| Mon 8 Jul 2002, 0:00 | | Servest / Amb Partners: Joint Announcement |
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Servest / AMB Partners: Joint announcement
Servest Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/000785/06)
JSE Share code: SRV ISIN: ZAE000015806
("Servest" or "the Company")
AMB Private Equity Partners Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/015329/06)
JSE Share code: APP ISIN: ZAE000026936
("AMB Partners")
Joint announcement regarding;
* the sale by Servest for cash, of its investment in Servest (Proprietary)
Limited, ("the Sale") to a consortium led by AMB Partners, ("the Consortium") in
accordance with section 228 of the Companies Act, 1973 (Act 61 of 1973), as
amended ("the Companies Act");
* the distribution to shareholders of Servest of the proceeds of the Sale
together with residual cash remaining within Servest by way of a distribution in
anticipation of liquidation; and
* the delisting, the final liquidation dividend and the voluntary winding up
of the Company
1. Introduction
Further to the cautionary announcement published by Servest on 28 May 2002,
shareholders of Servest are advised that agreement has been reached between
Servest and the Consortium whereby, subject to fulfilment of inter alia the
conditions precedent in paragraph 5 below ("the Sale Conditions"), Servest will
dispose of its entire investment in Servest (Proprietary) Limited (as more fully
described in paragraph 2 below) to Main Street 78 (Proprietary) Limited ("Main
Street 78"), a subsidiary of AMB Partners. The purchase consideration is R172
854 861 payable in cash ("the Sale Proceeds").
Subject to the fulfilment of the conditions precedent referred to in paragraph
6 below, Servest will make an Initial Distribution to the shareholders of
Servest of approximately 90 cents per Servest share ("the Initial
Distribution"), which represents a premium of 80% to the closing market price on
the JSE Securities Exchange South Africa ("the JSE") on Monday 27 May 2002,
being the day immediately preceding publication of the cautionary announcement,
of 50 cents per share, and a premium of 43% to the closing market price on the
JSE on Thursday 4 July 2002, being the day immediately preceding the publication
of this announcement, of 63 cents per Servest share. The final liquidation
dividend is not expected to be material.
2. The Sale
Subject to the fulfilment of inter alia the Sale Conditions, Main Street 78
will acquire from Servest the entire issued share capital of, and all of
Servest`s claims on loan account against Servest (Proprietary) Limited. Servest
(Proprietary) Limited is Servest`s only investment and is the holding company of
a support services group focused on providing lowtech, integrated outsourced
services across the contract cleaning, washroom and hygiene, industrial laundry,
security, marine services and office services industries.
The sale agreement, which will lie open for inspection, contains terms and
conditions typical for a transaction of this nature. Messrs K J Fine, D C
Zietsman and other senior Servest executives who are currently the shareholders
of Servest will reinvest the proceeds of the Initial Distribution accruing to
them in Main Street 78, and are part of the Consortium.
3. Rationale for the Sale by Servest of its investment in Servest
(Proprietary) Limited
Servest listed on the JSE by way of a reverse listing into the Publico
Holdings Limited cash shell in 1998. Servest was initially listed in the
Industrial - Cash Companies sector before transferring to the Industrial -
Services sector on 25 March 1999. At listing Servest shares traded at 380 cents
per share, but the share price has declined markedly since then. This is
primarily due to the fact that over the last two years investor appetite for
small capitalisation shares has declined significantly. The directors of
Servest remain positive about the future prospects of Servest, but do not
believe that a continued listing of Servest serves any beneficial purpose.
As a consequence of the lack of investor interest in small capitalisation
shares and the depressed share price, the listing of Servest no longer provides
the ability to raise capital or the ability to incentivise staff adequately.
The raising of capital and the incentivisation of staff members were both
primary drivers for the original listing of Servest. Servest also currently
incurs direct and indirect costs in excess of R1 million per year maintaining
the listing.
Accordingly, the Servest directors believe that the proposed sale of Servest`s
investment in Servest (Proprietary) Limited to Main Street 78 and the consequent
distributions should afford minority shareholders an ideal opportunity to
realise their investment in Servest at a significant premium to recent market
prices.
4. Rationale for the acquisition by AMB Partners of an interest in Servest
(Proprietary) Limited
The acquisition of an interest in Servest (Proprietary) Limited by AMB
Partners is in line with AMB Partners` strategy of investing in quality
companies with strong management teams which demonstrate the ability to achieve
superior growth. AMB Partners is of the opinion that Servest (Proprietary)
Limited meets its defined criteria for investment and hence will generate
superior returns over the medium to long-term. The investment in Servest
(Proprietary) Limited is expected to enhance the underlying growth in net asset
value of AMB Partners.
5. Sale Conditions
Implementation of the Sale is subject to the fulfilment of inter alia the
following conditions precedent:
* the issuing by Nedcor Investment Bank Limited ("NIB") of an opinion to the
effect that the terms and conditions of the Sale are fair and reasonable to
the shareholders of Servest;
* the passing by the shareholders of Servest, other than any related parties,
in general meeting of an ordinary resolution approving the terms and
conditions of the Sale in accordance with the provisions of section 228 of
the Companies Act;
* the approval of the Sale by the Competition Commission South Africa; and
* the approval of the necessary regulatory authorities, including the JSE,
the
Securities Regulation Panel ("SRP") and the South African Reserve Bank.
As regards the above conditions precedent, it is an express term of the sale
agreement that such conditions, other than that relating to Competition
Commission approval (which must be fulfilled within 90 days of the lodging of
the application for such approval) are fulfilled by Monday 30 September 2002, or
such later date as may be determined in accordance with the provisions of the
sale agreement, failing which the Sale will not become of force and effect.
6. Conditions precedent to the Initial Distribution
Payment of the Initial Distribution is subject to the fulfilment of the
following conditions precedent:
* the implementation of the Sale; and
* the passing by the shareholders of Servest of the resolutions necessary to
effect payment of the Initial Distribution.
7. The delisting, the final liquidation dividend and the voluntary winding up
of Servest
Subject to the implementation of the Sale and the payment of the Initial
Distribution, Servest will apply to the JSE for the termination of its listing.
Subject to the passing (and registration by the Registrar of Companies, where
required) of the resolutions which are to be proposed at a general meeting of
the shareholders of Servest, Servest will change its name and be wound up in
terms of a members` voluntary winding up. The winding up is expected to be
completed in approximately 18 months. During this period, costs will be
incurred in terms of the actual winding up. Furthermore, income and other taxes
may also have to be paid by Servest. Accordingly, the exact quantum and payment
date of the final liquidation dividend is unknown. However the final
liquidation dividend is not expected to be material. An announcement in this
regard will be published at the appropriate time advising the shareholders of
Servest of all pertinent information.
8. Interests of the Consortium
Neither AMB Partners nor Main Street 78 currently has an equity interest in
Servest. Messrs K J Fine, D C Zietsman and other senior Servest executives who
are part of the Consortium collectively own 29 615 451 shares in Servest,
amounting to 15,4% of Servest`s total shares in issue, and will as related
parties to the transaction not vote at the general meeting.
9. Financial effects
9.1 Servest
The table below sets out the financial effects of the Sale and the winding
up on the shareholders of Servest, assuming a total cash payment to the
shareholders of Servest of 90 cents per share:
Notes Before After %
(cents per share) (cents per share) change
Market value 1 50 90 80%
Market value 2 63 90 43%
Headline earnings 3 5.0 5.8 16%
Net asset value 4 180.1 90 (50%)
Net tangible asset value 5 8.5 90 959%
Notes:
1. The "Before" column is the closing market price per Servest share on the
JSE on Monday 27 May 2002, being the day immediately preceding the publication
of the first cautionary announcement. The "After" column shows the approximate
Initial Distribution to be received by each shareholder.
2. The "Before" column is the closing market price per Servest share on the
JSE on Thursday 4 July 2002, being the day immediately preceding publication of
this announcement. The "After" column shows the approximate Initial
Distribution to be received by each shareholder.
3. The "Before" column is the audited headline earnings per Servest share for
the year ended 28 February 2002, calculated on the weighted average number of
188 160 518 Servest shares in issue throughout the 12 months ended 28 February
2002. The "After" column reflects the after tax interest income, at an average
tax rate of 30%, that a shareholder would have earned had the approximate
Initial Distribution received by a shareholder been invested at an interest rate
of 9,18% for a year, being the average rate of interest earned before tax on a
12 month fixed deposit for the year ended 28 February 2002.
4. The "Before" column is the audited net asset value per Servest share at 28
February 2002, calculated on 192 060 957 shares in issue at 28 February 2002.
The "After" column shows the approximate Initial Distribution to be received by
each shareholder.
5. The "Before" column is the audited net tangible asset value per Servest
share at 28 February 2002, calculated on 192 060 957 shares in issue at 28
February 2002. The "After" column shows the approximate Initial Distribution to
be received by each shareholder.
9.2 AMB Partners
The table below sets out the pro forma financial effects of the Sale on
the headline earnings per unit ("HEPS") and net asset value per unit ("NAV") of
AMB Partners based on the financial results for the six months ended 31 March
2002, being the most recent reported results of AMB Partners. The pro forma EPS
and NAV have been calculated applying the same accounting policies applied in
AMB Partners` latest audited annual financial statements.
Notes Before After %
(cents per share) (cents per share) change
Headline earnings 1 16.8 23.7 41.1%
Net asset value 2 1 617 1 617 -
1. The "Before" column reflects the audited headline earnings per AMB Partners
unit for the six months ended 31 March 2002, calculated on the weighted average
number of 51 912 856 units in issue throughout the six month period ended 31
March 2002. The "After" column assumes that the Sale was concluded on 1 October
2001 and reflects the audited headline earnings per AMB Partners unit
calculated, to include AMB Partners` share, being 65%, of Servest (Proprietary)
Limited`s headline earnings for a six month period and taking account of an
interest forfeit calculated at an average after tax rate of 6.48% utilising an
average tax rate of 30% on AMB Partners portion of the Sale Proceeds, being R147
million.
2. The "Before" column is the audited net asset value per AMB Partners unit at
31 March 2002, calculated on 51 912 856 units in issue at 31 March 2002. The
"After" column assumes that the Sale was concluded on 31 March 2002 and reflects
the net asset value per AMB Partners unit at 31 March 2002 calculated to include
the acquisition of AMB Partners` interest of 65% in Servest (Proprietary)
Limited.
10. Salient dates and times for the shareholders of Servest
2002
Last day for shareholders to lodge forms of proxy for the
general meeting, by 09:00 on Wednesday 7 August
General meeting held at 09:00 on Monday 12 August
Results of general meeting published in the press on Tuesday 13 August
Expected last day to trade in Servest shares on the
JSE in order to be entitled to receive the Initial
Distribution on Wednesday 14 August
Expected date of suspension of the listing of Servest
on the JSE from the commencement of trade on Thursday 15 August
Expected record date to be recorded on the register
to receive the Initial Distribution Wednesday 21 August
Expected date of payment of the Initial Distribution Thursday 22 August
Termination of listing at commencement of trade on Friday 23 August
Notes:
1. Any variation of the above dates and times, approved as necessary by the JSE
and the Securities Regulation Panel will be published in the press and released
on SENS.
2. Dematerialised shareholders recorded on the register on the record date for
voting must provide their CSDP with their instructions for attendance or voting
at the general meeting in the manner stipulated in the custody agreement
governing the relationship between such shareholders and the CSDP. 3. These
instructions must be provided to the CSDP by the cut-off time and date advised
by the CSDP for instructions of this nature.
Share certificates may not be demateriliased or rematerialised after Tuesday 6
August 2002.
11. Opinions, recommendations and undertakings
NIB has been appointed as independent investment bank to the board of
directors of Servest. NIB will issue an opinion as to whether the terms and
conditions of the Sale are fair and reasonable to the shareholders of Servest.
The board of directors of Servest have considered the terms and conditions of
the Sale and subject to the receipt from NIB of an opinion to the effect that
the terms and conditions of the Sale are fair and reasonable to the shareholders
of Servest, recommend that the shareholders of Servest approve in general
meeting the resolutions required to effect the Sale, Initial Distribution,
delisting, final liquidation dividend and the voluntary winding up of the
Company.
12. Confirmation of financial resources
African Merchant Bank Limited has provided the Securities Regulation Panel
with the appropriate confirmation that Main Street 78 has sufficient financial
resources available to it to settle the Sale Proceeds due in terms of the sale
agreement.
13. Further cautionary announcement and documentation
Shareholders of Servest are advised to continue exercising caution while dealing
in Servest shares until a further announcement, is made in this regard on or
about Monday 15 July 2002.
A circular containing further information will be posted to the shareholders of
Servest and the shareholders of AMB Partners within 28 days of the publication
of this announcement.
5 July 2002
Investment bank and independent adviser to Servest
Nedcor Invesment Bank Limited
Corporate law advisers and consultants to Servest
Edward Nathan & Friedland (Pty) Ltd
(Registration number 1999/026464/07)
Sponsor to Servest
Deutsche Bank Securities (SA) (Pty) Limited
(Registration number 1995/011798/07)
Merchant bank and sponsor to AMB Partners
African Merchant Bank Limited
Registered Bank
Registration number 1996/016470/06
Attorneys to AMB Partners
Webber Wentzel Bowens
Date: 08/07/2002 07:43:00 AM Produced by the JSE SENS Department
