| Thu 8 Aug 2002, 0:00 | | Hunt Leuchars & Hepburn Holdings Limited - Company |
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Hunt Leuchars & Hepburn Holdings Limited - Company Announcement
Hunt Leuchars & Hepburn Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/001164/06)
Ordinary share code: HLH ISIN: ZAE000003299
Preference share code: HLHP ISIN: ZAE000011441
("HL&H")
PROPOSED SCHEMES OF ARRANGEMENT IN TERMS OF SECTION 311 OF THE COMPANIES ACT,
1973 (ACT 61 OF 1973), AS AMENDED ("THE ACT"),
PROPOSED BY INDUSTRIAL PARTNERSHIPS INVESTMENTS LIMITED ("IPI"),
A SUBSIDIARY OF REMGRO LIMITED ("REMGRO"), BETWEEN
HL&H AND ITS ORDINARY AND PREFERENCE SHAREHOLDERS (OTHER THAN IPI)
1. INTRODUCTION
1.1 Further to the cautionary announcement released on The Securities Exchange
News Service ("SENS") on Thursday, 4 July 2002 and in the press on Friday, 5
July 2002 ("the cautionary announcement"), PSG Investment Bank Limited ("PSGIB")
is authorised to announce that IPI intends to propose schemes of arrangement
between HL&H and its ordinary and preference shareholders ("HL&H shareholders"),
other than IPI ("scheme members"), in terms of section 311 of the Act ("the
schemes"). Upon the sanctioning of the schemes by the High Court of South Africa
("the Court"), IPI will acquire 59 862 158 HL&H ordinary shares ("the ordinary
scheme shares") and 37 878 656 HL&H preference shares ("the preference scheme
shares") (collectively "the scheme shares"). As a result, HL&H will become a
wholly-owned subsidiary of IPI and the listing of HL&H`s ordinary and preference
shares on the JSE Securities Exchange South Africa ("the JSE") will,
accordingly, be terminated.
1.2 IPI reserves the right to effect the transaction in paragraph 1.1 above in
such other manner as IPI considers to be more cost effective and have the same
effects as the proposed schemes.
1.3 IPI currently owns 162 932 743 out of the 222 794 901 issued ordinary shares
in HL&H and 83 771 330 out of the 121 649 986 issued preference shares in HL&H,
representing 73,1% and 68,9% of HL&H`s issued ordinary share capital and
preference share capital, respectively.
2. RATIONALE FOR THE SCHEMES
2.1 There has for some time been very low liquidity in the HL&H shares. IPI has
advised the board of directors of HL&H ("the board") that it is of the opinion
that, given the lack of tradeability of the share and the high costs associated
with maintaining a listing on the JSE, there appears to be little justification
for the continued listing of HL&H.
2.2 Consequently, IPI, as controlling shareholder of HL&H, has advised HL&H that
it intends to propose schemes of arrangement as regards the ordinary and
preference shareholders in HL&H which will enable HL&H shareholders to realise
their investment at a significant premium to the recent HL&H market prices.
3. TERMS OF THE SCHEMES
3.1 Subject to the fulfilment of the conditions precedent referred to in
paragraph 6 below, scheme members registered as such on the record date of the
schemes will, upon the schemes becoming operative, be entitled to receive a cash
consideration of 957 cents per ordinary scheme share and 997 cents per
preference scheme share ("the scheme consideration"), which represents a 17,4%
and 20,1% premium, respectively, to the market price of HL&H ordinary shares of
815 cents and HL&H preference shares of 830 cents on Thursday, 4 July 2002, the
last trading day prior to the publication of the cautionary announcement. If the
proposed schemes are implemented, scheme members will not be entitled to
ordinary or preference dividends declared after 5 July 2002, the date of the
publication of the cautionary announcement. The aggregate consideration
receivable by the scheme members will be R950 531 052,38, excluding a net
consideration of R39 922 859,00 to be paid to participants in the share
incentive scheme.
3.2 In the event of the schemes not becoming operative for any reason, IPI may,
at its election, make a substitute offer to acquire all the HL&H ordinary and
preference shares held by HL&H shareholders, other than IPI, for the same
considerations, i.e. 957 cents per ordinary share and 997 cents per preference
share ("the substitute offer"). This substitute offer will be conditional upon
HL&H minority shareholders holding no less than 90% of both the ordinary shares
and the preference shares accepting the substitute offer, in which case IPI will
invoke the provisions of section 440K of the Act to compulsorily acquire the
shares held by HL&H minority shareholders who do not accept the substitute
offer.
4. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
4.1 The board has appointed Standard Corporate and Merchant Bank, a division of
The Standard Bank of South Africa Limited, as the independent adviser to advise
the board as to whether the scheme consideration is fair and reasonable to
scheme members. This opinion and the opinion of the board will be published as
part of the salient dates announcement referred to in paragraph 9 below.
4.2 HL&H shareholders controlling 44 666 914 ordinary shares and 30 236 609
preference shares at the date of this announcement have, within the limitations
of their mandates, undertaken to vote in favour of the schemes and accept the
scheme consideration or, if applicable, to accept the substitute offer. These
undertakings currently represent 76,2% of the ordinary scheme shares and 80,0%
of the preference scheme shares that can vote.
5. FINANCIAL EFFECTS OF THE SCHEMES
5.1 On HL&H ordinary shareholders
The financial effects of the scheme on a scheme member holding ordinary scheme
shares are as follows:
Per 100 ordinary shares held
Before After
the scheme the scheme %
(cents) (cents) change
Market value 81 500(1) 95 700 17,4
Net tangible asset value 79 440(2) 95 700 20,5
Diluted net tangible asset value 55 960(2) 95 700 71,0
Earnings 9 010(3) 7 656(4) (15,0)
Headline earnings 9 060(3) 7 656(4) (15,5)
Diluted headline earnings 7 270(3) 7 656(4) 5,3
Notes:
1. Based on the closing market price of HL&H ordinary shares of 815 cents on 4
July 2002, the last trading day prior to the publication of the cautionary
announcement relating to the scheme.
2. Based on HL&H`s net tangible asset value and diluted net tangible asset value
per share at 31 March 2002 of 794,4 cents and 559,6 cents, respectively.
3. Based on HL&H`s earnings, headline earnings and diluted headline earnings per
share for the year ended 31 March 2002 of 90,1 cents, 90,6 cents and 72,7 cents,
respectively.
4. Based on the assumption that the scheme consideration had been invested to
earn an after-tax return of 8% during the year ended 31 March 2002.
5.2 On HL&H preference shareholders
The financial effects of the scheme on a scheme member holding preference
scheme shares are as follows:
Per 100 preference shares held
Before After
the scheme the scheme %
(cents) (cents) change
Market value 83 000(1) 99 700 20,1
Diluted net tangible asset value 55 960(2) 99 700 78,2
Dividend 4 340(3) 7 976(5) 83,8
Diluted headline earnings 7 270(4) 7 976(5) 9,7
Notes:
1. Based on the closing market price of HL&H ordinary shares of 830 cents on 4
July 2002, the last trading day prior to the publication of the cautionary
announcement relating to the scheme.
2. Based on HL&H`s diluted net tangible asset value per share at 31 March 2002
of 559,6 cents.
3. Based on the preference dividends per share relating to the 2002 financial
year of 43,4 cents.
4. Based on HL&H`s diluted headline earnings per share for the year ended 31
March 2002 of 72,7 cents.
5. Based on the assumption that the scheme consideration had been invested to
earn an after tax return of 8% during the year ended 31 March 2002.
6. CONDITIONS PRECEDENT
The implementation of the schemes is subject to, inter alia, the following
conditions precedent:
- HL&H board approval;
- the requisite majority of votes being cast in favour of the relevant scheme at
separate meetings of scheme members holding, respectively, ordinary scheme
shares and preference scheme shares, to be convened for such purpose;
- the Court sanctioning the schemes, and the resultant Order of Court
sanctioning the schemes being registered by the Registrar of Companies; and
- receipt 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.
7. CONFIRMATION TO THE SRP
PSGIB has satisfied the SRP that IPI has sufficient cash resources available to
meet its obligations in terms of the schemes.
8. TERMINATION OF HL&H`S LISTING ON THE JSE
Application will be made for the termination of HL&H`s listing on the JSE with
effect from the operative date of the schemes. Full details of the acceptance
and surrender procedure for HL&H share certificates and other documents of title
will be contained in the scheme documentation referred to in paragraph 9 below.
9. FURTHER ANNOUNCEMENT AND DOCUMENTATION
9.1 Subject to the necessary approvals from the JSE and the SRP, and subject to
the Court granting leave to convene scheme meetings, a circular containing full
details of the schemes will be posted to scheme members within 30 days of this
announcement.
9.2 A further announcement setting out the salient dates of the schemes will be
published in the press in due course.
Sandton
8 August 2002
Investment bank and transactional sponsor
PSG Investment Bank
Sponsor
ENF Sponsors (Pty) Ltd
(Registration number 2000/027636/07)
Attorneys
Knowles Husain Inc Attorneys
(Registration number 2000/000004/21)
Corporate law advisers and consultants
Edward Nathan & Friedland
Corporate Law advisers & Consultants
(Registration number 1999/026464/07)
Merchant bank to HL&H
SCMB
Corporate Finance Technology
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Date: 08/08/2002 08:08:58 AM Produced by the JSE SENS Department
