| Thu 22 Feb 2001, 0:00 | | Avi - Pro-rata Share Buyback By Way Of A Scheme Of |
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Anglovaal Industries Limited
(Incorporated in the Republic of South Africa)
(Registration number 1944/017201/06)
("AVI" or "the Company")
PRO-RATA SHARE BUYBACK BY WAY OF A SCHEME OF ARRANGEMENT AND AMENDMENTS TO THE
ARTICLES OF ASSOCIATION
1. INTRODUCTION
Shareholders are advised that AVI will propose a scheme of arrangement in terms
of section 311 of the Companies Act, 1973 (Act 61 of 1973), as amended ("the
Act"), between the Company and its shareholders other than Anglovaal Industries
Investments (Proprietary) Limited ("Subco"), a wholly-owned subsidiary of AVI,
("scheme members") in terms of which AVI and Subco will collectively acquire
from each scheme member 13.5 AVI shares per 100 AVI shares ("scheme shares")
held at the close of business on Thursday, 26 April 2001 ("the record date")
for a consideration of 818 cents per scheme share ("the scheme consideration")
("the scheme").
In terms of the scheme, a total of 49 294 207 scheme shares will be acquired by
AVI and Subco, representing 13.0% of the issued share capital of AVI, at an
aggregate consideration of R403.2 million.
2. RATIONALE FOR THE SCHEME
In accordance with AVI's strategy to improve the efficiency of its capital
structure, the board of directors of AVI has resolved to return excess cash to
its shareholders. Taking into account the cash-generating performance of AVI's
operations, its current level of cash resources and its lack of gearing, the
board of directors of AVI are of the view that AVI has cash resources in excess
of its requirements for funding the current operations and organic growth into
the foreseeable future.
Subject to the fulfilment of the conditions precedent set out in paragraph 3.4
below, AVI will purchase, by way of a scheme of arrangement between the Company
and its shareholders other than Subco, AVI shares for an aggregate
consideration of R403.2 million. The aggregate consideration will be financed
from the existing cash resources of the AVI Group.
3. THE SCHEME
3.1 The scheme consideration
Scheme members registered as such on the record date ("scheme participants")
will, against surrender of their documents of title to their entire holding of
AVI shares, receive 818 cents per scheme share held, being the 30-day
trade-weighted average price of AVI shares on the JSE Securities Exchange South
Africa ("JSE") at the close of business on Wednesday, 21 February 2001, and new
share certificates representing the balance of their shares in AVI.
3.2 Termination of listing on the JSE
In terms of the scheme, the scheme shares that are to be acquired by AVI will
be cancelled in the issued but not the authorised share capital of AVI and
application will be made to terminate the listing thereof in the event that the
scheme becomes operative. The scheme shares that are to be acquired by Subco
will not be cancelled and no application for the termination of the listing
thereof will be made.
3.3 The scheme meeting
A meeting of scheme members will be held at the registered office of AVI, 19
Impala Road, Chislehurston, Sandton, 2196 at 10:30 on Tuesday, 17 April 2001 to
consider and, if thought fit, approve the scheme ("the scheme meeting").
3.4 Conditions precedent to the scheme
Subject to the High Court of South Africa (Witwatersrand Local Division)
("Court") convening the scheme meeting, the implementation of the scheme will
be subject to the fulfilment of the following conditions precedent:
3.4.1 the special resolution approving the scheme being passed by the requisite
majority of shareholders in general meeting in accordance with the JSE Listings
Requirements and the registration of such special resolution by the Registrar
of Companies;
3.4.2 the scheme having been agreed to at the scheme meeting by a majority
representing at least three-fourths of the votes exercisable by scheme members
present and voting in person or by proxy;
3.4.3 the Court having sanctioned the scheme; and
3.4.4 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Act.
4. FINANCIAL EFFECTS OF THE SCHEME
The effect of the scheme on the earnings per AVI share ("EPS"), diluted
headline EPS and net asset value per AVI share ("NAV") is illustrated in the
table below.
Before the After the
scheme Scheme %
(cents) (cents) change
EPS 74.2 80.9 9.0
Diluted headline EPS 51.3 54.5 6.2
NAV 753.1 743.0 (1.3)
Notes:
1. The EPS, diluted headline EPS and NAV "Before the scheme" are based on the
unaudited interim results for the six-month period ended 31 December 2000.
2. The EPS and diluted headline EPS "After the scheme" are based on the
assumption that the scheme was implemented on 1 July 2000 and that the
aggregate scheme consideration was paid on this date. It is further assumed
that the aggregate scheme consideration would have earned interest at 10.5%
over this period, which interest would have attracted income tax at a rate of
30% and that 49 294 207 AVI shares representing the scheme shares were treated
as if they had been cancelled. These figures are compared with the actual EPS
and diluted headline EPS for the same period.
3. The NAV "After the scheme" is based on the assumptions that the scheme was
implemented on 31 December 2000, the aggregate scheme consideration was paid on
this date and that 49 294 207 AVI shares representing the scheme shares were
treated as if they had been cancelled. These figures are compared with the
actual NAV at 31 December 2000.
4. The difference between NAV and tangible NAV is not material and therefore
the effect of the scheme on tangible NAV has not been calculated.
5. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
The board of directors of AVI has considered the terms of the scheme and is of
the opinion that they are fair and reasonable to scheme members. Accordingly,
the board of directors of AVI recommends that shareholders vote in favour of
the special resolution approving the scheme and scheme members vote in favour
of the scheme. The directors of AVI intend to vote in favour of the special
resolution approving the scheme and in favour of the scheme in respect of their
own holdings of AVI shares.
6. DIRECTORS' STATEMENT
Having considered the effects of the scheme, the directors of AVI are of the
opinion that:
6.1 AVI and its subsidiaries will be able to pay their debts, in the ordinary
course of business, for a period of twelve months after the date of this
announcement;
6.2 the consolidated assets of AVI and its subsidiaries will be in excess of
their consolidated liabilities, measured in accordance with the accounting
policies used in the interim report for the six months ended 31 December 2000,
for a period of twelve months after the date of this announcement;
6.3 the ordinary share capital and consolidated reserves of AVI and its
subsidiaries will be adequate for a period of twelve months after the date of
this announcement; and
6.4 the working capital of AVI and its subsidiaries will be adequate for a
period of twelve months after the date of this announcement.
7. DEMATERIALISATION
Share Transactions Totally Electronic ("STRATE") is now fully operational, with
the Company scheduled for dematerialisation of its shares in October 2001. The
primary objective of STRATE is to eliminate the many risks inherent in the
current method of clearing and settling transactions executed on the JSE to the
benefit of all users on the JSE and investors in dematerialised shares in
general.
The directors of AVI have considered the pending implementation of STRATE and
believe it timeous to investigate the implementation of the Share Transfer and
Replacement Program ("STAR") to coincide with the surrender of share
certificates in terms of the scheme. STAR is a process administered by
Mercantile Registrars Limited and used to validate and immobilise issued shares
in the Company in preparation for the dematerialisation of shares in terms of
section 91A of the Act.
The JSE and STRATE Limited have endorsed STAR. More details regarding the
principal features of STAR and its consequences for shareholders, together with
a STAR implementation plan, will be provided in the document referred to in
paragraph 10 below, if appropriate.
8. AMENDMENTS TO THE COMPANY'S AUTHORISED SHARE CAPITAL AND ITS ARTICLES OF
ASSOCIATION
8.1 Proposed amendments and rationale
The directors of AVI propose to simplify the authorised share capital structure
of AVI by cancelling the convertible preference shares and variable rate
preference shares in the authorised but unissued share capital of AVI and to
amend AVI's Memorandum and Articles of Association to give effect to those
proposals and to make provision for transfers of shares to be effected
electronically as a result of the introduction of STRATE.
8.2 General meeting
A general meeting of shareholders will be held at 10:00 Tuesday, 17 April 2001
at 19 Impala Road, Chislehurston, Sandton, 2196 to consider and, if deemed fit,
approve the resolutions required to implement the scheme and amend the
authorised share capital and Articles of Association in the manner described
above.
9. IMPORTANT DATES AND TIMES
2001
Last day to lodge forms of proxy for the general
meeting by 10:00 on (see note 1) Wednesday, 11 April
Last day to lodge forms of proxy for the scheme
meeting by 10:30 on (see note 1) Thursday, 12 April
Last day to register in order to vote at both the
general meeting and the scheme meeting by the close
of business on Thursday, 12 April
General meeting to be held at 10:00 on Tuesday, 17 April
Scheme meeting to be held at 10:30 on Tuesday, 17 April
Court hearing to sanction scheme Tuesday, 24 April
If the scheme is sanctioned and implemented:
Press announcement notifying members that the
scheme has been sanctioned and will become operative,
published on Wednesday, 25 April
Record date on which members must be registered to
be scheme participants and so become entitled to
receive the scheme consideration, at the close of
trading on Thursday, 26 April
Operative date of the scheme Monday, 30 April
Existing share certificates will no longer be good
for delivery for transactions entered into on the
JSE on or after Monday, 30 April
The scheme consideration and share statement or new
share certificate expected to be posted on Monday, 30 April
Notes
1. If a form of proxy is not received by the time and date shown above, it may
be handed to the chairman of the applicable meeting by not later than 10
minutes before the commencement of the general meeting or the scheme meeting,
as the case may be.
2. Cheques in respect of the scheme consideration and fractional entitlements
to AVI shares will be posted on Monday, 30 April 2001 if documents of title to
the scheme member's entire holding of AVI shares are surrendered prior to the
operative date. If documents of title have not been surrendered by that date,
cheques will be posted within five business days of the receipt thereof.
3. Transactions in AVI shares during the week ending on the record date will be
for immediate settlement.
4. The abovementioned times and dates may be changed. Any such change will be
published in the press.
10. DOCUMENTATION
A document, which is subject to approval by the JSE and the SRP and which
contains notices of the abovementioned meetings, will be posted to shareholders
on or about 23 March 2001.
Sandton
22 February 2001
Merchant bank and sponsor
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Corporate law advisers
Taback and Associates (Proprietary) Limited
(Registration number 2000/010434/07)
