| Mon 22 Jul 2002, 0:00 | | Offer By Peregrine To Citadel Minorities |
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OFFER BY PEREGRINE TO CITADEL MINORITIES
Peregrine Holdings Limited Citadel Holdings Limited
(Registration number (Registration number
1994/006026/06) 2000/027580/06)
JSE code: PGR ("Citadel")
ISIN code: ZAE000015152
("Peregrine")
Acquisition by Peregrine of a majority interest in Citadel and offer to Citadel
minority shareholders
1. Introduction
Shareholders are referred to the announcement dated 4 June 2002 in which
shareholders were advised that Peregrine had increased its shareholding in
Citadel to 33.13% and was in negotiations relating to further increasing its
stake in Citadel.
Grant Thornton Kessel Feinstein Corporate Sponsors (Proprietary) Limited and
Peregrine Corporate Advisory Services (Proprietary) Limited are authorised to
announce that Peregrine (through its wholly owned subsidiary, Peregrine
Strategic Investments (Proprietary) Limited) will, following the implementation
of the acquisitions detailed below, hold 60,6% of Citadel. In addition,
Peregrine owns options to subscribe for Citadel shares which, if fully
exercised, would, prior to making the offer to Citadel minority shareholders
described below, result in Peregrine holding in excess of 71% of Citadel. No
decision to exercise such option will be made until the outcome of the offer to
Citadel minority shareholders is finalised.
2. The acquisitions
Peregrine :
- has, since 4 June 2002, purchased from various Citadel shareholders,
an additional 1,0% of the issued share capital of Citadel ("the OTC
acquisitions");
- has, subject to the fulfilment of the conditions precedent set out in
paragraph 4, acquired a further 22,2% of the issued share capital of
Citadel from a consortium ("the consortium") consisting of the
founders of Citadel and associated parties ("the controlling
acquisition"); and
- will, subject to the fulfilment of the aforementioned conditions,
exercise its option to acquire an additional 4,3% of the issued share
capital of Citadel from members of the consortium ("the option
exercise"). This option is separate and distinct from the option to
subscribe referred to in paragraph 1 above.
The total purchase price payable for the OTC acquisition, the controlling
acquisition and the option exercise (collectively "the acquisition") is R77,2
million. This is to be discharged by a combination of R21,5 million in cash and
by the issue of 19 298 016 ordinary shares of 0,1 cent each in the issued share
capital of Peregrine ("Peregrine shares") at an average issue price of R2,89 per
Peregrine share, being an average share swap ratio of 32,6 Peregrine shares for
every one Citadel share.
3. Terms of the offer
In terms of the Securities Regulation Code on Take-overs and Mergers, the
acquisition is an affected transaction and a mandatory offer to the minority
shareholders of Citadel ("Citadel minority shareholders") is required.
Accordingly, an offer ("the offer") will be made by Peregrine to Citadel
minority shareholders (including the holders of convertible preference shares
and convertible redeemable debentures) to acquire their Citadel shares,
preference shares and debentures (collectively "Citadel shares"). In terms of
the offer, Citadel minority shareholders may elect to receive 40 Peregrine
shares for every one Citadel share held ("the share offer"). Alternatively,
Citadel minority shareholders may elect a cash payment of R110 for every Citadel
share held ("the cash offer"). R110 is the highest cash price paid by Peregrine
for the acquisition of Citadel shares in the three months prior to the date of
this announcement.
After taking into account the irrevocable undertakings given by shareholders
holding 15,4% of the issued share capital of Citadel (which includes the 80 868
convertible preference shares in issue) not to accept the cash offer, Fisher
Hoffman PKF (Jhb) Inc has confirmed to the Securities Regulation Panel ("SRP")
that Peregrine has sufficient resources available to satisfy its obligations in
terms of the cash offer.
In the event that acceptances are received in respect of the offer for 90% or
more of the Citadel shares held by the Citadel minority shareholders, Peregrine
intends to invoke the provisions of section 440K of the Companies Act, Act 61 of
1973, as amended, to compulsorily acquire any Citadel shares in respect of which
the offer is not accepted.
4. Conditions precedent
The controlling acquisition and the offer are conditional, inter alia, on
the following conditions precedent :
- the approval, in general meeting, by the shareholders of Peregrine, of
the controlling acquisition and the making of the offer;
- the requisite approvals of the JSE Securities Exchange South Africa
("the JSE"), the SRP and the South African Reserve Bank; and
- the approval by the Competition Commission in terms of section 14 of
the Competitions Act.
5. Effect of the acquisition and the offer on Peregrine and Peregrine
shareholders
Nature of business of Citadel
Citadel is a well established private client wealth management business focused
on meeting the increasingly sophisticated needs of high net worth individuals
who seek ongoing and holistic financial/investment advice in a global context.
The experienced multi disciplinary team of specialists within Citadel embrace
the wide range of skills necessary to provide a comprehensive and integrated
service to such investors in recommending and implementing, through its well
known house view, a financial plan suited to each individual`s circumstances.
Rationale for the acquisition
Peregrine`s increased shareholding in Citadel will:
- complete the transformation of its investment in Citadel from a private
equity investment into a core component of Peregrine`s range of asset
management services with Citadel becoming a subsidiary of Peregrine;
- provide the Peregrine group with a vehicle focused specifically on wealth
management for high net worth individuals; and
- increase the assets under management within the Peregrine group by almost
R9,0 billion.
Financial effects on Peregrine
The table below sets out the pro forma effects on the headline earnings per
Peregrine share, net asset value per Peregrine share and net tangible asset
value per Peregrine share in the following scenarios :
- after the acquisition;
- after the acquisition where the cash offer is accepted in full by all the
Citadel minority shareholders excluding those from whom the irrevocable
undertakings referred to in 3 have been obtained; and
- after the acquisition where the share offer is accepted in full.
Audited Pro Pro forma Pro forma
Before1 forma Citadel Citadel
Peregrin becomes a becomes a
e after wholly wholly
the owned owned
acquisit subsidiar subsidiary
ion y - the - the
cash share
offer is offer is
accepted accepted
in full in full
Headline
earnings per 52,2 52,9 53,8 51,1
Peregrine share
for the twelve
months ended
31 March 2002
(cents)2
Net asset value
per Peregrine 184,5 204,8 213,4 221,0
share at
31 March 2002
(cents)3
Net tangible
asset value per 140,3 125,4 97,0 116,2
Peregrine share
at 31 March 2002
(cents)3
Weighted average
number of 207,2 233,1 246,7 267,8
Peregrine shares
in issue
(million)
Actual number of
Peregrine shares 201,4 235,9 254,0 282,1
in issue after
taking account
of shares held
as treasury
stock (million)
Notes:
1. The figures in the "before" column are extracted from the audited annual
results of Peregrine for the year ended 31 March 2002.
2 Headline earnings per Peregrine share are based on the weighted average
number of Peregrine shares in issue.
3. Net asset value per Peregrine share and net tangible asset value per
Peregrine share are based on the actual number of Peregrine shares in issue.
The pro forma effects set out above take into account the Citadel shares
purchased as referred to in the announcement dated 4 June 2002 and are based on
the following assumptions :
- the 29 040 convertible, redeemable debentures in Citadel were redeemed by
Citadel at R110 per debenture on 1 July 2001;
- the acquisition and the purchase of the Citadel shares in terms of the
offer had been effective from 1 July 2001, being the commencement of
Citadel`s last financial year (which ended on 30 June 2002);
- the Peregrine shares issued and cash paid in consideration for the
acquisition were issued and paid on 1 July 2001 and the Citadel shares
purchased in terms of the offer were purchased on 1 July 2001;
- acceptance of the cash offer is by all the Citadel minority shareholders
excluding those from whom the irrevocable undertakings referred to in
paragraph 3 above have been obtained;
- the unaudited headline earnings of Citadel for the nine month period from 1
July 2001 to 31 March 2002, amounted to R33,9 million;
of the Peregrine shares utilised to satisfy the purchase price payable for
the acquisition and the offer, the weighted average number of 8,6 million
shares are from treasury stock and the balance are to be issued from the
authorised but unissued share capital of Peregrine.
6. Financial effects of the offer on Citadel shareholders
The table below sets out the pro forma financial effects of accepting the cash
offer or the share offer on Citadel minority shareholders (per Citadel share)
based on the following assumptions :
- the pro forma Citadel headline earnings for the nine months ended 31 March
2002 amounting to R33,9 million have been annualised for a full twelve
month period;
- the cash offer and the share offer were accepted on 1 July 2001;
- the pro forma headline earnings attributable to a Citadel minority
shareholder who accepts the cash offer are based on investing the cash
received for twelve months at a post-tax interest rate of 6% per annum;
- the pro forma headline earnings attributable to a Citadel minority
shareholder who accepts the share offer are based on the headline earnings
of Peregrine for the year ended 31 March 2002 and on the weighted number of
Peregrine shares in issue;
- in the case of an acceptance of the cash offer, the pro forma net asset
value and pro forma net tangible asset value per Citadel share are based on
investing the cash received for nine months at a post-tax rate of 6% per
annum;
- all the convertible preference shares were converted into ordinary shares
on 1 July 2001 resulting in the number of Citadel shares in issue being
2 931 896, on which the headline earnings, net asset value and net tangible
asset value have been based;
- the 29 040 convertible, redeemable debentures in Citadel were redeemed by
Citadel at R110 per debenture on 1 July 2001;
- no allowance has been made for capital gains tax, if any, payable by a
Citadel minority shareholder.
Unaudit Pro forma Pro forma
ed Accepting the Accepting
Before1 cash offer the share
offer2
Headline
earnings R15,44 R6,60 R20,43
attributable to
Citadel minority
shareholders per
Citadel share
held prior to
the offer
Net asset value
per Citadel R27,65 R114,95 R88,40
share at 31
March 2002
Net tangible
asset value per R27,65 R114,95 R46,48
Citadel share at
31 March 2002
Notes
1 The figures in the "before" column are extracted from the unaudited results of
Citadel for the nine months ended 31 March 2002 and, in the case of headline
earnings, have been annualised for a full twelve month period.
2 Based on acceptance of the share offer by all the Citadel minority
shareholders.
7. Competition Commission
A filing in respect of the acquisition is in the process of being made to the
Competition Commission, the outcome of which shareholders will be advised in due
course.
8. Opinions and recommendation
The directors of Peregrine have considered the terms of both the cash offer and
the share offer and are of the opinion that they are fair and reasonable to the
shareholders of Peregrine. They recommend that shareholders vote in favour of
the acquisition and of Peregrine implementing the offer.
An independent expert will be appointed by the directors of Citadel to consider
and advise Citadel minority shareholders on the terms of the offer. To assist
Citadel minority shareholders in coming to an informed decision, Citadel will be
arranging presentations to fully discuss the offer and the implications thereof
on Citadel minority shareholders. Letters to this effect will be posted shortly
and invitations will follow in due course once dates and venues have been
confirmed.
9. Documentation
A circular, which is subject to approval by the JSE and the SRP, will be posted
to Peregrine shareholders and Citadel minority shareholders as soon as Citadel`s
audited financial statements for the year ended 30 June 2002 are finalised,
which is expected to be during the last week of August. A further announcement
will be published at that time.
Johannesburg
22 July 2002
Lead Sponsor
Grant Thornton Kessel Feinstein Corporate Sponsors (Pty) Limited
Joint Sponsor and Corporate Advisor
Peregrine Corporate Advisory Services (Pty) Limited
Date: 22/07/2002 04:30:00 PM Produced by the JSE SENS Department
