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BJM
BJM
BJM - BJM - Announcement regarding the disposal by BJM of the entire
issued share capital of BJM (UK) Limited and the entire issued share
capital of BJM (USA) LLC
BARNARD JACOBS MELLET HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/004798/06)
JSE code : BJM
ISIN : ZAE000014262
("BJM" or "the Company")
ANNOUNCEMENT REGARDING THE DISPOSAL BY BJM OF THE ENTIRE ISSUED SHARE
CAPITAL OF BARNARD JACOBS MELLET (UK) LIMITED ("BJM UK")("the UK
TRANSACTION") AND THE ENTIRE ISSUED SHARE CAPITAL OF BARNARD JACOBS
MELLET (USA) LLC ("BJM USA")("the USA TRANSACTION") (collectively,
"the TRANSACTIONS")
1. INTRODUCTION
Shareholders of BJM ("Shareholders") are advised that the Company
has entered into a Sale and Purchase Agreement ("the Agreement")
with Religare Capital Markets plc ("Religare Capital") and
Religare Investment Holdings (UK) Limited ("Religare Investment")
(collectively, "the Parties"), pursuant to which the Company will
dispose of the entire issued share capital of BJM UK (a wholly
owned subsidiary of BJM) to Religare Capital for the purchase
consideration set out in paragraph 4 ("the UK Purchase
Consideration") and the entire issued share capital of BJM USA (a
wholly owned subsidiary of BJM) to Religare Investment for the
purchase consideration set out in paragraph 5 ("the USA Purchase
Consideration"), the details of which are set out below, subject
to the fulfillment and/or waiver of the suspensive conditions as
set out below, for an aggregate anticipated purchase
consideration of R53,389,506 ("the Purchase Consideration").
2. DESCRIPTION OF BJM UK AND BJM USA
2.1 BJM UK
BJM UK is a member of the London Stock Exchange and
regulated by the Financial Services Authority. The core
business of BJM UK comprises South African research sales
and sales-trading to institutional investors in the United
Kingdom, Europe and the United States of America with
meaningful revenue also generated from trading in European
and Australian equities.
2.2 BJM USA
BJM USA is a FINRA registered broker dealer that specializes
in sales and trading of all listed South African securities.
South African sales and trading remains the core competency
and focus for BJM USA and it has expanded its research and
trading into North American gold stocks and more diversified
global mining product.
3. RATIONALE FOR THE TRANSACTIONS
Pursuant to the acquisition by Renaissance Securities Holdings
(SA) (Proprietary) Limited of Barnard Jacobs Mellet Securities
(Proprietary) Limited, being the institutional brokerage business
of BJM, and which acquisition was approved by Shareholders on
Monday, 12 July 2010 and became unconditional in accordance with
its terms on or about 13 July 2010, BJM no longer requires
institutional equity distribution capabilities in the United
Kingdom and the United States of America.
4. DETAILS OF THE UK TRANSACTION
4.1 The UK Purchase Consideration
It is anticipated that the UK Purchase Consideration shall
be approximately R33,500,228. In terms of the Agreement,
the UK Purchase Consideration is to be determined after the
first business day following ("the UK Transaction Closing
Date") the day upon which all the suspensive conditions
relating to the UK Transaction (set out below) have been
fulfilled or, where applicable, waived and shall be equal to
the following:
- the aggregate amount of all cash on hand or credited to
an account with any bank or other financial institution
to which BJM UK is beneficially entitled as at UK
Transaction Closing Date ; plus
- the aggregate of BJM UK`s claims against its trade and
other debtors as at the UK Transaction Closing Date;
less
- the aggregate amounts payable by BJM UK to its trade
creditors (together with the aggregate amount payable
by BJM UK in respect of tax and employment related
costs) as at the UK Transaction Closing Date; plus
- the aggregate of all payments made by BJM UK in respect
of services to be rendered by third parties for or on
behalf of BJM UK on or after the UK Transaction Closing
Date; less
- the aggregate of all of the liabilities of BJM UK that
have been accrued for but are not invoiced as at the UK
Transaction Closing Date.
After the UK Transaction Closing Date, the management of BJM UK
will prepare management accounts for BJM UK ("BJM UK Management
Accounts"), whereafter Smith and Williamson ("BJM UK Experts")
will be required to approve the BJM UK Management Accounts and
calculate the UK Purchase Consideration with reference to the BJM
UK Management Accounts. The BJM UK Experts shall set out the UK
Purchase Consideration in a certificate which shall be delivered
to the Parties ("BJM UK Consideration Certificate"). The UK
Purchase Consideration shall be paid on the third business day
following the day upon which Religare Capital receives the UK
Consideration Certificate from the BJM UK Experts.
4.2 Suspensive conditions
The UK Transaction is subject to the fulfilment, or where
applicable, waiver of the following suspensive conditions
("BJM UK Conditions"):
- the payment, on or before 31 October 2010, of a deposit
to Religare Capital`s attorney, namely Ashurst LLP, of
GBP 4 687 100.00, being an amount equal to the
aggregate anticipated UK Purchase Consideration and the
anticipated USA Purchase Consideration; and
- obtaining, on or before 31 March 2011, all the
requisite regulatory approvals, including; the South
African Reserve Bank ("SARB"), the UK Financial
Services Authority ("FSA"), the South African
Securities Regulation Panel ("SRP") and the Securities
and Exchange Board of India ("SEBI").
4.3 Warranties
BJM has given Religare Capital such warranties and
indemnities in respect of the UK Transaction as are usually
given with regard to transactions of this nature. The
warranties and indemnities are, however, subject to certain
disclosures made by BJM to Religare Capital and certain
limitations on the period during which and the maximum
amount which may be claimed by Religare Capital from BJM in
respect of a breach of warranty or a claim under an
indemnity.
5. THE USA TRANSACTION
5.1 The USA Purchase Consideration and payment
It is anticipated that the USA Purchase Consideration shall
be approximately R19,889,278. In terms of the Agreement,
the USA Purchase Consideration is to be determined after the
first business day following ("the USA Transaction Closing
Date") the day upon which all the suspensive conditions
relating to the USA Transaction (set out below) have been
fulfilled or, where applicable, waived and shall be equal to
the following:
- the aggregate amount of all cash on hand or credited to
an account with any bank or other financial institution
to which BJM USA is beneficially entitled as at the USA
Transaction Closing Date; plus
- the aggregate of BJM USA`s claims against its trade and
other debtors as at the USA Transaction Closing Date;
less
- the aggregate amounts payable by BJM USA to its trade
creditors (together with the aggregate amount payable
by BJM USA in respect of tax and employment related
costs) as at the USA Transaction Closing Date; plus
- the aggregate of all payments made by BJM USA in
respect of services to be rendered by third parties for
or on behalf of BJM USA on or after the USA Transaction
Closing Date; less
- the aggregate of all of the liabilities of BJM USA that
have been accrued for but are not invoiced as at the
USA Transaction Closing Date; less
- an amount of USD 181 134.00 in respect of certain costs
which will be incurred by BJM USA by the USA
Transaction Closing Date.
After the USA Transaction Closing Date, the management of BJM USA
will prepare management accounts for BJM USA ("BJM USA Management
Accounts"), whereafter Rayfield and Licata ("BJM USA Experts")
will be required to approve the BJM USA Management Accounts and
calculate the USA Purchase Consideration with reference to the
BJM USA Management Accounts. The BJM USA Experts shall set out
the USA Purchase Consideration in a certificate which shall be
delivered to the Parties ("BJM USA Consideration Certificate").
The USA Purchase Consideration shall be paid on the third
business day following the day upon which Religare Investment
receives the USA Consideration Certificate from the BJM USA
Experts.
5.2 Suspensive conditions
The USA Transaction is subject to the fulfilment, or where
applicable, waiver of the following suspensive conditions
("BJM USA Conditions") on or before 31 March 2011:
- obtaining all the necessary regulatory approvals,
including but not limited to, the Financial Industry
Regulatory Authority of the United States of America,
SARB, SRP and SEBI ; and
- the fulfilment or where applicable, the waiver of the
BJM UK Conditions resulting in the UK Transaction
becoming unconditional in accordance with its terms.
5.3 Warranties
BJM has given Religare Investments such warranties and
indemnities in respect of the USA Transaction as are usually
given with regard to transactions of this nature. The
warranties and indemnities are, however, subject to certain
disclosures made by BJM to Religare Investments and certain
limitations on the period during which and the maximum
amount which may be claimed by Religare Investments from BJM
in respect of a breach of warranty or a claim under an
indemnity.
6. Financial effects of the Transactions
The unaudited pro forma financial effects as set out below have
been prepared for illustrative purposes only to assist
shareholders in assessing the impact of the Transactions on
earnings per share ("EPS"), headline earnings per share ("HEPS"),
net asset value per share ("NAVPS") and tangible net asset value
per share ("TNAVPS").
The pro forma effects have been applied to BJM`s pro forma income
statement and balance sheet subsequent to the BJM FirstRand
Limited transaction, the details of which were set out in a
scheme document sent to Shareholders dated 30 July 2010 and are
referred to below.
These unaudited pro forma financial effects have been disclosed
in terms of the JSE Limited ("JSE") Listings Requirements and
because of their nature may not fairly present BJM`s financial
position, changes in equity, results of operations or cash flows.
The unaudited pro forma financial effects are the responsibility
of the directors of BJM.
Before After Perce- After Perce- After Perce-
the the UK ntage the USA ntage the ntage
Transa- Transa- change Transa- change Transa- change
ctions1 ction2 (%) ction3 (%) ctions4 (%)
EPS (cents) 16.81 (19.69) (217) (24.18) (244) (60.67) (461)
HEPS (31.01) (36.11) (16) (32.51) (5) (40.68) (31)
(cents)
NAVPS 463.94 351.95 (24) 375.43 (19) 263.45 (43)
(cents)
TNAVPS 29.79 28.47 (4) 29.48 (1) 28.16 (5)
(cents)
Weighted 70,218 70,218 0 70,218 0 70,218 0
average
number of
shares in
issue
(`000)
Shares in 75,335 75,335 0 75,335 0 75,335 0
issue at
year end
(`000)
Notes:
1. The figures have been obtained from the pro forma statements of
financial position as included in the circular to shareholders in
terms of a scheme of arrangement in terms of section 311 of the
Companies Act 61 of 1973, as amended, proposed by FirstRand
Limited ("FirstRand") between BJM and the Shareholders ("the
Scheme"), in terms of which FirstRand Investment Holdings
(Proprietary) Limited ("FRIHL"), a wholly-owned subsidiary of
FirstRand, will acquire all of the shares in the issued share
capital of BJM, for a cash consideration of R4.50 per ordinary
share in BJM ("BJM Shares") payable by FirstRand on behalf of
FRIHL ("Scheme Consideration"), issued on Friday, 30 July 2010.
2. The figures were calculated by removing BJM UK`s consolidated
figures from the Before the Transaction column. A sale price of
R33,500,228 and transaction costs of R1,129,443 were used. The
EPS and HEPS figures were calculated assuming the transaction was
effective 1 April 2009. The NAVPS and TNAVP were calculated
assuming the transaction was effective 31 March 2010.
3. The figures were calculated by removing BJM USA`s consolidated
figures from the Before the Transaction column. A sale price of
R19,889,278 and transaction costs of R670,557 were used. The EPS
and HEPS figures were calculated assuming the transaction was
effective 1 April 2009. The NAVPS and TNAVP were calculated
assuming the transaction was effective 31 March 2010. After the
year ended 31 March 2010 a large dividend of R14,582,000 was
declared by BJM USA. The effect of this post balance sheet event
has been incorporate in the figures.
4. The figures were calculated by removing BJM UK and BJM USA`s
consolidated figures from the Before the Transaction column. A
combined sale price of R53,389,506 and combined transaction costs
of R1,800,000 were used. The EPS and HEPS figures were calculated
assuming the transaction was effective 1 April 2009. The NAVPS
and TNAVP were calculated assuming the transaction was effective
31 March 2010. After the year ended 31 March 2010 a large
dividend of R14,582,000, was declared by BJM USA. The effect of
this post balance sheet event has been incorporate in the
figures.
7. Effective date
7.1 UK Transaction
The UK Transaction will be effective on the UK Transaction
Closing Date, from which date ownership of the entire issued
share capital of BJM UK shall pass to Religare Capital.
The fulfilment of the BJM USA Conditions is not a
prerequisite to the UK Transaction becoming unconditional
and therefore, the UK Transaction can be implemented
notwithstanding that the USA Transaction fails to become
unconditional.
7.2 The USA Transaction
The USA Transaction will be effective on the USA Transaction
Closing Date, from which date ownership of the entire issued
share capital of BJM USA Sale shall pass to Religare
Investments.
In terms of the Agreement, the fulfillment of the BJM UK
Conditions is a prerequisite to the USA Transaction becoming
unconditional, failing which, the USA Transaction will not
become effective.
8. Application of the Purchase Consideration
Shareholders are referred to the announcement released on the
Securities Exchange News Service ("SENS") on Friday, 30 July 2010
relating to the Scheme, and a further announcement released on
SENS on Tuesday, 17 August 2010 in terms of the confirmation of
the Scheme Consideration ("the Scheme Consideration
Announcement"). The financial impact of both the UK Transaction
and the USA Transaction has been fully accounted for purposes of
the Scheme Consideration Announcement.
Accordingly, the proceeds of the Transactions will be used for
purposes of discharging the Scheme Consideration.
9. Repayment of Loan Accounts
It should be noted that each of BJM UK and BJM USA may repay its
indebtedness to the Company prior to the UK Transaction Closing
Date and the USA Transaction Closing Date respectively.
10. Categorisation of the Transactions
In terms of the JSE Listings Requirements, the Transactions are
categorised as a Category Two Transaction. Consequently, approval
by Shareholders is not required.
Johannesburg
23 August 2010
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
External advisors to BJM
Bridge Capital
Legal advisors to BJM
Edward Nathan Sonnenbergs Inc
Legal advisors to Religare Capital and Religare Invetsment
Ashurst LLP
Date: 23/08/2010 14:49:55 Produced by the JSE SENS Department.
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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,
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