| Fri 27 Jul 2001, 0:00 | | Mcrtail - restructuring, disposal of assets, right |
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Members are advised that it was announced on 10 April 2001 that Mcrtail group (Mcrtail and its subsidiaries, associates and non-consolidated investments) was undertaking the restructuring in order to address the group's high gearing levels and to enable Mcrtail to focus on its core business of motor retailing. The Board is of the opinion that the restructuring, once implemented, will put the group on a sound financial footing for future growth.
Components of the restructuring
The restructuring will include the following:
· the early exercise of the Relyant Retail Limited ("Relyant") put option;
· the disposal of the Relyant shares;
· the rights offer;
· the standby debenture offer;
· the Retail Apparel Group Limited ("RAG") rights offer;
· the disposal of McCarthy Bonus Building Supplies Holdings (Pty) Limited ("Bonus") ;
· the disposal of Mcrtail 's interest in RAG in the medium term
The early exercise of the Relyant put option
In 1998 Mcrtail granted First National Bank ("FNB") a Relyant put option. FNB and the Board of Mcrtail have agreed that the Relyant put option be exercised with effect from 30 June 2001. The consideration payable by Mcrtail in terms of the early exercise of the Relyant put option will be R561 million.
The disposal of the Relyant shares
Pursuant to the settlement of the Relyant put option, Mcrtail will hold 22 727 273 Relyant preference shares in addition to the 17 733 682 Relyant ordinary shares which it currently holds. As part of the restructuring the Board has resolved to sell the Relyant shares in order to receive cash to reduce debt levels.
The Consideration
The consideration received by Mcrtail for the disposal of the Relyant shares will be R200 million in cash.
The rights offer
Details of the rights offer
The Board of the opinion that R900 million of additional equity will be required to place Mcrtail in a position where it has a manageable debt level and will be able to service its residual indebtedness.
The full terms of the rights offer will be published, and a rights offer circular will be posted to shareholders once the approvals of the shareholders have been obtained.
Standby debenture offer
Terms of the standby debenture offer
As the price at which the debentures have traded on the JSE has consistently been above 195 cents per debenture, and has also consistently been above the value of 5,875 ordinary shares, the offer to debenture holders will be implemented by means of a standby offer.
In terms of the standby debenture offer, debenture holders will be offered the following alternatives in consideration for the redemption of their debentures:
· 195 cents in cash per debenture; or
· 5,875 ordinary shares per debenture.
If debenture holders do not accept either of the above alternatives, they will continue to hold the debentures subject to the existing terms and conditions attaching thereto.
Debenture holders accepting the standby debenture offer will not be eligible to receive interest for the period between 1 July 2001 and the date on which they receive the standby debenture offer consideration.
Procedure for acceptance of the standby debenture offer
Should the market value of a debenture drop below the 195 cents per share, or below the market value of 5,875 ordinary shares, between Wednesday,
22 August 2001 and Friday, 14 September 2001, debenture holders will be entitled to redeem their debentures and to receive the standby debenture offer consideration.
Should the standby debenture offer become operational, and you wish to accept it, you should contact the Mcrtail company secretary by 16:00 on Friday,
14 September 2001, who will arrange for you to receive the standby debenture consideration according to your instruction.
RAG rights offer
RAG will undertake a R210 million rights offer, which will be fully underwritten by Mcrtail. In the event that no RAG shareholders follow their rights, Mcrtail will increase its ordinary shareholding in RAG to 96%.
Disposal of Bonus
Mcrtail has entered into an agreement with Real People Holdings to dispose of its holding of the entire issued share capital of Bonus, as well as its loan account in Bonus, for a consideration of R25 million in cash. The disposal will result in a loss on sale of R142 million. The loss has been provided for in the pro-forma balance sheet.
The consideration
The consideration will be R25 million in cash.
Disposal of RAG
Mcrtail has identified its interest in RAG as being non-core. As such, as part of the restructuring, Mcrtail intends to dispose of its investment in RAG. However, it is in the interests of both RAG and Mcrtail that the business of RAG first be given an opportunity to be restructured prior to disposal.
Accordingly, Mcrtail is underwritting the RAG rights offer in order to recapitalise RAG and provide it with a solid capital base from which to grow its operations.
The above transactions are subject to the shareholders and debenture holders approval at general meetings to be held on Friday, 21 August 2001.
Salient Dates
2001
Shareholders' general meeting to be held at 10:30, or soon thereafter as the general meeting of shareholders of RAG convened for 10:00 is concluded, on
Tuesday, 21 August
Debenture holders' general meeting to be held at
10:45, or so soon thereafter as the shareholders' general meeting is concluded, on
Tuesday, 21 August
Standby debenture offer opens at 09:00 on
Wednesday, 22 August
Standby debenture offer closes at 16:00 on
Friday, 14 September
Sponsor: Rand Merchant Bank 27.07.2001
