| Wed 25 Aug 2010, 16:30 | | PCN - Paracon Holdings Limited - Specific repurchase of Paracon shares |
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PCN
PCN
PCN - Paracon Holdings Limited - Specific repurchase of Paracon shares
Paracon Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1997/008181/06)
Share code: PCN ISIN: ZAE000029674
("Paracon" or "the company")
SPECIFIC REPURCHASE OF PARACON SHARES
1. Introduction
Shareholders are advised that Paracon has entered into an agreement
("acquisition agreement") with Rasputin 4th Investments (Proprietary)
Limited ("Rasputin"), for the specific repurchase by Paracon, and/or
its various nominated wholly-owned subsidiaries ("nominee/s"), of 5 165
192 Paracon ordinary shares ("repurchase shares") from Rasputin at a
price of 145 cents per share, subject to certain terms and conditions
as set out in paragraph 5 below ("specific repurchase").
Mr Graham Clive Bentley ("Bentley"), the sole director and shareholder
of Rasputin, holds a total beneficial interest of 6 665 192 ordinary
shares, including the 5 165 192 repurchase shares, in Paracon
indirectly via Rasputin. As Bentley was, until his resignation from the
Paracon board in March 2010, a director of Paracon, he is considered to
be a related party in terms the Listings Requirements of JSE Limited
("JSE"). However, due to the specific repurchase being effected at a
discount to the 30 days volume weighted average price ("30-day VWAP")
prior to signature of the acquisition agreement, a fairness opinion is
not required.
The repurchase shares will be acquired in accordance with the
provisions of sections 85 to 89 of the Companies Act, 1973 (Act 61 of
1973), as amended ("the Act") and the JSE Listings Requirements.
2. Rationale
Following his resignation from the Paracon board, Bentley wishes to
sell the repurchase shares, which Paracon and/or its nominee/s shall
acquire at a discount to the 30-day VWAP.
The directors of Paracon ("directors") believe that the acquisition of
the repurchase shares at a price of 145 cents, which represents a 9%
discount to the 30-day VWAP, will enhance Paracon`s earnings per share
going forward and will assist in maximising shareholder value. The
directors also believe that the specific repurchase would be in the
best interest of Paracon`s shareholders as it makes effective use of
Paracon`s existing cash resources.
Furthermore, the directors have resolved to implement a share incentive
scheme in the near future, for which shareholders` approval shall be
sought. The repurchase shares shall be held as treasury shares and may
also be utilised to settle shares to employees in terms of the
anticipated incentive scheme.
3. Terms of the specific repurchase and effective date
The consideration for the repurchase shares, which is R7 489 528, will
be discharged in cash by Paracon from the company`s existing cash
resources on the effective date, being Tuesday, 19 October 2010. The
repurchase shares will be held between various wholly-owned
subsidiaries of Paracon as treasury shares.
4. Financial effects
The table below sets out the unaudited pro forma financial effects of
the specific repurchase on Paracon`s earnings per share, headline
earnings per share, net asset value per share and net tangible asset
value per share.
The unaudited pro forma financial effects have been prepared to
illustrate the impact of the specific repurchase on the reported
financial information of Paracon for the six months ended 31 March
2010, had the specific repurchase occurred on 1 October 2009 for income
statement purposes and on 31 March 2010 for balance sheet purposes.
The unaudited pro forma financial effects have been prepared using
accounting policies that comply with International Financial Reporting
Standards and that are consistent with those applied in the results for
the six months ended 31 March 2010 as well as the audited results of
Paracon for the 12 months ended 30 September 2009.
The unaudited pro forma financial effects, which are the responsibility
of the directors, are provided for illustrative purposes only and,
because of their pro forma nature, may not fairly present Paracon`s
financial position, changes in equity, results of operations or cash
flow.
Before After Change
(cents) (cents) (%)
Earnings per share 8.0 8.0 -
Headline earnings per share 8.0 8.0 -
Net asset value per share 69.1 67.9 (1.7)
Net tangible asset value per 28.1 26.3 (6.4)
share
Weighted average number of 335 688 330 523
shares in issue, net of 205 013
treasury shares
Notes:
The "Before" column has been extracted from the unaudited interim
results of Paracon for the six months ended 31 March 2010.
The "After" column reflects the financial effects of the specific
repurchase on Paracon.
Based on the assumption that the specific repurchase was funded from
Paracon`s existing cash resources and assuming an average interest rate
on call funds of 6.5% per annum before tax that would have been earned
on the cash resources utilised to fund the repurchase transactions. The
South African corporate tax rate of 28% has been applied.
The effects on earnings per share and headline earnings per share are
calculated based on the assumption that the specific repurchase was
effected on 1 October 2009.
The effects of net asset value per share and net tangible asset value
per share are calculated based on the assumption that the specific
repurchase was effected on 31 March 2010.
The specific repurchase shares constitute 1.5% of the issued share
capital of Paracon. Currently Paracon holds 14 028 504 shares in
treasury. After the specific repurchase, Paracon will hold 19 193 696
shares in treasury.
5. Conditions precedent
The specific repurchase is conditional upon the fulfilment of the
following conditions precedent:
the obtaining of all regulatory approvals required for the
implementation of the specific repurchase, including, without
limitation the JSE;
the specific repurchase being approved and the special resolution being
passed to such effect by Paracon shareholders in general meeting; and
the special resolution being duly registered by the Registrar of
Companies in accordance with the Act.
6. Circular to Paracon shareholders
A circular containing full details of the specific repurchase and
incorporating a notice to convene a general meeting of Paracon
shareholders to be held on or about Tuesday, 12 October 2010 in order
to consider and, if deemed fit, to pass with or without modification,
the resolutions necessary to approve and implement the specific
repurchase will be sent to Paracon shareholders on or about Monday, 20
September 2010.
Johannesburg
25 August 2010
Sponsor
Merchantec Capital
Legal advisor
Werksmans Inc.
Reporting accountants
Grant Thornton
Date: 25/08/2010 16:30:02 Produced by the JSE SENS Department.
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