| Wed 10 Oct 2001, 0:00 | | Authority For A Specific Repurchase Of A Maximum O |
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Barnard Jacobs Mellet Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/004798/06)
Share code : BJM
ISIN code: ZAE000014262
("BJMH" or "the company")
Authority For A Specific Repurchase Of A Maximum Of 7 500 000 Shares In Bjmh
("the specific repurchase")
Introduction
BJMH has entered into an agreement with Masimo Share Scheme (Proprietary)
Limited ("Masimo") and the Public Investment Commissioners ("PIC") ("the
Agreement") relating to the possible purchase by BJMH or its subsidiaries in
March 2002 of a maximum of 7 500 000 of its ordinary shares in issue at that
time.
Background information to Masimo and rationale for the specific repurchase
When its shares were listed on the JSE Securities Exchange South Africa
("JSE") in 1998, BJMH introduced an empowerment initiative, the Masimo
Debenture Scheme, with the intent to facilitate share ownership by
Previously Disadvantaged Individuals ("PDIs"). In terms of the Masimo
Debenture Scheme:
BJMH allotted and issued 7 500 000 debentures to Masimo at an issue price of
R4 each, which debentures automatically and compulsorily convert into
ordinary shares on a one for one basis ("the conversion shares");
Masimo paid in full for the debentures utilising a loan from the PIC; and
Masimo ceded and assigned the rights and obligations in respect of the
debentures to the PDIs. For each debenture, 40 cents of the purchase price
was payable upfront by PDIs to Masimo and the outstanding balance was due
and payable by the PDIs to Masimo three years later, against payment of
which PDIs would take transfer of the conversion shares.
The conversion date of the debentures into ordinary shares was originally 20
March 2001. However, having regard to the BJMH share price on the JSE at
that time, this date was extended, with shareholders' approval, to 20 March
2002 ("new conversion date"). The new conversion date sought to provide a
further period of time to provide for the achievement of the original
empowerment objectives.
In recognition for the PIC consenting to the new conversion date and
subject, inter alia, to the suspensive conditions, BJMH has agreed to
provide protection to Masimo and the PIC against a decrease in BJMH's share
price below R2,60 as at 20 February 2002 ("the payment date"), by means of a
purchase undertaking in terms of which the PIC may, during the period 20
February 2002 to 5 March 2002 (both days inclusive) give written notice to
BJMH requiring BJMH to purchase all the conversion shares.
The maximum possible aggregate purchase would comprise 7 500 000 shares at
R2,60, equating to a maximum outlay by BJMH of R19,5 million.
In consideration for BJMH agreeing to the purchase undertaking, the PIC has
agreed to pay a fee to BJMH, calculated on a sliding scale, if the traded
price of BJMH shares on the payment date is in excess of R2,60. The maximum
fee payable would be R2,5 million.
Terms
The terms of the specific repurchase, subject to all the provisions of the
Agreement and the PIC requiring BJMH to implement the purchase undertaking,
are as follows:
Maximum number of shares to be purchased : 7 500 000
Price at which shares would be purchased : 260 cents per
share
Date with effect from which shares would be 20 March 2002
purchased :
Maximum amount payable for the purchase : R19,5 million
It is anticipated that any shares to be acquired in terms of the specific
repurchase will be effected by BJMH and held by one of its subsidiary
companies as treasury stock.
Suspensive conditions
The specific repurchase is authorised by the company's Articles of
Association. The Agreement is subject, inter alia, to the following
suspensive conditions being fulfilled before 30 November 2001 or any other
date agreed upon by the parties to the Agreement:
the approval by BJMH shareholders in general meeting of the specific
repurchase;
the registration by the Registrar of Companies of the special resolution
relative to the specific repurchase;
approval by the JSE and any other regulatory authorities as may be required.
Financial effects
BJMH's directors believe that the specific repurchase, if it becomes
effective, would be positive for BJMH in terms of its impact on, inter alia,
the earnings and net asset value per share of the company
The pro-forma financial effects of the specific repurchase on the net asset
value per share and the earnings per share, based on the audited financial
statements of the company as at 31 March 2001, are set out below:
Pro forma Pro forma %
before the after the change
specific specific
repurchase repurchase
(cents per (cents per
share) share)
Net asset value 298,44 301,16 0,91
Net tangible asset 297,20 299,83 0,88
value
Headline earnings per 44,23 46,35 4,80
share
Basic earnings per 25,26 26,03 3,06
share
Weighted average number
of shares in issue 112 961 105 461 -
(000's)
Number of shares in 113 583 106 083 -
issue (000's)
Assumptions:
The conversion is taken into account in both the "before" and "after"
figures set out above.
The financial effects have been calculated on the assumption that the
consideration payable for the specific repurchase (R19,5 million) was
financed from the BJMH Group's available cash resources of approximately
R300 million as at 31 March 2001.
The effect on net asset value and net tangible asset value assumes that the
specific repurchase was implemented on 31 March 2001.
The calculation of the pro forma headline earnings per share and basic
earnings per share after the specific repurchase assumes that the specific
repurchase was effected on 1 April 2000 and that:
the interest forfeited on the cash resources utilised for the specific
repurchase was calculated at 6,3% per annum, after tax of 30%; and
the interest previously payable on the 7 500 000 debentures at a rate of 7%
per annum, after tax of 30%, is excluded from the "after" calculation.
The shares repurchased are held as treasury stock by a BJMH subsidiary and
are therefore excluded from the "after" calculation.
Documentation
A circular to BJMH shareholders, setting out details of the specific
repurchase and including a notice of a general meeting to be held on or
about 15 November 2001 will be posted to shareholders on or about 24 October
2001.
Johannesburg.
10 October 2001
Corporate adviser and joint Lead sponsor
sponsor
Barnard Jacobs Mellet UBS Warburg Securities SA
Corporate Finance (Pty) (Pty) Limited
Limited
Attorneys Independent adviser
Werksmans Deloitte & Touche
