| Fri 7 Nov 2008, 11:00 | | SAP - Sappi - Sappi Announces Final Terms Of The Rights Offer And Withdrawal |
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SAP
SAVVI
SAP - Sappi - Sappi Announces Final Terms Of The Rights Offer And Withdrawal
Of Cautionary Announcement
Sappi Limited
Incorporated in the Republic of South Africa
Registration Number: 1936/008963/06)
ISIN Number: ZAE000006284
JSE Share Code: SAP
("Sappi" or "the Company")
This announcement is not for distribution in the United States, Australia,
Canada or Japan. This announcement does not constitute or form part of any
offer or solicitation to purchase or subscribe for securities in the United
States. The rights offer described herein has not been and will not be
registered under the U.S. Securities Act of 1933, as amended ("U.S.
Securities Act"), or under any relevant securities laws of any state or other
jurisdiction of the United States. The securities described herein (the
"Securities") may not be offered, sold, taken up, resold, renounced,
exercised, pledged, transferred or delivered, directly or indirectly, in or
into the United States at any time except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the U.S.
Securities Act and applicable state and other securities laws of the United
States. The Securities may be offered, sold, taken up, resold, renounced,
exercised, pledged, transferred or delivered, by persons outside the United
States in accordance with Regulation S under the U.S. Securities Act.
SAPPI ANNOUNCES FINAL TERMS OF THE RIGHTS OFFER AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
Shareholders of Sappi are referred to the announcements published by
Sappi on SENS dated 29 September 2008, 2 October 2008, 10 October 2008,
31 October 2008 and 3 November 2008; and the press advertisements dated
1 October 2008, 2 October 2008 and 10 October 2008 and 3 November 2008
regarding the acquisition (the "Acquisition") by Sappi of a substantial
portion of the coated graphic paper business of M-real Corporation (the
"Acquired Business") and a renounceable rights offer.
Sappi has finalised the terms of the rights offer and is seeking to
raise approximately ZAR5,8 billion (EUR450 million based on an exchange
rate of ZAR12.925/EUR) through a fully underwritten renounceable rights
offer of 286,886,270 new ordinary shares of ZAR 1.00 each ("rights offer
shares") to qualifying Sappi ordinary shareholders and their renouncees
that are eligible to participate at a subscription price of ZAR20.27 per
rights offer share ("subscription price") and in the ratio of 6 rights
offer shares for every 5 Sappi shares held ("rights offer").
The subscription price is at a discount of 65.2% to the closing price of
Sappi ordinary shares ("Sappi shares) on 6 November 2008 of ZAR58.25, at
a discount of 46.0% to the theoretical ex-rights price of a Sappi share
of ZAR37.53 on the same day and at a discount of 44.9% to the
theoretical ex-rights price of a Sappi share (adjusted for the dividend
of USD0.16 per share) of R36.80 on the same day.
The gross proceeds of the rights offer include approximately EUR18.6
million that correspond to treasury shares held by the Company. The
Company will fund any exercise of the rights with respect to such shares
from cash on hand and available borrowings.
On 31 October 2008, Sappi received notification that the EU competition
authorities cleared the transaction without conditions. At a general
meeting of Sappi shareholders held on 3 November 2008, Sappi
shareholders approved the general authority to Sappi directors to allot
and issue shares for the purpose of implementing the rights offer.
2. Conditions
The letters of allocation for the rights offer and the rights offer
circular are expected to be approved by the JSE and will be lodged for
registration with the Registrar of Companies on 10 November 2008. An
application in terms of section 142(2) of the Companies Act will also be
lodged with the Registrar of Companies on 10 November 2008.
The rights offer will only proceed if the letters of allocation and the
rights offer circular are registered and the application is approved.
Other than registration of the letters of allocation for the rights
offer and the rights offer circular, and approval of the application, by
the Registrar of Companies, there are no conditions precedent to the
rights offer.
3. Purpose of the rights offer and use of proceeds
The purpose of the rights offer is to finance the cash portion (being
EUR400 million) of the consideration payable under the Acquisition and
related costs. The Acquisition is subject to certain conditions
precedent, including the closing and settlement of the rights offer in
accordance with its terms. On 31 October 2008, Sappi received
notification that the EU competition authorities cleared the transaction
without conditions.
In addition, Sappi may terminate the Acquisition prior to the
anticipated completion should up to three changes, events or
circumstances occur which would together have a certain significant
adverse effect on production volumes of graphic paper at mills being
acquired pursuant to the Acquisition or lead to a liability in respect
of the businesses being acquired, which would have to be settled in
cash, having a net present value in excess of EUR110 million.
In the event that the Acquisition does not proceed, or proceeds on
amended terms, any portion of the proceeds of the rights offer not
applied for the purpose referred to above will be used to settle debt of
Sappi and its subsidiaries ("the Sappi Group") and/or be returned to
Sappi shareholders in an appropriate manner.
If the underwriters, in accordance with the underwriting agreement, are
entitled to cease underwriting the rights offer, and EUR450 million is
not otherwise raised pursuant to the rights offer, then a condition
precedent to the closing of the Acquisition will not be fulfilled,
unless otherwise agreed by Sappi and M-Real Corporation, and the
proceeds of the rights offer will, as described above, be used to settle
debt of the Sappi Group and/or be returned to Sappi shareholders in an
appropriate manner.
4. Rationale for the Acquisition
Sappi believes that the Acquisition and the integration of the Acquired
Business into its existing operations will:
- enhance its competitive position in the graphic paper industry
globally, and in particular Europe, by strengthening its leading
position in the coated woodfree market and significantly increasing
its presence in the coated magazine paper market, making it one of
the largest producers in Europe in that market (as measured by
capacity share);
- expand its geographic footprint by extending its operations into
Finland and Switzerland and increasing its presence in Germany;
- provide access to an enlarged customer base by adding to its
product range a number of well-known brands that complement its
existing products;
- provide improved cash flows for the Sappi Group as a result of
synergies from increased coated graphic paper production, expected
economies of scale and the expected optimization of capacity
utilization; and
- increase its profitability through synergies resulting from the
rationalization of manufacturing across the Sappi Group and the
integration of the sales and the administration functions of the
Sappi Group and those of the Acquired Business.
Sappi estimates total annual synergies of approximately EUR120 million
will arise from the Acquisition, which should be realisable within three
years and without material capital investments. This estimate of
synergies Sappi expects to achieve from the Acquisition is based on
assumptions which in the view of Sappi`s management were prepared on a
reasonable basis, reflect the best currently available estimates and
judgments, and present, to the best of Sappi`s management`s knowledge
and belief, the expected course of action and the expected future
financial impact on performance of Sappi due to the Acquisition.
However, the assumptions about these expected synergies are inherently
uncertain and, though considered reasonable by management as of the date
of preparation, are subject to a wide variety of significant business,
economic, and competitive risks and uncertainties that could cause
actual results to differ materially from those contained in this
estimate of synergies. There can be no assurance that Sappi will be able
to successfully implement the strategic or operational initiatives that
are intended, or realise the estimated synergies. This synergy estimate
is not a profit forecast or a profit estimate and should not be treated
as such nor relied on by shareholders or prospective investors to
calculate the likely level of profits or losses for Sappi for the fiscal
2008 or beyond. The reporting of the synergy estimate complies with the
accounting policies of Sappi.
5. Salient terms of the rights offer
The rights offer is being made on the following basis:
Qualifying holders of Sappi shares recorded in the register on Friday,
21 November 2008 ("the record date") and/or their qualifying renouncees,
are offered on the terms and conditions set out in the circular referred
to in paragraph 7 below ("the circular"), 286,886,270 rights offer
shares at a subscription price of ZAR20.27 per rights offer share and in
the ratio of 6 rights offer shares for every 5 Sappi shares held on the
record date. Fractions of rights offer entitlements will not be
allotted; each qualifying shareholder`s rights offer entitlement will be
rounded to the nearest whole number.
The subscription price is at a discount of 65.2% to the closing price of
Sappi shares on 6 November 2008 of ZAR58.25, at a discount of 46.0% to
the theoretical ex-rights price of a Sappi share of ZAR37.53 on the same
day and at a discount of 44.9% to the theoretical ex-rights price of a
Sappi share (adjusted for the dividend of USD0.16 per share) of R36.80
on the same day.
Upon their issue, the rights offer shares will be listed and rank, pari
passu, in all respects with the existing issued Sappi shares.
The latest time and date of acceptance and payment in full for the
rights offer shares will be 12:00pm (South African time) on Friday, 12
December 2008. Dematerialised shareholders are advised to contact their
CSDP or broker as early as possible to establish what the cut off times
are for the acceptances of the rights offer, as set out in the custody
agreement, as this may be earlier than the rights offer closing date.
Letters of allocation will be issued in dematerialised form and an
electronic record for certificated ordinary shareholders will be
maintained by the transfer secretary, Computershare Investor Services
(Proprietary) Limited. This will enable both dematerialised and
certificated holders of Sappi shares to sell or renounce some or all of
their rights to rights offer shares in accordance with the procedures
set out in greater detail in the circular.
All rights offer shares not subscribed for in terms of the rights offer
will be available for allocation to holders of Sappi shares who wish to
apply for a greater number of rights offer shares than those offered to
them in terms of the rights offer. Accordingly, holders of Sappi rights
offer entitlements may also apply for additional rights offer shares in
excess of the rights offer shares allocated to them in terms of the
rights offer on the same terms and conditions as those applicable to
their rights offer entitlement. The right to apply for additional
rights offer shares is transferable and will be transferred on
renunciation or sale together with the rights offer entitlement so
renounced or sold.
An announcement will be released on SENS on or about Monday, 15 December
2008, and published in the press on Wednesday, 17 December 2008, stating
the results of the rights offer and the basis of allocation of any
additional rights offer shares for which application is made.
6. Underwriting
The rights offer has been fully underwritten, subject to certain
conditions, by Citigroup Global Markets Limited and J.P. Morgan
Securities Ltd on, effectively in terms of South African law, a joint
and not a joint and several basis.
7. Qualifying Sappi Shareholders and renouncees
Sappi shareholders are able to participate in the Rights Offer other
than, subject to limited exceptions, shareholders in the European
Economic Area except Qualified Investors, shareholders in the United
Kingdom except Relevant Persons, or shareholders located, resident or
with a registered address in Australia, Canada, Japan, the United States
and any other jurisdiction in which the Rights Offer as contemplated
hereby may not lawfully be made (shareholders able to participate are
defined as "Qualifying Sappi Shareholders").
"Qualified Investors" are persons in member states of the European
Economic Area who are "qualified investors" within the meaning of
Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC).
"Relevant Persons" are persons in the United Kingdom who are Qualified
Investors who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005, as amended (the
"Order") or who are high net worth entities falling within Article 49 of
the Order.
Any person that is a renouncee of rights under the Rights offer (i) must
be a Qualifying Sappi Shareholder, or (ii) if such person were to have
been a registered shareholder of Sappi would have been a Qualifying
Sappi Shareholder, or (iii) must not be subject to the laws or
regulations of a country under which its participation in the rights
offer would be prohibited or subject to any restrictions imposed by that
country`s laws and regulations, collectively or individually as the
context may require.
8. Dividend
Shareholders are referred to the SENS announcement made on 6 November
2008 regarding the declaration of dividend number 85 of USD 0.16 per
share for the year ended September 2008. The record date for the
dividend will be Friday 28 November 2008 and the payment date of the
dividend will be 2 December 2008. The rights offer shares will only be
issued on 15 December 2008 with the result that holders of the rights
offer shares will not be entitled to and will not participate in
dividend number 85.
9. Financial effects
The unaudited pro forma financial effects set out below have been
prepared to assist Sappi shareholders to assess the impact of the
Acquisition and financing thereof (including the rights offer) on the
earnings per share, headline earnings per share, net asset value and
tangible net asset value per share of Sappi. These pro forma financial
effects illustrate how the Acquisition and the rights offer might affect
the reported financial information of Sappi if the Acquisition had
completed on 30 September 2007 and 30 June 2008 for balance sheet
purposes and 1 October 2006 for income statement purposes.
A simple consolidation of the historical financial information in the
form set out in the pro forma below does not purport to represent what
the results of operations or financial position of Sappi would have been
if the Acquisition and the rights offer had occurred on the dates
indicated, nor does it purport to project the results of operations or
financial position of Sappi for any future period or as of any future
date. The unaudited pro forma financial effects do not reflect:
- anticipated synergies and efficiencies associated with combining
the companies due to the adoption of best practices; and
- movements in the US Dollar / Euro exchange rate.
In addition, the pro forma financial effects do not give pro forma
effect to the long term supply agreements to be concluded with M-real
for energy, wood and pulp and the transitional marketing agreements for
the outputs of the Husum PM8 machine and the AAnekoski PM2 machine.
The pro forma financial effects have been prepared in accordance with
the Listings Requirements of the JSE and the Guide on Pro Forma
Financial Information issued by The South African Institute of Chartered
Accountants. These unaudited pro forma financial effects are the
responsibility of the directors and are provided for illustrative
purposes only. The material assumptions on which the pro forma financial
effects are based are set out in the notes following the table.
Pro forma financial effects for the 9 months ended 30 June 2008
Reviewed Pro forma
before the Pro forma after the Percentage
Acquisition adjustments Acquisition Change
Earnings per share (US 59 (23) 36 (39.0)
cents)
Headline earnings per share 58 (48) 10 (82.7)
(US cents)
Net asset value per share 7.29 (2.57) 4.72 (35.3)
(USD)
Tangible net asset value 7.25 (2.80) 4.45 (38.6)
per share (USD)
Ordinary shares in issue 229.1 286.0 515.1 124.8
(millions)
Weighted average number of 228.7 286.0 514.7 125.1
ordinary shares in issue
(millions)
Pro forma financial effects for the 12 months ended 30 September 2007
Audited Pro forma
before the Pro forma after the Percentage
Acquisition adjustments Acquistion Change
Earnings per share (US 89 (31) 58 (34.8)
cents)
Headline earnings per share 82 (52) 30 (63.4)
(US cents)
Net asset value per share 7.95 - - -
(USD)
Tangible net asset value per 7.92 - - -
share (USD)
Ordinary shares in issue 228.5 286.0 514.5 125.2
(millions)
Weighted average number of 227.8 286.0 513.8 125.5
ordinary shares in issue
(millions)
Notes and assumptions
A. The unaudited pro forma financial effect on the Sappi Group for the
nine months ended June 2008 has been prepared on the assumption that the
Acquisition occurred on 30 June 2008 for balance sheet purposes and 1
October 2007 for income statement purposes.
B. The unaudited pro forma financial effect on the Sappi Group for the
twelve months ended September 2007 has been prepared on the assumption
that the Acquisition occurred on 30 September 2007 for balance sheet
purposes or 1 October 2006 for income statement purposes.
C. The pro forma financial effects reflect the Acquisition and related
financing as described elsewhere in this circular.
D. The number of shares in issue and the weighted average number of
shares have been adjusted by 286.0 million shares representing the
number of shares (net of treasury shares) to be issued as consideration
for the Acquired Business and the rights offer. The number of
Settlement Shares will be 11,159,701 which is based on the volume
weighted average share price of Sappi on the JSE during the 30 trading
days prior to the date of the announcement of the Transaction and the
average EUR / ZAR daily exchange rate for the same period. The number of
Settlement Shares has been adjusted for the dilutive effect of the
Rights Offer and will be adjusted for any other action by Sappi in
respect of its capital with the effect of diluting the value of its
shares, or otherwise disadvantaging M-real in respect of the Settlement
Shares, prior to the date Sappi is required to deliver the Settlement
Shares. The number of rights offer shares was calculated as the number
of shares required to satisfy the 6 for 5 rights issue raising ZAR5,815
million being the ZAR equivalent of EUR450 million at an exchange rate
of 12.925. The rights issue price of ZAR20.27 represents a 44.9%
discount to the theoretical ex-rights price (adjusted for the dividend
of US$0.16 per share) of ZAR36.80.
E. The pro forma financial effects exclude:
- anticipated synergies and efficiencies associated with combining
the Sappi Group and the Acquired Business due to the adoption of best
practices; and
- movements in the US Dollar / Euro exchange rate.
F. Financial information for the Acquired Business has been extracted
from the financial statements for the Acquired Business provided to
Sappi by M-real Corporation. These financial statements have been
prepared on a full carve-out basis in accordance with IFRS as issued by
the IASB and are presented in Euros.
Such financial information has been converted from Euros to US Dollars
for the income statement, using the average exchange rate for the year
ended 31 December 2007 of EUR1 to USD1.3755, the three months ended 31
December 2007 of EUR1 to USD1.4556, for the six months ended June 2008
of EUR1 to USD1.5315 and for the balance sheet as at 30 June 2008 using
the period end rate of EUR1 to USD1.5795.
G. Financial information for Sappi was extracted from the published
consolidated results of Sappi for the year ended September 2007 prepared
in accordance with IFRS as issued by the IASB and from the published
condensed reviewed results for the nine months ended June 2008 prepared
in accordance with International Accounting Standard 34, Interim
Financial Reporting.
H. The allocation of the consideration payable by the Sappi Group for
the Acquired Business reflected in the pro forma financial effects is
preliminary based on estimated fair values and the estimated
consideration. It will eventually be adjusted based on a complete
assessment of the fair value of the net assets acquired and the final
consideration. The final consideration allocation is dependent on, among
other things, the finalisation of asset and liability valuations. Any
final adjustment will change the allocation of the consideration, which
will affect the fair value assigned to the assets and liabilities and
could result in a material change to the pro forma financial effects,
including a change to goodwill.
I. Pro forma adjustments include an adjustment to depreciation relating
to the preliminary fair value assigned to property, plant and equipment
to eliminate estimated historical expense and interest expense to take
into account the financing of the Acquisition. These adjustments have
been tax effected at an estimated statutory tax rate for the combined
group of 28.3%.
J. The pro forma financial effects are presented for information
purposes only, and do not purport to represent what Sappi`s actual
results of operations or financial position would have been had the
Acquisition and the financing thereof occurred on the dates indicated,
nor are they necessarily indicative of future results of operations or
financial position.
K. The pro forma headline earnings per share for the nine months ended
June 2008 and the twelve months ended September 2007 exclude a net asset
impairment reversal of EUR111 million recorded by the Acquired Business.
The impact thereof for the nine months ended June 2008 and the twelve
months ended September 2007 is 31 US cents and 30 US cents respectively.
10. Salient dates and times
Key dates and times in respect of the rights offer are set out below:
2008
Last day to trade in Sappi Friday, 14 November
shares on the JSE in order to
qualify to participate in the
rights offer (cum rights offer
entitlement)
Sappi shares trade ex the rights Monday, 17 November
offer entitlement on the JSE
from commencement of trade on
Listing of and trading in Monday, 17 November
letters of allocation under
share code "SAPN" and ISIN
Number - ZAE000128922 on the JSE
from commencement of trade on
Record date for shareholders to Friday, 21 November
participate in the rights offer
Circular posted and form of Monday, 24 November
instruction issued to
certificated Qualifying Sappi
Shareholders on
Dematerialised shareholders will Monday, 24 November
have their accounts at their
CSDP or broker credited with
their rights offer entitlement
on
Certificated shareholders will Monday, 24 November
have their rights offer
entitlement created in
electronic form and held at
Computershare on
Rights offer opens at 09:00 on Monday, 24 November
Last day for trading in letters Friday, 5 December
of allocation on the JSE
Listing and trading of rights Monday, 8 December
offer shares on the JSE at 09:00
on
Rights offer closes at 12:00 on Friday, 12 December
(see note 4)
Forms of instruction including Friday, 12 December
cheques in respect of
certificated shareholders to be
lodged by 12:00 on (see notes 3
and 4)
Record date for letters of Friday, 12 December
allocation
Entitlement in respect of the Monday, 15 December
rights offer available from
Rights offer shares issued and Monday, 15 December
posted to certificated
shareholders on or about
Accounts of dematerialised Monday, 15 December
shareholders updated and
credited/debited at their CSDP
or broker
Results of the rights offer and Monday, 15 December
basis of allocation of excess
applications published on SENS
on or about
Results of the rights offer and Wednesday, 17
basis of allocation of excess December
applications published in the
South African press on or about
Accounts of dematerialised Thursday, 18 December
shareholders updated in respect
of excess shares allocated at
their CSDP or broker on (see
note 5)
Share certificates in respect of Friday, 19 December
excess shares allocated posted
to certificated shareholders on
or about
Notes
1. All times indicated are South African times and are subject to change.
All changes will be released on SENS and published in the South African
press.
2. Share certificates in respect of Sappi shares may not be dematerialised
or rematerialised between Monday, 17 November 2008 and Friday, 21
November 2008, both days inclusive.
3. CSDPs effect delivery on a "delivery against payment method", in respect
of dematerialised shareholders.
4. If you are a dematerialised shareholder, you are required to notify your
duly appointed CSDP or broker of your acceptance of the rights offer in
the manner and time stipulated in the custody agreement. Dematerialised
shareholders are advised to contact their CSDP or broker as early as
possible to establish what the cut off times are for the acceptances of
the rights offer, as set out in the custody agreement, as this may be
earlier than the rights offer closing date.
5. In the announcement released by Sappi on SENS on 31 October 2008, this
date was reflected as 17 December 2008.
11. Documentation
The circular providing full details of the rights offer and
incorporating the form of instruction to holders of Sappi shares in
certificated form will be posted to shareholders located outside of the
United States, Australia, Canada and Japan on or about 24 November 2008.
The circular will be available on Sappi`s website at www.sappi.com on or
about 11 November 2008. Copies of the circular can be obtained during
normal business hours from the opening of the rights offer to the
closing of the rights offer from at the registered office of Sappi,
Sappi Offices, 48 Ameshoff Street Braamfontein, Johannesburg and the
Company`s transfer secretaries, Computershare, 70 Marshall Street,
Johannesburg 2001.
An International Offering Memorandum ("IOM") providing details of the
rights offer will be posted to all shareholders outside the United
States, Australia, Canada and Japan on or about 24 November 2008. The
IOM regarding the rights offer described herein has not been and will
not be registered under the U.S. Securities Act of 1933, as amended
("U.S. Securities Act"), or under any relevant securities laws of any
state or other jurisdiction of the United States.
12. Withdrawal of cautionary announcement
The cautionary announcement dated 31 October 2008 is hereby withdrawn.
13. Forward-looking statements
Certain statements in this release that are neither reported financial
results nor other historical information, are forward-looking
statements, including but not limited to statements that are predictions
of or indicate future earnings, savings, synergies, events, trends,
plans or objectives. Undue reliance should not be placed on such
statements because, by their nature, they are subject to known and
unknown risks and uncertainties and can be affected by other factors,
that could cause actual results and company plans and objectives to
differ materially from those expressed or implied in the forward-looking
statements (or from past results). Such risks, uncertainties and
factors include, but are not limited to, the risk that the assets
acquired as part of the Acquisition will not be integrated successfully
or such integration may be more difficult, time-consuming or costly than
expected, expected revenue synergies and cost savings from the
Acquisition may not be fully realised or realised within the expected
time frame, revenues following the Acquisition may be lower than
expected, any anticipated benefits from the consolidation of the
European paper business may not be achieved, the ability to obtain
governmental or regulatory approvals of the Acquisition on the terms and
schedule, the failure of shareholders of Sappi to approve the
Acquisition or the related financings, the highly cyclical nature of the
pulp and paper industry (and the factors that contribute to such
cyclicality, such as levels of demand, production capacity, production
and pricing), adverse changes in the markets for the group`s products,
consequences of substantial leverage, changing regulatory requirements,
unanticipated production disruptions, economic and political conditions
in international markets, the impact of investments, acquisitions and
dispositions (including related financing), any delays, unexpected costs
or other problems experienced with integrating acquisitions and
achieving expected savings and synergies and currency fluctuations. The
Company undertakes no obligation to publicly update or revise any of
these forward looking statements, whether to reflect new information or
future events or circumstances or otherwise.
Morgan Stanley & Co. Ltd in conjunction with one or more of its
affiliates ("Morgan Stanley") is acting for Sappi in connection with
this Acquisition and no one else and will not be responsible to anyone
other than Sappi for providing the protections offered to clients of
Morgan Stanley nor for providing advice in relation to this Acquisition.
Johannesburg
7 November 2008
Joint Bookrunners and underwriters:
Citigroup Global Markets Limited and J.P. Morgan Securities Limited
Financial adviser:
Morgan Stanley & Co Ltd.
Transaction sponsor:
Morgan Stanley South Africa (Proprietary) Limited
South African legal advisers:
Bowman Gilfillan Inc.
United States of America legal advisers:
Cravath, Swaine & Moore LLP
United Kingdom legal advisers:
Linklaters LLP
Underwriters` South African legal advisers:
Werksmans Attorneys
Underwriters` United States of America and United Kingdom legal advisers:
Latham and Watkins LLP
Reporting accountants and auditors:
Deloitte - Registered Auditors
JSE sponsor:
UBS South Africa (Proprietary) Limited
Notice
This notice sets out the restrictions applicable to shareholders and
renouncees who have registered addresses outside South Africa, who are
nationals, citizens or residents of countries, other than South Africa, or
who are persons (including, without limitation, custodians, nominees and
trustees) who have a contractual or legal obligation to forward this
announcement, the circular referred to herein, the international offering
memorandum referred to herein, any subscription form or any other document
concerning the rights offer (each an "Offering Document") to a jurisdiction
outside South Africa or who hold Sappi shares for the account or benefit of
any such person.
No action has been taken that would permit a public offering of the letters
of allocation and rights offer shares or the possession, distribution or
transmission of any Offering Document in any jurisdiction where action for
that purpose is required, other than South Africa.
The distribution of any Offering Document or the offer of letters of
allocation and rights offer shares to, or the exercise or transfer of letters
of allocation by, persons resident in, or who are nationals or citizens of,
countries other than South Africa may be restricted by the laws of the
relevant jurisdiction. Those persons should consult their professional
advisers as to whether they require any governmental or other consent or need
to observe any other formalities to enable them to distribute any such
documents or take up their rights. Any failure to comply with applicable
restrictions may constitute a violation of the securities laws of such
jurisdictions.
It is the responsibility of any person outside South Africa (including,
without limitation, nominees, agents and trustees for such persons) receiving
any Offering Document and wishing to take up rights under the rights offer to
satisfy himself as to full observance of the applicable laws of any relevant
territory, including obtaining any requisite governmental or other consents,
observing any other requisite formalities and paying any issue, transfer or
other taxes due in such territories.
Receipt of any Offering Document will not constitute an offer in those
jurisdictions in which it would be illegal to make an offer and, in those
circumstances, any Offering Document, if sent, will be sent for information
only and should not be copied or redistributed. No person receiving a copy of
any Offering Document in any territory, other than South Africa, may treat
the same as constituting an invitation or offer to such person unless, in the
relevant territory, such an invitation or offer could lawfully be made to him
without contravention of any registration or other legal requirements.
Accordingly, persons (including, without limitation, nominees, agents and
trustees) receiving a copy of any Offering Document should not, in connection
with the rights offer, distribute or send the same to any person in, or
citizen or resident of, or otherwise into any jurisdiction where to do so
would or might contravene local securities laws or regulations. Any person
who does forward any Offering Document into any such territory (whether under
a contractual or legal obligation or otherwise) should draw the recipient`s
attention to the contents of this notice.
Sappi reserves the right, but shall not be obliged, to treat as invalid any
acceptance or purported acceptance of the offer of letters of allocation and
rights offer shares which appears to Sappi or its agents to have been
executed, effected or despatched in a manner which may involve a breach of
the securities laws or regulations of any jurisdiction or if Sappi believes
or its agents believe that the same may violate applicable legal or
regulatory requirements.
Despite any other provision of any Offering Document, Sappi reserves the
right to permit any shareholder or renouncee to take up his rights if Sappi
in its sole and absolute discretion is satisfied that the transaction in
question is exempt from, or not subject to, the legislation or regulations
giving rise to the restrictions in question.
To ensure compliance with applicable provisions of the laws of the United
States and other countries, the procedures described in this notice must be
followed anywhere in the world.
- United States
The Offering Documents are intended only for use in connection with the
rights offer to persons outside the United States and are not to be given or
sent, in whole or in part, to any person within the United States in
accordance with Regulation S under the U.S. Securities Act. No Offering
Document constitutes or forms part of any offer or solicitation to purchase
or subscribe for securities in the United States.
The rights offer has not been and will not be registered under the U.S.
Securities Act, or under any relevant securities laws of any state or other
jurisdiction of the United States. The letters of allocation and rights
offer shares may not be offered, sold, taken up, resold, renounced,
exercised, pledged, transferred or delivered, directly or indirectly, in or
into the United States at any time except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the U.S.
Securities Act and applicable state and other securities laws of the United
States. The letters of allocation and the rights offer shares may be
offered, sold, taken up, resold, renounced, exercised, pledged, transferred
or delivered, by persons outside the United States in accordance with
Regulation S under the U.S. Securities Act.
No communication regarding the rights offer nor any public announcement
regarding the offer, sale, renunciation, exercise, transfer or delivery of
letters of allocation or the acquisition or subscription for the rights offer
shares may be made into the United States or be directed to persons residing
or present in the United States. In particular, no Offering Document may be
distributed by any intermediary or any other person within the United States.
When offering, selling, renouncing, exercising, transferring or delivering
the letters of allocation, each person must confirm that (a) it has not
received, in the United States, any prospectus or other Offering Document,
(b) at the time it transacts with its letters of allocation it is located
outside of the United States, (c) it is not acting on behalf of any person in
the United States and (d) its acquisition or subscription for the rights
offer shares or transaction with the letters of allocation is by persons
outside the United States in accordance with Regulation S under the U.S.
Securities Act.
- United Kingdom and European Economic Area
The Offering Documents and the rights offer are only addressed to and
directed at persons in member states of the European Economic Area who are
"qualified investors" within the meaning of Article 2(1)(e) of the Prospectus
Directive (Directive 2003/71/EC) ("Qualified Investors"). In addition, in
the United Kingdom, the Offering Documents are being distributed only to, and
are directed only at, Qualified Investors who have professional experience in
matters relating to investments falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended
(the "Order") or who are high net worth entities falling within Article 49 of
the Order, and to other persons to whom it may otherwise lawfully be
communicated (all such persons together being referred to as "Relevant
Persons"). The Offering Documents must not be acted on or relied upon (i) in
the United Kingdom, by persons who are not Relevant Persons, and (ii) in any
member state of the European Economic Area other than the United Kingdom, by
persons who are not Qualified Investors. Any investment or investment
activity to which the Offering Documents relate are available only (i) in the
United Kingdom to Relevant Persons, and (ii) in any member state of the
European Economic Area other than to Qualified Investors, and will be engaged
in only with such persons.
No other person should seek to participate in the rights offer or rely on any
Offering Document concerning the rights offer. Persons distributing the
Offering Documents must satisfy themselves that it is lawful to do so.
Persons located in the United Kingdom and in any member state of the European
Economic Area other than the United Kingdom that satisfy such requirements
will be able to exercise their letters of allocation under the rights offer
provided that any such person, by subscribing for all or some of their
letters of allocation and entitlements to new rights offer shares, will be
deemed to represent, warrant, agree and confirm that such person is a
Relevant Person or a Qualified Investor, as the case may be.
- Australia, Canada and Japan
No Offering Document will be sent to or should be forwarded to holders of
shares with registered addresses in, and no rights offer entitlement and
rights offer shares should be transferred, sold or delivered in or into any
of Australia, Canada or Japan. In addition, due to restrictions under the
securities laws of Australia, Canada and Japan no offer of the letters of
allocation and the rights offer shares being offered in the rights offer is
being made under any Offering Document to holders of shares with registered
addresses in, or to residents of Australia, Canada or Japan.
- Authorised Intermediaries
Authorised intermediaries will not accept notifications for the sale,
exercise, transfer or renunciation of letters of allocation or the
subscription for or acquisition of rights offer shares if they reasonably
believe that such transaction is not made in accordance with the terms
described herein.
Any subscription that is incomplete or does not comply with the required
procedures will be void.
- We recommend that financial intermediaries include the following legend
regarding United States restrictions in their subscription forms sent to
persons under the rights offer:
I confirm that I have not received, within the United States, any
circular, prospectus, other offering document or any other document
regarding the rights offer, nor any subscription form or
information document, and that at the time I exercise, transfer,
sell, resell, take up, pledge, renounce, transfer or deliver my
letters of allocation I am located outside of the United States, I
am not an agent or intermediary acting for a principal other than a
principal who has given instructions outside of the United States,
and that I acquire the rights offer shares, or renounce, sell,
resell, transfer or deliver the letters of allocation, in a
transaction by persons outside the United States in accordance with
Regulation S under the United States Securities Act of 1933, as
amended.
- We recommend that financial intermediaries include the following legend
regarding United States restrictions in information forms sent to
persons about exercising their letters of allocation:
The rights offer described herein has not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"), or under any relevant securities laws of
any state or other jurisdiction of the United States. The letters
of allocation and rights offer shares (the "Securities") may not be
offered, sold, taken up, resold, renounced, exercised, pledged,
transferred or delivered, directly or indirectly, in or into the
United States at any time except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of
the U.S. Securities Act and applicable state and other securities
laws of the United States. Accordingly, intermediaries may not
send any information to persons located in the United States, and
no envelope containing forms concerning the Securities may, except
if authorized by Sappi Limited, be posted or sent in any manner
from the United States. No action has been taken that would permit
an offer of the Securities or the possession, distribution or
transmission of this or any other document concerning the rights
offer in any jurisdiction where action for that purpose is
required, other than South Africa. This notice may not be
distributed into, and does not constitute an offer of, or the
solicitation of an offer to subscribe for or buy, any of the
Securities to any person in any jurisdiction to whom or in which
such offer or solicitation is unlawful.
Date: 07/11/2008 11:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
