Innovative Sage International Issue Successfully C
KBC Financial Products, international investment bankers, have announced the
successful completion of an international equity linked note issue for the
Sage Group.
The notes have been issued by Sage International Finance Limited (BVI), a
wholly-owned subsidiary of Sage Group Limited which has guaranteed the
issue.
The issue, by way of a private placement to international institutional
investors, has raised US$65 million (R520 million) for Sage. Closing took
place on Friday, 22 June. London based KBC Financial Products, a member of
the Brussels based KBC Bancassurance Group, acted as sole lead manager for
the transaction. KBC are leading global specialists and market makers in
equity linked products.
The placement was substantially over subscribed and will inter alia be used
for the redemption by Sage of its existing 4,5% cumulative convertible
redeemable preference shares for approximately R440 million on 30 June 2001.
The original US$55 million preference share issue provided the major initial
capital base for Sage's international expansion through Sage Life Assurance
of America Inc and Sage Life of Bermuda Limited.
The Sage notes mature on 31 July 2005, carry an 8% coupon paid in dollars
semi annually, and contain an embedded equity linked right referenced to the
ordinary shares of ABSA Group Limited. Sage has a significant strategic
investment in and business alliance with ABSA. The predominant part of
Sage's investment is currently pooled with the holdings of Remgro Limited
and the Mines Pension Funds in Universa (Pty) Limited which is one of the
major shareholders in ABSA, controlling approximately 24% of that company's
capital.
The basis of the Sage note is a first for the South African market, with an
innovative structure enabling Sage to tap the strong international investor
base for equity linked products on competitive terms. The issue was
targeted at European institutional investors.
The embedded equity linked right provides investors with participation in
upward movements in ABSA's share price (above an 18% exercise premium),
while remaining non-dilutive for Sage shareholders. The equity linked right
is exercisable at the holders option between two to four years from issue
date at the US
dollar/rand rate prevailing at that time - the increase in the value of a
portion of the ABSA share investment held by the Sage Group provides
immunity in the event of the exercise of that right.
Sage will have an acceleration call at par after three years if a 125%
hurdle above issue price, in dollar terms, is achieved. No redemptions can
take place during the first two years after issue. Assuming no exercise of
the equity linked right, redemption at maturity date, four years after
issue, would be at par.
ISSUED ON BEHALF OF SAGE LIFE BY CATHY FINDLEY PUBLIC RELATIONS ON
(011) 463-6372 OR EMAIL cathy@findleypr.co.za or marlene@findleypr.co.za
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