| Wed 8 Aug 2001, 0:00 | | Mccarthy Retail Limited - Confirmation Of The Mcre |
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salient dates
McCarthy Retail Limited
(Incorporated in the Republic of South Africa)
(Registration number 1991/003245/06)
("McRetail")
Confirmation of the McRetail restructuring and salient dates
1. Introduction
Shareholders and debenture holders are referred to the detailed terms
announcement published on 10 April 2001, which set out the rationale for and
terms of the McRetail restructuring. The outstanding details relating to the
restructuring have now been finalised and accordingly a circular setting out
the full terms of the restructuring will be posted to shareholders and
debenture holders today, Wednesday 8 August 2001.
This announcement confirms the major features of the restructuring and the
salient dates relating thereto.
2. The restructuring of McRetail
Since 1997, the capital of McRetail has been eroded by approximately R1,6
billion, despite the increased profitability of its motor and financial
services divisions. There have been significant bad debt write-offs in
McRetail's furniture, clothing and building supplies interests as a result
of the prolonged recession in the retail consumer sector. In addition,
operating profits and cash flows generated by these non-core businesses have
been weak or negative.
These factors have necessitated impairment write-offs against the carrying
value of these operations and, cumulatively, have had a material impact on
McRetail's debt levels. In addition, there is the uncertainty and risk
facing McRetail in respect of its obligations in terms of the Relyant put
option. This significantly increases the group's debt burden and places
McRetail into a technically insolvent position. In light of the
unsustainable gearing levels and the need for ongoing borrowing facilities,
the McRetail board of directors has proposed the restructuring.
The McRetail board of directors is of the opinion that the restructuring
will put McRetail on a sound financial footing for the future and will
enable it to return to its core business of motor retailing.
The restructuring entails the following:
o the early exercise of the Relyant Retail Limited ("Relyant") put option
("the Relyant put option") for an amount of R561 million. This is in terms
of an agreement entered into in 1998 when Relyant was created, whereby FNB
Corporate, a division of FirstRand Bank Limited ("FNB") has the option to
put 22 727 273 Relyant preference shares to McRetail. A pre-condition to the
underwriters' willingness to underwrite the rights offer is the simultaneous
early exercise by FNB of the option;
o the disposal by McRetail of its holding of 17 733 682 Relyant ordinary
shares and 22 727 273 Relyant preference shares to its debt funders for a
consideration of R200 million;
o a rights offer of McRetail ordinary and preference shares to raise R870
million, fully underwritten by McRetail's debt funders;
o a standby offer to McRetail debenture holders of 5.875 McRetail ordinary
shares or 195 cents in cash per debenture. As the price at which the
debentures have traded since the original announcement has consistently been
above the value of the consideration, the debenture offer will be
implemented by means of a standby offer that will only become effective
should the price at which the debentures trade on the JSE Securities
Exchange South Africa be less than 195 cents or the market price of 5.875
McRetail ordinary shares ("the standby debenture offer");
o the disposal of the entire issued share capital of Bonus Building Supplies
(Proprietary) Limited for R25 million. This disposal has been completed and
the sale consideration has been received by McRetail;
o a rights offer of ordinary shares of 0.1 cent each by Retail Apparel Group
Limited ("RAG") to raise R210 million, fully underwritten by McRetail;
o the sale of McRetail's interests in RAG over the medium-term; and
o the amendment of the share incentive scheme to take the impact of the
restructuring into account.
3. Conditions precedent
The restructuring is subject to, inter alia, the fulfillment of the
following conditions precedent:
o ordinary shareholders voting in favour of all resolutions necessary to
implement the restructuring;
o the registration of the special resolutions of shareholders by the
Registrar of Companies; and
o debenture holders voting in favour of all resolutions necessary to
implement the restructuring.
4. Special arrangements
Shareholders holding 134 847 310 ordinary shares (representing 67,9% of
ordinary shares in issue) and debenture holders holding 16 939 784
debentures (representing 41,0% of debentures in issue) have furnished
written undertakings to vote in favour of the restructuring.
5. Documentation
A circular will be posted to shareholders and debenture holders today,
Wednesday 8 August 2001, setting out the full terms and effects of the
restructuring and containing notices convening general meetings of
shareholders and debenture holders. If shareholders would like to receive an
electronic version of the circular, they may contact the Company Secretary
or alternatively e-mail a request to sponsor@rmb.co.za
At the general meetings, shareholders and debenture holders will be required
to consider and, if deemed fit, approve the resolutions required to
implement the restructuring.
6. Salient dates
2001
Last day to lodge forms of proxy
for the shareholders' general
meeting by 9:00 on Wednesday 29 August
Last day to lodge forms of proxy
for debenture holders'
general meeting by 9:30 on Wednesday 29 August
Shareholders' general meeting to
be held at 9:00, or so soon
thereafter as the general meeting
of RAG shareholders convened
for 9:30 is concluded, on Friday 31 August
Debenture holders general meeting
to be held at 9:30, or
so soon thereafter as the shareholders'
general meeting is concluded, on Friday 31 August
If the standby debenture offer becomes effective:
Standby debenture offer opens at 09:00 on Monday 3 September
Standby debenture offer closes at 16:00 on Friday 28 September
Durban
8 August 2001
Merchant bank and sponsor
Rand Merchant Bank
Corporate Finance
A Division of FirstRand Bank Limited
Attorneys
Deneys Reitz
Attorneys
