| Mon 2 Jul 2001, 0:00 | | Sale By Corpcom Of Its Business |
|
Corpcom Limited Independent News Clear Channel
& Media (South Africa) International BV
(Pty) Limited
("Corpcom") ("Independent") ("Clear Channel")
Sale by CORPCOM of its business
1. Introduction
Corpcapital Corporate Finance and Investec Bank Limited are authorised to
announce that Corpcom has reached agreement, subject to the conditions
referred to below, to sell its entire business ("the sale") excluding
certain liabilities ("retained liabilities") to a new company, Clidet No 355
(Pty) Limited ("the purchaser"), with effect from 1 May 2001 for a price
which, after settlement of transaction costs and retained liabilities,
should represent not less than 125 cents per Corpcom share.
2. The parties to the sale
2.1. Corpcom is the listed holding company of operating subsidiaries in
South Africa, the rest of Africa and Poland, carrying on business in the
outdoor media industry. Corpcom is the market leader in the outdoor media
industry in Africa.
2.2. Corpgro Limited ("Corpgro") holds 67% of the shares in Corpcom. A
separate announcement by Corpgro is published together with this
announcement.
2.3. Independent is South Africa's largest newspaper group and is a wholly-
owned subsidiary of Independent News & Media plc, based in Dublin, which
operates in six countries.
2.4. Clear Channel is the international arm of Clear Channel Communications
Inc., which is the global leader in out-of-home advertising with a market
capitalisation in excess of US$35 billion.
2.5. Each of Corpgro, Independent and Clear Channel will hold an effective
one-third equity interest in the purchaser.
3. Rationale for the sale
Corpcom's rationale for concluding the sale is as follows:
3.1. competitive activity in the African outdoor industry from global
industry leaders is inevitable. Centralised buying and access to global
brand adspend is increasingly a feature of the outdoor advertising industry.
Corpcom recognises the threat of and the need to be aligned with these
market forces;
3.2. the market price for Corpcom shares has declined and remains under
pressure due to the lack of investor interest in small-capitalisation
stocks, particularly in the media sector, and prevailing difficult trading
conditions;
3.3. it is not foreseen that these factors will improve significantly in the
short to medium term; and
3.4. in the circumstances the sale presents shareholders with the
opportunity to realise their investment at well above market prices
prevailing before the first cautionary notice relating to the sale issued on
1 March 2001. If shareholders were to retain their investment in Corpcom, it
is not anticipated in the short to medium term to result in a market price
exceeding 125 cents per Corpcom share.
4. Clear Channel and Independent's rationale
Africa is the only continent in which Clear Channel does not operate.
Corpcom, with its powerful market position in South Africa and other African
countries, its proven record and strong management, offers the best possible
entry to this market.
Clear Channel and Independent News & Media plc have a very successful
partnership in Australia and New Zealand and, with Independent's knowledge
of the local market, extending this partnership to South Africa will be of
great benefit to both parties.
5. The material terms of the sale
The material terms of the sale are as follows:
5.1. the sale is for a cash price of R468 million ("the sale price") on the
basis that the purchaser assumes all disclosed liabilities, other than the
retained liabilities;
5.2. the sale extends to all of Corpcom's operating subsidiaries and assets;
5.3. Corpcom has provided limited warranties and indemnities;
5.4. Corpcom has provided the usual undertakings in restraint of trade, for
no additional consideration; and
5.5. as a pre-requisite to the sale Independent and Clear Channel require
that:
5.5.1. Corpgro stands surety for 67% of Corpcom's limited warranty and
indemnity obligations;
5.5.2. Corpgro provides undertakings in restraint of trade, for no
additional consideration;
5.5.3. Corpgro invests in the purchaser R157 million of the R300 million
which is its attributable portion of the sale price, in consideration for
its one-third interest in the purchaser;
5.5.4. Corpgro is entitled and obliged in terms of put and call options to
dispose of its interest in the purchaser to Clear Channel and Independent
over five years at a price calculated on an equivalent formula to that used
to determine the sale price.
6. The conditions to the sale
The sale is subject to fulfilment of the following conditions precedent no
later than 14 September 2001:
6.1. the approval of the sale by the shareholders of Corpcom in general
meeting ("the general meeting") in terms of s228 of the Companies Act, 61 of
1973 ("Companies Act");
6.2. the approval of the sale by all relevant regulators including the JSE
Securities Exchange South Africa ("the JSE"), the Securities Regulation
Panel ("SRP"), the South African Reserve Bank and as required in terms of
the Competition Act, 89 of 1998.
7. SRP Ruling
The SRP has ruled that Corpgro may vote at the general meeting.
8. Financial Effects
The pro forma financial effects of the sale, which are set out in the table
below, are based on Corpcom's published consolidated interim results for the
six months ended 28 February 2001 ("interim period") and on the following
assumptions:
8.1. for the purposes of net tangible asset value per share, that the sale
price was received on 28 February 2001;
8.2. for the purposes of headline earnings per share, that the sale price
was received at the beginning of the interim period and was placed on
deposit earning after-tax interest of 7,14% per annum*; and
8.3. a total of 360 million Corpcom shares in issue and to be issued at the
date of this announcement.
Historical Pro forma
before the after the
sale sale Change
(cents) (cents) (%)
Net tangible asset value per share 34,1 125,0 267
Headline earnings per share* 6,9 4,5* (35)
* Note: the comparison of headline earnings per share with an after-tax
interest return is hypothetical only.
The 30 day weighted average closing market price per Corpcom share on 28
February 2001, being the day prior to the first cautionary announcement
relating to the sale, was 73 cents per share ("pre-cautionary price"). It is
anticipated that the sale price will represent not less than 125 cents per
Corpcom share, which would be a premium of 52 cents and an increase of 71%
over the pre-cautionary price.
9. Distribution to shareholders
It is anticipated that, after settlement of the retained liabilities,
shareholders will receive not less than 125 cents per Corpcom share, by way
of a distribution by Corpcom to its shareholders. Shareholders will be
advised in due course whether it will be proposed to wind up Corpcom
following such distribution.
There is a disputed claim by a vendor of a business acquired by Corpcom for
payment of R27 million. Corpcom has been advised that the claim is without
merit and arbitration proceedings are pending. If necessary, an amount
sufficient to discharge any potential liability for the disputed claim and
costs may be retained until the claim has been adjudicated so that the
distribution of the remainder of the sale proceeds is not delayed.
10. Circular
In compliance with the Listings Requirements of the JSE and the rules of the
SRP, a circular containing the details of the sale and incorporating an
independent opinion and notice of the general meeting will be sent to
Corpcom shareholders within 28 days of this announcement.
Johannesburg
2 July 2001
Corporate advisor and sponsor to Corpcom Merchant bank to Independent
and Clear Channel
Corpcapital Corporate Finance Investec Corporate Finance
Legal advisor to Corpcom Attorneys to Independent and
Clear Channel
Corpcapital Transaction Support Cliffe Dekker Fuller Moore Inc
Joint sponsor to Corpcom
Investec Securities
Herewith final version.
Please confirm with me before release.
Regards
Andrew
083 709 8091
