| Wed 3 Oct 2001, 0:00 | | Rentsure - Introduction Of Nozala As Shareholder, |
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Rentsure Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/023539/06)
Share code: RNT ISIN code: ZAE000012811
("Rentsure")
Rentmeester Versekeraars Beperk/Assurance Limited
(Incorporated in the Republic of South Africa)
(Registration number 1957/002523/06)
("Rentmeester")
Nozala Investments (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/004733/07)
("Nozala")
Assupol
(Registered as a Long-term Insurer in terms of
the Long-term insurance Act, no. 52 of 1998)
("Assupol")
ANNOUNCEMENT REGARDING:
* a significant Economic Empowerment investment in Rentsure;
* the merging of the assurance interests of Assupol and Rentmeester;
* the constituting of Rentmeester as a wholly-owned subsidiary of Rentsure;
and
* an increase in the authorised and issued share capital of Rentsure to
facilitate the above transactions;
AND A FURTHER CAUTIONARY ANNOUNCEMENT.
1. Introduction
Quaestor Capital is authorised to announce that the board of directors ("the
Board") of Rentsure has proposed to enter into the following transactions,
namely to:
* introduce Nozala as a significant Economic Empowerment stakeholder in
Rentsure ("the Nozala transaction");
* merge the assurance interests of Assupol with those of Rentmeester, a
subsidiary of Rentsure ("the Assupol transaction");
* constitute Rentmeester as a wholly-owned subsidiary of Rentsure by
increasing its shareholding in Rentmeester from 70% to 100% ("the
Rentmeester transaction"); and
* increase the authorised and issued share capital of Rentsure to facilitate
the above transactions.
2. Rationale for the transactions
2.1 Economic Empowerment
Rentsure, Assupol and Nozala have established mutual objectives to achieve
the following:
* to align the parties' empowerment objectives and upliftment strategies;
* to provide Assupol policyholders with the benefits of a demutualisation;
and
* to jointly work towards the successful expansion of the assurance
activities and long term objectives of all stakeholders.
2.2 Nozala transaction
With the above objectives in mind, discussions have been entered into with
Nozala for the purpose of Nozala acquiring a substantial interest in the
life assurance businesses of Rentmeester and Assupol. Nozala will
contribute towards the strategic vision and expansion of these assurance
activities. The Board has therefore invited Nozala to acquire a minimum
shareholding of 20% in Rentsure.
2.3 Assupol transaction
Assupol's board, after having considered various options, including those
pertaining to a demutualisation, is of the opinion that a demutualisation,
in the first instance, and the merger of its business with Rentmeester,
represent the most cost effective and beneficial route to its stakeholders.
With Assupol's demutualisation objectives in mind, Assupol and
Rentmeester have entered into an agreement in terms of which the assurance
businesses of Assupol and Rentmeester will be merged. The Rentmeester
vehicle will be utilised for the merger. Assupol's board is of the opinion
that the effective demutualisation of Assupol, together with Nozala's
involvement, will create significant benefits for Assupol's policyholders,
employees and other stakeholders.
It is envisaged that the merger of these assurance interests, combined
with the impetus that Nozala's involvement as a significant stakeholder
would provide, would result in a more streamlined assurance business with
sufficient critical mass that will enable Rentmeester and Assupol to provide
a more diverse and competitive product offering to its client base.
2.4 Rentmeester transaction
In line with the objectives stated above, the Board has proposed to acquire
the balance of Rentmeester's issued ordinary share capital presently owned
by the Vermooten family via EJ Grobbelaars Versekeringsmaatskappy
(Proprietary) Limited ("Grobbelaars") and Rentekor (Proprietary) Limited
("Rentekor"). The Rentmeester transaction will simplify the control
structure of the Rentsure group.
3. Diagrammatical illustration of the Rentsure group, after implementation
of the transactions
Set out below is a diagrammatical illustration of the Rentsure group
after implementation of the Nozala transaction, the Assupol transaction and
the Rentmeester transaction.
*Listed on the JSE Securities Exchange South Africa.
4. History and background of Nozala, Assupol and Rentmeester
4.1 Nozala
Nozala is a black-led women's investment group, which seeks opportunities in
targeted growth businesses. It has over the last five years developed a
sound track record as a credible empowerment company that has grown its
value to significant levels.
Nozala has developed a portfolio of attractive unlisted investments that
focuses broadly in the services sector.
Its empowerment base is a cross-section of rural and urban women and
incorporates a Trust that directs its benefits and support to emerging
women's businesses.
4.2 Assupol
Assupol was founded in 1913 as a life office focusing on affordable life
assurance products.
Assupol currently operates as a mutual organisation in the interests of
its policyholders.
The salient features of Assupol are:
* approximately 152 000 active policies;
* approximately 113 000 active policyholders;
* total assets of approximately R783 million;
* total income of R205 million;
* 132 employees; and
* 250 direct marketers.
4.3 Rentmeester
Rentmeester's business was founded in 1958. In 1977, the business of
Rondalia Life Assurance Company Limited, which commenced with business in
the early 1950's, was merged with Rentmeester. In 1995, the business
activities of Grobbelaars, which commenced business activities in 1943, was
merged with Rentmeester.
The salient features of Rentmeester are:
* approximately 219 000 active individual policies;
* approximately 310 000 active group scheme policies;
* approximately 520 000 active policyholders;
* total assets of approximately R382 million;
* total income of R301 million;
* 484 employees; and
* 235 direct marketers.
5. Salient terms and conditions of the transactions
5.1 Nozala transaction
Rentsure and Nozala will enter into a subscription agreement in terms of
which Nozala or its controlled nominee will acquire at least a 20% interest
in Rentsure's issued share capital, after Rentsure has effected all further
issues of shares contemplated in terms of the transactions announced herein.
Rentsure will publish these terms and conditions as soon as they have been
finalised. The implementation of this transaction will be subject to, inter
alia, the approvals set out in 6.1 below.
5.2 Assupol transaction
The salient terms and conditions of the merger agreement between Assupol and
Rentmeester are as follows:
* the Financial Soundness basis of valuation has been applied for purposes
of valuing the respective assurance interests of Rentsure, Rentmeester and
Assupol;
* the effective date of the valuation of these interests, as well as the
effective date of the Assupol transaction, is 1 July 2000;
* in consideration of Assupol's demutualisation benefits to its eligible
policyholders, Assupol's policyholder interests have been valued at R44 160
154 and Rentsure's interests, including its interest in Rentmeester (but
before the acquisition of a further 30% in Rentmeester), have been valued at
R61 858 000, equating to R1,53 per Rentsure share;
* the Rentmeester vehicle will be utilised for the Assupol demutualisation,
pursuant to which Rentmeester will make an offer to Assupol of R44 160 154
("the purchase consideration") for its entire business undertaking;
* the payment by Rentmeester to Assupol of the purchase consideration will
be reduced by the policyholder loan account deductions referred to below;
* Assupol will distribute the purchase consideration to its eligible
policyholders as a cash payment (the "cash entitlements"), after the
deduction of individual policyholder loans from these cash entitlements,
where applicable;
* Assupol policyholders will be granted the option to subscribe for Rentsure
shares with their cash entitlements, at R1,50 per Rentsure share;
* it is a precondition to the merger between Assupol and Rentmeester that a
significant economic empowerment stakeholder be introduced to Rentsure; and
* the implementation of this transaction is subject to the approvals set out
in 6.2 below.
5.3 Rentmeester transaction
The salient terms and conditions pertaining to this transaction are:
* the value of Rentmeester and the resultant purchase consideration have
been established on exactly the same principles pertaining to the proposed
merger between Rentmeester and Assupol, namely on the Financial Soundness
basis;
* the purchase consideration is R25 050 609;
* the effective date of the transaction is 1 July 2000;
* Rentsure will settle the purchase consideration by issuing 16 700 406 new
ordinary Rentsure shares of no par value at an issue price of R1,50 per
Rentsure share to Grobbelaars and Rentekor; and
* the implementation of this transaction is subject to the approvals set out
in 6.3 below.
6. Approvals required
6.1 Nozala transaction
The final terms and conditions pertaining to Nozala acquiring at least a 20%
shareholding in Rentsure are still to be agreed upon. As soon as this
transaction has been finalised, shareholders will be informed of the
approvals required to implement this transaction, which approvals are
expected to include:
* approval by Rentsure's ordinary shareholder's in general meeting;
* the increase of Rentsure's authorised share capital by special resolution;
and
* such other statutory and regulatory approvals as may be applicable,
including in respect of the JSE Securities Exchange South Africa ("JSE"),
the Securities Regulation Panel ("SRP") and the Financial Services Board
("FSB").
6.2 Assupol transaction
The proposed merger between Rentmeester and Assupol is subject to, inter
alia, the following:
* approval by Rentsure's ordinary shareholders in general meeting, pursuant
to a category 1 transaction in terms of the JSE Listings Requirements;
* approval by Assupol policyholders in terms of Assupol's statutes;
* such other statutory and regulatory approvals as may be applicable,
including in respect of the JSE, SRP, FSB and the Competition Commission;
and
* sanctioning by the High Court of South Africa.
The offer to Assupol's policyholders to subscribe for Rentsure shares is
subject to, inter alia, the following:
* approval by Rentsure's ordinary shareholders in general meeting of, inter
alia, the Assupol/Rentmeester merger and the increase in Rentsure's
authorised share capital;
* the Rentsure prospectus being approved by the JSE, SRP and FSB, insofar as
these approvals are required, and the registration thereof by the Registrar
of Companies; and
* such other statutory and regulatory approvals as may be applicable.
6.3 Rentmeester transaction
Grobbelaars and Rentekor are controlled by the Vermooten family, who also
controls Rentsure. As such, the Rentmeester transaction constitutes a
related party transaction requiring, inter alia, approval in general meeting
from Rentsure shareholders, other than the Vermooten family and parties
acting in concert with it. This transaction is furthermore subject to JSE,
SRP and FSB approvals, insofar as these approvals are required.
7 Financial effects of the transactions
7.1 Nozala transaction
The financial effects of the Nozala transaction will be published as soon as
the final terms and conditions of this transaction have been finalised.
7.2 Assupol transaction
The pro forma financial effects of the Assupol transaction, for illustrative
purposes only, on the earnings ("EPS"), headline earnings ("HEPS"), net
asset value ("NAV") and net tangible asset value ("NTAV") per Rentsure share
are as follows:
Percentage Percentage
Before 1 After 2 change After 3 change 4
EPS 28.2 70.45 149.7 56.87 101.4
HEP 28.2 70.45 149.7 57.07 102.1
NAV 153.0 209.76 37.1 196.28 28.2
NTAV 124.9 173.56 38.9 169.98 36.0
Notes:
1. Based on the audited results of Rentsure for the year ended 30 June 2000
and based on a weighted average number of 40 437 933 ordinary shares in
issue during the year and 40 437 933 ordinary shares in issue as at 30 June
2000.
2. Assumes:
* that neither the Nozala transaction nor the Rentmeester transaction has
been implemented;
* that none of Assupol's members elect to subscribe for new Rentsure
ordinary shares with their cash entitlements;
* no transaction implementation costs or merger benefits; and
* that a net consideration of R22 660 154 (after deduction of policyholder
loans, referred to above) is paid by Rentmeester to Assupol ("the net
consideration").
3. Assumes:
* that neither the Nozala transaction nor the Rentmeester transaction has
been implemented;
* that all of Assupol's policyholders subscribe for new Rentsure ordinary
shares with their cash entitlements (after deduction of policyholder loans,
referred to above), equating to 15 106 770 new Rentsure shares in issue a
total subscription amounting to R22 660 154 ("the issue proceeds");
* a weighted average number of 55 544 703 ordinary shares in issue during
the year and 55 544 703 ordinary shares in issue as at 30 June 2000; and
* no transaction implementation costs or merger benefits, other than costs
pertaining to issue duties relating to the new Rentsure shares.
4. Percentage change calculated with reference to the "Before" column.
5. Assumes that:
* the Assupol transaction was effected on 1 July 1999; and
* Rentsure forfeited investment income on the net consideration at 7% after
tax during the year.
6. Assumes that the Assupol transaction was effected on 30 June 2000 and
that the net consideration was paid on 30 June 2000.
7. Assumes that:
* the Assupol transaction was effected and the issue proceeds were received
on 1 July 1999;
* the issue proceeds have been invested at an after tax rate of 7%.
8. Assumes that the Assupol transaction was effected and the issue proceeds
were received on 30 June 2000.
7.3 Rentmeester transaction
The pro forma financial effects of the Rentmeester transaction, for
illustrative purposes only, on EPS, HEPS, NAV and NTAV per Rentsure share
are as follows:
Percentage Percentage
Before 1 After 2 change After 3 change 4
EPS 28.2 29.25 3.6 51.07 80.9
HEP 28.2 29.35 3.9 51.27 81.6
NAV 153.0 150.96 (1.4) 184.68 20.7
NTAV 124.9 131.06 4.9 164.38 31.6
Notes:
1. Based on the audited results of Rentsure for the year ended 30 June 2000
and based on a weighted average number of 40 437 933 ordinary shares in
issue during the year and 40 437 933 ordinary shares in issue as at 30 June
2000.
2. Assumes that neither the Nozala transaction nor the Assupol transaction
has been implemented. Based on a weighted average number of 57 138 339
ordinary shares in issue during the year and 57 138 339 ordinary shares in
issue as at 30 June 2000.
3. Assumes that both the Rentmeester transaction and the Assupol transaction
have been implemented and that all the Assupol members elect to subscribe
for Rentsure shares. Based on a weighted average number of 72 245 109
ordinary shares in issue during the year and 72 245 109 ordinary shares in
issue as at 30 June 2000.
4. Percentage change calculated with reference to the "Before" column.
5. Assumes that the Rentmeester transaction was effected on 1 July 1999.
6. Assumes that the Rentmeester transaction was effected on 30 June 2000.
7. Assumes that:
* the Assupol transaction and the Rentmeester transaction were effected
and the net proceeds were received on 1 July 1999;
* the net proceeds have been invested at an after tax rate of 7%.
8. Assumes that the Assupol transaction and the Rentmeester transaction were
effected and the net proceeds received on 30 June 2000.
7.4 Financial effects based on results for the financial year ended 30 June
2001
Rentsure shareholders are referred to paragraph 9 below regarding the delay
in the publication of Rentsure's results for the financial year ended 30
June 2001. The financial effects of the transactions, based on the results
of Rentsure, Rentmeester and Assupol for that financial year, will be
included in the announcement of Rentsure's results for the year ended 30
June 2001, which announcement will be published by no later than 15 October
2001.
8. Circular to shareholders
A circular to Rentsure's shareholders setting out full details of the above
transactions and containing a notice of general meeting of shareholders,
will be mailed to shareholders in due course.
9. Further cautionary announcement and postponement of the publication of
Rentsure's financial results for the year ended 30 June 2001
As a result of the impact of the proposed merger of Rentmeester and Assupol,
with an effective date of 1 July 2000, the finalisation of Rentsure's
results for the year ended 30 June 2001, including pro forma consolidated
results with that of Assupol, has been delayed. The Board will publish
Rentsure's results as soon as it is finalised, but preliminary results will
be published by no later than 15 October 2001.
Until the full details on the transactions referred to above have been
announced, shareholders are advised to continue to exercise caution when
dealing in their Rentsure shares.
Pretoria
3 October 2001
Sponsor and Corporate Advisor to Rentsure
Quaestor Capital (Pty) Ltd
Corporate Law Advisors
Gildenhuys van der Merwe Inc
Attorneys, Notaries and Conveyancers
(Registration number 1987/002114/21)
Merchant Bank to Nozala
AMB
African Merchant Bank Limited
Registered Bank
Registration number 1996/016470/06
