| Thu 30 May 2002, 0:00 | | Tile Afrika - Proposed Scheme Of Arrangement |
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Tile Afrika - Proposed Scheme of Arrangement
TILE AFRIKA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1983/005300/06)
Share code: TLF ISIN: ZAE000017604
("Tile Afrika" or "the company")
Proposed scheme of arrangement in terms of section 311 of the Companies
Act (Act 61 of 1973), as amended ("the Act") between Tile Afrika and Tile
Afrika shareholders (other than certain of the directors, the executive
management, the employees and certain strategic shareholders of Tile
Afrika ("the consortium")), in regard to a specific repurchase by Tile
Afrika of Tile Afrika shares
1. INTRODUCTION
1.1 Further to the cautionary announcement published on the Stock Exchange
News Service ("SENS") on Thursday, 16 May 2002, and in the press on Friday,
17 May 2002, PSG Investment Bank Limited ("PSGIB") is authorised to announce
that Tile Afrika intends to propose a scheme of arrangement between itself
and Tile Afrika shareholders (other than members of the consortium,
comprising certain of the directors, the executive management, the employees
and certain strategic shareholders of Tile Afrika) ("scheme members"), in
terms of section 311 of the Act ("the scheme"). Upon the sanctioning of the
scheme by the High Court of South Africa, Tile Afrika will acquire 3 185 138
Tile Afrika ordinary shares ("the scheme shares") and the members of the
consortium will become the sole shareholders of Tile Afrika. As a result,
Tile Afrika will no longer comply with the shareholder spread requirements
as set out in rules 4.31(g)(iv) and (v) of the JSE Securities Exchange South
Africa ("the JSE") Listings Requirements, and the listing of Tile Afrika`s
ordinary shares on the JSE will, accordingly, be terminated.
1.2 The members of the consortium currently own or control 56 814 862 out of
the 60 000 000 issued ordinary shares in Tile Afrika, representing 94,69% of
Tile Afrika`s issued ordinary share capital.
2. MECHANICS AND TERMS OF THE SCHEME
2.1 It is proposed that the scheme be effected by means of a specific
repurchase of shares in accordance with section 85 of the Act, in terms of
which Tile Afrika will, for a cash consideration of 180 cents per share,
repurchase the scheme shares held by scheme members ("the specific
repurchase").
2.2 Subject to the fulfillment of the conditions precedent referred to in 5
below, scheme members will receive a cash consideration of 180 cents per
scheme share ("the scheme consideration"), which represents a 5,9% premium
on the market price of Tile Afrika ordinary shares of 170 cents on
Wednesday, 15 May 2002, the last trading day prior to the publication of the
cautionary announcement relating to the scheme and a 70% premium to Tile
Afrika`s net tangible asset value per share at 31 December 2001, the
company`s interim reporting date, of 105,9 cents. The aggregate
consideration receivable by the scheme members will be R5 733 248,40.
2.3 In the event of the scheme not becoming operative for any reason, Tile
Afrika may, at its election, make a conditional substitute offer to acquire
all the Tile Afrika shares held by Tile Afrika shareholders, other than the
members of the consortium, for the same consideration, ie. 180 cents per
share ("the substitute offer").
3. RATIONALE FOR THE SCHEME
3.1 Tile Afrika was listed on the JSE on 10 March 1999. Its subsidiaries
operate as retailers of ceramic tiles, sanitaryware and allied products.
3.2 The limited tradeability and small capitalisation status of Tile Afrika
have, since listing, resulted in a very low liquidity in Tile Afrika shares.
The board of directors of Tile Afrika ("the board" or "the directors") are
of the opinion that, given the illiquidity of the share, the negative
sentiment towards both small capitalisation shares and, to an extent, retail
companies listed on the JSE and the high costs associated with maintaining a
listing on the JSE, there appears to be little justification for the
continued listing of Tile Afrika.
3.3 Consequently, the board is of the opinion that the interests of Tile
Afrika shareholders would best be served by implementing the scheme and
delisting Tile Afrika. The implementation of the scheme will enable Tile
Afrika shareholders to realise their investment at a significant premium to
net asset value and the issue price of 100 cents per share at the time of
Tile Afrika`s listing.
4. PRO FORMA FINANCIAL EFFECTS OF THE SCHEME ON SCHEME MEMBERS
The pro forma financial effects of the scheme on a scheme member who holds
100 Tile Afrika shares, which are based on the assumptions set out below,
are as follows:
Per 100 scheme shares held
Before the After the
scheme scheme %
R R change
Market value: 15 May 170(1) 180 5,9
2002
Net tangible asset 105,9(2) 180 70,0
value
Earnings 14,9(3) 7,2(4) (51,2)
Headline earnings 14,9(3) 7,2(4) (51,2)
Notes:
Based on the closing market price of Tile Afrika ordinary shares of 170
cents on Wednesday, 15 May 2002, the last trading day prior to publication
of the cautionary announcement relating to the scheme.
Based on Tile Afrika`s net tangible asset value at 31 December 2001 of 105,9
cents.
Based on Tile Afrika`s earnings and headline earnings for the 6-month
period ended 31 December 2001.
Based on the assumption that the scheme consideration has been invested to
earn an after-tax return of 8% during the 6-month period ended 31 December
2001.
5. CONDITIONS PRECEDENT
The implementation of the scheme is subject to the fulfillment of the
following conditions precedent:
5.1 the specific repurchase being approved at a general meeting of Tile
Afrika shareholders in terms of a special resolution passed by a majority of
75% of the votes exercisable by Tile Afrika shareholders (other than the
consortium members, their associates and any parties acting in concert with
them), present and voting either in person or by proxy and such resolution
being registered by the Registrar of Companies;
5.2 the requisite majority of votes being cast in favour of the scheme at a
meeting of scheme members to be convened for such purpose;
5.3 the High Court of South Africa (Witwatersrand Local Division)
sanctioning the scheme and the Order of Court sanctioning the scheme being
registered by the Registrar of Companies; and
5.4 eceipt of the necessary regulatory approvals including, to the extent
required, approvals from the JSE, the Securities Regulation Panel ("SRP")
and the South African Reserve Bank.
6. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
6.1 The board appointed Moores Rowland Chartered Accountants ("Moores
Rowland") as an independent adviser to advise the board as to whether the
scheme consideration is fair and reasonable to scheme members. Moores
Rowland has advised the board that it has considered the terms and
conditions of the scheme and is of the opinion that the terms and conditions
are fair and reasonable to scheme members.
6.2 Messrs S J de S Rego, V Leonardi and I A I Kara, who are directors of
Tile Afrika, are also members of the consortium. Mr R W Heunis, a non-
executive director of Tile Afrika, represents, as trustee, the Gertjes
Family Trust, which trust is a member of the consortium. The board has
considered, inter alia, the advice from Moores Rowland and the terms and
conditions of the scheme, and is of the unanimous opinion that the terms of
the scheme are fair and reasonable to scheme members and recommend that
scheme members vote in favour of the scheme.
6.3 Tile Afrika shareholders holding 1 264 200 Tile Afrika shares have given
irrevocable undertakings to vote in favour of the specific repurchase and
the scheme or, if applicable, to accept the substitute offer. These
undertakings represent 39,69% of the 3 185 138 votes exercisable,
respectively, at the general meeting and the scheme meeting.
7. CONFIRMATION TO THE SRP
BOE Bank Limited has satisfied the SRP that Tile Afrika has sufficient cash
resources available to meet its obligations in terms of the scheme.
8. TERMINATION OF TILE AFRIKA`S LISTING ON THE JSE
Application will be made for the termination of Tile Afrika`s listing on the
JSE with effect from the operative date of the scheme. Full details of the
acceptance and surrender procedure for Tile Afrika share certificates and
other documents of title will be contained in the scheme documentation
referred to in paragraph 9 below.
9. FURTHER ANNOUNCEMENT AND CIRCULAR TO SHAREHOLDERS
9.1 Subject to the necessary approvals from the JSE and the SRP, and subject
to the Court granting leave to convene the scheme meeting, a circular
containing full details of the scheme will be posted to scheme members
within 30 days of this announcement.
9.2 A further announcement setting out the salient dates of the scheme will
be published in the press in due course.
Johannesburg
31 May 2002
Investment bank and sponsor Independent adviser to scheme
members
PSG INVESTMENT BANK MOORES ROWLAND
Attorneys
FLUXMAN RABINOWITZ-RAPHAELY WEINER
Date: 30/05/2002 05:10:00 PM Produced by the SENS Department
