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Paracon Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008181/06)
Share code: PCN
ISIN: ZAE000029674
("Paracon" or "the company")
Specific repurchase of shares
1. INTRODUCTION
Grant Thornton Kessel Feinstein Corporate Sponsors (Proprietary) Limited is
authorised to announce that Paracon has entered into an agreement to acquire
the entire effective holding of H S Verdoorn in Paracon. H S Verdoorn is at
present a director of the company and is the holder of 19 364 384 Paracon
shares.
2. Salient terms
2.1 Paracon, or a nominated wholly-owned subsidiary company of Paracon,
propose to acquire, subject to the conditions precedent set out below, 19
364 384 Paracon shares at 39 cents per share from H S Verdoorn, in terms of
sections 85 to 89 of the Companies Act, 1973 (Act 61 of 1973), as amended
("the Act") and the Listings Requirements of the JSE Securities Exchange
South Africa ("JSE"), ("the specific repurchase").
2.2 The specific repurchase comprises 5% of the entire issued share capital
of Paracon and will be effective from 1 November 2001.
2.3 The net cash consideration for the specific repurchase amounts to R7 552
110 and will be settled as follows:
* R2 500 000 on the third business day after the fulfilment of the
conditions precedent; and
* the balance payable by no later than 12 June 2002 ("the settlement date").
The net cash consideration will be funded out of Paracon's existing cash
resources.
2.4 10 000 000 of the Paracon shares to be acquired as a result of the
specific repurchase will be held by a wholly-owned subsidiary company of
Paracon as treasury stock and the balance of 9 364 384 Paracon shares will
be cancelled.
2.5 The listing on the JSE of those Paracon shares to be cancelled will be
terminated at the close of business three business days after the
fulfillment of the conditions precedent.
2.6 H S Verdoorn will resign as a director of Paracon with effect from 30
November 2001 and has given standard warranties in relation to his ownership
of the Paracon shares to be sold.
3. Rationale for the specific repurchase
H S Verdoorn intends to emigrate from South Africa. His entire shareholding
in Paracon (amounting to 19 364 384 Paracon shares) is restricted in terms
of a shareholders agreement. In return for the release from these
restrictions, H S Verdoorn agreed to sell his Paracon shares at a discount
to the prevailing market price at the date on which the parties first agreed
in principle on the specific repurchase. The market price at that stage was
45 cents per Paracon share.
The directors of Paracon believe that the application of a portion of
Paracon's cash resources towards the specific repurchase will enhance
Paracon's earnings per share ("EPS") going forward and will assist in
maximising shareholder value.
4. FINANCIAL EFFECTS
On the assumption that the specific repurchase was implemented on 1 October
2000, the effect on the EPS and the headline earnings per share ("HEPS") for
the year ended 30 September 2001 and on tangible net asset value per share
("TNAV") and net asset value per share ("NAV") of Paracon at 30 September
2001 would have been as follows:
Before After Change
(cents) (cents) %
EPS 7.7 7.9 2.6
HEPS 9.5 9.8 3.2
TNAV 23.9 22.9 (4.2)
NAV 45.0 45.2 0.4
Notes:
1. The EPS and HEPS calculations above assume an after tax interest rate of
9,1% per annum, being the average after tax interest rate earned by Paracon
on the cash resources to be utilised in the specific repurchase. The
calculations are based on a weighted average of 408 560 603 Paracon shares
in issue during the year ended 30 September 2001.
2. The NAV and TNAV calculations are based on 362 600 569 Paracon shares in
issue as at 30 September 2001, after adjusting for treasury shares held by
Paracon which have been eliminated on consolidation.
3. The amounts in the Before column are based on Paracon's audited results
for the year ended 30 September 2001.
5. Conditions precedent
The specific repurchase is subject, inter alia, to the fulfilment of the
following conditions precedent:
- the necessary regulatory approvals;
- the requisite resolutions to implement the specific repurchase being
passed in general meeting by shareholders; and
- the registration of the special resolution by the Registrar of Companies.
6. Salient dates
2001
Circular mailed to shareholders on or about 29 November
Last day to lodge forms of proxy for the
general meeting of shareholders by 10:00 on 19 December
General meeting to be held at 10:00 on 21 December
Results of the general meeting of
shareholders published on 24 December
The above dates and times are subject to amendment. Any such amendment will
be released on the Stock Exchange News Service.
7. Documentation
A circular containing full details of the specific repurchase and including
a notice of the general meeting and form of proxy is in the process of being
prepared and, subject to the approval of the JSE, will be mailed to
shareholders on or about 29 November 2001.
Johannesburg
14 November 2001
Sponsor to the specific repurchase
Grant Thornton
Kessel Feinstein
Corporate Sponsors (Pty) Ltd
Registration number 2000/003541/07
Reporting accountants and auditors
Grant Thornton
Kessel Feinstein
Investment bank
Nedcor Investment Bank
Attorneys
Werksmans
Attorneys
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