| Thu 23 Oct 2008, 8:00 | | CAT - Caxton & CTP Publishers & Printers Limited - Disposal of 50% interest in |
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CAT CATP
CAT
CAT - Caxton & CTP Publishers & Printers Limited - Disposal of 50% interest in
Maskew Miller Longman to Pearson Plc
Caxton & CTP Publishers & Printers Limited
(Incorporated in the Republic of South Africa)
Registration number: 1947/026616/06
Share code: CAT ISIN: ZAE000043345
Preference share code : CATP ISIN: ZAE000043352
("Caxton" or "the company")
Reduction of shareholding in Maskew Miller Longman Holdings (Pty) Ltd ("MML")
from 50% to 15% and Formation of Pearson Southern Africa
Withdrawal of cautionary announcement
1 Introduction
Further to the cautionary announcement dated 8 October 2008, shareholders are
advised that Longman Group (Overseas Holdings) Limited ("Longman"), a subsidiary
of Pearson plc ("Pearson"), and Caxton agreed on 22 October 2008 to form Pearson
Southern Africa Education Group ("Pearson SA") to consolidate Pearson`s and
Caxton`s Southern African education businesses. In terms of this agreement,
Caxton will sell a portion of its 50% shareholding in MML to Longman for GBP45
496 000 and retain a 15% shareholding in MML, which, it is currently intended,
will house or have the economic benefit of all Caxton and Pearson`s Southern
African educational interests, including, Heinemann Publishers (Pty) Limited,
Heinemann Education Botswana Publishers (Pty) Ltd (together "Heinemann Southern
Africa") and Edexcel SA.
2 Rationale
Pearson which is the joint venture partner together with Caxton in MML, has
requested a revision to the manner in which the joint venture is conducted.
Pearson, during 2007 acquired Harcourt Education International. As part of this
purchase it acquired Heinemann Southern Africa which conducts educational
business.
Pearson expressed its desire to combine all its educational interests in
Southern Africa into one organisation. The nature of education on a world wide
basis is changing and Pearson is a leader in the field of new educational
products combining publishing with assessment and technology.
In order to achieve the objective of consolidating its interest, which Pearson
firmly believes will benefit the education of all South African students, it
approached Caxton to purchase Caxton`s interest in MML.
The joint venture has been operational for a period of twenty five years dating
back to 1983. Caxton has contributed to the growth of MML and the position that
it currently occupies as one of the leading educational publishers in South
Africa.
After long deliberation, discussion and negotiation and to afford Pearson the
opportunity of achieving its objectives, which are in line with its
international strategies, Caxton agreed to the transaction referred to herein.
Under the agreement with Pearson, Caxton will continue to provide printing
services to the enlarged businesses.
The new company is well positioned to meet the growing demands for education in
South Africa and across the region.
3 Salient terms of the transaction
3.1 Sale consideration
The cash consideration for reducing Caxton`s shareholding in MML is GBP45
496 000 .
3.2 Warranties
The agreement contains warranties that are normal for a transaction of this
nature.
3.3 Conditions precedent
The transaction is subject to the following conditions precedent:
* the approval of the transaction by the Exchange Control Department of
the South African Reserve Bank and the competition authorities;
* the notification by Longman to Caxton that it is in a position to
complete the steps necessary to form Pearson SA;
* the approval of the shareholders of Caxton, to the extent necessary;
to be fulfilled by not later than 23 June 2009 or such other date as
may be agreed upon in writing by the parties.
3.4 Effective and closing dates
The effective date of the transaction, the formation of Pearson SA and the
acquisition by Longman of Caxton`s interest in Pearson SA is 1 July 2008
("effective date") and the closing date will be 5 business days after the
fulfilment of the conditions precedent.
3.5 Put and Call arrangements in relation to Caxton`s 15% shareholding in
Pearson SA
Each year commencing 1 January 2012, within 120 days after the later of
board and auditor approval of the financial statements of MML for the
immediately preceding financial year, Caxton will be able to put its
remaining shares in MML to Longman for a purchase price based on 12,5
multiplied by the earnings before interest and tax and extraordinary items
of MML and taking into account cash, debt and dividend payments, subject to
a minimum price of GBP22 747 000 (twenty two million seven hundred and
forty seven thousand pounds sterling). Longman has a call option on
Caxton`s remaining shares exercisable each year commencing on 1 January
2014 on the same terms and conditions as the put is exercisable by Caxton.
The call is also exercisable by Longman if there is a change of control of
Caxton.
4 Financial Effects
The table below sets out the unaudited pro forma financial effects of the
transaction and is based on the published audited results of Caxton for the year
ended 30 June 2008. The unaudited pro forma financial effects, for which the
Caxton board is responsible, are presented for illustrative purposes only and
may not give a fair reflection of the financial position and results of the
operations post the implementation of the transaction.
Historica 1 Pro Forma %
l before after the
the MML MML
disposal disposal
30 June 30 June Change
2008 2008
Earnings per Ordinary Share 264.4 2 90.1%
(Cents) 139.1
Diluted earnings per Ordinary 264.4 2 90.1%
Share (Cents) 139.1
Headline earnings per Ordinary 137.6 2 1.8%
Share (Cents) 135.2
Diluted headline earnings per 137.6 2 1.8%
Ordinary Share (Cents) 135.2
Net Asset Value (Cents) 3 21.6%
835 1,015
Number of shares in issue -
495,639,6 495,639,62
28 8
Weighted average number of -
shares in issue 470,927,3 470,927,30
04 4
Notes:
1. Based on the published audited results for the year ended 30
June 2008
1. The amounts set out in the "Historical before the MML disposal"
column have been extracted from Caxton`s published audited results
for the year ended 30 June 2008.
2. EPS, HEPS, DEPS and DHEPS, as set out in the "Pro forma after the
MML disposal" column, reflect the effects of the disposal of part of
Caxton`s 50% interest in MML on EPS, HEPS, DEPS and DHEPS for the
year ended 30 June 2008 based on the following assumptions:
* The effective date of the disposal was 1 July 2007.
* Interest on the cash proceeds less the transaction costs and
capital gains tax has been earned from the effective date at the
same interest rate that Caxton received from its bankers for that
period.
* 15% of the annual dividend declared by the companies forming
Pearson SA Education were brought to account.
3. NAV per share, as set out in the "Pro forma after the MML
disposal" column, reflect the effects of the disposal of part of
Caxton`s interest in MML on the NAV per share for the year ended 30
June 2008 based on the following assumptions:
* The disposal was effective 1 July 2007.
* All transaction costs and capital gains tax are paid on the
effective date.
* The remaining 15% shareholding in Pearson SA Education has a
carrying value of R300 million.
4. Conversion of the cash consideration into Rands is based on the
exchange rate prevailing at the date when the sale elements were
agreed, subject to the successful conclusion of the printing
contract. Interest will be earned from effective date to the
payment date when all conditions precedent have been fulfilled
5. A tax rate of 28% has been applied.
The financial effects contained in this table have been prepared for purposes of
illustrating how the disposal would affect Caxton for the historical periods
indicated and are pro forma only. Accordingly, such effects do not necessarily
represent a true reflection of the financial effects of the disposal on Caxton`s
current and future net asset value.
5 The transaction is a category 1 transaction in terms of the JSE Limited
Listings Requirements, accordingly a circular to shareholders containing a
notice of general meeting to obtain the shareholders` approval to the
transaction to the extent necessary will, subject to the approval of the
JSE Limited, be despatched within 28 days from the date of the transaction
being entered into.
6 In the circumstances, the cautionary announcement dated 8 October 2008 is
withdrawn.
Johannesburg
22 October 2008
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Legal Advisers to Caxtons
Fluxmans Inc
SA Legal Advisers to Longman
Webber Wentzel
Date: 23/10/2008 08:00:16 Produced by the JSE SENS Department.
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