| Wed 25 Jul 2001, 0:00 | | Omega Holdings Limited - Proposed Scheme Of Arrang |
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OMEGA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/000896/06)
("Omega" 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 Shanghai
Industrial Investment (Holdings) Company Limited ("SIIC") between Omega and
its members other than SIIC
1. INTRODUCTION
Further to the cautionary announcement published on SENS on 25 June 2001 and
in the press on 26 June 2001, Sasfin Bank Limited ("Sasfin") is authorised
to announce that SIIC intends to propose a scheme of arrangement between
Omega and its members other than SIIC ("the scheme members") in terms of
Section 311 of the Act ("the scheme") which will be recommended by the board
of directors of Omega. Upon the sanctioning of the scheme and the
registration of the sanction order (whereupon the scheme will become
operative), SIIC will acquire 45 936 119 Omega ordinary shares held by
members other than SIIC ("scheme shares"). As a result, Omega will become
wholly owned by SIIC and the JSE Securities Exchange South Africa ("the
JSE") will, upon application, terminate the listing of Omega ordinary
shares.
SIIC currently controls 17 933 852 out of the total 63 869 971 issued
ordinary shares in Omega, representing 28,08% of Omega's entire issued share
capital.
2. RATIONALE FOR THE SCHEME
Over the last four years difficult trading conditions have resulted in the
company incurring losses which as at date hereof exceed R200 million.
Management has restructured and continues to explore ways of restructuring
the company's operations in an endeavour to stem these losses. It appears
that trading conditions will continue to be difficult and the company will
have to be more aggressive in cutting costs and re-engineering its business
in order to survive. Further working capital will, in addition, be required
in order to enable the company to continue trading after September 2001.
Maintaining a listing on the JSE has to be seriously considered, especially
in view of the escalating cost thereof. Small capitalisation counters are
unattractive to investors in the current environment and it will be
difficult if not impossible to raise further capital from shareholders or
the public. This is another reason why a continued listing is not necessary.
In terms of the Listings Requirements of the JSE, the continued listing of
the Omega shares will in any event be under pressure if the company does
not, in the next three financial years, return to the levels of
profitability which are required to retain a main board listing on the JSE.
The prospects of the company returning to these levels seem unlikely in the
short term.
In August 2000, SIIC, the single largest member of Omega provided guarantees
for Omega's banking facilities. In exchange for providing the guarantees
SIIC was granted an option to acquire further shares in the company. SIIC
has indicated that it will not exercise this option.
The guarantees which SIIC provided to Omega's bankers will expire during
September 2001 and although SIIC is committed to meet its obligations under
these guarantees it has indicated that it will not provide further
guarantees for Omega's banking facilities.
Omega and SIIC are of the opinion that the most appropriate way to further
rationalise Omega's business is for SIIC to integrate Omega's operations
with SIIC's other investments in South Africa. The directors of Omega and
SIIC believe the most commercially effective method of achieving this
integration would be for SIIC to acquire the entire issued share capital of
Omega.
SIIC has, therefore, proposed the scheme in order to enable it to effect the
integration, while simultaneously enabling the other shareholders to dispose
of their investment in the company at a consideration which, in an illiquid
market constitutes a premium to the current market price.
3. THE SCHEME
3.1 The scheme consideration
In terms of the scheme, members other than SIIC registered as such on the
record date of the scheme will, upon the scheme becoming operative, be
entitled to receive a cash payment of 8 cents for every Omega ordinary share
held.
3.2 Financial effects of the scheme on members
The table below illustrates the financial effects per share of the scheme on
a member:
Before After Change
the scheme the scheme (%)
(cents) (cents)
Market price:
- Monday, 25 June 2001 (1) 4 8 100
- 30 day weighted average (2) 2 8 300
Tangible net asset value 15 (3) 8 (47)
Headline earnings/(loss) (99.6)(4) 0.6(5) +100
The table has been prepared on the following basis:
1. The closing price of the Omega shares on the last trading day prior to
the publication of the first cautionary announcement on 26 June 2001.
2. The weighted average traded price of Omega shares over the 30 trading
days up to the publication of the first cautionary announcement.
3. At 31 March 2001 as per the published audited financial statements of the
company.
4. For the year ended 31 March 2001 as per the published audited financial
statements of the company.
5. The earnings per share in the "After" column assumes that the
consideration is invested at an after-tax rate of 7% per annum for the full
financial year ended 31 March 2001.
4. Conditions precedent
The scheme is expected to become operative on the first Monday 10 business
days after the fulfilment of the following conditions precedent:
4.1 the scheme being approved at the scheme meeting by a majority
representing not less than 75% (three-fourths) of the votes exercisable by
the scheme members present and voting either in person or by proxy at the
scheme meeting;
4.2 the High Court of South Africa sanctioning the scheme;
4.3 a certified copy of the Order of Court sanctioning the scheme being
lodged with, and registered by, the Registrar of Companies in terms of the
Act; and
4.4 any other regulatory approvals or consents necessary to implement the
scheme being obtained, including but not limited to approvals and consents
from the JSE, the SRP, and the Exchange Control department of the South
African Reserve Bank.
5. Opinions and recommendations
5.1 Sasfin Bank Limited has advised the board of directors of Omega that it
has considered the terms and conditions of the scheme, and is of the opinion
that the scheme consideration of 8 cents for every Omega share payable in
cash is fair and reasonable to scheme participants.
5.2 The board of directors of Omega, having considered the terms and
conditions of the scheme and the advice from Sasfin Bank Limited, is of the
unanimous opinion that the terms and conditions are fair and reasonable to
scheme participants and, accordingly, recommends that scheme members vote in
favour of the scheme.
5.3 The directors of Omega who are scheme members have undertaken to vote
in favour of the scheme in respect of the Omega shares held by them.
6. Confirmation to the Securities Regulation Panel ("the SRP")
ABSA Asia Limited has satisfied the SRP that SIIC has sufficient cash
resources available to meet its obligations in terms of the scheme.
7. Further announcement and documentation
7.1 Subject to the necessary approvals from the JSE, the SRP and the South
African Reserve Bank, a circular containing full details of the scheme will
be posted to scheme members within 30 days of this announcement.
7.2 A further announcement setting out the salient dates of the scheme will
be published in the press in due course.
Midrand
25 July 2001
Corporate advisor and sponsor Legal Advisors
Sasfin Bank Limited Webber Wentzel Bowens
(Registration number 1951/002280/06)
