| Fri 25 May 2001, 0:00 | | Offer By Mutual & Federal To The Shareholders Of S |
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Mutual & Federal Insurance Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1970/006619/06)
("Mutual & Federal")
SENTRASURE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/001465/06)
("Sentrasure")
Offer By Mutual & Federal To The Shareholders Of Sentrasure To Acquire The
Entire Issued Share Capital Of Sentrasure
1. Introduction
Nedcor Investment Bank is authorised to announce that Mutual & Federal has
made an offer ("the offer") to Sentrasure shareholders, other than CGU
Insurance Limited ("CGU Insurance"), for their Sentrasure shares ("the offer
shares"). CGU Insurance, which currently owns 63,23% of Sentrasure, is a
wholly-owned subsidiary of Mutual & Federal.
Sentrasure minorities who collectively own 20,86% of the issued share
capital of Sentrasure, constituting 56,75% of the offer shares, have
irrevocably undertaken to accept the offer.
A summary of the terms and conditions of the offer are set out below, full
details of which appear in the circular despatched to Sentrasure
shareholders on 25 May 2001 ("the circular").
2. Terms of the offer and cash confirmation
Subject to the fulfilment of the condition precedent set out in paragraph 5
below, the offer consideration payable in cash by Mutual & Federal for the
offer shares pursuant to the offer shall be R132 793 250 in aggregate,
equating to 173 cents per Sentrasure share. Nedcor Bank Limited has
confirmed to the Securities Regulation Panel ("SRP") that Mutual & Federal
has the necessary cash resources to implement the offer.
After the fulfilment of the condition precedent Mutual & Federal will
declare the offer unconditional, following which it intends invoking section
440K of the Companies Act, 1973 (Act 61 of 1973), as amended. This will
result in the offer shares of Sentrasure shareholders who have not accepted
the offer being compulsorily acquired.
Mutual & Federal has the right to nominate any subsidiary to make the offer,
including without limitation, CGU Insurance.
3. Rationale for the offer
Mutual & Federal recognises the value of the Sentrasure brand, culture and
its special relationships with co-operatives, agri-organisations, advisers
and policyholders. Sentrasure is aware of the fact that insurers are
experiencing increasing difficulties in providing cost effective service and
competitive products. Rationalisation, economies of scale and benefits to be
obtained from the intellectual capital of Mutual & Federal will
substantially enhance the competitiveness of Sentrasure. Full participation
in, and utilisation of the Mutual & Federal resources will only be possible
once Sentrasure becomes a wholly-owned subsidiary within the Mutual &
Federal group.
4. Financial effects of the offer on Sentrasure shareholders
The table below sets out the pro forma effects on a Sentrasure shareholder
who accepts the offer:
Before Accept Increase/
Each Sentrasure share held the offer the offer (decrease)
Net asset value (cents) 150,17 1 173,00 15,20%
Earnings (cents) 13,10 1 12,42 2 (5,19%)
Notes:
1. Based on audited results of Sentrasure for the year ended 31 December
2000.
2. Based on the assumption that the offer consideration of 173 cents per
share is reinvested to yield an after tax return of 7,18% per annum.
5. Condition precedent
The making of the offer is subject to the fulfilment of the following
suspensive condition, namely the acceptance of the offer by Sentrasure
shareholders holding 90% or more of the offer shares, by no later than
Friday, 20 July 2001.
The relevant offer documentation has been approved by the JSE Securities
Exchange South Africa, the SRP and to the extent necessary, the South
African Reserve Bank.
6. Salient dates and time of the offer
The offer opens at 09:00 on 25 May 2001.
The offer will remain open for two weeks after the condition precedent is
fulfilled. Shareholders will be informed in the press once this occurs. It
is expected that the offer will be declared unconditional on or about 1 June
2001.
The dates and time are subject to amendment. Any change will be published in
the press.
7. Opinions and recommendations
The Sentrasure board has appointed PricewaterhouseCoopers Corporate Finance
(Proprietary) Limited ("PwC-CF") to advise them regarding the terms of the
offer. The board of directors of Sentrasure and PwC-CF consider the terms
and conditions of the offer to be fair and reasonable to Sentrasure minority
shareholders. The text of PwC-CF's opinion is available in the circular.
Johannesburg
25 May 2001
Investment bank and joint sponsor to Mutual & Federal
Nedcor Investment Bank
Independent adviser to the minority shareholders of Sentrasure
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Joint sponsor to Mutual & Federal
Merrill Lynch South Africa (Pty) Ltd
Registered sponsor and
Member of the JSE Securities Exchange South Africa
Registration number 1995/001805/07
