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JD GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1981/009108/06)
Share code: JDG ISIN: ZAE000030771
("JD Group")
Further Cautionary Announcement and information regarding:
- the financial rescue of Profurn Limited ("Profurn") by FirstRand Bank
Limited ("FirstRand") involving the provision of selected retail expertise
and services by JD Group to Profurn at the request of Firstrand; and
- the Memorandum of Understanding entered into between JD Group and
FirstRand regarding the proposed sale of the businesses of Profurn to JD
Group; and
- the introduction of a foreign investor as a material shareholder in JD
Group.
1. INTRODUCTION
Further to the cautionary announcement published during June 2002, the JD
Group board of directors announces that:
- an interim agreement for JD Group to provide selected retail expertise and
services, in order to contain the difficulties experienced by Profurn, has
been entered into between JD Group, FirstRand and Profurn ("Interim
Agreement"); and
- a Memorandum of Understanding ("Acquisition MOU") has been entered into
between JD Group and FirstRand whereby FirstRand will procure, as set out in
paragraph 6 below, the sale of the businesses of Profurn to JD Group or its
nominees ("the proposed transaction").
2. INTERIM AGREEMENT
The Interim Agreement which has been considered and noted by the competition
authorities and , forms part of the financial rescue of Profurn by
FirstRand, will commence on the 28th of June 2002 and will continue to be in
force until the final adjudication of the application to the competition
authorities by JD Group and Profurn in respect of the proposed transaction.
The Interim Agreement will not affect the authority of the Profurn Board and
the overall responsibility for the business of Profurn will remain with the
Profurn Board and FirstRand as the major shareholder of Profurn. JD Group
will be paid a fee for services rendered in terms of this agreement.
3. ACQUISITION MOU
The proposed transaction will be structured in the most optimal manner and
will be subject to the fulfillment of the conditions precedent referred to
in paragraph 7
The purchase consideration shall be a maximum of 54,2 million JD Group
shares and shall be adjusted for a deterioration in Profurn`s operating
performance between 1 January 2002 and 30 June 2002 and any material
undisclosed liabilities that may be revealed during the due diligence review
to be performed by JD Group of Profurn. An audit of Profurn will be
undertaken for this period.
4. FOREIGN INVESTOR
FirstRand has entered into discussions with a foreign investor to acquire a
material portion of FirstRand`s eventual shareholding in JD Group as a
result of the proposed transaction.
5. RATIONALE FOR JD GROUP
JD Group has considered the necessary interim resource requirements and has
sufficient management depth to assist FirstRand to preserve the Profurn
asset base, without impacting on current responsibilities.
The proposed transaction in no way detracts or undermines any of JD Group`s
stated strategies. This transaction also has the potential to enhance value
for JD Group shareholders and at the same time to preserve jobs and the
supply base in the industry which is currently under threat.
6. UNDERTAKINGS FROM FIRSTRAND
FirstRand, which holds 78.8% of Profurn`s issued share capital, has
undertaken to vote in favor of any resolutions required to implement the
proposed transaction.
7. CONDITIONS PRECEDENT
The proposed transaction is conditional upon, inter alia, the following:
- approval of the necessary ordinary and special resolutions by the
requisite majority of JD Group and Profurn shareholders at their respective
general meetings relating to the proposed transaction; and
- approval of the revelant stock exchanges, the Securities Regulation Panel,
the competition authorities and other regulatory authorities that may be
required; and
- the grant of specified banking facilities to JD Group by one or more of
the major South African banks.
8. FURTHER CAUTIONARY ANNOUNCEMENT AND DOCUMENTATION
The relevant documentation, including the terms of comprehensive agreements
to be concluded, and further announcements will be communicated after the
Competition Authorities have issued a ruling regarding the proposed
transaction. JD Group shareholders are therefore advised to continue to
exercise caution in dealing in their securities until a further announcement
is published.
Corporate Advisor : Gensec Bank
Sponsor : JP Morgan
Legal advisor : Feinsteins Attorneys
Date: 27/06/2002 08:00:39 AM Produced by the SENS Department
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