| Tue 10 Jul 2001, 0:00 | | Merger Of Corpgro, Corpcapital And Corpcapital Ban |
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CORPGRO LIMITED
(Registration number 1983/011384/06)
("Corpgro")
CORPCAPITAL LIMITED
(Registration number 1946/023536/06)
("Corpcapital")
CORPCAPITAL BANK CONTROLING COMPANY LIMITED
(Registration number 1998/008346/06)
("Corpcapital Bank")
Merger of Corpgro, Corpcapital and Corpcapital Bank
1. Salient features
1.1 Corpgro will acquire the businesses of Corpcapital and Corpcapital Bank
and change its name to "Corpcapital Limited".
1.2 Corpcapital shareholders will receive one Corpgro share for every 3,1
Corpcapital shares held. Corpcapital Bank shareholders will receive 1,715
new Corpgro shares for each Corpcapital Bank share held.
1.3 After the merger:
1.3.1 there will be one point of entry for investment in the group;
1.3.2 New Corpcapital will have shareholders' funds of R1,5 billion and
historic pre-tax profits in excess of R350 million, placing it in the top
100 listed companies on the JSE, and making it the 10th largest banking
group in South Africa;
1.3.3 market capitalisation and liquidity will be substantially enhanced;
and
1.3.4 New Corpcapital's board will be reconstituted with Eric Ellerine
appointed as non-executive chairman.
2. Introduction
Following the cautionary announcements of 27 March 2001, 9 May 2001 and 16
May 2001, Corpcapital Corporate Finance is authorised to announce the basis
on which it is proposed to merge Corpgro, Corpcapital and Corpcapital Bank
("the merger").
3. The merger
3.1 Corpgro will acquire the businesses of Corpcapital and Corpcapital Bank
and change its name to "Corpcapital Limited" ("New Corpcapital").
3.2 Corpcapital shareholders will receive one Corpgro share for every 3,1
Corpcapital shares held. Corpcapital Bank shareholders will receive 1,715
new Corpgro shares for each Corpcapital Bank share held.
4. Rationale for the merger
4.1 The existing group structure has served its purpose in facilitating the
establishment and development of the group's businesses.
4.2 Operationally, the group's businesses are seamlessly integrated. The
merger will reflect this integration and unite shareholders' interests.
4.3 The merger will simplify the group structure for investors.
4.4 The merger will establish a single listed entity with increased ordinary
shareholders' equity and attributable profits, and enhanced market
capitalisation and liquidity.
4.5 The elimination of two listed companies will result in cost savings and
improved administrative efficiencies.
5. Determination of swap ratios
5.1 The boards of the companies appointed separate independent advisors, as
follows:
- Corpgro - Deloitte & Touche Corporate Finance;
- Corpcapital - KPMG Corporate Finance; and
- Corpcapital Bank - PricewaterhouseCoopers Corporate Finance.
5.2 Each independent advisor assisted the board of its client in the conduct
of a stand alone valuation and reviewed the valuations of each of the
companies.
5.3 All relevant valuation criteria were taken into account subject to the
overriding principle of establishing fair market values for Corpgro,
Corpcapital and Corpcapital Bank.
5.4 Each company appointed executive directors to negotiate swap ratios
within the ranges of these valuations.
5.5 The negotiated swap ratios were then considered by the full boards of
the companies. In each case, the swap ratios were unanimously approved.
6. Implementation of the merger
6.1 Corpgro will first acquire the business of Corpcapital against the issue
to Corpcapital of 88 million Corpgro shares, based on the agreed swap ratio
applied to those Corpcapital shares which are held by shareholders other
than Corpgro. These Corpgro shares will then be distributed to Corpcapital
shareholders, other than Corpgro, in the ratio of one Corpgro share for
every 3,1 Corpcapital shares held.
6.2 Corpgro will then acquire the business of Corpcapital Bank against the
issue to Corpcapital Bank of 101 million Corpgro shares, based on the agreed
swap ratio applied to those Corpcapital Bank shares held by shareholders
other than Corpcapital. These Corpgro shares will then be distributed to
Corpcapital Bank shareholders, other than Corpcapital, in the ratio of 1,715
Corpgro shares for each Corpcapital Bank share held.
6.3 As Corpcapital and Corpcapital Bank will then be redundant, shareholders
will be asked to approve the necessary resolutions to delist and wind-up
these companies.
6.4 Corpcapital Bank Limited, the registered bank and wholly-owned
subsidiary of Corpcapital Bank, will become a wholly-owned subsidiary of New
Corpcapital and will continue to operate in all respects as it currently
operates, under the name "Corpcapital Bank".
7. The boards of directors
7.1 The board of New Corpcapital will be reconstituted as follows: E
Ellerine* (Chairman); N J Frangos*; J M Liebesman (CEO); M H Sacks (MD); E
Grolman; G B Liebmann; N N Lazarus; W Trengove*; B Kalkhoven (*non-
executive).
7.2 The board of Corpcapital bank will remain as it is, namely: E Grolman*
(Chairman); B Kalkhoven (MD); E Calitz*; E Ellerine*; Z P Gama*; A J Grant;
E Moahloli*; R S Parker*; N M Phillips; M H Sacks*; G Verhoef* (*non-
executive).
8. The Corpcapital Bank options
8.1 Corpcapital Bank has issued options listed on the JSE Securities
Exchange South Africa ("JSE") ("the options") which entitle the holder at 2
June 2003 to acquire one ordinary Corpcapital Bank share at a strike price
of 800 cents per option.
8.2 New Corpcapital will propose a scheme in terms of section 311 of the
Companies Act, 1973 (Act 61 of 1973), as amended ("the option scheme"), to
exchange the options for new unlisted options in New Corpcapital ("the new
options"), based on the swap ratio applicable to the Corpcapital Bank
merger. Corpcapital Bank option holders will receive 1,715 new options for
each option held.
8.3 The new options will have the same strike date as the options. The
strike price of the new options will be 420 cents, based on the swap ratio
applicable to the Corpcapital Bank merger and a 10% discount which takes
account of the new options not being listed.
9. Conditions precedent
The merger will be subject to the following conditions precedent:
9.1 the approvals of all relevant regulators including the JSE, the
Securities Regulation Panel ("SRP"), the Registrar of Banks, the Registrar
of Long-Term Insurance and, to the extent necessary, the relevant authority
under the Competition Act, number 89 of 1998; and
9.2 the approvals of shareholders in Corpgro, Corpcapital and Corpcapital
Bank.
10. Mandatory offer to Corpcapital Bank minorities
If the conditions to the merger are not fulfilled, Corpcapital will make an
offer to the other shareholders in Corpcapital Bank of 2,5 Corpcapital
shares for each Corpcapital Bank share, in discharge of Corpcapital's
obligations under the SRP Code arising out of its original acquisition of
49% of the issued shares in Corpcapital Bank.
11. Financial effects
11.1 The pro forma financial effects of the merger are based on:
11.1.1 Corpgro's consolidated results for the year ended 31 August 2000
("financial year") and the published six months ended 28 February 2001
("interim period"), adjusted for the financial effects on Corpgro of the
sale by Corpcom Limited of its business, as announced on 2 July 2001;
11.1.2 Corpcapital's published consolidated results for the financial year
and the interim period;
11.1.3 Corpcapital Bank's published consolidated results for the financial
year and the interim period;
and on the following assumptions:
11.1.4 for the purposes of headline earnings per share, that the merger was
effective at the beginning of the relevant period;
11.1.5 for the purposes of net tangible asset value per share, that the
merger was effective on 28 February 2001; and
11.1.6 Corpgro having 440 000 000 shares in issue, after the merger.
Corpgro
Pro forma Pro forma
Before the After the
merger merger Change
(cents) (cents) (%)
Headline earnings per share for
the year ended 28 February 2001 66,1 65,8 -
Headline earnings per share for the
six months ended 28 February 2001 31,8 32,8 3
Headline earnings per share for
the year ended 31 August 2000 60,3 60,1 -
Net tangible asset value
per share at 28 February 2001 332 335 1
Corpcapital
Actual Pro forma
Before the After the
merger merger Change
(cents) (cents) (%)
Headline earnings per share for
the year ended 28 February 2001 23,1 21,2 (8)
Headline earnings per share for the
six months ended 28 February 2001 12,1 10,6 (12)
Headline earnings per share for
the year ended 31 August 2000 20,6 19,4 (6)
Net tangible asset value per share at
28 February 2001 96 108 13
Corpcapital Bank
Actual Pro forma
Before the After the
merger merger Change
(cents) (cents) (%)
Headline earnings per share for
the year ended 28 February 2001 102,0 112,7 10
Headline earnings per share for the
six months ended 28 February 2001 53,3 56,3 6
Headline earnings per share for
the year ended 31 August 2000 97,3 103,1 6
Net tangible asset value per share
at 28 February 2001 644 575 (11)
12. Circulars
In compliance with the Listings Requirements of the JSE, circulars
containing details of the merger and incorporating notices of general
meetings and the requisite fair and reasonable opinions will be sent to
Corpgro, Corpcapital and Corpcapital Bank shareholders within 28 days of
this announcement.
Rosebank
9 July 2001
Corporate advisor and joint sponsor
Corpcapital Corporate Finance
Joint sponsor
BoE Securities (Pty) Ltd
Member of the JSE Securities Exchange South Africa
Co. Reg. No. 1995/012240/07
Auditors to Corpgro and Corpcapital
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
Auditors to Corpcapital Bank
PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration no. 1998/012055/21)
Attorneys to the transaction
Deneys Reitz Attorneys Inc.
Reg. No. 1984/003385/21
Independent advisor to Corpgro
Deloitte & Touche
Independent advisor to Corpcapital
KPMG Corporate Finance
Independent advisor to Corpcapital Bank
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
