| Tue 5 Aug 2008, 15:28 | | BAWP - Barloworld Limited - Re-Pricing Of Barloworld`s 10% Broad-Based Black |
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BAW BAWP
BAW
BAWP - Barloworld Limited - Re-Pricing Of Barloworld`s 10% Broad-Based Black
Ownership Initiative
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
JSE share code: BAW
JSE ISIN: ZAE000026639
JSE share code: BAWP
JSE ISIN: ZAE000026647
("Barloworld")
RE-PRICING OF BARLOWORLD`S 10% BROAD-BASED BLACK OWNERSHIP INITIATIVE
1. Highlights
- Re-pricing of black ownership initiative at R83.31
- Now based on 30 day VWAP to 9 July
- Ensures sustainability of Black Economic Empowerment ("BEE") ownership
- Economic cost reduced to about 2.8% of market capitalisation
- Circular to be posted to shareholders on or about 15th August
Clive Thomson CEO said: "It is important for our BEE transaction to be
sustainable into the future. Due to the recent re-rating of the South
African equities market and Barloworld share price since our announcement
on 12th June, our board has recommended re-pricing the Barloworld black
ownership initiative. The economic cost of the transaction for
shareholders has been recalculated at 2.8% (previously 3.2%) of the
company`s market capitalisation."
2. Introduction
Barloworld shareholders are referred to the announcement published on SENS
on Thursday, 12 June 2008 and in the press on Friday, 13 June 2008 ("the
announcement") and are advised that the board of directors of Barloworld
("the board") has resolved to re-price the 10% Broad-based Black Ownership
Initiative ("the black ownership initiative").
The black ownership initiative was originally priced based on a 30 day
volume weighted average share price ("VWAP") of an ordinary share in the
share capital of Barloworld ("Barloworld ordinary share") calculated for
the 30 trading days ending at the close of trading on Friday, 6 June 2008
("price calculation date"), being R103.87 ("the current price"). Since the
announcement, the South African listed equities market has declined
significantly, as has the Barloworld share price.
To ensure the continued sustainability of the black ownership initiative,
it is proposed that the price calculation date be amended to 9 July 2008
("the amended price calculation date"). The 30 day VWAP of a Barloworld
ordinary share calculated for the 30 trading days ending on the amended
price calculation date is R83.31 ("the proposed re-pricing").
3. Rationale
The board is of the opinion that the proposed re-pricing will ensure the
sustainability of the black ownership initiative for the following reasons:
- to ensure a meaningful transfer of value to the black participants of the
black ownership initiative. At the proposed price this transfer of value is
significantly enhanced;
- to ensure that Barloworld`s BEE credentials remain at the same level;
- the funding agreements require a minimum share price cover on the date that
the funds are transferred. Based on the proposed price the risk of
breaching this minimum share cover ratio is reduced.
4. Economic cost
Barloworld has estimated the revised economic cost, based on current market
conditions, of the black ownership initiative for the duration of the
transaction to be approximately R481 million (of which R290 million will be
recognised in profit or loss in the first six months), calculated in
accordance with International Financial Reporting Standards ("IFRS") in
respect of share based payments. This translates into approximately 2.8% of
the market capitalisation of Barloworld calculated with reference to the
closing 30-day VWAP of R83.31 per Barloworld ordinary share on Wednesday, 9
July 2008.
5. Conditions precedent
The black ownership initiative remains subject to the fulfillment of the
suspensive conditions set out in the announcement.
6. Pro forma financial effects
The revised pro forma financial effects set out below have been prepared to
assist Barloworld shareholders to assess the impact of the black ownership
initiative on the earnings ("EPS"), headline earnings ("HEPS"), net asset
value ("NAV") and tangible NAV ("TNAV") per Barloworld ordinary share. The
material assumptions are set out in the notes following the table. These
pro forma financial effects have been disclosed in terms of the JSE Limited
("JSE") Listings Requirements and do not constitute a representation of the
future financial position, changes in equity, results of operations or cash
flows of Barloworld on implementation of the black ownership initiative.
The pro forma financial effects are the responsibility of the board and are
provided for illustrative purposes only.
Before the After the Percentage
implementation implementation change
of the black of the black
ownership ownership
initiative initiative
(cents) (cents)
EPS 506.4 352.3 (30.4)
HEPS 370.2 216.8 (41.4)
NAV per share 6 584 6 546 (0.6)
TNAV per share 5 391 5 358 (0.6)
Notes:
1. The EPS, HEPS, NAV per Barloworld ordinary share and TNAV per
Barloworld ordinary share "Before the implementation of the black
ownership initiative" are based on the interim results for the six
months ended 31 March 2008.
2. The EPS and HEPS "After the implementation of the black ownership
initiative" are based on the assumption that the black ownership
initiative was implemented on 1 October 2007 and include the
following:
- An IFRS2 charge of R290 million based on the Barloworld closing
share price on 9 July 2008 of R67.80 and the 30-day VWAP up to
that date of R83.31.
- Additional interest of R8 million incurred on replacing existing
funding of R1 207 million at an average rate of 11.5% per annum
with the funding from the black ownership initiative at a rate of
12.83% per annum.
- Transaction costs recognised in profit or loss amounting to R13
million associated with the implementation of the black ownership
initiative.
- Charges amounting to R29 million, representing the payment of
dividends to the strategic black partners and the community
service groups in respect of the 2007 final dividend of 200 cents
per Barloworld ordinary share.
3. The NAV per Barloworld ordinary share and TNAV per Barloworld ordinary
share "After the implementation of the black ownership initiative" are
based on the assumption that the black ownership initiative was
implemented on 31 March 2008.
4. The EPS and HEPS "After the implementation of the black ownership
initiative" are based on 205 233 329 weighted average Barloworld
ordinary shares in issue (204 190 329 weighted average Barloworld
ordinary shares in issue as per the interim results plus 1 043 000
Barloworld ordinary shares issued in the first year to the
participants of the General Staff Trust).
5. The NAV per Barloworld ordinary share and TNAV per Barloworld ordinary
share "After the implementation of the black ownership initiative" are
based on 205 603 750 Barloworld ordinary shares in issue (204 560 750
Barloworld ordinary shares in issue as per the interim results plus 1
043 000 Barloworld ordinary shares issued in the first year to the
participants of the General Staff Trust).
7. Important dates and times
The revised salient dates and times in respect of the black ownership
initiative are set out below:
2008
Circular and notice of general meeting Friday, 15 August
posted to shareholders on or about
Last day for receipt of proxies in respect Thursday, 4 September
of the general meeting by 10:30 on
General meeting of shareholders at 10:30 on Monday, 8 September
Results of general meeting released on SENS Monday, 8 September
on
Results of general meeting published in the Tuesday, 9 September
press on
Notes:
1. The abovementioned times and dates are South African times and dates, and
are subject to change. Any such change will be published on SENS and in the
press.
Sandton
5 August 2008
Investment bank and transaction sponsor
Standard Bank
Sponsor
JP Morgan Equities Limited
Attorneys
Bowman Gilfillan
Reporting accountants and auditors
Deloitte & Touche
Empowerment adviser
Empowerdex
Date: 05/08/2008 15:28:00 Produced by the JSE SENS Department.
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