented on 31 December 2007.
2. The unbundling will be implemented in compliance with section 90 of the
Companies Act, 1973, as amended ("Companies Act") and in terms of section
46 of the Income Tax Act, 1962.
3. The adjustments include the following items:
- the reversal of Imperial`s attributable portion of Eqstra`s earnings for
the six months ended 31 December 2007. The balance sheet effect represents
the elimination of the attributable book value of Eqstra`s net assets on
the consolidated Imperial balance sheet as at 31 December 2007;
- in anticipation of robust growth in Eqstra, Imperial will introduce a
further R400 million in equity to strengthen Eqstra`s balance sheet. An
interest rate of 10.5% has been assumed for the income statement effect;
- Eqstra`s portion of the loan to the Imperial Share Purchase Trust which is
to be transferred to Eqstra;
- in terms of the Lereko Mobility BEE transaction both Imperial and Eqstra
will have a call option to their respective shares. Eqstra`s portion of the
call option has effectively been transferred;
- the listing and unbundling costs of R10 million have been expensed;
- the Imperial group has 23 864 456 shares in treasury and will, upon
unbundling, receive 23 864 456 Eqstra shares representing 8.2% of all
classes of shares issued by Eqstra (post unbundling and the implementation
of the MCC minority transaction); and
- a tax rate of 29% has been used for adjustments where necessary.
2.2 Pro forma financial effects on Eqstra
The table below sets out the unaudited pro forma financial effects on
Eqstra of the additional funding, the Lereko call option, the repricing of
debt and unbundling journals ("restructuring transactions") and MCC
minority transaction, based on the unaudited results of Eqstra for the six
months ended 31 December 2007.
The unaudited pro forma financial effects are the responsibility of the
Eqstra directors and have been prepared for illustrative purposes only to
provide information about how the restructuring transactions and the MCC
minority transaction may have affected the financial position of the Eqstra
shareholders. Due to their nature the unaudited pro forma financial effects
may not be a fair reflection of Eqstra`s financial position after the
implementation of the restructuring transactions and the MCC minority
transaction.
Cents Imperial Adjusted Adjusted
Leasing and Eqstra after Eqstra after
Capital restructuring restructuring
Equipment transactions and buy- out
division before the of MCC
before the buy-out of minority
unbundling MCC minority shareholders
shareholders
EPS 95.5 78.2 95.9
HEPS 80.1 62.9 83.3
NAV per share 559.3 732.2 709.4
TNAV per share 532.8 720.5 699.7
Notes:
1. The `Imperial Leasing and Capital Equipment division before the unbundling`
represents the pro forma financial effects based on the unaudited results
of the Imperial Leasing and Capital Equipment division for the six months
ended 31 December 2007.
2. The `Adjusted Eqstra after restructuring transactions before the buy-out of
MCC minority shareholders` column represents the unaudited pro forma
results of the unbundled Eqstra after taking into account:
2.1 In anticipation of robust growth in Eqstra, Imperial will introduce a
further R400 million in equity to strengthen Eqstra`s balance sheet.
An interest rate of 10.5% has been assumed for the income statement
effect.
2.2 Eqstra`s portion of the loan to the Imperial Share Purchase Trust
which has been brought to account. This represents the existing loans
for the purchase of Imperial shares.
2.3 Eqstra will issue 14 516 617 "B" deferred ordinary shares to Lereko in
terms of the existing BEE Transaction at a par value of 0.1 cent per
share. In return, Eqstra has a call option on the converted shares
with a value of R117 261 000. As this was acquired as part of the
unbundling from Imperial, this is treated as an equity increase.
2.4 Eqstra will replace its inter-company debt with its own bank funding
which is at a higher interest rate of approximately the Johannesburg
Interbank Agreed Rate ("JIBAR") plus 155 basis points.
2.5 Eqstra listing costs will be written off to share premium upon listing
as allowed in terms of section 76 of the Companies Act.
3. The `Adjusted Eqstra after restructuring and buy-out of MCC minority
shareholders` column represents the pro forma results of the unbundled
Eqstra after taking into account the effect of the restructuring and MCC
minority transactions.
The 49.9% minority shareholders interest in MCC will be acquired by Eqstra
for the issue of shares in Eqstra as of the listing date. The purchase
price of R1 157 million will be settled by the issuance of 46 260 000
ordinary shares in Eqstra. In terms of the International Financial
Reporting Standard ("IFRS") number 3 "Business Combinations", which Eqstra
has early adopted, goodwill has not been recognised on this related party
transaction.
4. Eqstra will issue 16 781 968 "A" deferred ordinary shares to Ukhamba in
terms of the Imperial Holdings Limited BEE transaction.
5. A tax rate of 29% has been used for adjustments where necessary.
The financial effects set out above have been prepared based on IFRS and
interpretations of IFRS applicable at 31 December 2007. It should be noted
that IFRS is continuing to evolve through the issue and/or endorsement of
new Standards and Interpretations and developments in the application of
recently issued Standards. For that reason, it is possible that the
financial impact and adjustments reflected above may change before the
presentation of the results of Eqstra for the year ending 30 June 2008.
3. Fairness opinions
Fairness opinions from an independent professional expert, in terms of the
JSE Listings Requirements, are required to determine whether the MCC
minority transaction and the issuance of unlisted voting instruments (i.e.
the "A" and "B" deferred ordinary shares) by Eqstra to both Ukhamba and
Lereko Mobility are fair to Imperial shareholders.
In addition, an expert`s opinion is required in terms of the debenture
trust deed on the impact of the Eqstra unbundling on the redeemable equity-
linked debentures.
Deloitte & Touche Corporate Finance was appointed as the independent
professional expert to opine on the fairness to Imperial`s shareholders of
the MCC minority transaction and the issuance of unlisted voting
instruments as well as the impact of the unbundling on the redeemable
equity linked debentures. Deloitte & Touche Corporate Finance is of the
opinion that the terms and conditions of the MCC minority transaction and
the issue of unlisted voting instruments are fair to Imperial shareholders.
Deloitte & Touche Corporate Finance is also of the opinion that the revised
terms and conditions of the Lereko Mobility redeemable equity-linked
debentures are fair to debenture holders.
The opinions from Deloitte & Touche Corporate Finance will be contained in
the respective circulars to shareholders and debenture holders.
4. Salient dates and times
The salient dates relating to the transactions are set out below.
2008
Last day for the receipt of proxy forms for the Wednesday, 16 April
combined general meeting by 10:00 on
Combined general meeting of Imperial ordinary Friday, 18 April
shareholders and preference shareholders to be held at
Imperial Place Jeppe Quondam, 79 Boeing Road East,
Bedfordview at 10:00 on
Results of the combined general meeting released on Friday, 18 April
SENS on
Results of the combined general meeting published in Monday, 21 April
the press on
Last day to trade in Imperial ordinary shares on the Friday, 9 May
JSE to participate in the unbundling on
Imperial ordinary shares trade "ex" their entitlement Monday, 12 May
to Eqstra shares on
Imperial ordinary shareholders commence trading their Monday, 12 May
unbundled Eqstra shares (the JSE code will be EQS and
the ISIN will be ZAE000117123) on
Announcement of specified ratio in respect of the Wednesday, 14 May
apportionment of the cost/base cost of Eqstra for
taxation/CGT purposes on or about
Record date to participate in the unbundling on Friday, 16 May
Dematerialised Imperial ordinary shareholders will Monday, 19 May
have their accounts with their CSDP or broker updated
with the unbundled Eqstra shares on
Share certificates in respect of the unbundled Eqstra Monday, 19 May
shares will be posted, by registered post, at the risk
of the certificated Imperial ordinary shareholder
concerned, to certificated Imperial ordinary
shareholders on or about
Notes:
1. These dates and times are subject to change. Any material change will be
released on SENS and published in the press. Any reference to time is a
reference to South African time.
2. No dematerialisation or rematerialisation of Imperial ordinary share
certificates may take place between Monday, 12 May 2008 and Friday, 16 May
2008, both days inclusive.
5. Posting of the circular and pre-listing statement
A circular, providing further information on the transactions and
containing a notice of general meeting and a form of proxy, will be posted
to Imperial shareholders on Thursday, 20 March 2008 after which it will be
published on the Imperial website (www.imperial.co.za).
A pre-listing statement, providing further information on Eqstra, will also
be posted to Imperial shareholders on Thursday, 20 March 2008 after which
it will be published on both the Imperial and Eqstra websites
(www.imperial.co.za and www.eqstra.co.za).
6. Withdrawal of cautionary
The cautionary announcement is hereby withdrawn and accordingly caution is
no longer required to be exercised by shareholders when dealing in their
Imperial ordinary shares.
7. Conference call with Eqstra management
Shareholders and other interested parties are invited to join a call with
Eqstra management at 12.00 on Thursday, 20 March 2008, to discuss the
salient points of the proposed unbundling and listing.
The applicable dial in number is +27 (0)11 535 3600 upon which you should
ask to join the Eqstra call.
Johannesburg
19 March 2008
www.imperial.co.za
Merchant bank and transaction sponsor to Imperial: Rand Merchant Bank (A
division of FirstRand Bank Limited)
Legal adviser: Tugendhaft Wapnick Banchetti & Partners
Reporting accountants and auditors: Deloitte & Touche
Independent expert: Deloitte & Touche
Sponsor: Merrill Lynch South Africa (Proprietary) Limited
Date: 19/03/2008 17:43:09 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.
