| Wed 27 Oct 2010, 7:52 | | MVG/MVGP - Mvelaphanda Group Limited - The Listing of Mvelaserve on the JSE |
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MVG/MVGP - Mvelaphanda Group Limited - The Listing of Mvelaserve on the JSE
Main Board and The Unbundling of Mvela Group Shares in Mvelaserve to Mvela
Group Ordinary Shareholders
Mvelaphanda Group Limited
Registration Number: 1995/004153/06
(Incorporated in the Republic of South Africa)
Ordinary share code: MVG
ISIN: ZAE000060737
Preference share code: MVGP
ISIN: ZAE000073540
("Mvela Group" or "the Company")
THE LISTING OF MVELASERVE ON THE JSE MAIN BOARD AND THE UNBUNDLING OF MVELA
GROUP SHARES IN MVELASERVE TO MVELA GROUP ORDINARY SHAREHOLDERS
1 Introduction
Mvela Group ordinary and preference shareholders ("Mvela Group
shareholders") are referred to the announcement released on SENS on 7
October 2010, which confirmed the Mvela Group board of directors`
("Board") intention to proceed with the separate listing of the shares
in Mvelaserve Limited ("Mvelaserve") and the subsequent unbundling of
Mvela Group`s shares in Mvelaserve to Mvela Group ordinary shareholders
("the Unbundling"). The Board has therefore made application for the
separate listing of Mvelaserve on the securities exchange operated by
the JSE Limited ("JSE") ("Mvelaserve Listing"), and will distribute all
of the Mvelaserve shares held by the Company to shareholders recorded on
the register on Friday, 3 December 2010 (the "Record Date"), subject to
the fulfilment of the conditions precedent as set out in paragraph 5
below.
2 Rationale for the Mvelaserve Listing and Unbundling
The Mvela Group directors have undertaken an extensive strategic review
of their investments and have concluded that it is preferable for
Mvelaserve to be a separately listed, focused services business. The
Mvelaserve Listing and subsequent Unbundling will enhance the strategic
flexibility of the Mvelaserve business and will enable it to embark on
its own strategy to grow both organically and by acquisition. In
addition, the Mvelaserve Listing will provide a listed reference price
for Mvelaserve and will allow investors to attribute appropriate share
price ratings to both Mvela Group and Mvelaserve, aligned to the
specific dynamics of each of the respective companies.
3 The Unbundling
Subject to the fulfilment of the conditions precedent as set out in
paragraph 5 below, Mvela Group will unbundle its 100% interest in
Mvelaserve to Mvela Group ordinary shareholders. Mvela Group ordinary
shareholders, including the Mvela Group treasury share entities, will
receive Mvelaserve ordinary shares for Mvela Group ordinary shares held
on the Record Date. The provisional entitlement ratio is 25 Mvelaserve
ordinary shares for every 100 Mvela Group ordinary shares held on the
Record Date, although this may change as a result of the conversion of
Mvela Group preference shares into Mvela Group ordinary shares. The
final entitlement ratio will be announced once the total number of
preference shares who have elected to convert to ordinary shares is
known.
The Unbundling will be in terms of section 90 of the Companies Act, (Act
61 of 1973), as amended ("the Companies Act"), the relevant provisions
of the Listings Requirements and section 46 of the Income Tax Act, (Act
58 of 1962), as amended ("Income Tax Act"). Furthermore, if it is
determined that the Unbundling represents the whole or greater part of
the Company`s assets or undertaking, the shareholders will be required
to pass a special resolution in accordance with section 228 of the
Companies Act. This special resolution will be withdrawn at the combined
general meeting if the directors of the Company are satisfied that the
Unbundling does not involve the whole or greater part of the Company`s
assets or undertaking. The Unbundling will be implemented by way of a
reduction of Mvela Group`s share premium account (as contemplated in the
Companies Act) as at the Record Date and thereafter by reducing reserves
to the extent necessary.
4 Restructuring
Mvela Group and Mvelaserve have been restructured prior to the
Mvelaserve Listing to achieve the following:
* Zonke Monitoring Systems (Proprietary) Limited ("Zonke"): Mvela
Group disposed of its 75% interest in Zonke to Mvelaserve. In terms
of the Zonke sale and purchase agreement, effective on or about 7
October 2010, Mvelaserve allotted and issued 6,850,937 new
Mvelaserve shares (after the Mvelaserve share split) to Mvela Group
in exchange for Mvela Group;s shares in Macthyme Investments
(Proprietary) Limited (a wholly owned subsidiary of Mvela Group)
which had acquired Mvela Group;s 75% interest in Zonke from
Mvelaphanda Strategic Investments (Proprietary) Limited (a wholly
owned subisidary of Mvela Group). The acquisition was concluded at
a value of R81 million for Mvela Group`s 75% interest. The new
Mvelaserve shares issued to Mvela Group as consideration for Zonke
will form part of the Unbundling and have been taken into account
in the calculation of the provisional entitlement ratio.
* Stamford Sales: Mvelaserve`s and Mvelaphanda Management Services`
(a wholly owned subsidiary of Mvelaserve) jointly-held 40% interest
in Stamford Sales was sold to Mvela Group at a value of R26 982 820
on loan account.
* Settlement of intercompany loans between Mvelaserve group and Mvela
Group: The intercompany loans between Mvelaserve group and Mvela
Group have been settled through cash flows, set-offs, cession of
loans and net-off journals, with R653 million due from Mvelaserve
group to Mvela Group being settled through the issue of 55,254,736
new Mvelaserve shares (after the Mvelaserve share split of 794,559
new Mvelaserve shares for every 1 Mvelaserve share) to Mvela Group
and the utilisation by Mvelaserve of the subscription price in
respect of the aforesaid shares to settle the loan. These new
Mvelaserve shares will form part of the Unbundling and have been
taken into account in the calculation of the provisional
entitlement ratio.
5 Conditions precedent
The JSE has approved the Mvelaserve Listing subject to the fulfilment of
the following conditions precedent:
* the submission to the JSE of the relevant Part II documents as set
out in Section 16 of the JSE Listings Requirements;
* the passing by Mvela Group shareholders at the Mvela Group combined
general meeting of the resolutions required to approve the
Unbundling; and
* the registration of any special resolution by the Companies and
Intellectual Property Registration Office ("CIPRO").
The Unbundling is subject to the fulfilment of the following conditions
precedent by no later than 15 December 2010:
* the passing by Mvela Group shareholders at the Mvela Group combined
general meeting of the resolutions required to approve the
Unbundling;
* the registration of any special resolution by CIPRO; and
* the listing of the Mvelaserve shares on the JSE.
6 Salient dates and times
The salient dates and times of the Mvelaserve Listing and Unbundling are
as follows:
2010
Distribution of Mvelaserve pre-listing statement Wednesday, 27 October
to Mvela Group shareholders on or about
Publication of abridged pre-listing statement on Wednesday, 27 October
SENS and in the South African press
Publication of abridged pre-listing statement in Thursday, 28 October
the South African press
Last day for the receipt of forms of proxy for Wednesday, 17 November
the combined general meeting by 10:00
Combined general meeting to be held at Melrose Thursday, 18 November
Arch Hotel, High Street, Melrose Arch,
Johannesburg at 10:00
Results of the combined general meeting released Thursday, 18 November
on SENS
Results of the combined general meeting Friday, 19 November
published in the South African press
Finalisation announcement, including Friday, 19 November
confirmation of the entitlement ratio or
adjustment to the provisional entitlement ratio
released on SENS by no later than 4
Last day to trade in Mvela Group ordinary shares Friday, 26 November
on the JSE to participate in the Unbundling
Mvela Group ordinary shares trade "ex" their Monday, 29 November
entitlement to unbundled Mvelaserve shares
Mvelaserve ordinary shares listed on the JSE Monday, 29 November
(the JSE share code will be MVS and the ISIN
will be ZAE000151353)
Mvela Group ordinary shareholders commence Monday, 29 November
trading their unbundled Mvelaserve shares (the
JSE share code will be MVS and the ISIN will be
ZAE000151353)
Unbundling record date Friday, 3 December
Announcement of specified ratio in respect of Monday, 6 December
the apportionment of the base cost to Mvelaserve
for taxation/CGT purposes on or about
Dematerialised Mvela Group ordinary shareholders Monday, 6 December
will have their accounts with their CSDP or
broker updated with the unbundled Mvelaserve
shares on or about
Share certificates in respect of the unbundled Monday, 6 December
Mvelaserve shares will be posted, by registered
post, at the risk of the certificated Mvela
Group ordinary shareholders concerned, to
certificated Mvela Group ordinary shareholders
on or about
Notes:
1 The above dates and times are subject to change. Any material
changes will be released on SENS and published in the South African
press.
2 All times quoted in this circular are local times in South Africa.
3 No dematerialisation or re-materialisation of Mvela Group ordinary
share certificates may take place between Monday, 29 November 2010
and Friday, 3 December 2010, both days inclusive.
4 It is possible that as at the date of the general meeting of Mvela
Group shareholders the Mvelaserve shares constitute the greater
part of the assets of Mvela Group as contemplated in section 228 of
the Companies Act. Should this be the case, a special resolution
will be required to be passed by Mvela Group shareholders and
subsequently lodged and registered by CIPRO. In this instance, the
finalisation date announcement will be made as soon as possible
following the registration of the special resolution by CIPRO, and
the updated dates and times will be released on SENS and published
in the South African press.
7 Pro forma financial effects
Following the Unbundling, Mvela Group shareholders will hold the
Mvelaserve shares directly and accordingly there will be no material
effect on the aggregate earnings and underlying net asset value
attributable to each shareholder.
The table below sets out the pro forma financial effects of the
Unbundling on Mvela Group`s audited earnings per share ("EPS"), headline
earnings per share ("HEPS"), diluted EPS and diluted HEPS for the year
ended 30 June 2010, as well as Mvela Group`s net asset value per
ordinary share and net tangible asset value per ordinary share at 30
June 2010. These pro forma financial effects have been prepared for
illustrative purposes only and, because of their nature, may not fairly
present Mvela Group`s financial position, changes in equity, and results
of operations or cash flows. The pro forma financial information is the
responsibility of the Directors.
The Health unbundling refers to the unbundling by Mvela Group to its
ordinary shareholders of all of its shares held in Health Strategic
Investments Limited ("Health"), an asset backed security listed on the
JSE which owns the strategic investment in Life Healthcare Group
Holdings Limited ("Life Healthcare") previously held by Mvela Group.
Full details of the Health unbundling were disclosed in the circular to
shareholders dated 28 June 2010.
Before Effects Post Effect Post Effect Post Total
(cents of the Health of Health of Health %
) Health Unbundl Zonke Unbundl Mvelase Unbundl change
1 Unbundli ing Sale ing and rve ing,
ng (cents) (cents) Zonke Unbundl Zonke
(cents) 7, 8, 11 Sale ing Sale
9, 10 (cents) (cents) and
12, 13, Mvelase
14, 15, rve
16 Unbundl
ing
(cents)
5
Earnings 212.7 (170.6) 42.1 (2.5) 39.6 160.9 200.5 -5.75%
per
ordinary
share 2,
6
Headline 238.5 (170.6) 67.9 (2.5) 65.4 (38.1) 27.2 -88.58
earnings %
per
ordinary
share 2,
6
Diluted 192.5 (149.2) 43.3 (2.2) 41.1 159.4 200.5 4.16%
earnings
per
ordinary
share 2,
6
Diluted 215.0 (149.2) 65.8 (2.2) 63.6 (36.4) 27.2 -
headline 87.34%
earnings
per
ordinary
share 2,
6
NAV per 1 (437.3) 577.8 (6.7) 571.1 (213.2) 357.9 -
ordinary 015.1 64.74%
share 3
TNAV per 832.0 (437.3) 394.7 (6.7) 388.0 (69.9) 318.1 -
ordinary 61.77%
share 3
Diluted 465 465 484 465 484 527 599
number 484
of
ordinary
shares
in issue
(`000) 4
Diluted 465 465 307 465 307 527 422
weighted 307
number
of
ordinary
shares
in issue
(`000) 4
Weighted 406 406 962 406 962 527 422
number 962
of
ordinary
shares
(`000) 4
Notes and assumptions:
1 The Mvela Group financial information reflected in the "Before"
column has been extracted from the published audited annual results
of Mvela Group for the year ended 30 June 2010.
2 The pro forma adjustments to the statement of comprehensive income
have been calculated on the assumption that the Health unbundling,
Zonke sale and the Unbundling were implemented on 1 July 2009.
3 The pro forma adjustments to the statement of financial position
have been calculated on the assumption that the Health unbundling,
Zonke sale and the Unbundling were implemented on 30 June 2010.
4 Any conversion of Mvela Group preference shares into Mvela Group
ordinary shares prior to the finalisation date of the transactions
will have no impact on the financial effects as set out above, as
the financial effects have been formulated on a fully diluted
basis.
5 Preference dividends paid of R30 million have been added back to
total comprehensive income attributable to ordinary shareholders in
the statement of comprehensive income.
6 Assumed conversion of all of the Mvela Group preference shares in
the ratio of 2.22 : 1, i.e. 120 460 000 new ordinary shares. The
last conversion date for the preference shares to elect to convert
into ordinary shares is 4 November 2010 per the Conversion
Circular.
7 In the statement of comprehensive income all adjustments are
considered to have a continuing effect, except for the adjustments
detailed in notes 16 and 17.
Notes relating to the Health unbundling
8 On 20 August 2010 Mvela Group distributed all of the shares held by
it in Health, constituting 53.52% of the issued ordinary share
capital of Health, to Mvela Group ordinary shareholders in terms of
section 90 of the Companies Act and in accordance with section 46
of the Income Tax Act. Health owns the strategic investment in Life
Healthcare previously held by Mvela Group.
9 Dividends received during the year ended 30 June 2010 on Life
Healthcare shares unbundled have been deducted from previously
reported earnings in the statement of comprehensive income.
10 The fair value adjustment for the year ended 30 June 2010 on the
Life Healthcare shares unbundled has been reversed in the statement
of comprehensive income.
11 Interest paid on debt associated with the Life Healthcare shares
unbundled has been reversed in the statement of comprehensive
income.
Notes relating to the Zonke sale
12 In October 2010 Mvela Group sold its 75% interest in Zonke for R81
million which was settled through the issue of 6,850,937 new
Mvelaserve shares (after the Mvelaserve share split) to Mvela
Group. No profit will arise on the Zonke sale as the sale takes
place between group companies.
Notes relating to the Mvelaserve Unbundling
13 The assets and liabilities, in the statement of financial position,
and all transactions, in the statement of comprehensive income,
relating to Mvelaserve, including any consolidation journal
entries, have been reversed from the Mvela Group financial
information.
14 The net settlement of the intercompany loan accounts between Mvela
Group and Mvelaserve was settled through the issue of 55,254,736
new Mvelaserve shares to Mvela Group.
15 Net interest paid by Mvela Group on inter-company loan accounts
with Mvelaserve and Zonke have been reversed to the statement of
comprehensive income.
16 Profit on the unbundling of Mvelaserve of R957 million, being the
difference between the carrying value of Mvelaserve in Mvela Group
and the fair value of its assets less its liabilities at the date
of the Unbundling. The carrying value of Mvelaserve in Mvela Group
is R766 million and the fair value of its assets less its
liabilities has been determined at R1,723 billion for purposes of
this calculation.
17 Transaction costs of R3.94m which are non-deductible for income tax
purposes have been expensed to the statement of comprehensive
income.
8 Directors` opinion and recommendation
The Board has considered the terms and conditions of the Unbundling and
are of the opinion that the Unbundling will enhance shareholder value
for Mvela Group shareholders. Accordingly, the directors of Mvela Group
are in favour of the Unbundling and intend to vote, in respect of any
Mvela Group shares held by them at the date of the general meeting, in
favour of the resolutions necessary to approve and implement the
Unbundling. Furthermore, the Board recommends that shareholders also
vote in favour of such resolutions.
9 General meeting
A combined general meeting of Mvela Group shareholders will be held at
Melrose Arch Hotel, High Street, Melrose Arch, Johannesburg, at 10:00 on
Thursday, 18 November 2010 to consider, and if deemed fit, to pass, with
or without modification, the special and ordinary resolutions required
to implement the Unbundling.
10 Circular to shareholders
A circular, including the notice convening the general meeting, together
with the Mvelaserve pre-listing statement, will be posted to
shareholders on or about Wednesday, 27 October 2010. Copies of these
documents may be obtained during normal business hours from Wednesday,
27 October 2010 until Thursday, 18 November 2010 at the registered
office of Mvela Group.
Johannesburg
27 October 2010
Corporate adviser and transaction sponsor to Mvela Group and Mvelaserve
Limited
Investec Bank Limited
Legal adviser to Mvela Group and Mvelaserve Limited
Cliffe Dekker Hofmeyr Inc
Sponsor to Mvela Group
Deutsche Securities (SA) (Proprietary) Limited
Reporting accountants and auditors
PKF (Jhb) Inc
Communications advisers
College Hill
Date: 27/10/2010 07:52:02 Produced by the JSE SENS Department.
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implicitly, represent, warrant or in any way guarantee the truth, accuracy or
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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.
