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FirstRand Limited - Acquisition of the Saambou Housing Finance Book
FirstRand Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1966/010753/06)
Share code: FSR
ISIN: ZAE 000014973
("FirstRand")
Acquisition of the Saambou Housing Finance Book
1. Introduction
The board of directors of FirstRand Limited ("FirstRand") are proud to announce
that agreement in principle has been reached with the Receiver of Saambou Bank
Limited (in receivership) ("Saambou") in terms of which the FirstRand group
will:
- acquire the majority of the assets comprising Saambou`s Housing Finance Book;
and
- administer and collect the remainder of the assets comprising the Housing
Finance Book.
2. Background to the Saambou Housing Finance Book
The Saambou Housing Finance Division was created to focus on a market segment
with a household income of between R30 000 and R80 000 per annum. Its main
objective was to offer appropriate housing finance to this segment of the
market. Saambou`s Housing Finance Book comprises approximately 23 000 home loans
provided predominantly to families in the affordable housing market across the
country. It has a gross value of approximately R1.4 billion and an average loan
size of approximately R65 000.
3. Rationale for the transaction
The transaction that is currently being finalised provides the FirstRand group
with the capacity to develop further opportunities in the niche market of
affordable housing finance. The acquisition will enhance the FirstRand group`s
position in the low and medium income housing market.
The transaction is being structured such that it provides an attractive solution
for the Receiver of Saambou, as it allows for a sharing in the risks and rewards
of a book that has shown good performance to date.
4. Salient terms of the transaction
The salient terms of the transaction are summarised as follows:
- the book of approximately R1.4 billion will be stratified into two segments,
referred to as "included assets" and "excluded assets" respectively;
- FirstRand will acquire the included assets for cash at face value of
approximately R984 million ("the purchase consideration");
- the Receiver will place 50% of the purchase consideration on deposit with
FirstRand to cover a first loss position; and
- the excluded assets of approximately R414.0 million will be administered and
collected by FirstRand for a market-related collection fee.
5. Condition
The transaction is subject to the finalisation and signing of legal agreements
regarding the transaction and appropriate regulatory approvals.
Sandton
15 September 2002
Merchant Bank and Sponsor
to FirstRand Limited
Rand Merchant Bank
A division of FirstRand Bank Limited
Corporate Finance
Receiver to Saambou
John Louw
KPMG
Date: 13/09/2002 05:13:00 PM Produced by the JSE SENS Department
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