| Wed 25 Aug 2010, 7:45 | | LMID - Lereko Mobility - Background to Lereko Mobility |
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JSE SIM
LMID
LMID - Lereko Mobility - Background to Lereko Mobility
Lereko Mobility (Proprietary) Limited
Condensed audited results for the year ended 30 June 2010
Lereko Mobility (Proprietary) Limited
Incorporated in the Republic of South Africa
Registration number: 2004/034154/07
Share code: LMID
ISIN: ZAE0000067229
("Lereko Mobility")
Background to Lereko Mobility
In June 2005 Lereko Mobility (Proprietary) Limited ("the company")
concluded a Black Economic Empowerment transaction with Imperial
Holdings Limited ("Imperial").
In terms of this transaction the company acquired 14 516 617
preferred ordinary shares from Imperial which are unlisted and pays
a fixed annual dividend of 535 cents per share for the five years
up to and including 30 September 2010. Thereafter they will be
converted into ordinary shares on 30 September 2010 and will be
listed on JSE Limited ("JSE") ranking pari passu with Imperial`s
other ordinary shares.
In May 2008 Imperial unbundled its Leasing and Capital Equipment
division to its shareholders giving rise to Eqstra Holdings Limited
("Eqstra"). The company subscribed for 14 516 617 deferred ordinary
shares of 0.1 cent each in Eqstra which will also be converted into
ordinary shares and will be listed on JSE ranking pari passu with
Eqstra`s other ordinary shares.
To fund the acquisition of the original allocation of Imperial
shares the company raised senior funding by issuing to financial
institutions preference shares for R377 million and 14 533 096
debentures for R458 million. The debentures are unsecured,
subordinated to the claims of the preference shares and listed on
the JSE under the Asset-backed Securities: Other Securities sub-
sector.
The debenture holders are entitled to a coupon of 5% per annum. The
debentures will be redeemed on 1 October 2010 at R41.50 per
debenture plus an equity linked bonus being 25% of the extent to
which Imperial`s share price exceeds R111.55 and Eqstra`s share
price exceeds R33.70 on that date.
Imperial facilitated the transaction with vendor finance by issuing
preferred ordinary shares at their par value of 4 cents, which
discount had a value of R600 million. This will entitle Imperial to
a call option from the company for sufficient of Imperial`s
ordinary shares to be delivered on 15 June 2014 to settle this
amount plus a return which will amount to a minimum of R1 524
million. With the unbundling referred to above, Eqstra will be
entitled to a call option from the company for sufficient of
Eqstra`s ordinary shares to be delivered on 15 June 2014 to settle
its call option which will amount to a minimum of R420 million.
These call options are subordinated to the claims of both the
preference share and debenture funding.
Imperial Group (Pty) Ltd and Eqstra Corporation (Pty) Ltd
subsidiaries of Imperial Holdings Limited and Eqstra Holdings
Limited respectively, issued guarantees jointly (but not severally)
for a total amount of R100 million. This counts as additional
acceptable collateral (in the proportions of R78 400 000 by the
Imperial subsidiary and R21 600 000 by the Eqstra subsidiary) in
favour of the debenture holders and preference shareholders of
Lereko. These guarantees expire in September 2010 upon full
settlement of the debenture holders and preference shareholders.
The effect of the additional acceptable collateral is to reduce the
minimum combined Imperial and Eqstra share prices in respect of the
minimum share cover ratio of the preference share debt and
debenture debt.
In exchange for the provision of the additional acceptable
collateral, Lereko has agreed that Imperial and Eqstra`s call
options over their shares may be brought forward by 1 (one) year to
2014 at the election of Imperial and Eqstra.
Basis of preparation
The audited financial statements have been prepared on the
historical cost basis excluding financial instruments which are
fair valued and conform to International Financial Reporting
Standards (IFRS). The accounting policies are in terms of IFRS and
are consistent with those applied in the annual financial
statements for the year ended 30 June 2010. These condensed
financial statements have been prepared in accordance with the
framework concepts and the measurement and recognition requirements
of IFRS together with the AC 500 standards as issued by the
Accounting Practices Board or its successor, as well as in terms of
IAS 34 - Interim financial reporting.
The company`s auditors, Deloitte & Touche, have audited the results
and their signed unmodified opinion is available for inspection at
the company`s registered office.
Results
The company has posted a profit amounting to R37 million. Net fair
value adjustments include an increase in value of the Imperial and
a decrease in the value of the Eqstra shares.
The funding costs payable to the preference shareholders and the
debenture holders are included in net financing costs.
The interest bearing borrowings are payable to the preference
shareholders and debenture holders.
The call option liability is due to Imperial and Eqstra for the
vendor finance.
The equity of the company reflects a deficit of R698 million,
however the call options due to Imperial and Eqstra are both
subordinated to the claims of the preference and debenture holders.
The preferred ordinary shares in Imperial and Eqstra have a
combined market value at the reporting date of R1 316 million.
Other than the forward sale of shares as disclosed below there have
been no facts or circumstances of a material nature that have
occurred between the accounting date and the date of this report.
Conversion of shares after year end and settlement of debt
The preferred ordinary shares in Imperial and the deferred ordinary
shares in Eqstra, that the company owns, will convert to ordinary
shares on 30 September 2010.
The preference shares and debentures that the company has issued
have to be redeemed on 1 October 2010 as detailed in the debenture
redemption circular dated 19 August 2010.
The Board has decided to forward sell sufficient Imperial and
Eqstra ordinary shares to enable the company to redeem both the
preference shares and debentures. To date the company has forward
sold eight million Imperial and Eqstra ordinary shares and a small
additional number will be sold in due course to settle its
obligations.
On 15 June 2015 (or a year earlier at the discretion of Imperial
and Eqstra) a formula determined number of Imperial and Eqstra
ordinary shares will be delivered from the remaining shares to
settle the vendor finance provided by Imperial and Eqstra. Each of
the companies will get their ordinary shares only to settle their
respective call options and in all likelihood all the remaining
shares would revert back to Imperial and Eqstra. From 1 October
2010, until the final exercise of the call options, all ordinary
dividends on the remaining ordinary shares will accrue to the
company.
Interest on Debentures
Notice is hereby given that an interest payment of 103.75 cents per
debenture is payable to debenture holders for the period ending 30
September 2010.
In compliance with the requirements of Strate, the electronic
settlement and custody system used by the JSE Limited, the company
has determined the following salient dates for the payment of the
interest:
2010
Last day to trade cum-interest payment Thursday, 16 September
Debentures suspended from trade at Friday, 17 September
commencement of business on
Record Date Thursday, 23 September
Payment date Friday, 1 October
Termination of listing of Debentures from Monday, 4 October
commencement of trade on
Debenture certificates may not be dematerialised / rematerialised
after Thursday, 16 September 2010.
On Friday, 1 October 2010, the interest payment will be
electronically transferred to the bank accounts of certificated
debenture holders that utilise this facility. In respect of those
who do not, cheques dated 1 October 2010 will be posted on or about
that date. Debenture holders who have dematerialised their
debentures will have their accounts, held at their CSDP or Broker,
credited on Friday, 1 October 2010.
Company Secretary
RA Venter
By order of the Board
25 August 2010
BEDFORDVIEW
Sponsor:
Merrill Lynch South Africa (Pty) Limited
Lereko Mobility (Pty) Ltd
Condensed statement of financial position at 30 June 2010
2010 2009
R`000 R`000
Assets
Non-current asset
Investments 422,729 936,612
Current assets 904,036 10,448
Investments 893,493 10,448
Cash and cash equivalents 10,543 -
Total assets 1,326,765 947,060
Equity and liabilities
Capital and reserves (698,238) (881,656)
Share capital and premium 2,040 2,040
Non-distributable reserves 92,982 (53,584)
Distributable reserve (793,260) (830,112)
Non-current liabilities 1,155,192 1,815,421
Interest bearing borrowings - 832,854
Call option liability 1,082,243 961,468
Embedded derivative financial 1,719 3,014
liability
Deferred taxation 71,230 18,085
Current liabilities 869,811 13,295
Current portion of interest bearing 869,530 12,917
borrowings
Taxation 172 299
Trade and other payables 109 79
Total equity and liabilities 1,326,765 947,060
- -
Condensed statement of comprehensive income for the year ended 30
June 2010
2010 2009
R`000 R`000
Dividends received 77,664 77,664
Operating expenses (1,366) (1,641)
Net fair value adjustments 89,705 (151,743)
Net financing costs (99,697) (94,425)
Profit / (loss) before taxation 66,306 (170,145)
Taxation charge / (credit) 29,454 (28,006)
Profit / (loss) for the year 36,852 (142,139)
Other comprehensive income 146,566 29,580
Fair value adjustment on preferred and 170,426 34,395
deferred ordinary shares
Deferred tax on fair value adjustment (23,860) (4,815)
Total comprehensive income 183,418 (112,559)
Condensed statement of changes in equity for the year ended 30 June
2010
Issued Non- Total
capital distributable Distributable
reserves reserve
R`000 R`000 R`000 R`000
Balance as at 2,040 (83,164) (687,973) (769,097)
1 July 2008
Loss for the - - (142,139) (142,139)
year
Other - 29,580 - 29,580
comprehensive
income
Total 29,580 (142,139) (112,559)
comprehensive
loss for the
year
Balance as at 2,040 (53,584) (830,112) (881,656)
1 July 2009
Profit for - - 36,852 36,852
the year
Other - 146,566 - 146,566
comprehensive
income
Total 146,566 36,852 183,418
comprehensive
income for
the year
Balance as at 2,040 92,982 (793,260) (698,238)
30 June 2010
Condensed statement of cash flows for the year ended 30 June 2010
2010 2009
R`000 R`000
Cash flows from operating activities (10,787) (20,565)
Cash generated from operating activities 89,205 75,639
Net financing cost (99,697) (94,425)
Tax paid (295) (1,779)
Cash flows from financing activities 10,882 19,463
Loans raised 10,882 19,463
Increase/(decrease) in cash and cash 95 (1,102)
equivalents
Cash and cash equivalents at beginning of 10,448 11,550
the year
Cash and cash equivalents at end of the year 10,543 10,448
Date: 25/08/2010 07:45:01 Produced by the JSE SENS Department.
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