| Fri 17 May 2002, 0:00 | | Firstrand Limited - Transaction Between Firstrand |
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FirstRand Limited - Transaction between FirstRand and Saambou
FirstRand Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1966/010753/06)
Share code: FSR
ISIN: ZAE 000014973
First National Bank
A division of FirstRand Bank Limited
Saambou Bank Limited
(under curatorship)
(Incorporated in the Republic of South Africa)
Registration number: 1987/005437/06
Transaction between FirstRand and Saambou
1. Introduction
The board of directors of FirstRand Limited ("FirstRand") and the curator of
Saambou Bank Limited, under curatorship ("Saambou Bank") are proud to
announce that agreement has been reached in terms of which FirstRand Bank
Holdings Limited will acquire the shares in and claims against Saambou Bank
("the transaction"). The transaction, with an estimated gross value of R12,8
billion will, on finalisation, result in the FirstRand group effectively
assuming the depositor liabilities and acquiring the residential mortgage
loan book of Saambou Bank. Other assets and liabilities, including the micro-
lending and asset-based finance books, are specifically excluded.
2. Impact on Saambou Bank`s depositors and mortgage holders
As a result of the FirstRand group`s acquisition, and the resultant
assumption of the depositor liabilities, Saambou depositors will have full
access to the capital and interest of their deposits on the existing terms
and conditions with effect from Thursday 23 May 2002. Mortgage bond holders
will have access to any prepaid amounts on their mortgage bonds from the
same date.
3. Rationale for the transaction
The co-operation of FirstRand with the curator and the public sector has
resulted in a mutually beneficial transaction that will contribute to the
ongoing stability of the banking sector and resolve the position of Saambou
depositors and mortgage bond holders.
The transaction provides the opportunity for the FirstRand group to increase
its deposit - and mortgage home loans base.
Together with First National Bank, the group`s market share of retail fixed
term deposits will increase, with significant benefits expected from:
economies of scale;
improved productivity as a result of the utilisation of current capacity
in First National Bank`s infrastructure; and
access to a sizeable new customer base, with significant opportunities for
cross-selling First National Bank`s existing product range.
Saambou`s medium corporate deposit base will provide First National Bank
with access to a further 2 300 medium corporate clients.
Together with the acquisition of the NBS homeloan book in March 2002, the
transaction will increase the FirstRand group`s market share to
approximately 20%, with access to an additional 60 000 clients to whom
existing products can be marketed.
The transaction is in line with FirstRand`s cohesive growth strategy and
will provide further opportunities to service customers through its
integrated financial services model.
4. Salient terms of the transaction
FirstRand will purchase the shares in and claims against Saambou Bank from
Saambou Holdings Limited ("Saambou Holdings") for a nominal amount of R1,00.
FirstRand will propose a scheme of arrangement in terms of section 311 of
the Companies Act (1973) between Saambou Bank and all its creditors,
contingent or actual, other than depositors ("the scheme"). In terms of the
scheme:
all the assets and liabilities of Saambou Bank, other than the residential
mortgage loan book and the deposit liabilities, will then be ring fenced
into a receivership. Such assets and liabilities include, inter alia, the
micro-lending and asset-based finance assets, infrastructure and staff of
Saambou Bank; and
creditors will receive 100 cents in the Rand for their claims as at the
date of the sanctioning of the scheme.
Subsequent to the scheme the assets and liabilities of Saambou Bank will
comprise (based on current values):
the deposit liabilities - R12,8 billion;
the mortgage loan book - R4,9 billion (which excludes securitised mortgage
loans of R2,5 billion already owned by FirstRand); and
a claim against the receivership for R7,9 billion ("the claim").
Performance under the claim will be guaranteed by the South African Reserve
Bank ("SARB"). The claim will bear interest at a rate approximating the
SAFEX call rate.
Receivers will be appointed to manage the assets under receivership with a
view to ensuring optimal realisation, either through the collection of such
assets, or the disposal of assets to interested parties.
5. Conditions and interim arrangements
The transaction is subject to the following remaining conditions:
regulatory approvals associated with and consequential to the transaction,
and specifically including the scheme;
approval by the shareholders of Saambou Holdings to the disposal of the
shares in Saambou Bank; and
the sanctioning of the scheme by the High Court.
FirstRand, the SARB and the curator have agreed to implement an interim
arrangement to give provisional effect to the transaction, subject to the
fulfillment of the conditions.
The curator has agreed to assist in the administration of the Saambou Bank
access points (branches, call centres and ATMs) to ensure an efficient
handover to First National Bank and to minimise disruption for Saambou
depositors and mortgage bond holders.
Sandton
17 May 2002
Merchant Bank and Sponsor to FirstRand
Rand Merchant Bank
A division of FirstRand Bank Limited
Corporate Finance
Curator to Saambou
John Louw
KPMG
