| Fri 22 Nov 2002, 14:17 | | Glenrand M I B Limited - Announcement |
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Glenrand M I B Limited - Announcement
Glenrand MzIzB Limited
(Incorporated in the Republic of South Africa)
(registration number 1997/008001/06)
(JSE code: GMB ISIN: ZAE000018529)
("Glenrand M I B")
Disposal by Glenrand M I B of its interest in Glenrand Limited
Introduction
As announced on 4 October 2002, Glenrand M I B has been in discussions with
management minority shareholders ("management minorities") in its United Kingdom
subsidiary, Glenrand Limited ("Glenrand Limited").
Shareholders are hereby advised that preliminary agreement has been reached in
terms of which Glensure Limited ("Glensure"), a wholly owned subsidiary of
Glenrand M I B will dispose of its interest in Glenrand M I B International
Limited, which holds 100% of the equity share capital of Glenrand Limited ("the
transaction"), to the management minorities
Strategic rationale
In an effort to grow Glenrand Limited and given the constraints imposed on South
African organisations wanting to export further capital to fund growth in
existing off-shore operations, Glenrand Limited set about attracting top teams
of wholesale broking specialists by offering those individuals the opportunity
to own material equity stakes in their respective divisions. This strategy has
been very successful and over the last 24 months, Glenrand Limited attracted
several new specialist wholesale teams, thereby growing its revenues quite
considerably over this period.
This growth strategy has resulted in Glenrand MzIzB having its effective equity
stake in Glenrand Limited reduced. Whilst Glenrand MzIzB owns 83% of Glenrand
Limited, after accounting for the divisional equity stakes owned by various
management, our effective economic interest in Glenrand Limited is approximately
45%. Our effective economic interest in Glenrand Limited varies at any point in
time, depending upon the individual performances of Glenrand Limited`s
respective divisions.
Glenrand MzIzB felt uncomfortable with this level of effective economic interest
in Glenrand Limited and discussions with the executive management team, who
collectively hold a 55% effective economic stake in Glenrand Limited, commenced.
In the final analysis, Glenrand MzIzB understands that to ensure the continued
growth and success of Glenrand Limited, the management minorities need to retain
and possibly increase their equity in the business. For these reasons both
parties felt that the most suitable outcome would be for the management
minorities to acquire Glenrand M I B`s effective economic interest in Glenrand
Limited.
The relationship with Glenrand Limited remains extremely good and we expect to
continue using their wholesale capabilities and skills where we or our clients
have a particular need. Glenrand MzIzB has negotiated extremely favourable
`terms of trade` with Glenrand Limited where business continues to be placed
through them.
Glenrand MzIzB will continue to consider alternative international opportunities
and strategies to be aligned with the group`s current and future needs. The
resultant sale proceeds and repayment of loans by Glenrand Limited positions the
group well to fund future growth opportunities.
Salient terms of the transaction
The purchase consideration in respect of the transaction will be discharged by
the payment of GBP4,1 million in cash by the management minorities to Glensure
("transaction consideration"), equating to approximately R63,5 million at
current exchange rates. The effective date of the transaction is anticipated to
be on 31 March 2003 ("the effective date"). Glenrand MzIzB will give no
warranties and will retain all rights to the Glenrand name. It has also been
agreed that options over Glenrand MzIzB shares previously granted to Glenrand
Limited employees will lapse on the effective date.
Conditions precedent
The transaction is subject to the following conditions precedent:
the conclusion of a formal legal agreement
the consent of any relevant regulatory authorities; and
the clearance of United Kingdom Inland Revenue.
Financial effects of the transaction
The pro forma financial effects set out below have been prepared for
illustrative purposes only, to provide information about how the transaction
might have affected the financial information presented and, because of their
nature, may not give a true reflection of Glenrand M I B`s financial position.
(cents) Before1 After % change
Earnings per share2 35.3 39.85 12.8%
Headline earnings per 32.8 38.1 16.2%
share3
Net asset value per 73.7 94.76 28.5%
share4
Tangible net asset value 59.7 93.16 55.9%
per share4
Notes:
As at 30 June 2002
Based on a weighted average of 222,1 shares in issue for the year ended 30 June
2002
Based on a fully diluted weighted average of 224,5 shares in issue for the year
ended 30 June 2002
Based on 236,6 million shares in issue on 30 June 2002
Assuming the transaction was implemented on 1 July 2002, that the transaction
consideration was exchanged into rands at the current exchange rate of R15.48
and that the cash proceeds were deposited at an after tax interest rate of 8.4%
Assuming the transaction was implemented on 30 June 2002 and that the
transaction consideration was exchanged into rands at the current exchange rate
of R15,48.
Johannesburg
22 November 2002
Investment Bank
and Sponsor
NIB
Date: 22/11/2002 01:45:36 PM Produced by the JSE SENS Department
