| Tue 7 May 2002, 0:00 | | Powertech |
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Power Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/022346/06)
Share code: POW ISIN: ZAE000015640
("Powertech")
ALTRON
ALLIED ELECTRONICS CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
JSE Code: ATN ISIN: ZAE000029658
JSE Code: ATNP ISIN: ZAE000029666
("Altron")
Proposed capital reduction and scheme of arrangement
1. DETAILS ON PROPOSED CAPITAL REDUCTION AND SCHEME
Shareholders are referred to the cautionary announcement of Altron and
Powertech published on 31 January 2002 ("first cautionary announcement") and
the further cautionary announcement published on 6 March 2002 ("further
cautionary announcement").
Shareholders of Powertech are advised that, subject to shareholder approval
by way of a special resolution, Powertech will repay to shareholders an
amount of 100 cents in cash for each share held in Powertech, being a
distribution of R274 941 474 out of the share premium account in terms of
Section 90 of the Companies Act, No 61 of 1973, as amended ("the Act") and
articles 37.2 and 37.3 of Powertech's articles of association ("the capital
reduction").
In the further cautionary announcement, shareholders were advised that the
directors of Altron had resolved to procure that Altron propose a scheme of
arrangement ("the scheme") in terms of Section 311 of the Act between
Powertech and the scheme members, being Powertech shareholders other than
Altron and Aberdare Cables International Holdings (Pty) Limited ("ACIH"),
a wholly-owned subsidiary of Powertech which owns 9 186 362 treasury shares
in Powertech. The directors of Altron have resolved to propose that in terms
of the scheme, which is subject to fulfilment of the conditions precedent
referred to in
4 including the approval by shareholders of the capital reduction, Powertech
shareholders will receive 400 cents in cash for each share held in Powertech
("the cash consideration"). The scheme, if implemented, will result in
Powertech effectively becoming a wholly-owned subsidiary of Altron.
The combined capital reduction and cash consideration will result in a
payment to shareholders, other than Altron and ACIH who will only receive
the capital reduction, of 500 cents in cash for each share held in
Powertech, which represents a premium of 56,25% to the closing JSE
Securities Exchange South Africa ("the JSE") market price of 320 cents a
share on Wednesday 30 January 2002, being the day immediately preceding the
first cautionary announcement, and a premium of 19,05% to the closing JSE
market price of 420 cents a share on Monday 6 May 2002, being the day
immediately preceding the publication of this announcement.
Subject to implementation of the scheme, the JSE has agreed to:
suspend the listing of Powertech from the commencement of trade on the JSE
on Thursday 20 June 2002; and
terminate the listing of Powertech from the commencement of trade on the
JSE on Friday 28 June 2002.
2. RATIONALE
2.1 The capital reduction
Powertech has accumulated substantial cash resources through its sustained
trading performance and the sale of various assets, including an initial
payment of US$10,5 million from the sale of an interest in Aberdare Fibre
Optic Cables (Pty) Limited to Corning International Corporation of the
United States of America and approximately R130 million from the capital
reduction paid by Voltex Holdings Limited and the sale of its 28,8% holding
in Voltex Holdings Limited to The Bidvest Group Limited. These cash
resources are in excess of Powertech's medium-term operational requirements.
Furthermore, the power electronics and telecommunications sectors are
expected to provide limited suitable opportunities for acquisition or
expansion in the short- and medium-term.
Against this background, the board of directors of Powertech is of the
opinion that R275 million of Powertech's cash holding is in excess of
Powertech's medium-term requirements. Consequently, the board of directors
of Powertech believes that it is appropriate that this amount be returned to
shareholders by means of a distribution out of the share premium account.
2.2 The scheme
Powertech's share price has traded below its net asset value for almost two
years. Some of the reasons are that institutional investors have not shown
significant interest in closely-held illiquid shares and in companies with a
market capitalisation of less than R2 billion, the so called "small cap"
shares. As a result, Powertech's JSE listing no longer provides a cost
efficient medium for raising capital, which, together with the significant
direct and indirect costs of maintaining the listing, no longer provide a
compelling reason for maintaining the listing.
The combined capital reduction and cash consideration, which is in the
region of Powertech's audited net asset value at 28 February 2002, affords
the many small shareholders of Powertech an opportunity to exit their
investment at fair value.
3. SHAREHOLDERS' MEETINGS
In order to obtain the approval of Powertech shareholders for the capital
reduction, a general meeting of shareholders of Powertech will be held at
09:00 in the boardroom, Powertech House, Hampton Park, 20 Georgian Crescent,
Bryanston on Monday 10 June 2002 ("the general meeting").
In order to obtain the approval of scheme members for the scheme, a scheme
meeting will be held at 09:15 (or as soon thereafter as the general meeting
shall have been concluded or adjourned) in the boardroom, Powertech House,
Hampton Park, 20 Georgian Crescent, Bryanston on Monday 10 June 2002 ("the
scheme meeting").
4. CONDITIONS PRECEDENT
The capital reduction is conditional upon approval being obtained from a
majority representing not less than 75% of the votes exercisable by
shareholders present and voting either in person or by proxy at the general
meeting.
The scheme is conditional upon:
the approval of the capital reduction by the requisite majority of
shareholders;
the registration of the special resolution approving the capital reduction
by the Registrar of Companies in South Africa ("the Registrar");
the approval of the scheme by a majority representing not less than 75% of
the votes exercisable by scheme members present and voting either in person
or by proxy at the scheme meeting;
the High Court of South Africa (Transvaal Provincial Division) ("the
Court") sanctioning the scheme in terms of the Act; and
a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar in terms of the Act.
5. SALIENT DATES AND TIMES
The following are the expected dates and times regarding the capital
reduction and the scheme.
2002
Last day to trade in shares of Powertech
on the JSE in order to vote at the general
and scheme meetings, by close of trade
on the JSE on Thursday 30 May
Record date to determine those Powertech
shareholders entitled to vote at the general
and scheme meetings ("record date for voting"),
by close of trade on the JSE on Thursday 6 June
Last day to lodge forms of proxy for the
general meeting, by 09:00 on Friday 7 June
Last day to lodge forms of proxy for the
scheme meeting, by 09:15 on Friday 7 June
General meeting held at 09:00 on Monday 10 June
Scheme meeting held at 09:15 (or as soon
thereafter as the general meeting shall have
been concluded or adjourned) on Monday 10 June
Results of the general and scheme meetings
published in the press on Tuesday 11 June
Court hearing to sanction the scheme
expected at 10:00 or as soon thereafter as
Counsel may be heard on Tuesday 18 June
Expected last day to trade in shares of
Powertech on the JSE in order to receive
the capital reduction and the cash
consideration Wednesday 19 June
Expected date for suspension of Powertech's
listing on the JSE, from commencement of
trade on the JSE on Thursday 20 June
Expected record date to determine
those Powertech shareholders entitled
to receive the capital reduction, by close
of trade on the JSE on Wednesday 26
June
Expected record date to determine
those Powertech shareholders entitled to
receive the cash consideration, by close of
trade on the JSE on Wednesday 26 June
Expected payment date of capital reduction Thursday 27 June
Expected date from which the cash
consideration will be made available Thursday 27 June
Expected date for termination of
Powertech's listing on the JSE, from
commencement of trade on the JSE on Friday 28 June
Notes:
1. Any variation of the above dates and times, approved as necessary by the
JSE, Securities Regulation Panel ("the SRP") and/or the Court, will be
published in the press and released on SENS.
2. Shareholders should note that, as Powertech is trading in the STRATE
environment, settlement for trade takes place five business days after such
trade. Therefore, shareholders who acquire Powertech shares on the JSE after
Thursday 30 May 2002 will not be eligible to vote at the general or scheme
meetings and after Wednesday 19 June 2002 will not be eligible to
participate in the capital reduction or the scheme consideration.
3. Shareholders and scheme members who have dematerialised their Powertech
shares in favour of electronic record and are recorded on the register on
the record date for voting must provide their Central Securities Depository
Participant or broker, as the case may be ("CSDP") with their instructions
for attendance or voting at the general meeting and scheme meeting
respectively in the manner stipulated in the custody agreement governing the
relationship between such shareholders and the relevant CSDP. These
instructions must be provided to the CSDP by the cut-off time and date
advised by the CSDP for instructions of this nature.
4. No dematerialisation of Powertech share certificates will take place from
Tuesday 11 June 2002.
6. FINANCIAL EFFECTS OF THE SCHEME
The table below sets out the pro-forma effects of the combined capital
reduction and cash consideration on the market value, audited headline
earnings and audited net tangible asset value attributable to a Powertech
share:
Before After
(cents per (cents per Percentage
Notes share) share) change
Market value 1 320 500 56,25
Market value 2 420 500 19,05
Headline earnings 3 61,2 32,1 (47,5)
Net tangible asset
value 4 527,7 500 (5,25)
Notes:
1. The "Before" column is the closing JSE market price of a Powertech share
on Wednesday 30 January 2002, being the day immediately preceding the
publication of the first cautionary announcement. The "After" column shows
the combination of the capital reduction and cash consideration to be
received by a Powertech shareholder.
2. The "Before" column is the closing JSE market price of a Powertech share
on Monday 6 May 2002, being the day immediately preceding publication of
this announcement. The "After" column shows the combination of the capital
reduction and cash consideration to be received by a Powertech shareholder.
3. The "Before" column is the audited headline earnings per Powertech share
for the year ended 28 February 2002, calculated on the weighted average 266
346 918 shares in issue (net of treasury shares) in Powertech throughout the
12 months ended 28 February 2002. The "After" column reflects the after tax
interest income, at an average tax rate of 30%, that a Powertech shareholder
would have earned had the combination of the capital reduction and cash
consideration been invested at an interest rate of 9.18% for a year, being
the average rate of interest earned before tax on a 12 month fixed deposit
for the year ended 28 February 2002.
4. The "Before" column is the audited net tangible asset value per Powertech
share at 28 February 2002, calculated on the 265 755 111 shares in issue
(net of treasury shares) at 28 February 2002. The "After" column shows the
combination of the capital reduction and cash consideration to be received
by a Powertech shareholder.
7. OPINIONS AND RECOMMENDATIONS RELATING TO THE CAPITAL REDUCTION
7.1 The board of directors of Powertech is satisfied that, after the
proposed capital reduction, Powertech will be able to pay its debts as they
become due in the normal course of business, and that the consolidated
assets of Powertech, fairly valued, will, after the proposed capital
reduction, not be less than the consolidated liabilities.
7.2 The board of directors of Powertech recommends that shareholders vote in
favour of the special resolution to approve and implement the capital
reduction. Those directors of Powertech who own shares in their own right
intend to vote all such shares in favour of the capital reduction.
8. OPINIONS AND RECOMMENDATIONS RELATING TO THE SCHEME
8.1 Standard Corporate and Merchant Bank, a division of The Standard Bank of
South Africa Limited ("SCMB"), acting as independent financial adviser to
the board of directors of Powertech, has considered the terms and conditions
of the scheme and is of the opinion that, as at date of this announcement,
they are fair and reasonable to scheme members and has advised the board of
directors of Powertech accordingly.
8.2 The board of directors appointed a sub-committee, consisting of Messrs
JB Maree, MC Berzack, L Boyd and PL Wilmot to consider the terms and
conditions of the scheme.
8.3 The sub-committee of the board is of the opinion that the terms and
conditions of the scheme are fair and reasonable to scheme members and has
advised the board of directors accordingly. The board of directors of
Powertech has considered the terms and conditions of the scheme and, taking
into account the opinion of SCMB, is also of the opinion that the terms and
conditions thereof are fair and reasonable to scheme members and recommend
that scheme members vote in favour of the scheme at the scheme meeting.
Those directors of Powertech who own shares in their own right intend to
vote all such shares in favour of the scheme.
8.4 It should be noted that Dr WP Venter and Messrs MC Berzack, L Boyd, PD
Redshaw, RE Venter and PL Wilmot are directors of both Powertech and Altron.
Other Powertech non-executive directors, Messrs DC Mpofu and GJ Trollope,
are alternate directors of Altron. Mr N Claussen, a Powertech director and
Powertech's Chief Executive, and Mr DC Mpofu are also members of Altron's
executive committee.
9. UNDERTAKINGS BY CERTAIN SCHEME MEMBERS
Written undertakings to vote in favour of the capital reduction have been
received from shareholders holding in aggregate 84,34% of the issued share
capital of Powertech. Written undertakings to vote in favour of the scheme
have been received from shareholders holding in aggregate 68,82% of the
scheme shares.
10. CONFIRMATION OF FINANCIAL RESOURCES
Nedbank, a division of Nedcor Bank Limited, has confirmed to the SRP that
sufficient financial resources are available to Altron to ensure that it is
able to honour its financial commitment in terms of the scheme.
11. CIRCULAR TO SHAREHOLDERS OF POWERTECH
A circular, which is subject to the prior approval of the SRP and JSE,
providing information on the capital reduction and scheme and containing,
inter alia, notices of the general and scheme meetings, is being prepared
and is expected to be posted to shareholders of Powertech on or about Friday
17 May 2001.
Johannesburg
7 May 2002
Merchant bank and independent financial adviser to Powertech
SCMB
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Investment bank to Altron
NEDCOR INVESTMENT BANK
Corporate law advisers and consultants
EDWARD NATHAN & FRIEDLAND (PTY) LTD
(Registration number 1999/026464/07)
www.enf.co.za
Auditors
KPMG
Joint sponsors to Altron and Powertech
NEDCOR INVESTMENT BANK
ENF SPONSORS
ENF SPONSORS (PTY) LTD
(Registration number 2000/027636/07)
