| Mon 29 Apr 2002, 0:00 | | Offer To The Shareholders Of Genbel |
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GENBEL SOUTH AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1949/032379/06)
JSE Code: GBL
ISIN: ZAE000010054
("Genbel")
OFFER TO THE SHAREHOLDERS OF GENBEL
1. INTRODUCTION
Further to the cautionary announcement renewed by Genbel on 20 March 2002,
the Genbel board of directors ("Genbel board") wishes to announce that,
subject to the fulfilment of the conditions precedent referred to in
paragraph 10 below, agreement has been reached between Genbel Securities
Limited ("Gensec") and Genbel in terms of which Gensec will extend an offer
to the shareholders of Genbel ("Genbel shareholders") for the acquisition of
all of their Genbel shares for a consideration as described in paragraph 4
below ("the offer").
The offer will be implemented by means of a scheme of arrangement in terms
of Section 311 of the Companies Act, 1973 (No 61 of 1973), as amended ("the
scheme").
Gensec, through its wholly owned subsidiary Gensec Bank Limited, currently
holds 11 956 261 Genbel shares, being 27,24% of Genbel's issued share
capital.
2. RATIONALE
The Genbel board has, over the past 12 months, considered alternatives for
the future strategy of Genbel. The need for restructuring arose from the
introduction of Capital Gains Tax ("CGT") and the persistent discount to net
asset value ("NAV") at which the Genbel share price has been trading.
In terms of CGT legislation, Genbel will be liable for CGT on the realised
gains on its capital portfolio and its shareholders will also be taxed on
capital gains on their investment in Genbel. Investment gains in unit trusts
and certain other investment entities are not taxed in those entities and
these unit holders will thus only be liable for CGT on their capital
investment. This puts investors in Genbel at a relative disadvantage.
The tax inefficiency, together with the persistent discount to NAV at which
Genbel has been trading, led the Genbel board to conclude that it is no
longer competitive for Genbel to remain a closed-ended investment trust.
3. RESTRUCTURING INITIATIVES
The Genbel board's aim with any restructuring is to maximise value for
Genbel shareholders. The Genbel board's initiatives began with the
appointment of advisers to identify and evaluate alternative strategies
available to Genbel. The resultant alternatives considered by the Genbel
board included:
- conversion to a unit trust;
- unbundling and voluntary liquidation;
- sale of certain of Genbel's unlisted assets; and
- evaluating offers or partial offers for the company.
Various regulatory, tax and practical issues which would have impaired
shareholder value were identified in respect of the above alternatives.
After careful consideration of these issues, the Genbel board has concluded
that the implementation of the offer is the most effective and efficient
method of achieving the objective of delivering maximum value for Genbel
shareholders.
4. CONSIDERATION
The total consideration will be a cash payment equal to 97% of the NAV of
Genbel as determined by Rand Merchant Bank's Corporate Finance Division
("RMB") during the five business days subsequent to the fulfilment of the
conditions precedent in respect of the offer ("the offer consideration").
The NAV of Genbel will be adjusted to take into account the cancellation of
the treasury shares referred to in paragraph 7 below and for costs in
respect of the offer of approximately R5 million.
Full details of the formula which will be applied in determining the Genbel
NAV will be included in the circular referred to in paragraph 12 below.
5. FINANCIAL EFFECTS OF THE OFFER
The table below reflects the financial effects of the offer on Genbel
shareholders based on the market value of Genbel, the Genbel NAV and the pro
forma offer consideration, based on the formula referred to in paragraph 4
above, as at 24 April 2002, being the last practicable date prior to
finalisation of this announcement.
Genbel NAV (cents per share)* 1 672
Market value (cents per share) 1 400
Discount to Genbel NAV (%) 16.3
Pro forma offer consideration (cents per share) 1 621
Discount to Genbel NAV (%) 3.1
Premium to market value (%) 15.8
* Adjusted for the costs referred to in paragraph 4 above.
The financial effects as reflected above have been prepared for illustrative
purposes only. The final offer consideration will be calculated in terms of
paragraph 4 above and Genbel shareholders will be informed of the final
terms and financial effects of the offer by means of an announcement on SENS
and in the press.
6. OPINIONS AND RECOMMENDATIONS
RMB has been appointed to advise an independent sub-committee of the Genbel
board as to whether the terms and conditions of the offer are fair and
reasonable to Genbel shareholders. The independent sub-committee's opinion
in this regard will be included in the circular referred to in paragraph 12
below.
7. APPLICATION FOR THE DELISTING OF TREASURY SHARES
Genbel purchased 4 536 741 Genbel shares held as treasury shaes by Gensa
Trading Limited, a wholly owned subsidiary of Genbel. Application will be
made to the JSE Securities Exchange South Africa ("JSE") and the Namibian,
London and Brussels Stock Exchanges for the delisting of these shares.
8. TERMINATION OF GENBEL'S LISTINGS
Application will be made for the termination of Genbel's listing on the JSE
and the Namibian, London and Brussels stock exchanges with effect from the
operative date of the scheme.
9. CASH CONFIRMATION
It has been confirmed to the Securities Regulation Panel ("SRP") that Gensec
has sufficient cash resources to satisfy its financial obligations in
respect of the offer.
10. CONDITIONS PRECEDENT
The offer is subject to the normal conditions precedent that would be
applicable to a transaction of this nature including, inter alia, the
following:
- final approval of the Registrar of Banks to the extent required;
- approval of the JSE and Namibian, London and Brussels Stock Exchanges, the
South African Reserve Bank and any other regulatory authorities, to the
extent required;
- unconditional approval by the Competition Tribunal; and
- cancellation of the treasury shares.
11. GENBEL SHAREPLAN
Participants in the Genbel SharePlan shall be treated in the same manner as
the other Genbel shareholders in terms of the offer. The circular referred
to in paragraph 12 below will contain information and instructions in
respect of the impact of the offer on Genbel SharePlan participants.
12. FURTHER DOCUMENTATION
Documentation in respect of the offer is in the process of being prepared,
and a circular, which is subject to the approval of the JSE and SRP, will be
mailed to Genbel shareholders within 30 days of the date of this
announcement (or, with the consents of the JSE and the SRP, as soon as
possible thereafter).
Further announcements, including the salient dates pertaining to the offer,
will be published on SENS and in the press in due course.
13. CONTACT DETAILS
Toll-free numbers available within South Africa
Genbel Helpdesk 0800 00 49 35
Facsimile 0800 00 49 36
Genbel SharePlan Administrator 0800 00 31 30
Internet address www.genbel.com
E-mail address moreinfo@genbel.com
Johannesburg
29 April 2002
Merchant bank and transactional sponsor to Genbel
RAND MERCHANT BANK
Corporate advisor to Gensec
GENSEC BANK LIMITED
Sponsoring broker in Namibia
HENDRIK LOMBARD
Member of the Namibian Stock Exchange Trading as Simonis Storm Securities
Corporate law advisors to Gensec
HOFMEYR ATTORNEYS
Corporate law advisors and consultants to Genbel
EDWARD NATHAN & FRIEDLAND
Competition lawyers to Genbel and Gensec
WEBBER WENTZEL BOWENS
