| Thu 20 Sep 2001, 0:00 | | Chet/ Chester - Proposed Scheme Of Arrangement |
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Chet Industries Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1997/013498/06)
(Share code: CET ISIN code: ZAE 0000 28312)
("Chet")
Chester Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1983/005300/06))
(Share code: CES ISIN code: ZAE 0000 13348)
("Chester")
Proposed scheme of arrangement in terms of section 311 of the Companies Act,
1973 (Act 61 of 1973), as amended ("the Act"), proposed by Chester between
Chet and Chet shareholders (other than Chester and certain directors and
executive management of Chet)
1. INTRODUCTION
1.1 Further to the cautionary announcement published in the press on 13
September 2001, PSG Investment Bank Holdings Limited ("PSGIB") is authorised
to announce that Chester intends to propose a scheme of arrangement between
Chet and Chet shareholders other than Chester and certain directors and
executive management of Chet and their family interests ("scheme members"),
in terms of section 311 of the Act. Upon the sanctioning of the scheme by
the High Court of South Africa, Chester will acquire approximately 43 988
120 Chet ordinary shares ("the scheme shares"). As a result, Chet 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 Chet's ordinary shares on the JSE
will, accordingly, be terminated.
1.2 Chester currently owns 114 457 552 out of the 186 777 800 issued
ordinary shares in Chet, representing 61,28% of Chet's issued ordinary share
capital.
2. RATIONALE FOR THE SCHEME
2.1 Chet was listed on the JSE on 2 December 1997. Chet is a
broadly based fast moving consumer goods operation manufacturing, selling,
marketing, administering and distributing its range of products to the
retail, wholesale, selected independent, hardware and do-it-yourself
outlets.
2.2 Chet'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 Chet ("the board" or "the directors") are of the opinion that,
given 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 little justification
for the continued listing of Chet.
2.3 Consequently, Chester, as controlling shareholder of Chet, and the
board are of the opinion that the interests of Chet shareholders would best
be served by implementing the scheme and delisting Chet. The implementation
of the scheme will enable Chet shareholders to realise their investment at a
significant premium to the current and recent Chet market prices.
3. TERMS OF THE SCHEME
Subject to the fulfillment of the conditions precedent referred to in 5
below, scheme members will receive a cash consideration of 30 cents per
scheme share ("the scheme consideration"), which represents a 87,5% premium
on the market price of Chet ordinary shares of 16 cents on Wednesday, 12
September 2001, the last practicable business day prior to the publication
of the cautionary announcement relating to the scheme. The aggregate
consideration receivable by the scheme members will be approximately R13,196
million.
4. FINANCIAL EFFECTS OF THE SCHEME
4.1 On Chet shareholders
The financial effects of the scheme on a scheme member are as follows:
Per 100 scheme shares held
Before the scheme After the scheme
(cents) (cents) %
change
Market value 1 600(1) 3 000 87,5
Net asset value 3 280(2) 3 000 (8,5)
Earnings 140(3) 168(4) 20,0
Headline earnings 140(3) 168(4) 20,0
Notes:
1.Based on the closing market price of Chet ordinary shares of 16 cents on
Wednesday, 12 September 2001, the last practicable date prior to the
publication of the cautionary announcement relating to the scheme.
2.Based on Chet's net tangible asset value per share at 30 June 2001 of 32,8
cents.
3.Based on Chet's earnings and headline earnings per share for the 10-month
period ended 30 June 2001 of 1,40 cents.
4.Based on the assumption that the scheme consideration has been invested to
earn an after tax return of 6,72% during the 10-month period ended on 30
June 2001.
4.2 On Chester
The financial effects of the scheme on Chester are as follows:
Before the scheme After the scheme %
(cents) (cents) change
Net asset value per share 108,2(1) 110,4(4) 2,0
Earnings per share 6,5(2) 6,6(5) 1,5
Headline earnings per share 4,6(3) 4,7(5) 2,2
Notes:
1. Based on 147 493 821 Chester shares in issue at 30 June 2001.
2. Based on earnings of R9,591 million for the six-month period ended 30
June 2001 and a weighted average number of 147 493 821 Chester shares in
issue.
3. Based on headline earnings of R6,839 million for the six-month period
ended 30 June 2001 and a weighted average number of 147 493 821 Chester
shares in issue.
4. Based on the assumption that the scheme was implemented on 30 June 2001.
5. Based on the assumption that the scheme was implemented on 1 January
2001 and was, accordingly, effective for the six-month period ended 30 June
2001.
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. CONFIRMATION TO THE SECURITIES REGULATION PANEL ("the SRP")
Fluxman Rabinowitz-Raphaely Weiner has satisfied the SRP that Chester has
sufficient cash resources available to meet its obligations in terms of the
scheme.
7. FURTHER ANNOUNCEMENT AND DOCUMENTATION
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.
A further announcement setting out the final terms and salient dates of the
scheme will be published in the press in due course.
Johannesburg
21 September 2001
Investment bank and sponsor
PSG Investment Bank
Attorneys
Fluxman Rabinowitz - Raphaely Weiner
