| Thu 15 Oct 2009, 17:06 | | IBPL / NBK / NBKP - Imperial Bank/ Nedbank Group/ |
|
JSE NED NBKP IBLP
IBLP NED NBKP
IBPL / NBK / NBKP - Imperial Bank/ Nedbank Group/ Nedbank - Announcement of a
Firm Intention
Imperial Bank Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/012641/06)
Share code: IBPL
ISIN: ZAE000081675
("Imperial Bank")
Nedbank Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/010630/06)
Share code: NED & NSX: NBK
ISIN: ZAE000004875
("Nedbank Group")
Nedbank Limited
(Incorporated in the Republic of South Africa)
(Registration number 1951/000009/06)
Share code: NBKP
ISIN: ZAE000043667
("Nedbank")
ANNOUNCEMENT OF A FIRM INTENTION BY NEDBANK TO MAKE A VOLUNTARY UNCONDITIONAL
OFFER TO THE HOLDERS (OTHER THAN NEDBANK) OF IMPERIAL BANK PERPETUAL, NON-
REDEEMABLE, NON-PARTICIPATING, NON-CUMULATIVE PREFERENCE SHARES ("IMPERIAL BANK
PREFERENCE SHARES") ("THE OFFER") AND WITHDRAWAL OF IMPERIAL BANK CAUTIONARY
ANNOUNCEMENT
1. Introduction
1.1 On 16 September 2009 Nedbank announced that agreement had been reached
with Imperial Financial Holdings Limited ("IFH"), a 100% held
subsidiary of Imperial Holdings Limited, in terms of which Nedbank
will, subject to the fulfilment of certain conditions, acquire IFH`s
shareholding of 49,9% of the ordinary shares in Imperial Bank (the
"Acquisition"), thereby constituting Imperial Bank as a wholly owned
subsidiary of Nedbank.
1.2 It is the intention that following the Acquisition (which is
anticipated to be finalised between the first and second quarter of
2010), Nedbank will, subject to South African Reserve Bank ("SARB")
approval, amalgamate the businesses of Imperial Bank with its relevant
existing businesses ("the amalgamation") in terms of section 54 of the
Banks Act, 1990 (the "Banks Act").
1.3 Imperial Bank will make an application to the SARB to have its banking
licence cancelled pursuant to the amalgamation being implemented.
1.4 It is anticipated that the amalgamation will be completed between the
fourth quarter of 2010 and the first quarter of 2011.
1.5 Thereafter, steps will be taken to dissolve, wind-up or deregister
Imperial Bank (the "dissolution"). It is anticipated that it will take
approximately 6 to 12 months after the completion of the amalgamation
to dissolve Imperial Bank. However, the timing of the intended
dissolution is uncertain.
1.6 In terms of the articles of association of Imperial Bank, Imperial
Bank Preference Shares will be redeemed upon the dissolution of
Imperial Bank at a price equal to R100 per share (the "Redemption
Amount") together with any accrued and unpaid dividends.
1.7 Holders of Imperial Bank Preference Shares are referred to the initial
cautionary announcement released on the Securities Exchange News
Service ("SENS") on 29 May 2009, and further cautionary announcements
released subsequently on SENS.
1.8 The Securities Regulation Panel has ruled that based on information
provided in submissions received, Nedbank is not required to make a
mandatory offer to the holders of the Imperial Bank Preference Shares
pursuant to the Acquisition.
1.9 Nedbank has, despite not being obliged to do so, submitted to the
board of directors of Imperial Bank (the "Board") a notice of its firm
intention to make a voluntary unconditional offer to acquire the
remaining Imperial Bank Preference Shares which Nedbank does not
already own so as to enable the holders of the remaining Imperial Bank
Preference Shares to achieve more certainty in relation to the value
and tenure of their holdings.
2. Reason for the amalgamation
The amalgamation will result in more efficient structures being established
in the Nedbank group since the Nedbank group has been required, inter alia,
to duplicate governance structures, risk management systems and
infrastructures (e.g. properties, computer systems etc) in respect of
similar businesses conducted by Imperial Bank and Nedbank.
3. The Offer
3.1 Terms and mechanism of the Offer
Nedbank, which currently holds 50,1% of Imperial Bank`s ordinary
shares and approximately 35% of Imperial Bank Preference Shares, is
offering to acquire all of the Imperial Bank Preference Shares which
Nedbank does not already own. In the event that 90% or more, but less
than 100%, of the holders of the Imperial Bank Preference Shares
(other than Nedbank) accept the Offer, Nedbank will invoke the
provisions of section 440K of the Companies Act, 1973, (the "Companies
Act") to compel acceptance of the Offer by the remaining holders of
the Imperial Bank Preference Shares which did not accept the Offer.
3.2 Offer Consideration
Nedbank offers to exchange the holdings of the registered holders of
Imperial Bank Preference Shares for perpetual, non-redeemable, non-
cumulative, non-participating preference shares in the share capital
of Nedbank ("Nedbank Preference Shares") in the ratio of 10 Nedbank
Preference Shares for each Imperial Bank Preference Share held
("Exchange Ratio"). The rights and privileges attaching to the Nedbank
Preference Shares will be set out in the offer document referred to in
paragraph 8 below.
3.3 No Increase Statement
Nedbank will not increase the offer consideration.
3.4 Basis of determination of Exchange Ratio
The Exchange Ratio is equal to the ratio of the nominal value of an
Imperial Bank Preference Share (R100) to the nominal value of a
Nedbank Preference Share and is consistent with Nedbank`s assessment
of:
3.4.1 an exchange basis that will result in the holders of
Imperial Bank Preference Shares improving their income
earnings position in comparison to their income earnings
position had they continued to own Imperial Bank Preference
Shares;
3.4.2 the yields on similar or better rated preference shares
listed on the securities exchange operated by JSE Limited
("JSE") (including Nedbank Preference Shares);
3.4.3 the present value of future dividends and the redemption
proceeds of the Imperial Bank Preference Shares upon the
dissolution of Imperial Bank at an uncertain time in the
future on an unconditional basis.
3.5 Opinions
The Board of Imperial Bank has appointed Ernst & Young Advisory
Services Limited ("Ernst & Young") as an independent expert to provide
an opinion on the terms and conditions of the Offer to ensure that
they are fair and reasonable to Imperial Bank Preference Shareholders.
Imperial Bank will appoint a sub-committee of independent directors to
consider the findings of the independent expert. Preference
Shareholders will be informed in due course of the outcome of this
review and of the opinion of the aforesaid sub-committee.
3.6 Offer Dates
3.6.1 The Offer opens on Thursday, 12 November 2009, or such
earlier date as Nedbank may in its discretion elect, subject
to regulatory approval, and closes on the first Friday, at
least 21 days thereafter (the "Offer Period").
3.6.2 The Securities Regulation Panel requires that the Offer is
open for a period of at least 21 days. Subject to approval
by the Securities Regulation Panel, Nedbank reserves the
right to extend the Offer Period. An announcement regarding
any such extension will be published in the press and will
be released on the SENS.
3.7 Acceptance or rejection of the Offer
This Offer will be open to all registered holders of Imperial Bank
Preference Shares (other than Nedbank) who have legal title thereto
and are able to effect unencumbered transfer of their Imperial Bank
Preference Shares to Nedbank during the Offer Period.
3.7.1 Nedbank will issue new Nedbank Preference Shares to
registered holders of Imperial Bank Preference Shares which
elect to accept the Offer as and when such acceptances are
received during the Offer Period.
3.7.2 Registered holders of Imperial Bank Preference Shares which
wish to accept the Offer should follow the instructions in
the offer document that will be sent to them by mail or
contact their financial advisors or stockbrokers in this
regard.
3.7.3 Holders of Imperial Bank Preference Shares which do not wish
to accept the Offer do not have to respond to the invitation
by Nedbank to exchange their Imperial Bank Preference
Shares.
3.7.4 If Nedbank invokes the provisions of section 440K of the
Companies Act, it will give written notice thereof to the
holders of the Imperial Bank Preference Shares which did not
accept the Offer.
3.8 Special arrangements
No arrangements exist between Nedbank, Imperial Bank, or any other
parties acting in concert with Nedbank or Imperial Bank in relation to
the Offer. This is an unconditional Offer and is not subject to
the Acquisition becoming unconditional or the implementation of the
amalgamation. Imperial Holdings Limited and IFH are not holders of
Imperial Bank Preference Shares and are not acting in concert with
Nedbank or Imperial Bank in relation to the Offer.
4. Undertaking by Nedbank
Nedbank has irrevocably undertaken to the Board that it will ensure that
from the date of completion of the amalgamation until such time as the
Imperial Bank Preference Shares are redeemed, Imperial Bank shall remain in
a position to pay any preference share dividends due on Imperial Bank
Preference Shares and a return of capital on dissolution of Imperial Bank.
In addition, Nedbank will procure that, from the date of completion of the
amalgamation until such time as the resolution for the dissolution of
Imperial Bank is passed, a preference dividend will be declared and paid to
the holders of the Imperial Bank Preference Shares on the preference
dividend payment dates as defined in the articles of association of
Imperial Bank, notwithstanding that, in terms of the rights attaching to
the Imperial Bank Preference Shares, the holders of the Imperial Bank
Preference Shares are not, entitled to same.
5. Financial effects
The table below sets out the financial impact on the holder of 1 Imperial
Bank Preference Share which accepts the Offer ("financial effects").
Effect on market Market data (clean Market value
value of share closing price) (4)
exchange
Imperial Nedbank 1 10 Nedbank %
Bank Preference Imperial Preference change
Preference Shares Bank Shares
Shares Preference
Share
Holding of 1 Imperial R69.52 R10.09 R69.52 R100.85 45.1%
Bank Preference Share
pre-announcement
converted into 10
Nedbank Preference
Shares (28 May 2009)
Holding of 1 Imperial R79.59 R10.08 R79.59 R100.83 26.7%
Bank Preference Share
post-announcement
converted into 10
Nedbank Preference
Shares (29 May 2009)
Current holding of 1 R90.77 R9.75 R90.77 R97.46 7.4%
Imperial Bank
Preference Share
converted into 10
Nedbank Preference
Shares (14 October
2009)
Effect on dividend of Dividend rate Notional dividend (2), (3)
share exchange (% of prime)
Imperial Nedbank 1 10 Nedbank %
Bank Preference Imperial Preference change
Preference Shares Bank Shares
Shares Preference
Shares
Dividend of 1 Imperial 70% 75% R7.35 R7.88 7.2%
Bank Preference Share
converted into 10
Nedbank Preference
Shares
Effect on nominal Nominal value Nominal value (2)
value of share (R per share)
exchange
Imperial Nedbank 1 10 %
Bank Preference Imperial Nedbank change
Preference Shares Bank Preference
Shares Preference Shares
Shares
Nominal value of 1 R100.00 R10.00 R100.00 R100.00 -
Imperial Bank
Preference Share
converted into 10
Nedbank Preference
Shares (2)
Notes:
1. Announcement of the Acquisition was released on SENS on 29 May 2009.
2. Based on a par value for Imperial Bank Preference Shares of R100.00
per preference share and a par value for Nedbank Preference Shares of
R10.00 per preference share.
3. The notional dividend assumes a prevailing prime overdraft rate of
10.5%.
4. Clean closing prices are calculated by removing both notionally
accrued dividends and declared but unpaid dividends from the closing
listed market price on the JSE.
6. Taxation
The effect of taxation on the holders of Imperial Bank Preference Shares
which accept the Offer will vary, depending on the circumstances of each
shareholder. In considering the Offer, holders of Imperial Bank Preference
Shares should take their own tax advice.
7. Advantages of the Offer
In Nedbank`s view, the Offer presents, inter alia, the following advantages
to the holders of Imperial Bank Preference Shares:
7.1 the ability to lock in the gain in the market price of an Imperial
Bank Preference Share since 29 May 2009, being the date on which
Imperial Bank issued a cautionary announcement in regard to the
Acquisition;
7.2 Holders of Imperial Bank Preference Shares accepting the Offer will
receive an increase in the total dividends received compared to their
equivalent current holding of Imperial Bank Preference Shares as shown
under the financial effects in paragraph 5 above.
7.3 the Offer is unconditional and provides holders of Imperial Bank
Preference Shares who accept the Offer, with the opportunity to remain
invested in preference shares of a similar type. Holders of Imperial
Bank Preference Shares who do not accept the Offer will, upon the
dissolution of Imperial Bank, be entitled to the Redemption Amount as
well as any accrued and unpaid dividends. The timing of the
dissolution is however dependent on a number of conditions being
fulfilled, some of which are outside Nedbank`s control; and
7.4 increased security, as Nedbank has a larger balance sheet and more
diversified earnings, relative to that of Imperial Bank.
8. Offer document and withdrawal of cautionary announcement
An offer document, which is subject to regulatory approval, providing full
details of the Offer will be posted in due course to holders of Imperial
Bank Preference Shares.
The holders of Imperial Bank Preference Shares are referred to the
cautionary announcement dated Monday, 28 September 2009 and are advised
that they are no longer required to exercise caution when dealing in
Imperial Bank Preference Shares.
Sandton
15 October 2009
Investment bank, corporate Independent lead sponsor to
adviser and sponsors to Nedbank Group
Nedbank Group and Nedbank -Merrill Lynch South Africa
Limited and sponsor to (Pty) Ltd-
Imperial Bank
- Nedbank Capital, a division
of Nedbank Limited -
Independent lead sponsor to Attorneys
Nedbank Limited -ENS-
-Investec Bank Limited-
Sponsoring broker in Namibia Independent professional
to Nedbank Group expert
-Old Mutual Investment -Ernst & Young Advisory
Services (Namibia) (Pty) Ltd Services Limited-
-
Independent sponsor to
Imperial Bank
-Deloitte & Touche Sponsor
Services (Proprietary)
Limited-
Date: 15/10/2009 16:51:30 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.
