| Wed 4 Apr 2001, 0:00 | | Lenco - Unbundling Of Malbak And Scheme Of Arrange |
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Lenco Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021962/06)
("Lenco" or "the company")
The unbundling of Lenco's interest in Malbak Limited and a scheme of arrangemen
1. Introduction
Rand Merchant Bank is authorised to announce that:
- Lenco will distribute 67 232 993 of its holding of 67 711 162 Malbak Limited
("Malbak") shares, to its shareholders ("the unbundling"); and
- Lenco (Proprietary) Limited will propose a scheme of arrangement in terms of
section 311 of the Companies Act between Lenco and its shareholders other than
Lenco (Proprietary) Limited to acquire all the Lenco shares not already owned
by Lenco (Proprietary) Limited ("the scheme")
(the unbundling and the scheme will hereafter be referred to as "the
transaction").
This announcement sets out the reasons for, and the terms and effects of, the
transaction.
The transaction is indivisible and the unbundling will not proceed unless the
scheme is approved.
2. Rationale for and effects of the transaction
Lenco shares are currently trading at a discount to their underlying value.
Market sentiment is that Lenco is a "cheap entry to Malbak" and no value is
being ascribed to the other assets in Lenco. In addition, the costs associated
with the listing on the JSE Securities Exchange South Africa ("JSE") are not
justified by the profits of the company.
If the transaction is implemented, the discount at which Lenco shares are
trading will be eliminated and shareholders will realise the full value of the
underlying investments. In addition the management of Lenco will not have the
financial and administrative burden of retaining a listing on the JSE.
3. The unbundling
In terms of the unbundling, Lenco will distribute 67 232 993 of its holding of
67 711 162 Malbak Limited ("Malbak") shares to its shareholders registered as
such at the close of business on Friday 15 June 2001 ("the record date").
The Malbak shares will be distributed by way of a dividend in specie, in the
ratio of 85 Malbak shares for every 100 Lenco shares held.
4. The scheme
In terms of the scheme, Lenco shareholders, registered as such on the record
date, will receive a cash consideration of 15 cents per Lenco share held
("the scheme consideration").
5. Conditions precedent
The transaction is subject to the following conditions precedent:
- the approval of the relevant documentation by the Securities Regulation Panel
("SRP") and the JSE;
- the approval by Lenco shareholders in general meeting of the special and
ordinary resolutions to be proposed thereat to enable the unbundling to be
implemented;
- the approval of the scheme by the holders of not less than 75% of the shares
in Lenco, other than Lenco (Proprietary) Limited, who are present and voting at
the Scheme meeting;
- the sanction of the High Court;
- the registration by the Registrar of Companies of the special resolutions to
be proposed at the general meeting and the Order of Court; and
- the Commissioner for Inland Revenue formally approving the unbundling as an
unbundling transaction in terms of Section 60 of the Income Tax Act, No 113 of
1993.
6. Financial effects
The financial effects of the transaction on Lenco shareholders holding 1 Lenco
share are illustrated in the following table.
Before the After the
transaction transaction Change
(cents) (cents) (%)
(Loss)/earnings per share
for the 6 months ended
30 September 2000:
- Attributable (1) (36.3) 9.2 +
- Headline (2) (1.0) 8.2 +
Net asset value per share as at
30 September 2000 (3) 251.5 247.9 (1.4)
Market value (4): 175.0 189.3 8.1
Notes:
1. The attributable loss per Lenco share for the 6 months ended 30 September
2000, which includes certain exceptional losses made by Lenco during that
period, is compared with the pro-forma attributable earnings, excluding the
exceptional items, based on:
- the attributable earnings of 10.0 cents per Malbak share for the 6 months
ended 30 September 2000 multiplied by 0.85, which each Lenco shareholder will
receive based on a holding of 1 share; plus
- 15 cents per Lenco share multiplied by 9,5% multiplied by 6/12, which is
assumed to be the after-tax interest rate a shareholder could obtain on the
cash balance for a six month period.
2. The headline loss per Lenco share for the 6 months ended 30 September 2000
is compared with the pro-forma headline earnings based on:
- the headline earnings of 8.8 cents per Malbak share for the 6 months ended 30
September 2000 multiplied by 0.85, which each Lenco shareholder gets based on a
holding of 1 share; plus
- 15 cents per Lenco share multiplied by 9,5% multiplied by 6/12, which is
assumed to be the after-tax interest rate a shareholder could obtain on the
cash balance for a six month period.
3. The net asset value per Lenco share at 30 September 2000 is compared with
the pro-forma net asset value based on the net asset value per Malbak shares at
30 September 2000 of 274 cents per share multiplied by 0.85 plus the scheme
consideration.
4. The market value of a Lenco share at the close of business on 3 April 2001,
the last trading day prior to the publication of the terms announcement is
compared to the value of 0.85 of a Malbak share on that date plus the scheme
consideration.
7. Listing on the JSE
Shareholders should note that, if the transaction is implemented, trade in
Lenco shares will be suspended from the commencement of business on Wednesday
13 June 2001 and Lenco will be delisted from the JSE with effect from Monday 18
June 2001.
8. Opinions and recommendation
8.1. PricewaterhouseCoopers Corporate Finance (Proprietary) Limited has advised
the board of directors of Lenco that they have considered the terms and
conditions of the scheme and are of the opinion that they are fair and
reasonable from a financial point of view to Lenco shareholders.
8.2. Lenco directors who are associated with Lenco (Proprietary) Limited have
recused themselves from discussions relating to the scheme due to potential
conflicts of interest. The remaining independent directors of Lenco have
considered the independent adviser's opinion and the terms and conditions of
the scheme and are of the opinion that they are fair and reasonable to Lenco
shareholders.
Accordingly, the independent directors of Lenco recommend that scheme members
vote in favour of the scheme at the scheme meeting and intend to do so
themselves in respect of their own holdings of Lenco shares.
8.3. The directors of Lenco have considered the terms and conditions of the
unbundling and are unanimously of the opinion that they are fair and reasonable
to Lenco shareholders. Accordingly, the board of directors of Lenco recommends
that Lenco shareholders vote in favour of the unbundling at the general
meeting. The directors of Lenco intend to vote in favour of the unbundling at
the general meeting in respect of their own holdings of Lenco shares.
9. Cash confirmation
The SRP has received confirmation from Standard Corporate and Merchant Bank, a
division of the Standard Bank Investment Corporation Limited, that Lenco
(Proprietary) Limited has the necessary resources available to implement the
transaction.
10. Important dates and times
2001
Last day to lodge form of proxy for the general meeting
by 11:00 on Friday 25 May
Last day to lodge form of proxy for the scheme meeting
by 11:30 on Friday 25 May
Last day to register in order to vote at the general meeting
and scheme meeting by 16:00 on Friday 25 May
General meeting to be held at 11:00 on Monday 28 May
Scheme meeting to be held at 11:30 on, or so soon
thereafter as the general meeting has been concluded Monday 28 May
Publication of results of general and scheme
meetings Wednesday 30 May
Application to Court for the sanctioning of the scheme
meeting Tuesday 12 June
Suspension of trade in Lenco shares from
commencement of business on Wednesday 13 June
Publication of fulfilment of conditions precedent and
reminder of last day to register Thursday 14 June
Record date to participate in the unbundling and
scheme at 16:00 on Friday 15 June
Termination of listing of Lenco shares on the JSE
at 16:00 on Friday 15 June
Effective date of the unbundling on Monday 18 June
Operative date of the scheme on Monday 18 June
Scheme consideration cheques and Malbak share
certificates posted to scheme participants (if documents
of title are received on or prior to the record date or,
failing that, within five business days of receipt thereof
by the transfer secretaries) on or about Monday 18 June
Notes:
1. If a form of proxy for the scheme meeting is not received by the time and
date shown above, it may be handed to the chairperson of the scheme meeting no
later than 10 minutes before the commencement of the scheme meeting.
2. All transactions in Lenco shares from Monday 11 June 2001 will be for
immediate settlement.
3. The shares in Lenco will be suspended from Wednesday 13 June 2001.
4. These dates and times may be changed. Any such amendments will be published
in the press.
11. Documentation
A circular, which is subject to the approval of the SRP and the JSE, setting
out the details of the transaction and containing notices for the general
meeting of shareholders and scheme meeting will be posted to Lenco shareholders
on or about 30 April 2001.
Cape Town
4 April 2001
RAND MERCHANT BANK
CORPORATE FINANCE
A Division of FirstRand Bank Limited
Merchant bank and sponsor
Independent financial adviser to Lenco minorities
PricewaterhouseCoopers
Corporate Finance (Pty)Ltd
(Registration number 1970/003711/07)
Legal adviser
BERNADT VUKIC
POTASH & GETZ
ATTORNEYS
