| Fri 17 May 2002, 0:00 | | Restructure Of The Saambou Holdings Group And |
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RESTRUCTURE OF THE SAAMBOU HOLDINGS GROUP AND PROPOSED DISPOSAL OF
SAAMBOU BANK LIMITED (UNDER CURATORSHIP) ("Saambou Bank")
SAAMBOU HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004170/06)
Share code: SBO ISIN number: ZAE 000006409
("Saambou Holdings")
RESTRUCTURE OF THE SAAMBOU HOLDINGS GROUP AND PROPOSED DISPOSAL OF
SAAMBOU BANK LIMITED (UNDER CURATORSHIP) ("Saambou Bank")
Introduction
Investec Bank Limited, on behalf of the Board of directors of Saambou
Holdings, is authorised to announce:
the restructure of the Saambou Holdings Group referred to in paragraph 2
below ("the Saambou Holdings Group restructure"); and
that agreement has been reached between FirstRand Limited ("FirstRand"), the
South African Reserve Bank and the curator of Saambou Bank in terms of
which, subject to the fulfilment of the conditions precedent referred to in
paragraph 3.3 below, FirstRand Bank Holdings Limited ("FirstRand Bank") will
acquire all of the shares in and claims against Saambou Bank for R1 ("the
Saambou Bank disposal"). In this regard, Saambou Holdings shareholders are
also referred to the joint announcement by FirstRand and Saambou Bank
published elsewhere in this publication today.
The Saambou Holdings Group restructure and the Saambou Bank disposal are
referred to collectively as "the Saambou Holdings transactions".
The Saambou Holdings Group restructure
Rationale for the Saambou Holdings Group restructure
It was necessary to restructure certain interests within the Saambou
Holdings Group to:
enable Saambou Holdings to operate as an entity independent of Saambou Bank;
transfer all of the banking operations and assets to Saambou Bank;
resolve certain of the potential areas of conflict between Saambou Holdings
and Saambou Bank;
simplify the capital structure of Saambou Bank; and
place the curator of Saambou Bank in a better position to conclude
transactions relating to Saambou Bank.
Salient terms
The Saambou Holdings Group restructure was effected in terms of agreements
entered into mainly between Saambou Holdings and Saambou Bank, the salient
terms of which are set out below:
2.2.1 Saambou Holdings disposed of the following significant wholly-
owned subsidiaries to Saambou Bank for an aggregate consideration of R198
million:
Saambou Property Finance Commerical (Proprietary) Limited, which mainly
provides debt finance against commercial properties;
EMID (Proprietary) Limited, which houses the information technology hardware
and most of the software utilised by Saambou Bank;
Fourth Dimension Financial Services (Proprietary) Limited, a company which
provides financial advisory services;
Saambou International Insurance PPC Limited, which contains a portfolio of
liquid assets; and
Thuthukani Group Limited, which owns various emerging market loan books and
also includes Snyman & Vennote.
Saambou Holdings sold back to Saambou Bank all the promissory notes issued
to it by Saambou Bank for R114,7 million. The promissory notes comprised 16
semi-annual payments by Saambou Bank of R12,6 million each from 29 April
2002.
After application of the amounts referred to in paragraphs 2.2.1 and 2.2.2
above, Saambou Holdings paid R36,8 million to Saambou Bank to settle the
outstanding balance of the loan from Saambou Bank to Saambou Holdings.
Saambou Holdings accelerated the conversion of the compulsorily convertible
loans effectively held by it in Saambou Bank, into ordinary shares in
Saambou Bank.
As part of the Saambou Holdings Group restructure, Saambou Holdings has
disposed of approximately 26% of the ordinary shares in Primevest Holdings
(Proprietary) Limited ("Primevest") in exchange for Primevest`s 24,7 million
non-redeemable, non-cumulative preference shares in Saambou Bank, which were
subsequently converted into ordinary shares that form part of the shares to
be disposed of to FirstRand Bank in terms of the Saambou Bank disposal.
Saambou Holdings agreed with certain of its compulsorily convertible
preference shareholders that 9,6 million of the Saambou Holdings
compulsorily convertible preference shares will no longer be entitled to
preference share dividends.
Saambou Holdings purchased from Saambou Bank 5 million Saambou Holdings
redeemable / convertible preference shares for R5 million.
Saambou Holdings has agreed with Saambou Bank that should Saambou Bank write
off amounts advanced under various staff share incentive schemes, all
Saambou Holdings ordinary shares acquired by Saambou Bank pursuant to the
writing off of such advances or the direct or indirect release of employees
from their liabilities under such schemes shall effectively be cancelled for
no consideration. The maximum number of Saambou Holdings ordinary shares
that can be cancelled as aforementioned is 20 286 310.
3. Saambou Bank disposal
3.1 Rationale for the Saambou Bank disposal
The curator of Saambou Bank, after having managed a process in which several
financial institutions were invited to bid for the shares in or the business
of Saambou Bank, is proposing the Saambou Bank disposal as the only viable
transaction for Saambou Bank stakeholders.
3.2 Salient terms
The consideration offered by FirstRand Bank to Saambou Holdings for Saambou
Bank is R1. Following the Saambou Bank disposal, Saambou Holdings will have
no further exposure to Saambou Bank or any of its underlying assets or
liabilities. Pursuant to the completion of the Saambou Bank disposal, the
FirstRand Group will have effectively assumed the depositor liabilities of
Saambou Bank amounting to R12,8 billion and acquired the residential
mortgage loan book of Saambou Bank amounting to R4,9 billion as well as a
claim of R7,9 billion against a receivership into which certain assets and
liabilities of Saambou Bank will be ring fenced.
The directors of Saambou Holdings have appointed independent advisors to
advise them on the terms and conditions of the Saambou Bank disposal.
Saambou Bank depositors are referred to the joint announcement by FirstRand
and Saambou Bank as well as the announcement by Saambou Bank to depositors
published elsewhere in this publication today for information relating to
their deposits.
Conditions precedent
The Saambou Bank disposal is subject to the following conditions precedent:
approval by Saambou Holdings ordinary shareholders in general meeting of the
ordinary resolution to implement the Saambou Bank disposal;
approval by the regulatory authorities, to the extent required; and
the sanctioning of a scheme of arrangement by the High Court that will be
proposed by FirstRand in terms of section 311 of the Companies Act (1973)
between Saambou Bank and all its creditors, contingent or actual, other than
depositors.
4. Future prospects of the Saambou Holdings Group
Subsequent to the Saambou Holdings transactions, the significant assets and
liabilities of Saambou Holdings will be:
a 100% interest in Saambou Life Assurance Limited ("Saambou Life"), which
had a net asset value of approximately R244 million at 31 March 2002 after
adjusting for Saambou Holdings` obligation to Saambou Bank of R36,8 million,
as referred to in paragraph 2.2.3 above, which was funded by Saambou Life.
The aforementioned net asset value of R244 million excludes the value of
Saambou Life`s in-force policies, which is in the process of being valued by
Saambou Life`s actuaries;
a 100% interest in National Insurance Limited ("Natsure"), which had a net
asset value of approximately R25 million at 31 March 2002;
an obligation at 31 March 2002 to Saambou Holdings promissory note holders
for the payment of 16 semi-annual amounts of R12,6 million each, commencing
on 29 April 2002, which had a present value of approximately R124 million at
31 March 2002 assuming a discount rate of 15%; and
an obligation at 31 March 2002 to Saambou Holdings promissory note holders
for the payment of 6 semi-annual amounts of R19,8 million each, commencing
on 29 April 2002, which had a present value of approximately R99 million at
31 March 2002 assuming a discount rate of 15%.
The directors of Saambou Holdings are considering various alternatives
relating to either the disposal of Saambou Life and Natsure or the run off
of their underlying businesses subsequent to the Saambou Holdings
transactions and further announcements in this regard will be made in due
course.
5. Documentation
The relevant documentation setting out the full details of the Saambou
Holdings transactions, which is subject to the approval of the JSE and the
Securities Regulation Panel, and a notice convening a general meeting of
ordinary shareholders to approve the Saambou Bank disposal will be posted to
ordinary shareholders in due course.
Pretoria
17 May 2002
Merchant bank to Sponsor to Saambou Legal adviser to
Saambou Holdings Holdings Saambou Holdings
Investec Bank Limited Investec Bank Limited Jowell Glyn & Marais
Corporate Finance
