| Tue 23 Apr 2002, 0:00 | | Disposal Of Chester's Interest In Brandcorp Holdi |
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CHESTER INVESTMENT HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1983/005300/06)
Share code: CES ISIN: ZAE000013348
("Chester" )
DISPOSAL OF CHESTER'S INTEREST IN BRANDCORP HOLDINGS LIMITED
1. Introduction
Further to the cautionary announcement published on 22 March 2002, PSG
Investment Bank Limited is authorised to announce that Chester and Brandcorp
Holdings Limited ("Brandcorp") have agreed, subject to the conditions
precedent referred to in 2.1 below, that Brandcorp will buy back Chester's
entire holding of 58 445 094 shares in Brandcorp, constituting 43,7% of
Brandcorp's issued shares ("the Brandcorp disposal shares") at a price of
130 cents per share ("the disposal").
2. The disposal
2.1 The disposal is subject to the approval of, respectively, shareholders
of Brandcorp and Chester in general meeting and any other regulatory
approvals which may be required.
2.2 The JSE Securities Exchange South Africa ("the JSE") has granted
Brandcorp a dispensation allowing it to buy back more than 40% of its issued
shares.
2.3 The total consideration due by Brandcorp to Chester pursuant to the
disposal amounts to R75 978 622.
2.4 Chester will not be allowed to vote the Brandcorp disposal shares at the
general meeting of Brandcorp shareholders to be convened for purposes of
approving the buy-back by Brandcorp of the Brandcorp disposal shares.
3. Pro forma financial effects of the disposal
Based on:
- Chester's audited financial results for the year ended 31 December 2001;
- for purposes of earnings per share and headline earnings per share
effects, on the assumption that the disposal had been effective on 1 January
2001 and that Chester would have earned a return of 8% after tax on the
proceeds of the buy-back; and
- for purposes of the net asset value and net tangible asset value per share
effects, on the assumption that the disposal had been effective on 31
December 2001;
the pro forma effect of the disposal on earnings, headline earnings, net
asset value and net tangible asset value per Chester share would have been
as follows:
Historic - Pro forma - Change
Before the After the (%)
disposal disposal
(cents) (cents)
Earnings per share 14,6 10,5 (28,1)
Headline earnings per 12,6 8,5 (32,5)
share
Net asset value per 113,5 117,5 3,5
share
Net tangible asset 116,2 120,2 3,4
value per share
The financial effects contained in the table above have been prepared for
the purposes of illustrating how the disposal would have affected the
relevant financial ratios of Chester for the financial period indicated and
are pro forma only.
4. Rationale for the disposal
Chester's interest in Brandcorp amounts to almost 44% of Brandcorp's issued
shares. The majority of the remaining Brandcorp shares are effectively held
by Brandcorp management and entrenched shareholders making it difficult for
Chester to substantially increase its stake.
The disposal price of 130 cents per share amounts to a premium of around 30%
to the Brandcorp market price at the time negotiations began. The disposal
offers Chester the opportunity to unlock the value of its stake in Brandcorp
for cash.
Although earnings per share would decrease initially as a result of the
disposal, the cash received provides Chester with the opportunity to
consider alternatives which will enhance earnings.
5. Salient dates
2002
Last day to lodge proxy forms for
general meeting of Chester shareholders on 4 June
General meeting of Chester shareholders on 6 June
Payment to Chester of disposal consideration
On 6 June
Press announcement regarding the
results of the general meeting of
Chester shareholders on 7 June
The dates and times indicated above are subject to amendment. Any amendment
will be published on the Stock Exchange News Service.
6. General meeting and circular to shareholders
6.1 As the disposal amounts to a category 1 transaction for Chester in terms
of the Listings Requirements of the JSE and a disposal as contemplated in
section 228 of the Companies Act, No. 61 of 1973, as amended, the disposal
has to be approved by Chester shareholders in general meeting.
6.2 A circular containing full details of the disposal and a notice of
general meeting is being prepared and will, subject to JSE approval, be
posted to Chester shareholders within 28 days.
Johannesburg
23 April 2002
Investment bank and sponsor
PSG INVESTMENT BANK
Reporting accountants
FISHER HOFFMAN PKF (JHB) INC.
