| Fri 27 Jun 2008, 9:36 | | HCI - Hosken Consolidated Investments Limited - Irrevocable support to acquire |
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HCI
HCI
HCI - Hosken Consolidated Investments Limited - Irrevocable support to acquire
shares in Johnnic Holdings Limited and cautionary announcement
26 June 2008
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
(Share code: HCI ISIN: ZAE000003257)
("HCI" or the "Company")
UNDERTAKING TO ACQUIRE SHARES IN ITS SUBSIDIARY COMPANY, JOHNNIC HOLDINGS
LIMITED ("JOHNNIC")
1. INTRODUCTION
Shareholders are informed that in terms of an agreement entered into between
HCI and Coronation Asset Management (Proprietary) Limited ("Coronation")
finalised on 27 June, 2008, HCI has undertaken to acquire from Coronation its
28.6% shareholding in Johnnic (the "Acquisition") for a consideration of
R16.75 per Johnnic ordinary share (the "Purchase Price"). HCI is considering
concluding the Acquisition in terms of section 440A of the Companies Act,
1973 (Act 61 of 1973), as amended ("the Potential Offer"). The purpose of
this announcement is to provide information on the Acquisition in terms of
the JSE Listings Requirements.
2. RATIONALE
Prior to the Acquisition, HCI held a 67% interest in Johnnic. HCI has
embarked on a strategy to increase its shareholding in Johnnic when an
appropriate opportunity arises. The HCI board of directors believes that the
Acquisition may also provide an opportunity to delist Johnnic and create a
single entry point for the HCI group.
3. BUSINESS OF JOHNNIC
Johnnic is an investment holding company with interests in gaming, hotel and
exhibition businesses. Johnnic is listed on the JSE Limited and comprises the
following major investments:
- 100% Gallagher Estate and properties;
- 30.2% interest in Suncoast Casino through Durban Add-Ventures;
- 9.5% effective interest in the Tsogo Sun Group; and
- 90.5% interest in Montauk Energy Capital.
4. THE ACQUISITION
4.1. Introduction
In terms of the Acquisition, HCI will acquire the entire
shareholding of Coronation of 47 654 721 ordinary shares in Johnnic.
4.2. The Purchase Consideration
HCI will pay R16.75 for every Johnnic ordinary share held by Coronation,
totalling R798 million (the "Purchase Consideration"), and will settle
the Purchase Consideration as follows:
4.2.1. a cash settlement of R720 million; and
4.2.2. 993 542 HCI ordinary shares.
4.3. Pro forma financial effects of the Acquisition on HCI shareholders
for the 12 month period ended 31 March 2008
The table below illustrates the unaudited pro forma financial effects of
the Acquisition based on the published, audited results for the 12 month
period ended 31 March 2008. The preparation of the unaudited pro forma
financial effects is the responsibility of the directors of HCI. The
unaudited pro forma financial effects have been prepared for illustrative
purposes only to provide information on how the Acquisition may have
impacted on HCI`s results and financial position before and after the
Acquisition and due to the nature thereof may not give a fair reflection
of HCI`s results and financial position.
12 months ended Before the After the Change
31 March 2008 Acquisition Acquisition2,3
,4
(R) (R) (%)
Headline earnings 702.10 673.65 -4.05%
per share
Earnings per 562.95 529.66 -5.91%
share
Net asset value 2 375.92 2 356.02 5 -0.84%
per share
Net tangible 1 471.46 1 199.41 5 -18.49%
asset value per
share
Notes:
The financial effects are indicative only and have been based on the
assumptions set out below:
1. The "Before the Acquisition" column for the 12 months ended
31 March 2008 reflects the published HCI audited financial results
for the 12 months ended 31 March 2008.
2. The "After the Acquisition" column has been adjusted for the
effects of the Acquisition by HCI.
3. Calculations for the "After the Acquisition" column have been
based on the assumption that the Acquisition was effected on 1 April
2007 for income statement purposes and on 31 March 2008 for balance
sheet purposes.
4. The "After the Acquisition" column assumes that the consideration
is funded by the issue of 993,542 HCI ordinary shares at a price of
R78.72 per HCI share, R340 million of group cash resources and
raising debt funding of R380 million, assuming an average interest
rate on call funds of 7.84%, an average debt funding rate of 11.29%
and a South African corporate tax rate of 28%.
5. For purposes of calculating Net asset value per share and Net
tangible asset value per share "After the Acquisition", it was
assumed that the excess paid over the net book value of the assets
acquired relates to goodwill which is not impaired.
5. CATEGORISATION
In terms of the JSE Listings Requirements the Acquisition is categorised as a
category two transaction.
6. POTENTIAL OFFER TO REMAINING MINORITY SHAREHOLDERS IN JOHNNIC
The HCI board of directors is considering making the Potential Offer to all
Johnnic minority shareholders on the following basis:
- R16.75 per Johnnic ordinary share in cash; or
- R15.11 in cash and 0.02084876 HCI ordinary shares for every Johnnic
ordinary share held.
Further details in this regard will be provided in due course.
Sandton
27 June 2008
Investment bank and sponsor to HCI
Investec Bank Limited
(Registration number 1969/004763/06)
Date: 27/06/2008 09:36:41 Produced by the JSE SENS Department.
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