| Fri 3 May 2002, 0:00 | | Distribution Of Wooltru's Holdings In Massmart, Tr |
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the "Unbundling")
Wooltru Limited
(Incorporated in the Republic of South Africa)
(Registration number 1936/008278/06)
("WOOLTRU" or "the Company")
Share Code: WLO ISIN Code: ZAE000007993
Share Code: WLN ISIN Code: ZAE000008744
Share Code: WLOP ISIN Code: ZAE000008009
Share Code: WLP1 ISIN Code: ZAE000008017
Distribution of Wooltru's holdings in Massmart, Truworths and Woolworths
(the "Unbundling")
1. Introduction
Further to the cautionary announcement of 2 April 2002, Wooltru is pleased
to announce that the Wooltru Board of Directors (the "Directors") has
resolved to distribute Wooltru's entire holdings of shares in Massmart
Holdings Limited ("Massmart"), Truworths International Limited
("Truworths"), and Woolworths Holdings Limited ("Woolworths") (the
"Distributable Shares"), to the holders of Wooltru Ordinary and "N" Ordinary
shares ("Wooltru Shareholders") registered as such on the record date ("the
Record Date"), details of which are contained in the timetable below. The
Unbundling will be by way of a distribution in specie, and is subject to
certain approvals, including the approval of Wooltru Shareholders, which
will be sought at a meeting of Wooltru Shareholders (the "Combined General
Meeting") proposed to be held on 10 June 2002.
2. Rationale for the Unbundling
On 29 August 2000, as part of Wooltru's preliminary report for the year
ended 30 June 2000, the Directors informed Wooltru Shareholders of their
intention to accelerate the strategy of releasing value in all the retail
investments held by Wooltru. This process was aimed at eliminating the
discount on these assets inherent in the Wooltru share price.
The Directors are thus of the opinion that the Unbundling, together with the
ultimate disposal of Wooltru's unlisted investments and the subsequent
distribution of the proceeds realised will enhance value for Wooltru
Shareholders by:
* removing the holding company discount inherent in the market value of
the Wooltru shares;
* allowing Wooltru Shareholders greater choice and flexibility as to the
weightings of each of the underlying investments in their portfolios; and
* increasing the liquidity in Massmart, Woolworths and Truworths shares.
3. The Unbundling
As at the close of business on 29 April 2002, the last business day prior to
the Wooltru board meeting at which the Directors resolved to proceed with
the Unbundling, the Distributable shares had a combined market value of
R3 851 million, whilst the market capitalisation of the 475 921 702 Wooltru
Ordinary and "N" Ordinary shares in issue was R3 678 million.
The Distributable Shares held by Wooltru, which have a book value of
R650 683 777, will be unbundled by Wooltru in terms of its Articles of
Association, Section 90 of the Companies Act, 1973 (Act 61 of 1973) as
amended, and in accordance with section 60 of the Income Tax Act, no. 113 of
1993 (the "Old Unbundling Legislation") by way of a distribution in specie
and reduction of the share premium account by R650 683 777. The reason for
proceeding under the Old Unbundling Legislation is that neither Woolworths
nor Truworths would qualify to be unbundled in terms of new legislation
passed in December 2001.
For every Wooltru Ordinary share or Wooltru "N" Ordinary share held on the
Record Date, Wooltru Shareholders will receive an entitlement to 0,16901
Massmart shares, 0,52185 Truworths shares and 0,86242 Woolworths shares
(together the "Unbundling Ratios"). Wooltru Shareholders will also retain
their respective holdings of Wooltru Ordinary shares and Wooltru "N"
Ordinary shares.
The Unbundling Ratios will be applied to shareholders' entire holdings of
Wooltru Ordinary shares and Wooltru "N" Ordinary shares and will, in most
cases, give rise to an entitlement to Massmart, Truworths and Woolworths
shares which is not a whole number. In these cases, the entitlements will be
rounded either up or down to the nearest whole number of shares by STRATE
and Wooltru Shareholders will receive the rounded whole number of shares.
4. Implications of proceeding under the Old Unbundling Legislation
Wooltru has decided to proceed with the Unbundling under the provisions of
the Old Unbundling Legislation in terms of an application submitted to the
South African Revenue Services ("SARS") on 24 August 2001. As a result
Wooltru has certainty that it will not pay Secondary Tax on Companies
("STC"), but the unbundling will be deemed to be a disposal by Wooltru of
its shares in Massmart, Truworths and Woolworths for capital gains tax
("CGT") purposes. The direct impact of this is that Wooltru will incur a CGT
liability estimated at R22.5 million at the time of unbundling. Wooltru
will meet this obligation out of existing cash resources.
5. The Future of Wooltru
Following the Unbundling, the remaining assets of Wooltru will constitute:
* 100% of Wooltru Properties, a property development and investment
company that, at the date of this announcement, holds a small property
portfolio, valued by the directors at R69,7 million. Deeds of sale for
certain of these properties, constituting R58,9 million of the total by
value have been signed subject to the fulfilment of certain conditions,
further properties valued at R5,8 million are under offer, whilst Wooltru is
actively seeking buyers for the balance of R5,0 million;
* an effective 33,2% of Affinity Logic, an information technology company
that operates as a joint venture with Datatec Limited, which is in the
process of being sold. Wooltru has accepted an offer for the sale of its
interest in Affinity Logic, as a result of which Wooltru will receive R45
million, but the final terms of the sale are still being negotiated; and
* cash and other receivables administered by the Wooltru head office,
being:
* remaining amounts due from the sale of CNA totalling R50 million;
* expected proceeds due from the unwinding of the Wooltru Share Trust of
R65 million;
* cash on deposit of R90 million
Against this, Wooltru has provided for R90 million of expenditure that may
be incurred prior to the final liquidation of Wooltru, in addition to the
R22.5 million CGT liability referred to above.
Following the Unbundling, the Board will take the necessary steps to propose
that Wooltru is placed into voluntary liquidation, which will culminate in
Wooltru's remaining cash being distributed to Wooltru's then shareholders as
a final liquidation dividend. It is anticipated that this may be achieved
by the end of the 2003 calendar year.
6. Position of the Wooltru Preference Shareholders
The Wooltru Preference Shareholders will have the right to attend the
Combined General Meeting and vote on the resolution proposing the
Unbundling. They will not, however, be eligible to participate in the
Unbundling. At the time of the ultimate liquidation of Wooltru, the Wooltru
Preference Shareholders will, in terms of the Memorandum and Articles of
Association of Wooltru, receive any accumulated dividends as well as the
return of their capital.
7. Financial Effects of the Unbundling
Upon implementation of the Unbundling, Wooltru Shareholders will hold those
numbers of Massmart, Truworths and Woolworths shares as are equivalent to
their effective indirect interests as a result of their holdings in Wooltru.
Consequently, other than for the costs of the Unbundling there is no
financial effect on Wooltru shareholders' earnings per share or net assets
per share resulting from the Unbundling.
8. Shareholders in the USA, Canada, Australia or Japan
Subject to certain exceptions, Wooltru Shareholders with addresses in the
USA, Canada, Australia or Japan and beneficial owners of shares in Wooltru
in the USA, Canada, Australia or Japan holding their shares through nominee
companies, whether or not such nominee companies are in the USA, Canada,
Australia or Japan, will receive an entitlement to the Distributable Shares,
but shall not be entitled to have the Distributable Shares registered in
their names. Their entitlements to such shares will be sold on the JSE
Securities Exchange South Africa, and such shareholders and beneficial
owners will receive cash equal to the proceeds (net of costs) derived from
the sale of such shareholders' and beneficial owners' entitlements, unless
such shareholders or beneficial owners provide proof to the satisfaction of
the Directors that they are entitled to receive a distribution of the
Distributable Shares under the laws of the USA, Canada, Australia or Japan,
as the case may be.
9. Implementation conditions
SARS has given an in principle approval for the Unbundling to take place in
terms of the application submitted by Wooltru under the provisions of the
Old Unbundling Legislation. The implementation of the Unbundling will
therefore take place only when:
formal written approval has been received from SARS; and
the Special Resolution to be proposed at the Combined General Meeting is
passed by the requisite majority of votes present in person or by proxy at
that meeting and is registered with the Registrar of Companies.
10. Timetable, Shareholder Circular and Combined General Meeting
A circular, giving further details of the unbundling and incorporating a
notice of general meeting will be posted to Wooltru shareholders on or about
10 May 2002. A summary of the timetable is set out below:
Last day to lodge forms of proxy Thursday 6 June 2002
(10h00)
Combined General Meeting (10h00) Monday 10 June 2002
Results of Combined General Tuesday 11 June 2002
Meeting published
Last Day to Trade for the Tuesday 18 June 2002
Unbundling
Ex Date Wednesday 19 June 2002
Record Date Tuesday 25 June 2002
Wooltru Ordinary and "N" Wednesday 26 June 2002
Ordinary shares trade ex-
distribution on the JSE
Securities Exchange South Africa
and the Namibian Stock Exchange
Wooltru Shareholders entitled to Wednesday 26 June 2002
trade in Distributable Shares
Allotment of shares and posting Wednesday 26 June 2002
of certificates for
Distributable Shares
The Combined General Meeting is scheduled to be held in Cape Town at 10h00
on 10 June 2002, for the purpose of considering and, if deemed fit, passing,
with or without modification, the special resolution proposing the
Unbundling. Notice of the Combined General Meeting will be included in the
Circular.
11. Comment from the Chairman
"The announcement of the Unbundling brings to an end a period of significant
uncertainty for all our stakeholders. The process that we have gone through
to get to this position has been a long and complex one, but we are
delighted to have finally reached our goal of implementing this significant
step towards realising value for our shareholders."
Cape Town
2 May 2002
Financial Adviser and Sponsor
Cazenove
Member of the JSE Securities Exchange South Africa
Namibian Sponsor
Phillip van Heerden
Trading as HSBC Securities (Namibia) (Pty) Limited
(Registration number 95/505 )
Member of the Namibian Stock Exchange
Corporate Law Advisers and Consultants
Edward Nathan & Friedland (Pty) Ltd
(Registration number 1999/02434/07)
Attorneys
Mallinicks Attorneys
Joint Reporting Accountants and Auditors
Ernst & Young
Joint Reporting Accountants and Auditors
Nkonki Sizwe Ntsaluba Inc.
