| Fri 30 Jan 2009, 17:04 | | ACT/ACTP - Afrocentric Investment Corporation Limited - Fulfilment of |
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ACT ACTP
ACT
ACT/ACTP - Afrocentric Investment Corporation Limited - Fulfilment of
conditions precedent and mandatory offer in terms of the SRP code
AFROCENTRIC INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/000570/06)
Share code: ACT/ ACTP & ISIN: ZAE000078416 / ZAE000082269
("AfroCentric" or "the Company")
LETHIMVULA INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/005087/06)
("Lethimvula")
FULFILMENT OF CONDITIONS PRECEDENT AND MANDATORY OFFER IN TERMS OF THE SRP
CODE
1 INTRODUCTION AND BACKGROUND
Shareholders of both AfroCentric and Lethimvula are referred to the joint
AfroCentric and Lethimvula announcements released on the Securities
Exchange News Service of the JSE Limited ("JSE") on 23 September 2008 and
the subsequent announcements thereto, in which they were advised that
AfroCentric had entered into a share purchase agreement to acquire 365
865 029 ordinary shares in the issued share capital of Lethimvula
("Lethimvula Shares") representing 63.2% of the entire issued share
capital of Lethimvula (the "Acquisition") from certain Lethimvula
shareholders (the "Sellers").
2 CONDITIONS PRECEDENT TO THE ACQUISITION
Shareholders of both AfroCentric and Lethimvula are advised that all of
the conditions precedent to the Acquisition have now been fulfilled.
3 OFFER
Subsequent to the fulfilment of the conditions precedent to the
Acquisition, AfroCentric holds 63.2% of the entire issued share capital
of Lethimvula and accordingly in terms of the Securities Regulation Code
on Take-Overs and Mergers ("SRP Code") AfroCentric is obliged to make an
offer to all shareholders of Lethimvula, other than AfroCentric and its
subsidiary and associate companies (the "AfroCentric Group") (the
"Offeree Shareholders"), to acquire all of their Lethimvula Shares on the
same terms and conditions as those on which the Lethimvula Shares were
purchased by AfroCentric from the Sellers ("Offer").
The Offer is subject to the suspensive conditions set out in paragraph y8
below. Should the Offer be accepted by Offeree Shareholders, holding not
less then nine-tenths of the Lethimvula Shares, it is the intention of
AfroCentric to exercise its entitlement to compulsorily acquire the
emaining Lethimvula Shares in terms of Section 440k of the Companies Act,
1973 (Act 61 of 1973) (the "Act"), as amended. Should AfroCentric elect
to exercise its entitlement in terms of Section 440k of the Act,
Lethimvula will become a wholly-owned subsidiary of AfroCentric.
In addition, AfroCentric will make an appropriate offer, or appropriate
offers as the case may be, to African Vanguard Capital (Proprietary)
Limited and Dewald Dempers (the "Option Holders") in respect of the
options that they currently hold to subscribe for ordinary shares in the
share capital of Lethimvula.
4 RATIONALE FOR THE ACQUISITION AND THE OFFER
The Acquisition, which gave rise to the Offer, falls in line with
AfroCentric`s strategy to operate as a broad-based, black empowered
diversified investment holding company that will enable the Company and
its shareholders to actively and beneficially participate in economic
opportunities available in a transforming South Africa.
Apart from the expected economic benefits, the Acquisition and resulting
Offer is core to the investment strategy of AfroCentric to facilitate and
extend the participation in, or the change in ownership of, prestigious
traditionally white-owned enterprises into black hands. In addition, the
Acquisition and resulting Offer enable shareholders of Lethimvula to
participate in the broader investment portfolio of AfroCentric.
South Africa`s private healthcare industry rates as one of the best in
the world and Lethimvula`s subsidiary, Medscheme Limited, has proudly
contributed to that ranking and reputation. Medscheme Limited has been a
leading administrator in the private healthcare sector for the past 37
years, with a growing membership in excess of 1 million members.
Subsequent to the Acquisition Lethimvula became the only black-owned
healthcare administrator in South Africa forming an integral part of a
JSE listed entity.
5 THE OFFER CONSIDERATION
The Offer consideration payable to the Offeree Shareholders who elect to
accept the Offer ("Offer Participants") is a maximum amount of R1.555 per
Lethimvula Share plus such additional amount to be determined in
accordance with the provisions of paragraph y5.2.2 below (the "Offer
Consideration"). The Offer Consideration is to be discharged in two
tranches, namely R0.933 per Lethimvula Share in respect of the first
tranche (the "First Tranche") and R0.622 per Lethimvula Share plus an
additional amount to be determined in accordance with paragraph y5.2.2
below in respect of the second tranche (the "Second Tranche"). Offer
Participants may elect to receive the entire First Tranche in AfroCentric
ordinary shares ("Share Election") or to receive the First Tranche by way
of a combination of cash and AfroCentric ordinary shares ("Cash
Election"). Offer Participants who fail to make an election will be
deemed to have elected the Cash Election as a default.
5.1 The First Tranche
The First Tranche of the Offer Consideration, being R0.933 per
Lethimvula Share, will be settled by the AfroCentric Group on the
settlement date, which date will be announced in due course by:
5.1.1 If the Share Election is made by an Offer Participant:
issuing or procuring the delivery of 0.35885 AfroCentric
ordinary shares per Lethimvula Share to the Offer Participant
at an issue price of R2.60 per AfroCentric ordinary share and
paying an amount equal to any fraction that is arrived at when
the provisions of this paragraph are applied to the Offer
Participant by rounding such fraction to R2.60 and issuing or
procuring the delivery of one AfroCentric ordinary share to the
Offer Participant in respect of such fractions; or
5.1.2 If the Cash Election is made or if no election is made by an
Offer Participant:
paying the Offer Participant an amount of R0.345 per Lethimvula
Share in cash; plus
issuing or procuring the delivery of 0.22615 AfroCentric
ordinary shares per Lethimvula Share to the Offer Participant
at an issue price of R2.60 per AfroCentric ordinary share and
paying an amount equal to any fraction that is arrived at when
the provisions of this paragraph are applied, to the Offer
Participant by rounding such fraction to R2.60 and issuing or
procuring the delivery of one AfroCentric ordinary share to the
Offer Participant in respect of such fractions.
5.2 The Second Tranche
The Second Tranche, being a maximum amount of R0.622 per
Lethimvula Share plus such additional amount to be determined
in accordance with paragraph y5.2.2 below will be settled by
AfroCentric on the Second Tranche payment date, being within 20
days of finalising the Lethimvula audited financial statements
for the period ending 30 June 2013 (the "Second Tranche Payment
Date") by:
5.2.1 issuing or procuring the delivery of a maximum of 0.23923
AfroCentric ordinary shares per Lethimvula Share to the Offer
Participant at an issue price of R2.60 per AfroCentric ordinary
share and paying an amount equal to any fraction that is
arrived at when the provisions of this paragraph are applied to
the Offer Participant by rounding such fraction to R2.60 and
issuing or procuring the delivery of one AfroCentric ordinary
share to the Offer Participant in respect of such fractions
(the "Second Tranche Shares"). The number of Second Tranche
Shares to be issued or delivered on the Second Tranche Payment
Date will be determined as follows:
5.2.1.1 should the average profit after tax of Lethimvula for the
financial years ending 30 June 2011, 2012 and 2013 ("Average
PAT") be greater than or equal to R180 million, then the
AfroCentric Group will, on the Second Tranche Payment Date,
issue or procure the delivery of 0.23923 AfroCentric ordinary
shares per Lethimvula Share held by the Offer Participant; or
5.2.1.2 should the Average PAT be less than R180 million, then
AfroCentric will on the Second Tranche Payment Date, issue or
procure the delivery of the Second Tranche Shares to the Offer
Participant based upon the formula below:
A = B x (C / D)
Where
A = the number of Second Tranche Shares per Lethimvula Share
held by the Offer Participant;
B = 0.23923;
C = the Average PAT minus R90 million; and
D = 90 million; and
5.2.2 paying an amount in cash to the Offer Participant on the Second
Tranche Payment Date equal to:
5.2.2.1 the dividends; plus
5.2.2.2 any Secondary Tax on Companies
which would have been paid on the Second Tranche Shares held by the
Offer Participant during the period commencing on the closing date
of the offer, which date will be announced in due course ("Closing
Date") and ending on the Second Tranche Payment Date, if the Second
Tranche Shares to be issued in terms of paragraph y5.2.1 above had
been issued to the Offer Participant on the Closing Date.
6 OPINION AND RECOMMENDATIONS
The board of directors of Lethimvula has appointed Vunani Corporate
Finance as the independent advisor ("Independent Advisor") to advise on
whether the terms and conditions of the Offer to the Offeree Shareholders
and the appropriate offer, or appropriate offers as the case may be, to
the Option Holders are fair and reasonable. Details of the opinion of the
Independent Advisor will be provided in the circular to be posted to
Lethimvula shareholders in due course.
7 SECURITIES REGULATION PANEL ("SRP") CONFIRMATION
The SRP has been given appropriate confirmation from United Towers
(Proprietary) Limited, a wholly owned subsidiary of ABSA Bank Limited
(complying with its requirements) that the AfroCentric Group has
sufficient cash resources and/or facilities available to meet its cash
commitments in relation to the Offer.
8 SUSPENSIVE CONDITIONS
The Offer is subject to all relevant documentation to be distributed
to the Lethimvula shareholders being approved by the SRP.
9 FURTHER ANNOUNCEMENT AND DOCUMENTATION
A further announcement setting out the salient dates and times and the
pro forma financial effects of the Offer on the Lethimvula Shareholders
will be made within 30 days of this announcement.
A circular, providing further information on the Offer is expected to
be posted to the Lethimvula shareholders in due course.
Johannesburg
30 January 2009
Advisors to AfroCentric Advisors to the Sellers and Lethimvula
Investment Bank and sponsor to Legal advisor to the Sellers
the transaction Rothbart Inc
Investec Bank Limited (Registration number 1995/001105/21)
(Registration number
1969/004763/06)
Sponsor to AfroCentric Lead corporate advisor to the Sellers
Sasfin Capital Sinergi Corporate Advisors
(Registration number (Proprietary) Limited
1951/002280/06) (Registration number 2004/011875/07)
Legal advisor to AfroCentric Corporate advisor to the Sellers
HR Levin Attorneys, Notaries & Base Capital (Pty) Ltd
Conveyancers (Registration number 2002/008290/07)
(Practice number M2841)
Joint Legal Advisors to Lethimvula
Edward Nathan Sonnenbergs
(Registration number 2006/018200/21)
Rothbart Inc
(Registration number 1995/001105/21)
Date: 30/01/2009 17:04:01 Produced by the JSE SENS Department.
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