| Wed 15 May 2002, 0:00 | | Explorer Corporation Holdings Limited - Acquisiti |
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Explorer Corporation Holdings Limited - Acquisition Of The Entire Issued
Share Capital Of Industrial Credit Company Limited, Changes To The Board Of
Directors And Withdrawal Of Cautionary Announcement
EXPLORER CORPORATION HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/010950/06)
("Explorer" or "the Company")
SHARE CODE: EPL
ISIN : ZAE000017489
ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF INDUSTRIAL CREDIT COMPANY
LIMITED, CHANGES TO THE BOARD OF DIRECTORS AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the further cautionary announcement published
on 11 April 2002.
Sasfin Bank Limited is authorised to announce that, subject to certain
resolutive conditions, Explorer has acquired from Loita Capital Partners
International Limited ("Loita"), Explorer`s controlling shareholder, the
entire issued share capital of and all of Loita`s claims against Industrial
Credit Company Limited ("ICC") ("the acquisition"). The purchase
consideration will be settled by the issue of Explorer shares.
2. THE INCREASE IN AUTHORISED SHARE CAPITAL
It is necessary to increase Explorer`s authorised share capital in order to
implement the acquisition and to take advantage of future opportunities as
and when they arise.
It is therefore proposed that the authorised share capital of Explorer be
increased from 500 000 000 ordinary shares with a par value of one cent each
to 2 000 000 000 ordinary shares with a par value of one cent each.
3. THE CONSOLIDATION OF THE AUTHORISED AND ISSUED SHARE CAPITAL
It is proposed that, subsequent to the increase in the authorised share
capital referred to in paragraph 2 above, the authorised and issued share
capital of Explorer be consolidated due to the large number of issued shares
which would otherwise exist relative to the market capitalisation of the
company.
Accordingly it is proposed that, prior to the issue and allotment of the
shares necessary to settle the purchase consideration for the acquisition,
the share capital of Explorer comprising 2 000 000 000 authorised and 258
000 000 issued ordinary shares with a par value of one cent each be
consolidated on a one for ten basis into 200 000 000 authorised and 25 800
000 issued ordinary shares with a par value of ten cents each.
4. THE ACQUISITION
Explorer has acquired, from Loita, the entire issued share capital of and
all of Loita`s claims against ICC, for a purchase consideration of R75 075
000 (being US$7 150 000 at a fixed conversion rate of R10, 50 per US$) with
effect from 1 January 2002. The consideration will be settled by the issue
and allotment of 85 800 000 consolidated Explorer shares at 87,5 cents per
share.
ICC is Zambia`s leading provider of lease finance and has been in operation
for over 37 years, achieving a profit in each of these years. This success
has been attributed to ICC`s well-established reputation and corporate name
in Zambia`s banking and financial services market and to the commitment and
ability of its board of directors and experienced senior managers who have
adopted a proactive and innovative approach to winning and maintaining
business.
Some 89% of ICC`s lease book is denominated in hard currency and its major
clients comprise mainly multinationals and well-established local
corporations including reputable exporters. The lease facilities are
primarily for the acquisition of commercial and passenger vehicles and
plant, machinery and equipment.
ICC has a solid leasing product brand and principally provides full payout
lease finance. Total cost of the leased assets is recovered over the primary
period. Under the lease contracts, the lessee is responsible for all taxes,
insurance, value added tax, legal and other related expenses. ICC also
provides other leasing services such as operating leases, vendor leases and
lease syndication.
ICC has instituted stringent internal controls based on thorough operational
procedures and state of the art management information systems. ICC
complies with, and in most cases exceeds, the minimum regulatory
requirements of the Bank of Zambia. ICC is run on public company lines with
a board of directors comprising a majority of independent non-executives.
ICC does not write any hire purchase transactions due to restrictions
imposed on the margins chargeable on hire purchase transactions in terms of
the relevant hire purchase regulations. In the event that such restrictions
are removed this area of business may be considered.
ICC continues to expand its hard currency lease business backed by a matched
diversified funding base from various reputable financial institutions.
ICC wishes to capitalise on its strong performance in Zambia by expanding
its operations into neighbouring and other countries across sub-Saharan
Africa by leveraging off Loita`s existing business interests in many of
these territories. Synergistic benefits derived from such a growth strategy
include rapid market entry, access to Loita`s developed business networks
and reduced operating costs through shared administrative and related
resources.
Resolutive Conditions
The acquisition is subject to the following resolutive conditions:
- the necessary special resolutions relating to the increase in the
authorised share capital of Explorer and the consolidation of the authorised
and issued share capital of Explorer not being passed by shareholders in
general meeting and/or not being registered by the Registrar of Companies;
- the necessary regulatory approvals for the acquisition not being granted;
- the statutory requirements which may be a prerequisite to the
implementation of the acquisition not being complied with; or
- the approval of the acquisition by Explorer shareholders in a general
meeting not being obtained,
by 30 August 2002.
5. FINANCIAL EFFECTS
The pro forma financial effects of the proposed consolidation of Explorer`s
share capital and of the acquisition on Explorer`s earnings per share,
headline earnings per share, net asset value per share and tangible net
asset value per share are set out below:
Before(1) After the After the Change(6)
(cents) consolidation(2) consolidation (%)
(cents) and the
acquisition(3)
(cents)
(Loss)/earnings (4,9) (49,0) 2.5 >100
per share (4)
Headline (4,7) (47,0) 5.2 >100
(loss)/earnings
per share (4)
Net asset value 4,57 45,7 77.8 +70.2
per share(5)
Tangible net 0,79 7,9 69.1 >100
asset value per
share(5)
Notes:
1. The figures in the "Before" column have been extracted from the published
audited financial results of Explorer for the year ended 31 December 2001.
2. The figures in the "After the consolidation" column reflect the pro forma
effects of the consolidation on earnings and headline earnings per share and
on net asset value and tangible net asset value per share and were
calculated on the assumption that the consolidation was effected on 1
January 2001.
3. The figures in the "After the consolidation and the acquisition" column
reflect the pro forma effects of the acquisition on earnings and headline
earnings per share and on net asset value and tangible net asset value per
share and were calculated on the assumption that the consolidation and the
acquisition were effected on 1 January 2001.
4. Based on a weighted average number of 161 698 619 Explorer shares,
16 169 862 consolidated shares and 101 969 862 consolidated shares after the
acquisition in issue during the period 1 January 2001 to 31 December 2001.
5. Based on 258 000 000 Explorer shares, 25 800 000 consolidated shares and
111 600 000 consolidated shares after the acquisition in issue at 31
December 2001.
6. The "Change" column reflects the comparison of the effects of the
acquisition with the situation prior to the acquisition (but after the
consolidation).
6. PROSPECTS
Explorer has concluded agreements, in the normal course of business, to
provide it with access to databases containing information pertaining to
potential clients.
As part of the rescue operation that commenced in 2000, Explorer has changed
its strategic intent as follows:
- changing the business model for card related products in South Africa to
attract high volume fixed margin transactions; and
- to replicate and expand this business model into other African countries,
using the Loita infrastructure and the funding and processing operations of
Mauritius Commercial Bank Limited.
The acquisition will give Explorer the opportunity to grow by utilising the
Loita expertise to develop ICC`s leasing business on the African continent.
It is the vision of both Explorer and Loita that Explorer will become the
investment holding company for Loita`s African financial services assets as
specifically identified by both Explorer and Loita.
It is also intended that Explorer will acquire additional businesses to
enable it to grow further in Africa.
It is anticipated that application will be made to the JSE to transfer the
listing of Explorer to the financial services sector of the main board once
Explorer meets the qualifications for such a listing.
7. DOCUMENTATION
Subject to obtaining approval from the necessary regulatory bodies,
including, inter alia, the JSE Securities Exchange South Africa and the
Securities Regulation Panel, a circular incorporating full details of the
increase in authorised share capital, the consolidation of the share capital
and the acquisition and including a notice of general meeting of
shareholders and a form of surrender will be posted to shareholders within
28 days of the date of this announcement.
8. CHANGES TO THE BOARD OF DIRECTORS
Aaron Stanger has resigned from the Board of directors of Explorer with
effect from 31 May 2002.
Colin Clarke, currently an executive director will become a non-executive
director of Explorer with effect from 1 June 2002.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Explorer has now concluded the negotiations that were the subject of the
previous cautionary announcements.
Accordingly, shareholders are advised that caution is no longer required
when dealing in the Company`s securities.
Johannesburg
15 May 2002
Merchant bank and sponsor Auditors to & reporting accountants
for Explorer
Sasfin Bank Limited Ernst & Young
Chartered Accountants (SA)
Independent advisor to Independent advisors to the
minority shareholders board of directors of Explorer
Ernst & Young Corporate Deloitte & Touche
Finance (Pty) Ltd
Corporate and legal advisor Reporting accountants for ICC
Nucleus Corporate Finance (Pty) Ltd. PricewaterhouseCoopers Inc.
