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Homechoice Holdings Limited - Announcement Of Delisting Proposal And Offer And
Cautionary Announcement
Homechoice Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1991/005430/06)
Share code: HCH ISIN: ZAE000011409
("HomeChoice" or "the Company")
ANNOUNCEMENT OF DELISTING PROPOSAL AND OFFER AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are advised that the board of directors of the Company ("the
Board") has resolved to propose that it be authorised to make written
application to the JSE Securities Exchange South Africa ("the JSE") for the
Company`s listing on the JSE to be voluntarily terminated.
R Garratt, who currently controls 44.38% of all the issued shares in the
Company, has furnished the Board with an irrevocable written undertaking
that he (or his nominee) will make an offer to purchase from HomeChoice
Shareholders all the issued shares in the Company not under his control
("the Offeree Shares") for a cash amount of 18 cents per share, conditional
on the delisting application succeeding.
2. THE PROPOSALS
The Board will convene a meeting of the shareholders of the Company to
propose that it be authorised to apply to the JSE for the listing of the
Company to be voluntarily terminated.
The proposed delisting will be coupled with an offer, in terms of section
440 of the Companies Act of 1973, ("the Act") from R Garratt (or his
nominee) ("Garratt") to purchase from the shareholders of HomeChoice other
than himself ("the HomeChoice Shareholders"), all the Offeree Shares for a
cash amount of 18 cents per share. The offer will however be conditional on
the delisting application succeeding. It is anticipated that the offer will
close shortly after the outcome of the delisting application becomes known,
the intention being that shareholders who accept the offer will be paid the
offer consideration as soon as possible after the fulfillment of this
condition. Garratt has also furnished the Board with an irrevocable written
undertaking that he shall exercise the voting rights attaching to the
shares in the Company under his control in such a manner and grant such
approvals as may be required to fulfill this condition.
There will be no obligation on HomeChoice Shareholders to accept the offer.
Those HomeChoice Shareholders, who wish to remain as shareholders in the
Company following the termination of its listing, will be able to do so.
Shareholders should however note that they may hold shares in an unlisted
company and as there will be no ready market for their shares, tradability
in their shares will be limited.
Garratt may become entitled, under section 440K of the Act to acquire
compulsorily, the remaining Offeree Shares from those HomeChoice
Shareholders who do not accept the offer, if Garratt receives valid
acceptances from Offerees that hold at least 90% of all HomeChoice shares
held by Offerees. Garratt intends invoking this provision should he become
entitled to do so.
3. RATIONALE
The directors have considered the rationale for the listing of the Company
and have come to the view that the benefits of having the Company listed
are significantly outweighed by the disadvantages.
The Company is unable to effectively issue shares to raise capital. The
costs of maintaining a listing are high, there is general negative
sentiment towards small capitalisation companies, particularly credit
retailers, and the directors are of the view that it is unlikely that the
market rating of the Company will improve in the short to medium term.
The offer price of 18 cents per share represents a premium of 44% to the
weighted average share price of 12.5 cents per share for the 30 trading day
period ended on Wednesday 13 November 2002. The offer accordingly enables
shareholders to realise a cash amount for their shares at a premium to the
prevailing current market price.
4. FINANCIAL EFFECTS
The table below provides the pro forma effects of the offer on the earnings
and net asset value per HomeChoice share and is based on the assumptions
set out below:
Before the After the Percentage
Offer Offer Change
Headline (loss)/earnings per (39.5) (1) 1.35 (2) n/a
share (cents)
(Loss)/earnings per share (41.7) (1) 1.35 (2) n/a
(cents)
Net tangible asset value 220 (1) 18 (3) (91.8%)
(cents)
Market value per share 12.5 (4) 18 (3) 44%
(cents)
Notes:
(1) Based on Homechoices` audited results for the twelve month period ended 31
December 2001.
(2)The earnings attributable to a Homechoice shareholder on the cash received in
terms of the offer, assuming that the cash had been invested for the full twelve
month period ended 31 December 2001 and earned an after tax return of 7.5%.
(3)The cash consideration of 18 cents per share to be paid to Homechoice
shareholders for their Homechoice shares in terms of the offer.
(4)The 30 trading day weighted average of Homechoice shares on the JSE up to 13
November 2002.
5. SUSPENSIVE CONDITIONS
The delisting proposal and the offer will be subject to the fulfillment of the
following suspensive conditions:
- obtaining the requisite approvals from the JSE and the Securities
Regulation Panel ("the SRP") for the circular containing details of the
proposals to be mailed to HomeChoice Shareholders;
- obtaining approvals from the shareholders of the Company and JSE for the
termination of the listing of the Company;
- obtaining the approvals of the Competition Authorities and any other
regulatory authorities having jurisdiction over the proposals, to the
extent required;
The offer is conditional on the delisting proposal being successful.
6. INDEPENDENT OPINION
RSM RSDM Associates (Cape Town), Chartered Accountants, have been appointed
by the Board to advise whether the terms of the offer are fair and
reasonable to the Offerees. Their opinion will be included in the circular
to HomeChoice Shareholders as contemplated below. The Board (other than
Garratt) will in the circular and following its assessment of the fair and
reasonable opinion, express its views on the merits of the offer.
7. CASH CONFIRMATION TO THE SRP
It has been confirmed to the SRP that Garratt has sufficient cash resources
available to meet his obligations under the offer.
8. FURTHER DOCUMENTATION
A further announcement detailing the salient dates of the transaction will
be published shortly. A circular to HomeChoice Shareholders containing
details of the delisting proposal and the offer and incorporating a notice
of a general meeting of HomeChoice Shareholders will be prepared and will
be mailed to HomeChoice Shareholders, subject to the approvals of the JSE
and the SRP, within 28 days.
9. CAUTIONARY ANNOUNCEMENT
Shareholders are advised to exercise caution in dealing in their HomeChoice
shares until a further announcement is made.
14 November 2002
Cape Town
TRANSACTION ADVISOR SPONSOR
HJS Advisory Services Sponsors (Proprietary)
(Proprietary) Limited Limited
ATTORNEYS
Sonnenberg Hoffmann &
Galombik
Date: 14/11/2002 10:05:38 AM Produced by the JSE SENS Department
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