| Mon 22 Aug 2011, 17:39 | | PLD - Paladin Capital Limited - Curro unbundling |
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PLD
PLD
PLD - Paladin Capital Limited - Curro unbundling
PALADIN CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2007/032836/06)
Share Code: PLD
ISIN Number: ZAE000138970
("Paladin" or "the Company")
Curro unbundling
Paladin ordinary shareholders ("Paladin shareholders") are referred to the
SENS announcement dated 2 August 2011 regarding the unbundling by Paladin of its
77.54% ordinary shareholding in Curro Holdings Limited ("Curro Holdings") to
Paladin shareholders (the "announcement").
On 15 August 2011, Paladin unbundled and distributed, in compliance with section
46 of the Companies Act, 2008 and in terms of section 46 of the Income Tax Act,
1962 ("the Income Tax Act"), 125 007 040 Curro Holdings ordinary shares ("Curro
Holdings shares") to Paladin shareholders recorded as such in the shareholders
register of Paladin on 19 August 2011 ("record date") subsequent to which each
Paladin shareholder will receive 21.53126 Curro Holdings shares for every 100
Paladin shares held on the record date (the "Unbundling").
The unbundling in terms of section 46 of the Income Tax Act will not have any
tax consequence for the shareholders of Paladin other than having a new cost for
tax purposes ("tax cost") for their Paladin shares as indicated below.
In terms of section 46 of the Income Tax Act the original tax cost for the
Paladin shares must be apportioned between the Paladin shares and the unbundled
Curro Holdings shares and the purpose of this announcement is to notify Paladin
shareholders of the apportionment ratio.
For Paladin shares held on trading account, the tax cost to be apportioned will
be equal to the original expenditure incurred in respect of such Paladin shares,
as contemplated in the relevant sections of the Income Tax Act. The tax cost
(i.e. base cost for Paladin shares held on capital account) will be determined
on a similar basis.
The apportionment ratio
The tax cost must be apportioned in the ratio of 61.46% relating to a Paladin
share held after the Unbundling and 38.54% relating to an unbundled Curro
Holdings share ("apportionment ratio"). The apportionment ratio is based on
Paladin`s closing share price of R1.82 per share and Curro Holdings` closing
share price of R5.30 per share as at 15 August 2011.
Paladin shareholders are advised to consult their own tax advisors should they
have any queries regarding the taxation consequences of the Unbundling and the
calculation of their costs for taxation purposes.
PSG Group offer to Paladin minorities
Subsequent to the Curro unbundling referred to above, PSG Group Limited ("PSG
Group") made an offer to acquire the entire issued share capital of Paladin in
exchange for either a cash payment or the issue of PSG Group shares ("the
Scheme") through a scheme of arrangement.
The tax treatment of Scheme participants is dependent on their individual
circumstances and on the tax jurisdiction applicable to such Scheme
participants. It is recommended that the Scheme participants seek appropriate
advice in this regard.
The following guide on the tax consequences of the Scheme for South African
resident Paladin Shareholders has been set out for illustrative purposes only
and should not be construed as tax advice by either PSG Group or Paladin.
The tax consequences for Paladin Shareholders will depend on whether they elect
to receive the Share Consideration or the Cash Consideration.
Share Consideration
Paladin Shareholders that elect to receive the Share Consideration will
automatically qualify for roll-over relief in terms of section 42 of the Income
Tax Act to the extent that the value of the PSG Shares equals or exceeds the
cost of the Paladin Shares (determined according to the apportionment in respect
of the Curro unbundling) disposed of by the respective Paladin Shareholders. In
terms of the roll-over relief, the relevant Paladin Shareholders shall be deemed
to have disposed of their Paladin Shares for proceeds equal to the base cost
thereof. The application of section 42 of the Income Tax Act will therefore
result in there being no immediate tax charge for the relevant Paladin
Shareholders as such liability is rolled over. The cost of the Paladin Shares so
disposed of will be attributed to the PSG Shares acquired in terms of the
Scheme.
Cash Consideration
For Paladin Shareholders that elect to receive the Cash Consideration, the
disposal will be an outright disposal of the shares by such Shareholder.
Therefore if the Paladin Shares were held by such Shareholder on capital
account, such disposal will be subject to capital gains tax and the Paladin
Shareholder must account for a capital gain or loss on the difference between
the tax cost of such shares and the Cash Consideration.
Should the Paladin Shareholder hold the shares as trading stock, such Paladin
Shareholder would have to account for any differentials between the tax cost of
such shares and the Cash Consideration for Income Tax purposes.
Special rules apply to Collective Investment Schemes and these Shareholders must
also consult their professional advisors on the tax treatment of the Cash
Consideration in regards to their specific circumstances.
None of Paladin, PSG Group, PSG Capital or their advisors take any
responsibility nor will they be held liable for any loss or damaged suffered by
any Paladin Shareholder or any other person due to the tax consequences set out
above differing to the actual tax consequences applicable to any respective
Paladin Shareholder.
Stellenbosch
22 August 2011
Corporate adviser
PSG Capital
Designated adviser
QuestCo Sponsors (Pty) Limited
Date: 22/08/2011 17:39:01 Produced by the JSE SENS Department.
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