| Tue 6 Mar 2001, 0:00 | | Joint Cautionary Announcement Regarding Nail & Met |
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NEW AFRICA INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/002467/06)
("NAIL")
METROPOLITAN LIFE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1949/032491/06)
("Metropolitan")
JOINT CAUTIONARY ANNOUNCEMENT REGARDING:
- NAIL AND METROPOLITAN CONVERGENCE AND METROPOLITAN RESTRUCTURING
- RETURN OF CAPITAL TO NAIL SHAREHOLDERS
- NAIL'S NON-FINANCIAL SERVICES ASSETS
Further to the announcement made on 20 September 2000 in which NAIL reconfirmed
its commitment to implementing its vision of creating a truly South African
diversified financial services group focused on Metropolitan, NAIL and
Metropolitan are pleased to announce their intended strategy in order to
achieve this vision, the initiation of which is subject to the fulfilment of
the conditions set out in paragraph 6 below.
This announcement is intended for the information of NAIL and Metropolitan
shareholders and does not constitute an offer or a statement of a firm
intention to make an offer for Metropolitan.
1. NAIL and Metropolitan convergence and Metropolitan restructuring
1.1 Corporate convergence between NAIL and Metropolitan
It is anticipated that the proposed corporate convergence between NAIL and
Metropolitan would be effected through a series of inter-related steps:
- the acquisition, by way of a scheme of arrangement (the "Scheme"), by New
Africa Finance Holdings Limited ("Nafhold") (a wholly owned subsidiary of NAIL,
the only asset of which is NAIL's interest in Metropolitan) of all the shares
in Metropolitan not already held by it (the "Acquisition");
- the change of name of Nafhold to New Africa Capital Limited ("New Africa
Capital");
- the delisting of Metropolitan from the JSE Securities Exchange South Africa
(the "JSE") and Namibian Stock Exchange (the "NSX"), and the listing of New
Africa Capital on the JSE and NSX; and
- the unbundling by NAIL of its entire shareholding in New Africa Capital to
its ordinary and N ordinary shareholders (the "Unbundling").
It is intended that the Acquisition will take the form of a share for share
exchange, the ratio of which will be determined by the boards of NAIL and
Metropolitan. It is currently anticipated that the ratio will be such that the
number of issued shares of New Africa Capital after implementation of the
Scheme will equal the number of issued shares of Metropolitan before the
Scheme. Metropolitan shareholders other than Nafhold ("Metropolitan
minorities") will, therefore, exchange their shareholding in Metropolitan for
an identical shareholding in New Africa Capital.
1.2 Metropolitan restructuring
Metropolitan has embarked on a process of implementing internal structural and
management changes. The internal restructuring objectives of Metropolitan will
be achieved in the following manner:
- the unbundling by Metropolitan to New Africa Capital of the operating
subsidiaries and other shareholder investments currently held by Metropolitan;
- the branding strategy will involve the retention of the Metropolitan brand at
an operating level, with New Africa Capital being the corporate brand for the
New Africa Capital group (the "Group"); and
- the adoption of a comprehensive empowerment code and the establishment of an
empowerment sub-committee of the board which will oversee and monitor the
implementation of the Group's empowerment objectives.
1.3 Board of directors and management team of Metropolitan
With effect from 1 January 2001, the Metropolitan board has been expanded to
include the following non-executive directors:
- Irene Charnley (Chairperson of M-Cell Limited and Executive Director of
Johnnic Holdings Limited and Johnnic Communications Limited);
- Phuthuma Nhleko (Managing Director of Worldwide African Investment Holdings
(Pty) Limited);
- Gloria Serobe (Executive Director of Finance of Transnet Limited); and
- Dr. Ian Goldin (Chief Executive and Managing Director of Development Bank of
Southern Africa).
In addition, Sandile Zungu (Executive Director of NAIL) will be appointed to
the board of New Africa Capital in an executive capacity at which time he will
relinquish his executive role in NAIL. Dikgang Moseneke will assume the role of
Executive Chairman of New Africa Capital and will relinquish his executive role
in NAIL. Peter Doyle and Preston Speckmann will continue in their positions as
Group Chief Executive Officer and Group Financial Director, respectively.
It is anticipated that the board of directors of New Africa Capital will
comprise:
- Dikgang Moseneke (Executive Chairman);
- Peter Doyle (Group Chief Executive Officer);
- Preston Speckmann (Group Financial Director);
- Sandile Zungu (Executive Director: Strategic Investments & Private Equity)
- Ntuthukoyezwe Buthelezi;
- Irene Charnley;
- Prof. Willie Esterhuyse;
- Dr. Ian Goldin;
- Fatima Jakoet;
- Sydney Muller;
- John Newbury;
- Phuthuma Nhleko;
- Gloria Serobe;
- Zwelakhe Sisulu;
- Marius Smith; and
- Dr. Franklin Sonn.
It is intended that New Africa Capital will continue to develop a corporate
environment in which entrepreneurial individuals from previously disadvantaged
groups can flourish and play a role in developing a business designed to take
advantage of the significant opportunities arising in the financial services
sector.
1.4 Rationale
The corporate convergence between NAIL and Metropolitan and the Metropolitan
restructuring is designed to achieve the following key objectives:
- the creation of a single point of entry for investors into NAIL's financial
services assets;
- the de facto enfranchisement of the NAIL N ordinary shareholders with regard
to NAIL's financial services assets;
- unlocking of NAIL's holding company discount;
- the separation of Metropolitan's life business from its operating
subsidiaries and other shareholder investments and the creation of a holding
company as the listed entity, which will ensure increased transparency and more
efficient control and utilisation of capital within the Group;
- the strengthening of the Metropolitan board, management team and shareholder
base through the participation of prominent black business people and investors
- the leveraging of New Africa Capital's empowerment credentials in order to
strengthen future business; and
- increasing the liquidity of Metropolitan shares.
2. RETURN OF CAPITAL TO NAIL SHAREHOLDERS
Further to NAIL's announcement in September 1999, it intends to return up to
R400 million to its shareholders. The board has decided that the return of
capital will be by means of a combination of a share buy-back and cash
dividend. The latter will be determined at the time of release of the NAIL
results, which is currently scheduled for late March 2001.
3. NAIL'S NON-FINANCIAL SERVICES ASSETS
The proposed transactions will lead to the effective separation and listing of
NAIL's non-financial services interests.
Subject to the implementation of the Scheme, the Unbundling and the return of
capital, NAIL will comprise:
- media assets housed in its wholly-owned media subsidiary, New Africa Media
Holdings (Pty) Limited ("NAM");
- approximately R540 million in cash; and
- other non-media investments (including NAIL's 60% interest in Alisa Holdings
(Pty) Limited, the franchise holder of the Hertz brand).
NAM is a media holding company with interests in print media, radio, TV
production and other media assets, including New Africa Publications Limited
(90.5%) which publishes the Sowetan Newspaper, Jacaranda FM (Pty) Limited
(effectively 37.2%), Kaya FM (Pty) Limited (22.4%), KFM Radio (Pty) Limited
(70.0%) and Urban Brew Studios (Pty) Limited (50.1%).
Following the return of capital set out in paragraph 2, it is intended that
NAIL's remaining R540 million will be utilised in developing NAIL's future
strategy.
4. CONTINUED EXISTENCE OF NAIL N ORDINARY SHARES
It is intended that NAIL will maintain the ordinary and N ordinary shareholding
structure above its non-financial services assets in order to maintain control
by empowerment shareholders, which is perceived by NAIL to be important in
securing licences in the regulated media sector, NAIL's core activity
immediately following the transactions outlined above.
5. GROUP STRUCTURE
5.1 Current structure
REFER TO PRESS FOR DETAILS
5.2 New structure
REFER TO PRESS FOR DETAILS
6. CONDITIONS
The board of NAIL believes that it is important to ensure that following the
implementation of the Scheme and the Unbundling, the strong empowerment
characteristics of NAIL and Metropolitan are secured and that there is
significant influence over the affairs of NAIL and Metropolitan and substantial
participation in their shareholdings by empowerment groups.
The board will consider these objective to have been achieved on fulfilment of
the following conditions:
6.1 Conclusion of satisfactory contractual agreements for the purpose of
ensuring the ownership of not less than 30% of the issued share capital of NAIL
by empowerment groups;
6.2 Conclusion of satisfactory contractual agreements for the purpose of
ensuring the ownership of not less than 15% of the issued share capital of New
Africa Capital by empowerment groups following the implementation of the
Scheme and the Unbundling by NAIL; and
6.3 Conclusion of satisfactory contractual agreements for the purpose of
creating a voting pool representing not less than 25% of the shareholders'
votes of New Africa Capital following the implementation of the Scheme and the
Unbundling by NAIL.
The convergence between NAIL and Metropolitan and the separate listing of the
non-financial services assets of NAIL as set out above will be initiated
following the fulfilment of these conditions which it is anticipated will occur
no later than 90 days after this announcement.
7 CAUTIONARY ANNOUNCEMENT
Shareholders of NAIL and Metropolitan are accordingly advised to exercise
caution when dealing in the securities of the respective companies until such
time as a further announcement is made.
Johannesburg Belville
5 March 2001 5 March 2001
Financial adviser to NAIL Financial adviser to Metropolitan
Deutsche Securities (SA) (Pty) Ltd N M Rothschild & Sons
Joint sponsors to NAIL Sponsor to Metropolitan
Deutsche Securities (SA) (Pty) Ltd N M Rothschild & Sons
Wipcapital (Proprietary) Limited
Corporate law advisers and Sponsoring broker to Metropolitan
consultants to NAIL in Namibia
Edward Nathan & Friedland Colin van Zyl / Hendrik Lombard
Trading as Lexus Securities (Pty) Ltd
Legal adviser to NAIL Legal adviser to Metropolitan
Chuene Kwinana Motsatse Deneys Reitz
