| Tue 15 Apr 2008, 11:21 | | BFS - Blue Financial Services Limited - Issue of u |
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BFS
BFS
BFS - Blue Financial Services Limited - Issue of unsecured convertible bonds
BLUE FINANCIAL SERVICES LIMITED
(Registration number 1996/006595/06)
(JSE Code: BFS
ISIN: ZAE000083655)
("Blue" or "the Company")
ISSUE OF UNSECURED CONVERTIBLE BONDS
1. Introduction
Shareholders are advised that Blue has entered into an agreement with a new
foreign inventor, EMP Africa FII Investments LLC ("EMP"), in terms of which Blue
will issue and sell 10 convertible bonds ("convertible bonds") for US$10 million
("the transaction").
2. Information relating to the convertible bonds
The terms of the convertible bonds are as follows:
Issue and price: 10 convertible unsecured bonds at an
aggregate value of US$10 million.
Interest rate: 10% per annum payable bi-annually in
February and August.
Maturity date: 28 February 2013.
Conversion: All the bonds.
Conversion event: Event of material default / mandatory
conversion.
Mandatory conversion: At a price of R5.30 per Blue ordinary share
(conversion price"), operative immediately
when the price of Blue`s ordinary shares,
based on the weighted average traded price
on the JSE Limited ("JSE"), equals or
exceeds R5.83 for 30 consecutive days.
Currency: Converts to Rand at the actual exchange rate
upon initial receipt of the funds.
Mandatory conversion:
Subject to the JSE Listings Requirements, the conversion price of the shares to
be issued could at the discretion and option of EMP, inter alia, be subject to
adjustment as follows:
- In order to preserve EMP`s proportionate interest, appropriate adjustments
will be made to the number of conversion shares issued in the event of
a re-capitalisation of Blue`s shares via a sub-division or consolidation
or an issue of shares in lieu of a dividend.
- If at any time from and after the closing date (defined as three days after
the fulfilment or waiver of the conditions precedent), Blue issues or sells
any additional shares at a price per share that represents a discount of
more than 10% to the 30 day weighted average traded price on the JSE
("sales discount percentage"), except with respect to the issuance of
shares to AIG Global Emerging Markets Fund II, L.P. ("AIG") pursuant to the
AIG Subscription Agreement, then the conversion price shall be adjusted by
reducing the conversion price by the difference between (a) the conversion
price and (b) the number that is equal to R5.83 less the sales discount
percentage of R5.83.
Event of material default:
Any events occurring, which will constitute an "event of material default" are
set out in detail in the aforementioned agreement and include, inter alia:
- Blue failing to make interest payments on the convertible bonds when due;
- Blue being subject to judgements which call for payments in excess of
US$500 000;
- Blue or any of its subsidiaries being restrained by law from conducting all
or any material part of its business for more than 15 days; and
- Any event, which due to its nature, would reasonably be expected to have a
material adverse effect on the company and its subsidiaries.
3. Conditions precedent
The transaction is subject, inter alia, to the following conditions precedent:
- all permissions required in connection with the lawful issue of the
convertible bonds and the conversion thereof into Blue ordinary shares
being obtained (i.e. shareholder approval); and
- compliance with all regulatory obligations to the extent necessary to
effect the transaction.
4. Financial effects
The unaudited pro forma financial effects of the transaction, for which the
directors are responsible, are provided for illustrative purposes only to show
the effect thereof on earnings, headline earnings, diluted earnings and diluted
headline earnings per share. Because of their nature, the unaudited pro forma
financial effects may not give a fair presentation of the group`s financial
position and performance. The unaudited pro forma financial effects have been
compiled from the reviewed interim financial statements for the six month ended
31 August 2007 and are presented in a manner consistent with the format and
accounting policies adopted by Blue and have been adjusted as described in the
notes below:
Pro
Before forma
the After Percentage
trans- the change
action trans-
action
Earnings per share 5.31 4.60 -13.4
(cents)
Headline earnings per
share (cents) 5.17 4.46 -13.8
Diluted earnings per
share (cents) 4.70 3.99 -15.2
Diluted headline
earnings per share 4.58 3.87 -15.5
(cents)
Weighted average number
of shares in issue 369 949 369 949
(`000)
Fully diluted weighted
average number of shares 445 380 458 925
in issue (`000)
Notes:
1 The "Before the transaction" column information has been extracted from
Blue`s interim results for the six months ended 31 August 2007 as released
on SENS on 31 October 2007.
2. The effects relating to earnings are based on the following assumptions and
information:
- the transaction was effective 1 March 2007;
- the US$10 million received in terms of the convertible bond issue
equalled R72.534 million (based on the relevant R/US$ exchange rate of
7.2534 at the beginning of the period) and interest of 10% per annum
(pre tax) was payable on this amount;
- no adjustments have been made to reflect any benefit (income or
interest earned / saved) to be derived from the proceeds of the
convertible bond issue, in terms the "Guide on Pro Forma Financial
Information" issued by the South African Institute of Chartered
Accountants dated September 2005. Management is nevertheless of the
opinion that the proceeds of the convertible bond will be used in a
manner which will be to the benefit of shareholders;
- the expenses relating to the transaction are insignificant; and
- the number of Blue shares into which the convertible bond would
convert is 13 544 340 for purposes of diluted earnings and headline
earnings per share calculations based on the relevant R/US$ exchange
rate of 7.1785 at the end of the period.
3. The effects relating to the balance sheet are insignificant (less than 3%)
and are therefore not disclosed.
5. Circular to shareholders
Subject to JSE approval, a circular, containing details of the transaction as
well as a notice of general meeting, will be posted to shareholders in due
course.
Pretoria
15 April 2008
Transactional Designed Adviser
Vunani Corporate Finance
Designated Adviser
Ernst & Young Sponsors (Pty) Limited
Date: 15/04/2008 11:21:21 Produced by the JSE SENS Department.
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