| Tue 12 Mar 2002, 0:00 | | Tradek Holdings Limited - Announcement |
|
Tradek Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1964/0012963/06)
Share code: TDK ISIN: ZAE000018891
("Tradek" or "the Company")
ANNOUNCEMENT REGARDING
* The acquisition by Tradek of PSG Investment Services (Pty) Limited
("PSGIS");
* An alternative cash offer to Tradek shareholders at 14.5 cents per share;
* A specific buy-back of shares;
* A change of control and waiver of a mandatory offer to shareholders;
* A change of name;
* An increase in authorised share capital; and
* A consolidation of authorised and issued share capital.
1. INTRODUCTION
Shareholders are advised that agreement has been reached between Tradek and
PSG Financial Services Limited ("PSG Group"), in terms of which Tradek will
acquire PSGIS (`the Acquisition") as detailed in 3 below; and PSG Group and
Tradek will make an alternative cash offer to Tradek shareholders at 14,5
cents per share as detailed in 4 below.
2. BACKGROUND AND RATIONALE
Tradek is a financial services group primarily focusing on stockbroking,
both on-line and full service, private client portfolio management, offshore
investment services and money market services.
PSGIS is an integrated private wealth management group primarily focusing
on:
* stockbroking, both online and full service;
* asset management, which includes private client portfolios, unit trusts,
multi-managed funds and international funds;
* financial advisory services, which provide full financial planning
services to private clients and offers a range of independent products
including local and offshore investments, long- and short-term insurance,
healthcare and employee benefits.
In the light of the complementary nature of these businesses and the
rationalisation benefits to be derived from merging certain of the
operations, it was agreed to merge Tradek and PSGIS.
Management of Tradek and PSGIS are of the view that the South African
private client stockbroking and portfolio management industry is poised for
consolidation, and economies of scale will need to be in the forefront of
this process.
The combined entity, PSG Tradek, will be a group with:
- assets under administration of more than R 11 billion;
- an active client base of over 100 000 ;
- settlement of approximately 20 000 JSE Securities Exchange South Africa
("JSE") trades per month; and
- annual turnover of more than R 140 million.
3. SALIENT TERMS OF THE ACQUISITION
Tradek will acquire PSGIS, from PSG Group and PSGIS staff ("the vendors")
for a total acquisition price of R 62 514 822 ("Acquisition price"). The
Acquisition price will be settled by the issue of 431 136 703 Tradek
ordinary shares at 14.5 cents per share. The above Acquisition price is
subject to certain profit and net asset value adjustments as detailed below:
3.1 Should the headline earnings of PSGIS for the year to 28 February 2002
be less than R 10 million, the Acquisition price will be reduced by 625
cents for every 100 cents that such headline earnings are below R 10
million.
3.2 Should the net tangible asset value of PSGIS at 28 February 2002 be
less than R 41 million, then the Acquisition price will be reduced by 100
cents for every 100 cents the net tangible asset value is below R 41
million.
3.3 The total maximum downward adjustment in terms of 3.1 and 3.2 is 7,5%
of the Acquisition price.
3.4 Should the net tangible asset value of Tradek at 31 March 2002 be less
than R 26,8 million then the Acquisition price will be increased by 100
cents for every 100 cents the net tangible asset value is below R26,8
million. The maximum upward adjustment of the Acquisition price is 7,5% of R
26,8 million.
The effective date of the transaction will be 1 April 2002.
The parties have given warranties that are normal in a transaction of this
nature.
4. CASH OFFER TO TRADEK SHAREHOLDERS
The current shareholders of Tradek will be afforded the opportunity to sell
all or part of their Tradek ordinary shares at a price of 14.5 cents per
share ("cash offer"), in the ratio 50:50 to PSG Group and Tradek, subject to
Tradek shareholders approving the specific buy-back of shares. Tradek will
acquire the shares as part of a specific buy-back of shares in terms of
Section 85 of the Companies Act, Act 61 of 1973 (as amended).
The details of the dates of the cash offer will be announced once all
suspensive conditions have been fulfilled.
5. CHANGE OF CONTROL AND REVISED LISTING PARTICULARS
The Acquisition will result in a change of control of Tradek and accordingly
an offer to minority shareholders of Tradek by PSG Group will be required in
terms of the rules of the Securities Regulation Panel ("SRP"). The
Acquisition is inter alia subject to minority shareholders waiving their
rights to an offer from PSG Group in terms of rule 8.7 of the SRP code.
The circular to shareholders detailing the Acquisition will contain revised
listing particulars as though the company applied for a new listing.
Following the Acquisition the company will make an application to the
Listing Committee of the JSE to move Tradek's listing to the main board
section of the JSE.
6. INCREASE AND CONSOLIDATION OF SHARE CAPITAL
To give effect to the Acquisition, the Company intends to increase its
authorised share capital from 500 000 000 ordinary shares of 1 cent each to
1 000 000 000 ordinary shares of 1 cent each. In addition the Company
intends to consolidate its authorised and issued share capital, immediately
after the issue of shares referred to in point 3 above, on a 10 to 1 basis.
7. BOARD OF DIRECTORS
The Tradek board of directors will be reconstituted on the approval of the
Acquisition by the shareholders. The executive directors will be Jaap du
Toit (Chief Executive Officer), Paul Theron, Dawie Klopper and John
Balderson. The non-executive directors will be Jannie Mouton (Chairman) and
Chris Otto. Further appointments of non-executive directors will be made in
due course.
8. CHANGE OF NAME
The Company intends to change its name to PSG Tradek Limited, subject to the
approval by the Registrar of Companies, the JSE and shareholders of Tradek
of the relevant special resolution.
9. FINANCIAL EFFECTS
The financial effects of the Acquisition on the earnings per share and net
asset value per share of Tradek, had the acquisition been effective for the
6 months period ended 30 September 2001 are detailed below.
Before the After the % After the %
Acquisition Acquisition change Acquisition change
(cents) assuming no Assuming
shareholders 100% of
accept the shareholders
cash offer accept the
(cents) cash
offer
(cents)
Earnings per
share 0.05 0.51 824 0.51 824
Headline
earnings per 0.05 0.62 1037 0.65 1083
share
Net asset 16.2 14.9 (7.9) 14.9 (7.9)
value per
share
Net tangible 15.3 10.9 (28.4) 10.2 (33.1)
asset value
per share
Weighted
average number 184 772 615 909 523 523
of shares in
issue (`000)
The financial effects after the Acquisition are based on:
The results for the six months period to 30 September 2001 as per the
published interim results of Tradek;
The Acquisition being effective from 1 April 2001;
An unadjusted purchase price of R62,5 million;
The issue of 431 136 703 Tradek shares in settlement of the Acquisition
price;
The goodwill of R 21,5 million arising on the acquisition being amortised
over 15 years;
Earnings and headline earnings of PSGIS of R 3,7 million for the six months
to 30 September 2001;
Net tangible asset value of PSGIS of R 39,1 million at 30 September 2001;
Buy back of 92 386 436 shares at a total cost of R13,4 million;
Decrease in interest earned on R13,4 million at an after tax rate of 6,6%
for the six months period.
10. SUSPENSIVE CONDITIONS
The transaction is subject to the fulfilment of, inter alia, the following
suspensive conditions:
Satisfactory completion of financial and legal due diligence investigations
in respect of Tradek by PSG Group and PSGIS by Tradek;
Restraint of trade undertakings being concluded by executives as required by
PSG Group and Tradek respectively;
The SRP dispensing with the obligation on PSG Group to make a mandatory
offer to minority shareholders in terms of Rule 8.7 of the SRP Code;
Shareholder approval;
Competitions Commission approval;
JSE and SRP approval.
11. CONFIRMATION OF FINANCIAL RESOURCES
PSG Investment Bank has provided the SRP with the appropriate confirmation
that PSG Group has sufficient financial resources available to meet its
obligations in terms of the cash offer.
12. DOCUMENTATION AND FURTHER ANNOUNCEMENTS
A detailed circular to Tradek shareholders containing details of the
transaction, revised listing particulars and notices convening the required
meeting of Tradek shareholders will be mailed to shareholders within 30 days
or such later date as approved by the JSE. Details of the cash offer will be
announced in the press once all suspensive conditions have been fulfilled.
13. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement issued by Tradek on
1 March 2002 and is advised that, as a result of this announcement, the said
announcement are hereby withdrawn.
Johannesburg
12 March 2002
Corporate adviser to Tradek Sponsor to Tradek Investment bank to PSG Group
Corporate Solutions Exchange Sponsors PSG Investment Bank
Legal adviser to Tradek Legal adviser to PSG Group
Fluxman Rabinowitz Raphaely Weiner Hofmeyr Herbstein & Gihwala
Inc
