| Mon 27 Oct 2008, 8:17 | | GEN - 0Bond Exchange of South Africa Limited - ANNOUNCEMENT RELATING |
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JSE
GEN
GEN - 0Bond Exchange of South Africa Limited - ANNOUNCEMENT RELATING
TO A FIRM INTENTION BY THE JSE LIMITED TO MAKE AN OFFER FOR 100% OF
THE ORDINARY SHARES IN BESA
0Bond Exchange of South Africa Limited
(Registration No. 2007/034441/06)
Incorporated in the Republic of South Africa
("BESA")
ANNOUNCEMENT RELATING TO A FIRM INTENTION BY THE JSE LIMITED TO MAKE
AN OFFER FOR 100% OF THE ORDINARY SHARES IN BESA
1. INTRODUCTION
BESA hereby gives notice (as required in terms of the
Securities Regulation Code on Takeovers and Mergers (the
"Code")) that it has received an unsolicited written
notification from the JSE Limited (the "Offeror") that the
Offeror intends to make an offer (the "Proposed Offer") to all
of the ordinary shareholders of BESA ("BESA Shareholders") to
acquire 100% of the ordinary shares in BESA (the
"Transaction"). BESA received this notification at
approximately 17h00 on Friday 24 October 2008 in the form of a
letter and accompanying announcement, which letter stated that
the announcement would be issued by the Offeror on Monday 27
October 2008 before the market opens.
2. BESA SHAREHOLDERS ARE ADVISED TO TAKE NO ACTION
BESA Shareholders are urged not to take any action at this
time, including in particular that they should not sign any
irrevocable undertakings in favour of the Offeror. Having now
made a firm intention to make an offer, the Offeror is obliged,
in terms of the Code, to extend the Proposed Offer, within 30
days after this announcement, in the form of a circular to all
BESA Shareholders (the "Offeror Circular"). As such, BESA
Shareholders will have ample time to consider their positions
before making any decisions. BESA is carefully considering the
Proposed Offer and awaits the Offeror Circular with interest,
whereafter BESA will, within 14 days after the receipt of the
Offeror Circular as required by the Code, advise BESA
Shareholders in detail as to BESA`s recommendations and the
independent advice of BESA`s external advisers in the form of
its own circular (the "BESA Circular").
3. SALIENT TERMS OF THE PROPOSED OFFER
BESA has been advised of the following by the Offeror in regard
to the Proposed Offer:
3.1 The Proposed Offer is for the entire issued ordinary share
capital of BESA ("BESA Ordinary Shares"). Following the issue of new
shares in terms of BESA`s recent rights issue, there are 1 924 655
BESA Ordinary Shares in issue.
3.2 The consideration payable under the Proposed
Offer will, subject to various adjustment mechanisms
contemplated in paragraph 3.4 below, be R173 219 130
(the "Offer Consideration") and will be settled in cash.
On the basis of BESA`s current ordinary issued share
capital, the Offer Consideration equates to a price per
Ordinary Share of R90.
3.3 The Offeror has stated that if the Proposed
Offer is accepted by BESA Shareholders in respect of not
less than nine-tenths of the BESA Ordinary Shares then the
Offeror intends to invoke the provisions of section 440K
of the Companies Act No. 61 of 1973 ("Companies Act").
This implies that the Offeror would then acquire the
remaining BESA Ordinary Shares for the Offer Consideration
notwithstanding that such BESA Shareholders would not have
accepted the Proposed Offer.
3.4 The Offeror states that the Offer Consideration
will be adjusted under the following circumstances:
3.4.1 If the net asset value of BESA
("BESA NAV"), including the funds in the BESA Guarantee
Fund (the "Fund"), is less than R170 million at the date
on which the Proposed Offer becomes or is declared
wholly unconditional (the "Final Date") then the Offer
Consideration will be adjusted downwards, on a Rand for
Rand basis, with the amount of the difference. The BESA
NAV is to be calculated in a manner consistent with the
format and accounting policies applied in BESA`s audited
financial statements for the year ended 31 December
2007.
3.4.2 If, within 30 days after the Final Date,
the Offeror finds that BESA is party to an agreement of
whatever nature with any third party (other than the
lease agreement in respect of the premises occupied by
BESA in Melrose Arch), in terms of which BESA has or will
have any financial obligations exceeding R5 million per
annum per agreement or which will endure for longer than
3 years after the Final Date, then the Offer
Consideration will be reduced by the present value,
calculated at a discount rate of 12,5%, of (i) the amount
by which each such financial obligation exceed R5 million
during the relevant 3 year period; and/or (ii) all the
amount(s) payable by BESA after the expiry of the
relevant 3 year period.
3.4.3 If, within 30 days after the Final Date,
the Offeror finds that BESA is a party to any agreement
which contains a termination clause that will be
triggered as a result of the Proposed Offer, then the
Offer Consideration will be reduced by the amount of any
penalty and/or damages that may be payable or become
payable by BESA pursuant to the enforcement of such
termination clause.
3.4.4 If, within 30 days after the Final Date,
the Offeror finds that the Fund has any outstanding tax
liabilities (including penalties and interest) of
whatever nature as at the Final Date, then the Offer
Consideration shall be reduced by the amount of such
liabilities, irrespective of whether such liabilities
are then due and payable.
3.5 The Offeror has stated that the calculation of any adjustment
in the Offer Consideration will be performed by the auditors of BESA
at the Offeror`s cost within 60 days after the Final Date and the
results of their findings will be disclosed to the Ordinary
Shareholders as soon as reasonably possible after such results
become available.
3.6 The Offeror states further that R105 856 135 of the Offer
Consideration (or R55 per Ordinary Share) will be paid to Ordinary
Shareholders within 7 days of the Final Date, with Ordinary
Shareholders being required to wait for the balance which will be
retained in trust pending the finalisation of the amount of the
adjustment of the Offer Consideration. The amount due to Ordinary
Shareholders following the finalisation of the adjustment to the
Offer Consideration (if any), will be paid within 5 business days of
the auditors having made their determination, as contemplated in
paragraph 3.5 above.
3.7 Conditions Precedent
The Offeror States that the Proposed Offer will be
subject to the fulfillment or waiver of the following
conditions precedent:
3.7.1 The Proposed Offer being accepted by
Ordinary Shareholders in respect of
at least 50% plus one of all the BESA Ordinary
Shares by no later than 60 days after the date on
which the Offeror
Circular is posted (the "Posting Date") to BESA
Shareholders.
3.7.2 The approval of the Transaction, to
the extent required, by the Financial Services Board,
by no later than 60 days after the Posting Date.
3.7.3 The Offeror obtaining the necessary
exchange control approval for the Transaction from
the South African Reserve Bank by no later than 60
days after the Posting Date.
3.7.4 The unconditional approval of the
Transaction by the Competition Authorities, in terms
of the Competition Act No. 89 of 1998, by no later
than 120 days after the Posting Date, and if such
approval is granted subject to conditions, the
Offeror confirming to BESA, in writing, within 125
days after the Posting Date, that the conditions are
acceptable to the Offeror.
3.7.5 BESA has not within 60 days after the
Posting Date disposed of the entire business of BESA
(including all its assets and liabilities, as well as
the Fund) to the Offeror, in terms of a written sale of
business agreement, which agreement has: (a) become
unconditional in accordance with its terms, save for any
conditions relating to regulatory approval; and (b) has
been authorised or ratified by a special resolution of
BESA Shareholders in general meeting as required by
section 228 of the Companies Act. The Offeror has
indicated that this condition precedent has been
inserted because it is the Offeror`s preference to
acquire the entire business of BESA rather than the BESA
Ordinary Shares.
3.7.6 The Securities Regulation Panel ("SRP") approving the
Offeror Circular.
The conditions precedent in paragraphs 3.7.1 and 3.7.5
are for the benefit of the Offeror
and can be waived by the Offeror at any time.
In addition, subject to the prior approval of
the SRP, the Offeror shall be entitled to extend any of
the dates for fulfillment of the conditions precedent.
4. FURTHER DETAILS PERTAINING TO THE PROPOSED OFFER
The Offeror has further advised BESA as follows:
4.1 First National Bank of South Africa Limited has furnished
confirmation to the SRP that the Offeror has sufficient resources
available to satisfy full implementation of the Transaction.
4.2 Neither the Offeror nor any of its directors hold or control
any shares in BESA. The Offeror has been silent as to whether any
person acting in concert with the Offeror owns or controls any BESA
Ordinary Shares.
4.3 The Offeror has indicated that they would retain all BESA`s
staff on terms and conditions that are no less favourable than those
they currently enjoy, if the Transaction is implemented.
4.4 BESA Shareholders are referred to the public announcement of
the Offeror on Monday 27 October 2008 for further details.
5. NO IRREVOCABLES
The documentation which the Offeror has provided to BESA thus
far is silent as to the levels of support, if any, that the
Offeror has from BESA Shareholders. In addition, BESA has no
knowledge of the Offeror, or anyone acting in concert with the
Offeror, holding any option to purchase any BESA Ordinary
Shares.
6. BESA`s BOARD IS EXAMINING ALL RELEVANT ISSUES
BESA is currently evaluating the Proposed Offer and has not
formed any views on the Proposed Offer or its rationale. In
this regard BESA`s board of directors is examining all aspects
of the Proposed Offer, including (without limitation) the
evaluation of the following:
6.1 Whether the price of R90 per BESA Ordinary Share contained in
the unsolicited Proposed Offer fairly values BESA`s business and
long term potential and strategic position within the South African
capital markets. BESA`s board intends to evaluate this carefully
across a variety of valuation criteria.
6.2 Whether the payment terms in the Proposed Offer, including the
various adjustment mechanisms therein, are fair to BESA
Shareholders.
6.3 The implications of the statement in the Offeror`s letter to
BESA that : "If the BESA Board would like to discuss selling the
exchange as a going concern we will consider revising the offer.".
6.4 The impact of the Transaction on the structure of South
Africa`s capital markets and the potential consequences that might
flow from the consolidation of the two exchanges.
6.5 The impact of the Transaction on authorised users, other market
participants and wider stakeholders in the Bond Exchange, with
specific reference to the nature, quality and pricing of existing
and future BESA services.
6.6 The levels of execution risk which may exist in implementing
the Transaction, including risks arising from the likelihood and
timing of obtaining various regulatory approvals which are required,
such as from the Financial Services Board and the Competition
Authorities.
7. CONCLUSION
As noted in paragraph 2 above, BESA`s board of directors is
giving the Proposed Offer due and detailed consideration so as
to explore the merits or otherwise of the Proposed Offer and
its rationale. In the interim, BESA Shareholders are advised
not to commit themselves before they have seen the detailed
response and advice of BESA in the BESA Circular. In any event,
BESA Shareholders are advised to exercise caution when dealing
in BESA Ordinary Shares until a further announcement is made.
Melrose Arch
Johannesburg
27 October 2008
Legal Advisors
Edward Nathan Sonnenbergs Inc.
Date: 27/10/2008 08:17:25 Produced by the JSE SENS Department.
