| Tue 30 Oct 2001, 0:00 | | Batepro/charton - Proposed Scheme Of Arrangement T |
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Batepro
Bateman Project Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1982/003648/06)
Share code: BTO ISIN: ZAE000010450
("Batepro")
Charton Investments S.A.
(Incorporated in the British Virgin Islands)
(Registration number 358762)
("Charton")
PROPOSED SCHEME OF ARRANGEMENT TO THE SHAREHOLDERS OF BATEPRO
1. Introduction
Further to the cautionary announcement dated 12 September 2001, Investec
Bank Limited is authorised to announce that Charton will extend an offer, by
means of a scheme of arrangement ("the scheme") in terms of section 311 of
the Companies Act, 1973 (Act 61 of 1973), as amended ("the Act"), to the
shareholders of Batepro ("the scheme participants"), for the acquisition of
all their Batepro shares for a consideration amounting to 700 cents per
Batepro share ("the scheme consideration").
If any of the conditions precedent to the scheme as set out in paragraph
8 below ("the conditions precedent") are not fulfilled, Charton may, at its
election, extend a substitute offer in terms of section 440K of the Act to
scheme participants in terms of which scheme participants will be entitled
to accept a substitute offer in respect of their Batepro shares for the same
consideration as the scheme consideration ("the substitute offer").
Batepro shareholders are referred to the announcement by Edward L Bateman
Limited ("ELB") appearing on the Stock Exchange News Service today.
2. Background and rationale for the scheme
2.1. Background
Batepro has over the recent past embarked upon a transformation process
in order to position itself to take advantage of the numerous opportunities
and challenges available globally. This transformation process has provided
Batepro with the platform from which to further develop its business model.
Whilst these changes will provide opportunities for growth, the
introduction of foreign shareholders with strong financial backing is
crucial to meet these new challenges. The industry in which Batepro operates
requires a global approach to business backed by investors who can add
strategic value and financial backing.
Batepro is becoming increasingly involved in very large lump-sum turnkey
projects on a global basis. Undertaking these large projects will require
financial and strategic support significantly beyond that currently
available to Batepro.
2.2. Rationale
As a result the management of Batepro and ELB have entertained an
approach by a consortium of foreign investors and have secured an attractive
offer for Batepro shareholders.
Charton will furthermore provide Batepro with access to international
capital whilst supporting current management in their transformation
process, global initiatives and strategic objectives.
The current uncertainty prevailing in world markets and the general
market sentiment is not conducive to raising capital. Given the negative
sentiment to small capitalisation companies and the future funding
requirements of Batepro, management believes that Batepro would be better
structured as an unlisted company and in this regard scheme participants
(including ELB) will be given an opportunity to dispose of their shares in
terms of the scheme.
In addition, the cost of a continued listing and the lack of shareholder
spread and resultant illiquidity of Batepro shares provide further
justification for the delisting of Batepro.
3. The scheme consideration
The scheme consideration payable by Charton will be a cash amount of 700
cents per Batepro share being an aggregate consideration of ZAR277.6
million. Charton has also agreed to pay interest on the scheme consideration
at Investec Bank Limited's overnight call rate from 1 February 2002 to the
date payment is made by Charton to the scheme participants. In addition,
Batepro declared a final dividend of 20 cents per share for the year ended
30 June 2001 which was paid to its shareholders on 22 October 2001.
4. Financial effects
The table below sets out the financial effects of the scheme on a scheme
participant based on the scheme consideration of 700 cents per Batepro
share:
Per Batepro share Before the After the Percentage
scheme scheme change
Note (cents) (cents) (%)
Market value - 21 June 2001 4.1 500,0 700,0 40,0
Market value - 26 October 2001 4.2 610,0 700,0 14,8
Earnings and headline earnings 4.3 84,3 49,0 (41,9)
Net asset value 4.4 340,8 700,0 105,4
Tangible net asset value 4.4 309,2 700,0 126,4
The financial effects have been prepared for illustrative purposes only and
have been based on the following assumptions:
4.1. the closing market price per Batepro share on 21 June 2001, being the
trading day immediately preceding the publication of the first cautionary
announcement relating to the scheme compared to the scheme consideration of
700 cents per Batepro share;
4.2. the closing market price per Batepro share on 26 October 2001, being
the last practicable trading day prior to the publication of this
announcement compared to the scheme consideration of 700 cents per Batepro
share;
4.3. the earnings and headline earnings per Batepro share for the year ended
30 June 2001 as published in the audited results of Batepro compared to the
interest which a scheme participant would have earned had an amount
equivalent to the scheme consideration been invested for a 12-month period
at an after tax interest rate of 7% per annum; and
4.4. the net asset value and tangible net asset value per Batepro share at
30 June 2001 as published in the audited results of Batepro compared to the
scheme consideration of 700 cents per Batepro share.
5. Cash confirmation
The Securities Regulation Panel ("SRP") has been provided with proof of the
availability of funding for Charton to meet the full financial obligation of
the scheme.
6. Opinions and recommendations
The board of directors of Batepro has appointed advisors to provide an
independent opinion on whether the terms of the scheme are fair and
reasonable to scheme participants. The substance of such advice and the
recommendations of the board will be advised to Batepro shareholders in due
course.
7. Undertakings and arrangements
Scheme participants holding approximately 75% of the issued share capital
of Batepro have irrevocably undertaken to vote in favour of the scheme at
the meeting to be held to vote on the scheme ("the scheme meeting") or, if
applicable, to accept the substitute offer.
ELB shareholders holding 50,89% of the issued share capital of ELB have
irrevocably undertaken to vote in favour of the resolution required for the
disposal by ELB of its shareholding in Batepro in terms of section 228 of
the Act.
In order to incentivise management and to ensure the continued commitment
of the management to Batepro, it is the intention that agreement will be
reached between Charton and management, in terms of which management will be
given the opportunity to reinvest into Charton a portion of the scheme
consideration received by them in their capacity as scheme participants.
8. Conditions precedent
The scheme is subject to the fulfilment of, inter alia, the following
conditions precedent:
8.1. the approval by the South African Competition Authorities;
8.2. the approvals, insofar as may be necessary, of the appropriate
documentation by the JSE Securities Exchange South Africa ("the JSE"), the
SRP and the Exchange Control Division of the South African Reserve Bank;
8.3. the approval of at least 75% of those Batepro shareholders entitled to
vote on the scheme, present or represented and voting at the scheme meeting;
8.4. the approval, in terms of section 228 of the Act, by ELB shareholders
of the disposal by ELB of its shareholding in Batepro;
8.5. the sanction of the scheme by the High Court of South Africa; and
8.6. registration of the Order of Court by the Registrar of Companies.
The above conditions precedent are to be fulfilled by no later than 28
February 2002. In the event that any of the conditions precedent are not
fulfilled, the substitute offer may, at the election of Charton, become
operative, in terms of which Charton will acquire Batepro shares from all
those scheme participants who elect to accept the substitute offer. Should
the substitute offer be accepted in respect of 90% or more of the Batepro
shares held by scheme participants, Charton may elect to invoke the
provisions of section 440K of the Act and the listing of Batepro will
terminate once the six-week period as envisaged by section 440K has lapsed.
9. Termination of Batepro's listing on the JSE
Application will be made for the termination of Batepro's listing on the JSE
with effect from the operative date of the scheme. Full details of the
acceptance and surrender procedure for Batepro share certificates and other
documents of title will be contained in the scheme documentation referred to
in paragraph 10 below.
10. Further announcements and documentation
The scheme documentation is in the course of preparation and will, subject
to the approval of the JSE, SRP and South African Reserve Bank, be posted to
Batepro shareholders in due course.
Further announcements, including the salient dates pertaining to the scheme,
will be published from time to time.
Johannesburg
30 October 2001
Merchant bank to the scheme and Charton
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Attorneys to Charton
Jowell, Glyn & Marais Inc
(Registration number 1990/000849/21)
Sponsor to Batepro
Investec Bank Limited
(Registration number 1969/004763/06)
Attorneys to Batepro
Werksmans Attorneys
Independent advisors to Batepro
KPMG
Registered Chartered Accountants (SA)
(Registration number 1999/021543/21)
