| Fri 19 Jul 2002, 0:00 | | Daewoo Company Announcement |
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Daewoo Company Announcement
Daewoo Electronics S.A. Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/004570/06)
Share code: DAE ISIN: ZAE000009437
("Daewoo" or "the company")
ANNOUNCEMENT REGARDING:
- A specific repurchase of ordinary shares;
- Proposed scheme of arrangement in terms of section 311 of the Companies Act,
1973 (Act 61 of 1973), as amended ("the Act") between Daewoo and its
shareholders, other than Daewoo Electronics Investment Company (Proprietary)
Limited ("Daewoo Investments"); and
- The delisting of Daewoo.
1. Introduction
1.1 Further to the cautionary announcements published on 17 April 2002 and 5
June 2002 shareholders are advised that Daewoo intends to propose a scheme of
arrangement between Daewoo and its shareholders, other than Daewoo Investments
("the scheme members"), in terms of section 311 of the Act ("the scheme"), which
scheme will be recommended by the board of directors of Daewoo. The scheme will
become operative upon the fulfilment of conditions precedent referred to
hereunder.
1.2 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
Daewoo will, for a cash consideration of 2 cents per share, repurchase 20 433
051 Daewoo ordinary shares held by scheme members ("scheme shares") (such
repurchase being referred to herein as the "specific share repurchase"). The
repurchased shares will be cancelled.
1.3 If the scheme is implemented, Daewoo Investments will own all the issued
shares in Daewoo and the listing of Daewoo ordinary shares on the JSE Securities
Exchange South Africa ("the JSE") will be terminated.
1.4 Daewoo Investments currently controls 31 166 949 out of the total 51 600
000 issued ordinary shares in Daewoo, representing 60,4% of Daewoo`s entire
issued share capital.
2. Rationale for the scheme
The directors of Daewoo believe that Daewoo`s listing no longer adds value to
the company and the scheme will allow shareholders to exit Daewoo and to
terminate Daewoo`s listing on the JSE.
The weak financial performance of the company and the limited tradability of the
shares on the JSE has resulted in Daewoo not being an attractive investment to
potential shareholders and has caused existing shareholders difficulty in
disposing of their shares.
The management time and expenses related to being listed are not justifiable. In
addition, the continued listing of Daewoo shares will in any event be under
pressure if the company does not achieve the levels of profitability which are
required to maintain a Main Board listing on the JSE.
Having considered all these factors, the directors believe that the scheme, if
implemented, will provide the present minority shareholders of Daewoo with a
mechanism to realise their investment in Daewoo at a premium to the current
market value of their shares on the JSE.
3. The Scheme
3.1 The scheme consideration
In terms of the scheme, scheme members registered as such on the record date of
the scheme will, upon the scheme becoming operative, be entitled to receive a
cash payment of 2 cents for every Daewoo ordinary share held.
3.2 Financial effects of the scheme on scheme members
The table below illustrates the financial effects per share of the scheme on a
scheme member:
Notes Before the After the
scheme scheme Change
(cents) (cents) (%)
Headline
(loss)/ 1 (182,50) 0,14 >100,0
earnings per
share (cents)
Market value 2 1,00 2,00 +100,0
per share
(cents) 3 1,23 2,00 +63,0
Market value
per share
(cents)
Tangible net
asset value 4 (343,00) 2,00 >100,0
The table has been prepared on the following basis:
1. The "Before" column represent the audited headline earnings per share of
Daewoo for the financial year ended 31 December 2001. The "After" column
reflects the after tax interest income, at a tax rate of 30%, that a scheme
member would have earned had the scheme consideration been invested at an after
tax rate of 7,0% for the financial year ended 31 December 2001.
2. The market value in the "Before" column is the closing price of Daewoo
shares on the last trading day prior to the publication of the first cautionary
announcement on 17 April 2002. The "After" column shows the scheme
consideration.
3. The market value in the "Before" column is the weighted average traded
price of Daewoo shares over the 30 trading days up to the publication of the
first cautionary announcement on 17 April 2002. The "After" column shows the
scheme consideration.
4. The "Before" column is the tangible net asset value per share of Daewoo at
31 December 2001.
5. The above calculations exclude the effect of capital gains tax on
individual shareholders.
4. Conditions precedent
The scheme is expected to become operative on the first Monday, at least five
business days after the fulfilment of the following conditions precedent:
4.1 the approval at a general meeting of the shareholders of Daewoo of a
special resolution to amend the company`s articles of association to authorise
the company to acquire its own shares in terms of section 85 of the Act and such
special resolution being registered by the Registrar of Companies in terms of
the Act;
4.2 the specific share repurchase being approved in terms of a special
resolution of shareholders of Daewoo at a general meeting (in respect of which
special resolution Daewoo Investments shall not be entitled to vote) and such
special resolution being registered by the Registrar of Companies in terms of
the Act;
4.3 the scheme being approved at the scheme meeting by a majority representing
not less than 75% (three-fourths) of the votes exercisable by the scheme members
present and voting either in person or represented by proxy at the scheme
meeting;
4.4 the High Court of South Africa ("the Court") sanctioning the scheme;
4.5 a certified copy of the Order of Court sanctioning the scheme being lodged
with, and registered by, the Registrar of Companies in terms of the Act; and
4.6 any other regulatory approvals or consents necessary to implement the
scheme being obtained, including but not limited to approvals and consents form
the JSE, the Securities Regulation Panel ("the SRP") and the Exchange Control
department of the South African Reserve Bank.
5. Opinions and Recommendations
5.1 The board of directors of Daewoo has instructed BDO Spencer Steward, acting
as independent financial advisor, to review and consider the terms and
conditions of the scheme. The latter has advised the board of directors of
Daewoo that it has considered the terms and conditions of the scheme, and is of
the opinion that the scheme consideration of 2 cents for every Daewoo share
payable in cash is fair and reasonable to scheme members.
5.2 The board of directors of Daewoo, having considered the terms and
conditions of the scheme and the advice from BDO Spencer Steward, is of the
unanimous opinion that the terms and conditions are fair and reasonable to
scheme members and, accordingly, recommends that shareholders vote in favour of
the specific share repurchase and scheme members vote in favour of the scheme.
5.3 The directors of Daewoo who are scheme members have undertaken to vote in
favour of the scheme in respect of the Daewoo shares held by them.
6. Cash confirmation to the Securities Regulation Panel
FirstRand Bank Limited has satisfied the SRP that Daewoo has sufficient cash
resources available to meet its obligations in terms of the scheme.
7. Further announcement and documentation
7.1 Subject to the necessary approvals from the JSE, the SRP and the South
African Reserve Bank, and subject to the Court granting leave to convene the
scheme meeting, a circular containing full details of the scheme and notices
convening the general and scheme meetings will be posted to scheme members in
due course.
7.2 A further announcement setting out the salient dates of the scheme and
shareholders meeting will be published in the press in due course.
Johannesburg
19 July 2002
Corporate Advisor Sponsor
Corporate Solutions Exchange Sponsors
Legal Advisor Independent Corporate Advisor
Fluxman Rabinowitz Raphaely Weiner BDO Spencer Steward
Date: 19/07/2002 12:18:07 PM Produced by the JSE SENS Department
