| Fri 11 May 2001, 0:00 | | Wesco / Toyota Sa - Repurchase And Scheme Of Arran |
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Wesco Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1968/005871/06)
("Wesco")
TOYOTA SOUTH AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/020429/06)
("Toyota SA" or "the Company")
ANNOUNCEMENT REGARDING:
- Share repurchase in terms of section 85 of the Companies Act
(Act 61 of 1973), as amended ("Companies Act"); and
- Scheme of arrangement in terms of section 311 of the Companies Act
1. Introduction
Further to the cautionary announcements of Toyota SA and Wesco published on 29
March 2001, shareholders of such companies are advised that the directors of
Toyota SA have resolved to procure that Toyota SA propose a scheme of
arrangement in terms of section 311 of the Companies Act ("the scheme") between
the Company and its shareholders (other than Wesco, the Company's controlling
shareholder, and Toyota Motor Corporation of Japan ("TMC")) ("scheme members")
in terms of which the shares of scheme members will be acquired for a cash
consideration of
R46 per share ("scheme consideration").
Subject to the fulfilment of the conditions precedent referred to in 4 below,
implementation of the scheme will see a total of 9 031 992 Toyota SA shares
("scheme shares"), representing 22,21% of the Company's issued share capital,
being acquired by the Company from scheme members for a total cash
consideration of R415 471 632 by way of a share repurchase in accordance with
section 85 of the Companies Act ("the share repurchase"). The shares comprising
the share repurchase will then be restored to the status of authorised unissued
shares in the capital of the Company.
Following the share repurchase, the listing of the Company on the JSE
Securities Exchange South Africa ("the JSE") will be terminated.
2. Background to and rationale for the scheme Toyota SA, as an Original
Equipment Manufacturer ("OEM"), is a company dedicated and committed to:
- supplying the range of vehicles, parts, accessories and services to meet the
requirements of the South African and export markets that it services;
- ensuring that products are of outstanding quality, value for money and instil
pride of ownership;
- developing and maintaining a dealer network which will provide superior
service and excellence in customer care;
- fair and progressive employment practices and the development, in accordance
with the Company's requirements, of the skills and potential of its employees;
- the social, educational and economic development, where appropriate, of the
communities in which it operates; and
- keeping abreast of international best practices relating to vehicle
manufacturing, distribution and information technologies.
In meeting these commitments, Toyota SA is mindful of the need to generate
sustainable returns on investments which reward shareholders and secure funding
for the Company's continued growth.
In reaching its decision to propose the scheme, the Board has taken cognisance
of the significant changes which affect and have occurred within the global
and, more particularly, the South African motor industry. Within the South
African market, the majority of OEM's are today wholly-owned by overseas parent
companies. This provides such OEM's with access to global capital sources as
well as enhanced supplier and selling networks on a worldwide scale thereby
enabling economies of scale and access to the facilities and know-how of the
global parent and its affiliates.
Financing of Toyota SA's capital expenditure and operational requirements has
in the past been adequately sourced from a balance between retained income and
prudent borrowings. The recent trend in the deterioration of the Rand to Yen
exchange rate has resulted in a substantial increase in cost of sales which
could not be recovered fully by way of price increases. This situation has
resulted in the Company sustaining losses and could potentially place the
Company's long-term funding structure under strain, leading to the Company
struggling to maintain its ideals and objectives as stated above. Furthermore,
other South African OEM's, being wholly-owned subsidiaries of their overseas
parent companies and, in some cases, not being exposed to the Rand to Yen
exchange rate, have a competitive advantage over Toyota SA in terms of access
to substantial export markets. In order to regain the ability to achieve its
objectives and to become a true global player in the production of quality
vehicles for export, substantial capital expenditure will be required. The
directors are unanimously of the opinion that the shareholding of the Company
should be restructured in such a manner as to avoid further loss of value to
the present minority shareholders.
The scheme, if implemented, will enable Wesco, together with TMC, to carry out
the required structural changes that will need to be made by the Company to
ensure its long-term success. As more fully described in 10 below, the
restructuring will require future funding from TMC and a larger TMC
shareholding in Toyota SA which is conditional upon Toyota SA repurchasing the
shares of the scheme members. At the same time, the scheme, if implemented,
will enable scheme members to realise their investment against payment of the
scheme consideration, thus preserving the value of their investment. The scheme
consideration represents a premium of 76,9% to the market price of R26 a Toyota
SA share at the time of the publication of the announcement on 29 March 2001.
3. Financial effects of the scheme on scheme members
The table below sets out the pro forma financial effects of the scheme on the
headline earnings, market value and net asset value per share attributable to
scheme members:
Percentage
Notes Before After change
Headline
earnings
per share
(cents) 1 (111,2) 273,7 -
Market value
per share
(cents) 2 2 600 4 600 76,9
Market value
per share
(cents) 3 3 720 4 600 23,7
Net asset
value per
share (cents) 4 5 912,9 4 600 (22,2)
Notes:
1. The "Before" column represents the audited headline earnings per share of
Toyota SA calculated on the 40 668 000 shares in issue in Toyota SA throughout
the financial year ended 31 December 2000. The "After" column reflects the
after-tax interest income, at an average tax rate of 30%, that a scheme member
would have earned had the scheme consideration been invested at an interest
rate of 8,5%, based on the average rate of interest earned on a six-month fixed
deposit, for the financial year ended 31 December 2000.
2. The market value per share in the "Before" column is the closing JSE market
price of a Toyota SA share at 28 March 2001, being the date immediately
preceding the cautionary announcement published on 29 March 2001 advising
shareholders of the Company to exercise caution in dealing in their shares. The
"After" column shows the scheme consideration.
3. The market value per share in the "Before" column is the closing JSE market
price of a Toyota SA share at 10 May 2001, being the last practicable date
prior to the publication of this announcement. The "After" column shows the
scheme consideration.
4. The "Before" column is the net asset value per share of Toyota SA determined
on the 40 668 000 shares in issue at 31 December 2000 and the audited net asset
value of the Company in respect of the financial year ended 31 December 2000.
The "After" column shows the scheme consideration.
4. Conditions precedent
It is expected that the scheme will become operative on Monday, 16 July 2001,
being the first business day following the record date, which is expected to be
Friday, 13 July 2001, by which date the following conditions precedent must
have been fulfilled:
4.1 the special resolution necessary to authorise Toyota SA to effect the share
repurchase in order to implement the scheme will have been passed at the
general meeting of the Company to be held as indicated in 6.1 below and will
have been registered by the Registrar of Companies;
4.2 the scheme will have been approved by a majority representing not less than
three-fourths of the votes exercised by eligible scheme members present and
voting either in person or by proxy at the scheme meeting to be held as
indicated in 6.2 below;
4.3 the High Court of South Africa (Witwatersrand Local Division) ("the Court")
will have sanctioned the scheme; and
4.4 the Court Order sanctioning the scheme will have been registered by the
Registrar of Companies in terms of the Companies Act.
5. Listing of Toyota SA
Subject to the scheme becoming unconditional in accordance with the "Expected
important times and dates" referred to in 9 below, the JSE has agreed to:
5.1 the listing of the Company on the JSE being suspended with effect from the
commencement of trading on the JSE on Thursday, 12 July 2001;
5.2 the listing of the Company on the JSE being terminated with effect from the
close of trading on the JSE on Friday, 13 July 2001.
6. Meetings to be held in regard to the scheme
The following meetings will be convened in regard to the share repurchase and
the scheme:
6.1 a general meeting of the Company's shareholders to be held in the
Auditorium, Toyota Building, Stand 1, Wesco Park, Old Pretoria Road, Sandton,
at 10:00 on Thursday, 28 June 2001 (or so soon thereafter as the annual general
meeting of Toyota SA convened to be held at 09:30 on the same date shall have
been concluded or adjourned) ("the general meeting") to consider and, if deemed
fit, to pass the special resolution necessary to authorise the share repurchase
in order to implement the scheme;
6.2 a meeting of scheme members to be held in the Auditorium, Toyota Building,
Stand 1, Wesco Park, Old Pretoria Road, Sandton, at 10:15 on Thursday, 28 June
2001 (or so soon thereafter as the general meeting shall have been concluded)
("the scheme meeting") to consider and to vote on the scheme.
Each of the two meetings are conditional on the other. Accordingly, should any
of the resolutions to be proposed at the general meeting or the scheme meeting
fail, the scheme will not become operative.
7. Views of the directors of Toyota SA and Nedcor Investment Bank Limited
Nedcor Investment Bank Limited ("NIB"), acting as independent financial adviser
to the board of directors of Toyota SA, has considered the terms and conditions
of the scheme and is of the opinion that they are fair and reasonable from a
financial point of view to the scheme members and has advised the directors of
Toyota SA accordingly.
As regards expressing an opinion on the scheme, directors of Toyota SA who are
also directors of Wesco, as well as those directors of Toyota SA who are also
directors of TMC, or who were nominated by TMC to serve as directors of Toyota
SA, have recused themselves from expressing such opinion. All of the remaining
directors of Toyota SA have considered the terms of the scheme and, taking into
account the opinion of NIB, are of the unanimous opinion that the scheme is
fair and reasonable to scheme members. In providing advice to these Toyota SA
directors, NIB has considered, inter alia, the Toyota SA directors' commercial
assessment of the scheme. Accordingly, the board of directors of Toyota SA
recommends that scheme members vote in favour of the scheme at the scheme
meeting and that shareholders of the Company vote in favour of the special
resolution at the general meeting necessary to authorise the share repurchase
in order to implement the scheme.
As regards the scheme, those directors of Toyota SA who own shares in their own
right intend to vote such shares in favour of the scheme.
8. Confirmation of financial resources
The Standard Bank of South Africa Limited has provided the Securities
Regulation Panel ("the SRP") with the appropriate confirmation that Toyota SA
has sufficient financial resources available to it to ensure that it is able to
honour its commitment in terms of the scheme if the scheme becomes operative.
9. Expected important times and dates
As at the date of this announcement, the following important times and dates
are indicative and are subject to change. Notice of any such change will be
advised in the press.
2001
Last day to lodge form of proxy for the
general meeting, by 10:00 on Tuesday, 26 June
Last day to lodge form of proxy for the
scheme meeting, by 10:15 on Wednesday, 27 June
(proxy forms may be handed to the
chairman of the scheme meeting up to
10 minutes before the commencement of
the scheme meeting)
Last day to register as a shareholder
of Toyota SA in order to vote at the
scheme meeting, by close of business on Wednesday, 27 June
General meeting held at 10:00 (or so
soon thereafter as the annual general
meeting of Toyota SA convened to be held
at 09:30 on the same date shall have been
concluded or adjourned) on Thursday, 28 June
Scheme meeting held at 10:15 (or so
soon thereafter as the general meeting
shall have been concluded) on Thursday, 28 June
Application to Court to sanction the
scheme expected on Tuesday, 10 July
Expected date for listing of Toyota SA on
the JSE to be suspended at the commencement
of trade on the JSE on Thursday, 12 July
Expected record date to participate in
the scheme at close of business on Friday, 13 July
Expected date for listing of Toyota SA on
the JSE to terminate at close of trade
on the JSE on Friday, 13 July
Operative date of scheme expected on Monday, 16 July
Expected date from which the scheme
consideration will be made available or
posted to scheme members (subject to
documents of title to Toyota SA shares
having been received on or prior to
the record date or, failing that, within
five business days of receipt thereof by
the transfer secretaries) on Wednesday, 18 July
Notes:
1. If a completed proxy form in respect of the scheme meeting is not received
by the time and date shown above, it may be handed to the chairman of the
scheme meeting not less than 10 minutes before the scheduled commencement time
for the scheme meeting or any adjournment thereof.
2. Any change to the above times and dates as approved by the JSE and/or SRP
and/or the Court as required, will be advised by notification in the press.
3. All transactions in the shares of Toyota SA on the JSE during the week
