| Thu 4 Sep 2008, 8:35 | | Liberty / Libhold / Standard Bank - Joint Announcement |
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LGL LBH SBK
LIBU LBH SBK
LGL / LBH / SBK - Liberty / Libhold / Standard Bank - Joint Announcement
Liberty Group Limited
Registration No. 1957/002788/06
Incorporated in the Republic of South Africa
JSE share code: LGL
ISIN: ZAE000057360
("Liberty")
Liberty Holdings Limited
Registration No. 1968/002095/06
Incorporated in the Republic of South Africa
JSE share code: LBH
ISIN: ZAE000004032
("Libhold")
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
JSE share code: SBK
NSX share code: SNB
ISIN: ZAE000109815
("Standard Bank")
JOINT ANNOUNCEMENT BY LIBERTY, LIBHOLD AND STANDARD BANK IN RESPECT OF THE
PROPOSED RESTRUCTURING OF THE LIBERTY GROUP, WHICH INVOLVES:
* AN OFFER BY LIBHOLD TO ACQUIRE ALL OF THE ISSUED ORDINARY SHARES OF
LIBERTY (OTHER THAN THOSE ALREADY HELD BY LIBHOLD AND LIBERTY`S TREASURY
SHARES) IN EXCHANGE FOR AN ISSUE OF ORDINARY SHARES IN LIBHOLD;
* THE SUBDIVISION OF LIBHOLD`S AUTHORISED AND ISSUED ORDINARY SHARE
CAPITAL AND AN INCREASE OF LIBHOLD`S AUTHORISED ORDINARY SHARE CAPITAL;
AND
* THE WITHDRAWAL OF LIBHOLD`S CAUTIONARY ANNOUNCEMENT.
1. INTRODUCTION
Further to the cautionary announcement released by Libhold on 21 July 2008, the
shareholders of Liberty, Libhold and Standard Bank are advised that Libhold has
agreed with Liberty to propose a scheme of arrangement ("scheme") in terms of
section 311 of the Companies Act No. 61 of 1973, as amended ("Companies Act")
between Liberty and all of its members in terms of which Libhold will acquire
all the shares in the issued share capital of Liberty, other than those already
held by Libhold and the Liberty shares owned by Liberty`s wholly-owned
subsidiary Lexshell 615 (Proprietary) Limited ("treasury shares"), in exchange
for an issue of ordinary shares in Libhold ("consideration shares").
2. RATIONALE FOR THE SCHEME
While Liberty will remain a leading South African long-term insurer, Liberty
also wishes to re-structure its assets and the holding thereof in order to
position itself best for its intended growth in areas other than long-term
insurance. The diversification of the Liberty group`s wealth operations
commenced in 2007, when Liberty acquired the shares that it did not already own
in STANLIB Limited, which is the third largest asset manager in South Africa.
Liberty has recently announced its intention to re-enter the health care market
both in South Africa and other emerging market countries. As Liberty looks to
further its diversification into different wealth businesses, as well as
geographically expand its operations, it would be more appropriate to implement
a structure with a listed holding company that holds directly the various
non-long-term insurance business units alongside Liberty, the regulated long-
term insurer. This requires that shareholders in Liberty hold their interests
through a listed company other than Liberty.
Libhold currently owns 145 156 070 shares in Liberty, which represents
approximately 51.15% of the issued ordinary share capital of Liberty (excluding
the treasury shares). Libhold has no assets other than this shareholding in
Liberty, certain cash to be received from Liberty`s interim dividend and certain
liquid assets. Libhold therefore constitutes the ideal vehicle for the
abovementioned restructuring of the Liberty group which Liberty wishes to
effect.
The rationale for the scheme is therefore to ensure that all shareholders in the
Liberty group hold their investments through Libhold so that Liberty can be
de-listed from the securities exchange operated by JSE Limited ("JSE") and then
implement its restructuring at the operating company level to facilitate its
future growth strategy.
3. THE CONSIDERATION SHARES
Since the object of the scheme is a group restructuring rather than a take-out
of minority shareholdings, it is intended that the scheme should in essence be
economically neutral to both Liberty shareholders and Libhold shareholders.
In order to achieve such economic neutrality, Libhold will:
- subdivide and increase its existing ordinary share capital; and
- retain certain cash and liquid assets to cover its existing
liabilities and the value of the shortfall in the number of Liberty
shares owned by it below the number of shares in its issued share
capital after that sub-division. The value of that shortfall will
be calculated prior to the scheme meeting and any cash not required
for this purpose will be distributed by Libhold to its shareholders
as a dividend prior to the implementation of the scheme.
As a result, the value of each issued Libhold share should essentially be equal
to the value of a Liberty share and the scheme will provide for Liberty
shareholders to receive one consideration share for every Liberty share which
they transfer to Libhold in terms of the scheme. The consideration shares will
be listed on the JSE and will rank pari passu with the existing Libhold ordinary
shares.
Due to the essential economic neutrality, the scheme should preserve the values
of current direct and indirect shareholdings in Liberty and the financial
effects of the scheme for shareholders of Liberty, Libhold and Standard Bank
will be insignificant.
4. CONDITIONS PRECEDENT
The issuing to Liberty shareholders of the circular relating to the scheme is
subject to the fulfilment of the condition precedent that the High Court of
South Africa ("Court") grants an order convening a meeting of Liberty
shareholders ("scheme meeting") to approve the scheme. The scheme itself will
be subject to the fulfilment, on or before 31 December 2008, of the conditions
precedent that:
4.1 the scheme shall have been approved, with or without modification, at
the scheme meeting by a majority representing not less than three-
fourths (75%) of the votes exercisable by Liberty members who are
present and voting either in person or by proxy at the scheme meeting;
4.2 the shareholders of Libhold in general meeting shall have adopted a
special resolution to subdivide each Libhold ordinary share into three
ordinary shares and increase the authorised ordinary share capital of
Libhold ("Libhold special resolution"), and the Libhold special
resolution shall have been registered by the Registrar of Companies;
4.3 the shareholders of Libhold in general meeting shall have adopted an
ordinary resolution approving the implementation by Libhold of the
scheme;
4.4 the Court shall have granted an Order that the scheme be sanctioned in
terms of section 311 of the Companies Act and approved in terms of
section 37 of the Long-term Insurance Act and the Order in terms of
section 311 of the Companies Act shall have been registered by the
Registrar of Companies; and
4.5 Liberty, Libhold and Standard Bank shall have obtained any other
regulatory approvals which may be required.
5. LIBHOLD EGM
In terms of the JSE`s Listings Requirements, the scheme constitutes a category 1
transaction for Libhold and a category 2 transaction for Standard Bank.
Consequently, and in order to proceed with the scheme and achieve the economic
neutrality referred to above, Libhold will need to obtain the approval of its
shareholders at an extraordinary general meeting ("Libhold EGM") for, inter
alia:
5.1 the sub-division of each one of Libhold`s authorised and issued
ordinary shares into three ordinary shares;
5.2 the increase of Libhold`s authorised ordinary share capital from 225
000 000 shares (as it will be following the abovementioned sub-
division) to 400 000 000 shares;
5.3 the implementation of the scheme, including the issue of the
consideration shares in terms of the scheme;
5.4 the adoption of share incentive schemes equivalent to the existing
Liberty share incentive schemes, in order to enable Libhold to assume
the rights and obligations of Liberty in terms of those existing
schemes. For this purpose, Libhold will offer to conclude agreements
with the holders of certain rights under those existing schemes which
will not affect the strike prices or vesting dates of the rights
granted in terms of those existing schemes; and
5.5 the appointment to the Libhold board of those directors of Liberty who
are not already directors of Libhold.
6. HOLDINGS OF SECURITIES
Standard Bank currently directly owns 7 246 005 shares in Liberty, which
represents approximately 2.55% of the issued ordinary share capital of Liberty
(excluding the treasury shares). Standard Bank also currently directly owns 48
661 145 shares in Libhold, which represents approximately 99.12% of the issued
ordinary share capital of Libhold. Should the scheme become effective, Standard
Bank`s aggregate shareholding in Libhold will be approximately 53.3%.
Standard Bank has undertaken to vote in favour of the scheme at the scheme
meeting and will vote in favour of the resolutions referred to in paragraph 5
which are to be tabled at the Libhold EGM.
The scheme and subsequent de-listing of Liberty shares from the JSE will not
affect the holders of any bonds or insurance policies issued by Liberty.
The scheme will also not affect the holders of Libhold`s preference shares.
7. AMENDMENTS
The scheme may be amended, varied or revised in such manner as Liberty and
Libhold may agree, provided that no such amendment, variation or revision shall
be made unless the approval of the Court or other appropriate regulatory
authorities has, to the extent required, been obtained.
8. CONFIRMATION OF SUFFICIENT FUNDS
Since the scheme consideration consists of new ordinary shares in Libhold, the
SRP has not required confirmation of the availability of cash to pay the scheme
consideration.
9. FURTHER ANNOUNCEMENTS AND DOCUMENTATION
Subject to the grant by the Court of an order convening the scheme meeting,
further announcements will be made on or about Tuesday, 23 September 2008
setting out :
9.1 the salient dates of the scheme. Following that announcement, a
circular providing further information on the scheme and containing,
inter alia, a notice of the scheme meeting, a form of proxy and a form
of surrender, is expected to be posted to Liberty shareholders on or
about Friday, 26 September 2008; and
9.2 the date of the Libhold EGM and the dates of implementation of the
subdivision referred to in paragraph y5 above. Following that
announcement, a circular containing, inter alia, a notice of the
Libhold EGM, a form of proxy and a form of surrender, is expected to
be posted to Libhold shareholders on or about Friday, 26 September
2008.
These times and dates are subject to change. Any change will be announced on
SENS and published in the press.
10 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The Libhold cautionary announcement dated 21 July 2008 is hereby withdrawn.
Johannesburg
4 September 2008
Legal adviser to Liberty and Libhold
Werksmans
Independent sponsor to Liberty and Libhold
Merrill Lynch South Africa (Proprietary) Limited
Investment bank and sponsor to Standard Bank
Standard Bank
Independent sponsor to Standard Bank
Deutsche Securities (SA) (Proprietary) Limited
Legal adviser to Standard Bank
Bowman Gilfillan
Date: 04/09/2008 08:00:02 Produced by the JSE SENS Department.
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