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of Brimstone's investment in Peoples Bank Limited ("peoples bank")through
the Brimstone Consortium and withdrawal of cautionary announcement
(Registration number 1995/010442/06)
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE000015277 Share Code: BRT
ISIN Number: ZAE000015285 Share Code: BRN
("Brimstone" or "the company")
Details of the funding structure of Brimstone's investment in Peoples Bank
Limited ("peoples bank")through the Brimstone Consortium and withdrawal of
cautionary announcement
Introduction
Further to the announcement released on SENS on Monday 26 November 2001, ENF
Sponsors (Proprietary) Limited and African Harvest Capital (Pty) Limited are
authorised to provide further details on Brimstone's investment into Peoples
Bank as a member of the Brimstone Consortium. The Brimstone Consortium is a
consortium of six Black Economic Empowerment ("BEE") groups brought together
to acquire a 20% interest in Peoples Bank. Brimstone's investment will be
through the special purpose vehicle Brimstone Investment PB (Pty) Limited
("Brimstone Investment PB").
Terms of the transaction
Shareholders are referred to the announcement placed by Peoples Bank in the
Business Day and Business Report yesterday.
In terms of the agreement between Nedcor Bank Limited ("Nedcor") and the BEE
investors ("the Shareholder's Agreement") and the Preference Share
Subscription Agreement ("the funding agreement"), Brimstone, will acquire
100% of the issued ordinary shares in Brimstone Investment PB, established
for the purposes of acquiring and funding an 8% shareholding in Peoples
Bank, for a consideration of R100 (one hundred Rand) ("the consideration").
Brimstone Investment PB will then issue 152 397 687, cumulative, redeemable
preference shares to five financial institutions ("the funders") for a total
consideration of R152 397 687 ("the preference share consideration") to fund
Brimstone's 8% shareholding.
After the third anniversary of the date that the preference shares are
issued, the funders are entitled to transfer the preference shares they hold
in Brimstone Investment PB to Nedcor Bank in consideration for either Nedcor
shares ("the Nedcor exchange") or an equivalent cash consideration. The
ordinary shareholders in Brimstone Investment PB may only commence redeeming
these preference shares after the third anniversary of the preference share
issue date. Such redemption is voluntary and entirely at the discretion of
the ordinary shareholders in Brimstone Investment PB.
Should a listing of Peoples Bank occur, the ordinary shareholders in
Brimstone Investment PB may redeem the preference shares using Peoples Bank
shares as currency, subject to providing a certain minimum Internal Rate of
Return to the preference shareholders.
Should the preference shares not have been redeemed by the fifth anniversary
of the preference share issue date, the funders will be entitled to transfer
the preference shares they hold in Brimstone Investment PB to Nedcor Bank in
consideration for either Nedcor shares ("the Nedcor exchange") or an
equivalent cash consideration.
Statements of Generally Accepted Accounting Principles require that
Brimstone recognise the acquired Peoples Bank shares and the Brimstone
Investment PB preference share obligation in Brimstone's consolidated
financial statements. Any reduction in value in the Peoples Bank shares will
be matched by a reduction in the recognised amount of the preference share
obligation.
As the net liability for Brimstone to acquire the ordinary shares in
Brimstone Investment PB can never be greater than R100 and given that the
preference shares may only be redeemed after the third anniversary at the
discretion of the ordinary shareholders of Brimstone Investment PB, the JSE
Securities Exchange South Africa has ruled that shareholder approval should
be sought if it is applicable at that time, in the event that such
redemption is due to take place.
Withdrawal of cautionary announcement
Shareholders are accordingly advised that caution is no longer required when
dealing with their shares.
Cape Town
27 November 2001
Financial adviser
African Harvest Capital (Pty) Ltd
(Registration number 1998/01469/07
Sponsor
ENF Sponsors (Proprietary) Limited
(A sponsor registered with the JSE Securities Exchange South Africa)
(Registration number 2000/027636/07)
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