| Fri 12 Apr 2002, 0:00 | | Autoquip Proposed Scheme Of Arrangement |
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AUTOQUIP GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/002838/06)
Share code ATQ ISIN ZAE000000634
("Autoquip" or "the company")
Proposed scheme of arrangement in terms of Section 311 of the Companies Act,
1973 (Act 61 of 1973), as amended ("the Act"), proposed by Sabvest
Investments (Proprietary) Limited, Bridgestone Firestone SA Holdings
(Proprietary) Limited, Bruce d'Arcy Coquelle (including his family, his
family trust and an investment company controlled by him) and Carl Rogers
("the Consortium") between Autoquip and its members other than the
Consortium
1. INTRODUCTION
1.1 Further to the cautionary announcement published on SENS on 20 March
2002 and in the press on 22 March 2002, Sasfin Bank Limited is authorised to
announce that the Consortium intends to propose a scheme of arrangement
between Autoquip and its members other than the Consortium ("the scheme
members") in terms of Section 311 of the Act ("the scheme") which will be
recommended by the board of directors of Autoquip. Upon the fulfilment of
the conditions precedent the scheme will become operative.
1.2 It is proposed that the scheme be effected by means of a specific
repurchase of shares in accordance with section 85 of the Act in terms of
which Autoquip will, for a cash consideration of 120 cents per share,
repurchase 1 810 658 Autoquip ordinary shares held by members other than the
Consortium ("scheme shares") (such repurchase being referred to herein as
the "specific share repurchase").
1.3 As a result, members of the Consortium will own all the issued shares in
Autoquip and the JSE Securities Exchange South Africa ("the JSE") will
terminate the listing of Autoquip ordinary shares.
1.4 The members of the Consortium currently control 13 272 469 out of the
total 15 083 127 issued ordinary shares in Autoquip, representing 88.0% of
Autoquip's entire issued share capital.
2. RATIONALE FOR THE SCHEME
Trading conditions and industry changes over the recent past have resulted
in a necessity to investigate means of restructuring the company's
operations. Any restructuring will or is likely to prejudice Autoquip's
immediate ability to generate acceptable returns on investment, which are
required to reward shareholders and to secure funding from shareholders for
the company's continued growth.
In addition, the limited tradability of Autoquip shares on the JSE has
resulted in Autoquip not being an attractive investment to potential
shareholders and has caused existing shareholders difficulty in disposing of
their shares when they so desire.
Maintaining a listing on the JSE has to be seriously considered, especially
in view of the escalating cost thereof. Small capitalisation counters are
unattractive to investors in the current environment and it will be
difficult, if not impossible, to raise further capital from shareholders or
the public. This is another reason why a continued listing is not considered
necessary.
In terms of the Listings Requirements of the JSE, the continued listing of
the Autoquip shares will in any event be under pressure if the company does
not achieve the levels of profitability which are required to maintain a
main board listing on the JSE.
Having considered all these factors, the directors believe that the scheme
if implemented, will provide the present minority shareholders of Autoquip
with a mechanism to realise their investment in Autoquip at a premium to the
current market value of their shares on the JSE.
3. THE SCHEME
3.1 The scheme consideration
In terms of the scheme, members other than the Consortium registered as such
on the record date of the scheme will, upon the scheme becoming operative,
be entitled to receive a cash payment of 120 cents for every Autoquip
ordinary share held.
3.2 Financial effects of the scheme on members
The table below illustrates the financial effects per share of the
scheme on a member:
Before After Change
the the (%)
scheme scheme
(cents) (cents)
Market price:
Tuesday, 19 March 2002 87 120 +37.9
(1)) 94 120 +27.7
30 day weighted
average (2)
Tangible net asset 193 (3) 120 -37.8
value
Headline earnings 3.1(4) 4.2(5) +35.5
The table has been prepared on the following basis:
1. The closing price of the Autoquip shares on the last trading day prior to
the publication of the first cautionary announcement on 20 March 2002.
2. The weighted average traded price of Autoquip shares over the 30 trading
days up to the publication of the first cautionary announcement.
3. At 31 December 2001 as per the published unaudited interim results of the
company.
4. For the six months ended 31 December 2001 as per the published unaudited
results of the company.
5. The earnings per share in the "After" column assumes that the
consideration is invested at an after-tax rate of 7% per annum for the six
months ended 31 December 2001.
4. CONDITIONS PRECEDENT
The scheme is expected to become operative on the first Monday 5 business
days after the fulfilment of the following conditions precedent:
4.1 the approval at the general meeting of a special resolution to amend the
company's articles of association to authorise the company to acquire its
own shares in terms of section 85 of the Act and the special resolution
approving the amendment being registered by the Registrar in terms of the
Act;
4.2 the specific share repurchase being approved at the general meeting in
the form of a special resolution passed in terms of the Act and approved by
a majority of the votes exercised by Autoquip shareholders (other than the
Consortium and their associates and any parties acting in concert) present
or voting either in person or by proxy and the special resolution approving
the specific share repurchase being registered by the Registrar in terms of
the Act;
4.3 the scheme being approved at the scheme meeting by a majority
representing not less than 75% (three-fourths) of the votes exercisable by
the scheme members present and voting either in person or by proxy at the
scheme meeting;
4.4 the High Court of South Africa ("the Court ") sanctioning the scheme;
4.5 a certified copy of the Order of Court sanctioning the scheme being
lodged with, and registered by, the Registrar of Companies in terms of the
Act; and
4.6 any other regulatory approvals or consents necessary to implement the
scheme being obtained, including but not limited to approvals and consents
from the JSE, the Securities Regulation Panel ("the SRP") and the Exchange
Control department of the South African Reserve Bank.
5. OPINIONS AND RECOMMENDATIONS
5.1 The board of directors of Autoquip has instructed Deloitte & Touche
Corporate Finance to review and consider the terms and conditions of the
scheme. The latter has advised the board of directors of Autoquip that it
has considered the terms and conditions of the scheme, and is of the opinion
that the scheme consideration of 120 cents for every Autoquip share payable
in cash is fair and reasonable to scheme participants.
5.2 The board of directors of Autoquip, having considered the terms and
conditions of the scheme and the advice from Deloitte & Touche Corporate
Finance, is of the unanimous opinion that the terms and conditions are fair
and reasonable to scheme participants and, accordingly, recommends that
scheme members vote in favour of the scheme.
5.3 The directors of Autoquip who are scheme members have undertaken to vote
in favour of the scheme in respect of the Autoquip shares held by them.
5.4 Directors of Autoquip who are also directors of any consortium member
will vote their shareholding in the Company in support of the Special
Resolution authorising the specific repurchase, but the votes will not be
counted for the purpose of determining whether or not the required majority
of the shareholders, other than the Consortium, their associates and any
parties acting in concert, in respect of that Special Resolution has been
obtained.
6. CONFIRMATION TO THE SECURITIES REGULATION PANEL
ABSA Bank Limited has satisfied the SRP that Autoquip has sufficient cash
resources available to meet its obligations in terms of the scheme.
7. FURTHER ANNOUNCEMENT AND DOCUMENTATION
7.1 Subject to the necessary approvals from the JSE, the SRP and the South
African Reserve Bank, and subject to the Court granting leave to convene the
scheme meeting, a circular containing full details of the scheme and notices
convening the general and scheme meetings will be posted to scheme members
in due course.
7.2 A further announcement setting out the salient dates of the scheme will
be published in the press in due course.
Johannesburg
12 April 2002
Corporate advisor and sponsor Legal Advisors
Sasfin Bank Limited Webber Wentzel Bowens
(Registration number 1951/002280/06)
Independent advisor to the
minority shareholders of Autoquip
Deloitte & Touche Corporate Finance
