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Real Africa Durolink Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1992/004888/06)
("RADH")
PSG Investment Bank Holdings Limited
(Registration number 1998/01735/06)
("PSGBH")
Acquisition of RADH by PSGBH and cautionary announcement
1. Introduction
RADH and PSGBH have been in discussions concerning the combining of their
respective businesses. Prior to these discussions reaching finality, the
management of RADH took steps to close out a large open trading position which
resulted in a pre-tax loss of approximately R196 million ("the loss").
2. Offer to RADH shareholders
PSGBH will, subject to the conditions precedent set out below, make an offer to
RADH shareholders on the basis of 100 new PSGBH shares for every 100 RADH
shares. It is envisaged that the offer will be implemented by proposing a
scheme of arrangement in terms of section 311 of the Companies Act, 1973 (Act
61 of 1973), as amended, so as to constitute RADH a wholly-owned subsidiary of
PSGBH. On conclusion of the acquisition RADH will be delisted from the JSE
Securities Exchange South Africa ("the JSE").
3. Rationale
Key to any investment bank in the highly competitive South African banking
industry is the ability to attract and retain skilled people, critical mass and
access to international markets and distribution channels. The acquisition of
RADH will enable PSGBH to achieve a greater depth of people skills at all
levels, which will lead to improved innovation of new products and, therefore,
increased profitability. The combination of PSGBH's and RADH's strong core
competencies in structured products and investment banking will further enhance
the footprint of PSGBH.
After the proposal, PSGBH will have equity capital of approximately R2 billion.
4. Terms of the acquisition
Shareholders in RADH will receive 100 PSGBH shares for every 100 RADH shares
held by them. The purchase consideration due to RADH shareholders of R325 630
000 will be settled by the issue of 415 000 000 new PSGBH shares at a price of
78,4 cents per share ("consideration shares"). The purchase consideration was
calculated based on the market price of a PSGBH share at the close of business
on Monday, 9 April 2001 less an unpaid distribution valued at 16,6 cents per
share in respect of PSGBH's year ended 28 February 2001 to which RADH
shareholders will not be entitled. The number of consideration shares may vary
based on the outcome of a due diligence investigation to be carried out by
PSGBH. In this regard, RADH has warranted that its net tangible asset value as
at the effective date of the acquisition on 1 May 2001 will not be less than
R550 million.
5. Financial effects
The financial effects of the acquisition on PSGBH and RADH will be announced on
conclusion of the due diligence investigation referred to above. Shareholders
are accordingly advised to exercise caution when dealing in their shares until
a further announcement is made.
6. Conditions precedent
The acquisition is subject to the following conditions precedent:
* the approvals of various regulatory bodies including the JSE, the Securities
Regulation Panel and the Registrar of Banks;
* the approval by PSGBH shareholders of the transaction and an increase in
PSGBH's authorised share capital; and
* the transaction being approved by RADH shareholders.
7. Undertakings
RADH shareholders which, collectively, hold 72% of the shares in RADH, have
undertaken to vote in favour of all the RADH resolutions required to implement
the acquisition and accept the offer.
PSG Group Limited holds 68% of the shares in PSGBH and has undertaken to vote
in favour of all the PSGBH resolutions required to implement the proposed
acquisition.
8. Documentation and further announcements
Circulars to RADH and PSGBH shareholders regarding details of the acquisition
and which will include a notice convening the required meetings are being
prepared and will be posted to shareholders within 28 days or such later date
as approved by the JSE.
A further announcement giving salient dates, times and the financial effects of
the acquisition will also be published in due course.
Sandton
10 April 2001
Sponsor to RADH
Deutsche Securities (Proprietary) Limited
Member of the Deutsche Bank Group
Deutsche Securities (SA) (Pty) Limited
(Registration number 1995/011798/07)
Sponsor to PSGBH
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
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