| Fri 16 Nov 2001, 0:00 | | Southern African Investments Limited - Acquisition |
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Entertainment (Proprietary) Limited ("Vse") And Further Cautionary
Announcement
SOUTHERN AFRICAN INVESTMENTS LIMITED
(Registration number: 1941/014601/06)
Incorporated in the Republic of South Africa
("Sail" or "the Company")
ISN/Share code
ACQUISITION OF VODACOM SPORT AND ENTERTAINMENT (PROPRIETARY) LIMITED ("VSE")
AND FURTHER CAUTIONARY ANNOUNCEMENT
1. ACQUISITION OF VSE
1.1 INTRODUCTION
Further to the cautionary announcement dated 17 October 2001, SAIL Capital
(Pty) Ltd ("SAIL Capital") is authorised to announce that, subject to the
suspensive and resolutive conditions, as set out in paragraph 1.4 below,
Sail has acquired 100% of the issued share capital of VSE ("the VSE
acquisition"), with effect from 1 September 2001 ("the effective date").
VSE engages in sponsorship and event management on behalf of corporate
clients who wish to raise their profile through associations with sport and
entertainment activities. VSE's main focus is to provide a full service
offering to the sport and entertainment requirements of the Vodacom Group
(Pty) Ltd ("Vodacom") and associate companies.
1.2 RATIONALE
SAIL focuses on developing, growing and leveraging its core Sports Brands
business. The VSE acquisition will unlock economies of scale benefits and
will expose SAIL to a wider range of professional sports codes. The strong
management team and substantial long-term contracted cash flows of VSE will
directly complement SAIL's high growth Sports Brands business with immediate
effect.
1.3 THE VSE ACQUISITION
1.3.1 The acquisition for cash
SAIL has acquired 51% of the issued ordinary shares in VSE from Vodacom for
R45 million in cash, subject to the resolutive condition set out in
paragraph 1.4.2 below.
The purchase consideration will be settled as follows:
R22.5 million, paid on 15 November 2001 ("the transaction date");
R11.25 million plus interest at prime less 1%, payable 12 months after the
effective date; and
R11.25 million plus interest at prime less 1%, payable 24 months after the
effective date.
1.3.2 The management acquisition
SAIL has acquired the remaining 49% of the issued ordinary shares in VSE
from the current key VSE management ("management"), for R43 235 294, in
exchange for 28 823 529 new SAIL ordinary shares of no par value at 150
cents each ("the consideration shares")("the management acquisition"),
subject to the suspensive and resolutive conditions set out in paragraph 1.4
below. The terms of the management acquisition are that:
management may sell 25% of the consideration shares after the expiry of a
period of 1 year from the transaction date;
management retain the remaining 75% of the consideration shares up to 31
March 2006; and
management may put the consideration shares to SAIL within a period of 30
days after 31 March 2006, at a price of 200 cents per share ("the potential
repurchase").
1.4 SUSPENSIVE AND RESOLUTIVE CONDITIONS
1.4.1 The management acquisition is subject to the suspensive condition
that SAIL shareholders in general meeting, excluding controlling
shareholders and their associates, approve the requisite resolutions to
implement the potential repurchase. SAIL will obtain a fair and reasonable
opinion from its independent advisers on the price per share payable under
the potential repurchase.
1.4.2 The VSE acquisition is subject to the resolutive condition that,
should the Competition Commission not approve the VSE acquisition by 1
February 2001, the VSE acquisition will accordingly be terminated. The cash
consideration will then be repaid to SAIL, including interest.
1.5 FINANCIAL EFFECTS
The table below sets out the pro forma financial effects of the VSE
acquisition on SAIL based on its unaudited interim results for the six
months ended 30 June 2001, using the following assumptions:
the VSE acquisition had been effective on 1 January 2001 for earnings and
headline earnings per share purposes and on 30 June 2001 for net asset value
per share purposes; and the cash acquisition was funded at an after tax rate
of interest of 8.4%.
Unaudited Pro Increase Increase
Before forma
6 months After
ended 6
30 June months
2001 ended
30
June
2001
(%)
(cents) (cents) (cents)
Earnings per share 3.05 4.02 0.97 31.80
Headline earnings per 3.83 4.76 0.93 24.28
share
Net asset value per 79.84 87.87 8.03 10.06
share
1.6 CIRCULAR TO SHAREHOLDERS
A circular to shareholders, setting out the details of the VSE acquisition
and giving notice of the general meeting to authorise the potential
repurchase, will be sent to shareholders in due course.
2. FURTHER CAUTIONARY ANNOUNCEMENT
Further to the further cautionary announcement dated 18 October 2001, SAIL
Capital is authorised to announce that discussions with the West Indies
Cricket Board Inc. are still in progress. These discussions, if successfully
concluded, may have a material effect on the price at which SAIL shares
trade on the JSE Securities Exchange South Africa and the Luxembourg Stock
Exchange. Accordingly, shareholders are advised to exercise caution in
dealing in their SAIL shares until a further announcement is made in this
regard.
Cape Town
16 November2001
Corporate advisor Attorneys Sponsor
Sail Capital (Pty) Ltd Cliffe Dekker Fuller BoE Securities (Pty)
Moore Ltd
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