| Mon 9 Jul 2001, 0:00 | | Magnum Global Funds Sa Ltd - Proposed Scheme Of Ar |
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Magnum Global Funds SA Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1998/025064/06)
("Magnum" or "the company")
Proposed scheme of arrangement in terms of section 311 of the Companies Act,
1973 (Act 61 of 1973), as amended ("the Act"), proposed by Magnum Global
Investments Limited ("MGI") between Magnum SA and Magnum SA shareholders
(other than MGI and various legal entities controlled by Dion Friedland
("Friedland")) ("the MGI Consortium")
1. INTRODUCTION
1.1 Further to the cautionary announcement published in the press on 17 May
2001, Trans Atlantic Securities (Proprietary) Limited ("Trans Atlantic") is
authorised to announce that MGI intends to propose a scheme of arrangement
between Magnum SA and Magnum SA shareholders other than the MGI Consortium
and certain executive management members and directors of Magnum SA ("scheme
members"), in terms of section 311 of the Act ("the scheme"). Upon the
sanctioning of the scheme, MGI will acquire 21 083 200 Magnum SA ordinary
shares ("scheme shares"). As a result, Magnum SA will no longer comply with
the shareholder spread requirements as set out in rules 4.31(g)(iv) and (v)
of the JSE Securities Exchange South Africa ("the JSE") Listings
Requirements, and the listing of Magnum SA ordinary shares on the JSE will,
accordingly, be terminated.
1.2 MGI currently controls 61 875 000 out of the 110 000 000 issued ordinary
shares in Magnum SA, representing 56,25% of Magnum SA's entire issued
ordinary share capital.
1.3 The MGI Consortium currently controls 70 791 800 out of the 110 000 000
issued ordinary shares in Magnum SA, representing 64,36% of Magnum SA's
issued ordinary share capital.
1.4 In anticipation of the scheme, MGI intends to enter into agreements
with, inter alia, certain executive management members and directors of
Magnum SA, in terms of which agreements MGI will acquire, in addition to the
scheme shares, said parties' shares (comprising 18 125 000 Magnum ordinary
shares) for a consideration of approximately 12,8 cents per share.
1.5 The implementation of the scheme shall not constitute a change of
control of Magnum SA as MGI already holds a controlling interest in Magnum
SA.
2. RATIONALE FOR THE SCHEME
2.1 Magnum SA was listed on the JSE on 24 June 1999. As a result, inter
alia, of delays in the removal of restrictions on the marketing of hedge
funds and alternative investments to individuals by the Financial Services
Board, the company has performed poorly in the period since its listing.
2.2 Magnum SA's shares have for some time been trading with very limited
liquidity and at a significant discount to net asset value. The board of
directors of Magnum SA ("the board" or "the directors") are of the opinion
that, given the company's poor results since listing, the illiquidity of the
share, the current negative sentiment towards small capitalisation shares on
the JSE and the high costs associated with maintaining a listing on the JSE,
there appears to be very little justification for the continued listing of
Magnum SA.
2.3 Consequently, the board recommended the scheme to MGI, and the board and
MGI agreed that the interests of Magnum SA shareholders would best be served
by implementing the scheme and delisting Magnum SA. The implementation of
the scheme will enable Magnum SA shareholders to realise their investment at
a significant premium to the current Magnum SA market price.
3. TERMS OF THE SCHEME
Subject to the fulfilment of the conditions precedent referred to in 5
below, scheme members will receive a cash consideration of 22 cents per
scheme share ("the scheme consideration"), which represents a 144,4% premium
on the market price of Magnum SA ordinary shares of 9 cents on 16 May 2001,
the last business day prior to the publication of the first cautionary
announcement relating to, inter alia, the scheme. The aggregate
consideration receivable by the scheme members will amount to R4 638 304.
4. FINANCIAL EFFECTS OF THE SCHEME
4.1 The financial effects of the scheme on a scheme member are as follows:
Before the After the
Per 100 scheme scheme scheme Change
shares held (cents) (cents) (%)
Market values 900 (1) 2 200 144,4
1 100 (2) 2 200 100,0
Net asset value 2 024 (3) 2 200 8,7
Loss/earnings (159) (4) 88 (5) 155,4
Notes:
1. Based on the closing market price of Magnum SA ordinary shares of 9 cents
on 16 May 2001, the business day prior to the publication of the first
cautionary announcement relating to the scheme.
2. Based on the closing market price of Magnum SA ordinary shares of 11
cents on 3 Julie 2001, the last practicable date prior to the publication of
this announcement.
3. Based on Magnum SA's net asset value per share of 20,24 cents at 31
December 2000.
4. Based on Magnum SA's loss per share of 1,59 cents for the six-month
period ended 31 December 2000.
5. Based on the assumption that the scheme consideration has been invested
to earn an after tax return of 8% during the six-month period ended on 31
December 2000.
4.2 Based on the board's estimate of Magnum SA's net realisable value at 31
May 2001 of 16,5 cents per share (after taking into account all ancillary
costs associated with the scheme and the delisting), the scheme
consideration represents a 33,3% premium to such estimated net realisable
value per share.
5. CONDITIONS PRECEDENT
The implementation of the scheme is subject to, inter alia, the following
conditions precedent:
- the requisite majority of votes being cast in favour of the scheme at a
meeting of scheme members to be convened for such purpose;
- the High Court of South Africa (Witwatersrand Local Division) sanctioning
the scheme and the Order of Court sanctioning the scheme being registered by
the Registrar of Companies; and
- receipt of the necessary regulatory approvals.
6. OPINIONS AND RECOMMENDATIONS
6.1 KPMG Corporate Finance, appointed by the board to consider the scheme on
behalf of the scheme members, has advised the board that it has considered
the terms and conditions of the scheme and is of the opinion that the terms
of the scheme are fair and reasonable to the scheme members.
6.2 The directors, other than Friedland representatives, having considered
the terms of the scheme and the opinion of KPMG Corporate Finance, are of
the opinion that the terms of the scheme are fair and reasonable to the
scheme members and recommend that scheme members vote in favour of the
scheme.
7. CONFIRMATION TO THE SECURITIES REGULATION PANEL ("the SRP")
Trans Atlantic has satisfied the SRP that MGI has sufficient cash resources
available to meet its obligations in terms of the scheme.
8. FURTHER ANNOUNCEMENT AND DOCUMENTATION
8.1 Subject to the necessary approvals from the JSE and the SRP, a circular
containing full details of the scheme will be posted to scheme members
within 30 days of this announcement.
8.2 A further announcement setting out the salient dates of the scheme will
be published in the press in due course.
Johannesburg
10 July 2001
Corporate advisers and sponsor
Trans@lantic Securities (Pty) Ltd
Corporate Finance
(Registration number 1999/000210/07)
Attorneys to the scheme
Werksmans Attorneys
Independent advisers to the scheme
KPMG Corporate Finance
Attorneys to MGI and the MGI Consortium
Kallmeyer & Strime Attorneys
