| Tue 3 Dec 2002, 17:03 | | Proposed PSG acquisition of Appleton |
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Proposed PSG acquisition of Appleton
APPLETON LIMITED PSG GROUP LIMITED
(Incorporated in the Republic (Incorporated in the Republic
of South Africa) of South Africa)
(Registration number (Registration number
1999/004031/06) 1970/008484/06)
Share Code: ALE Share Code: PSG
ISIN Code: ZAE000027488 ISIN Code: ZAE000013017
("Appleton") ("PSG")
PROPOSED ACQUISITION BY PSG INVESTMENT SERVICES (PTY) LIMITED OF THE ENTIRE
ISSUED SHARE CAPITAL OF APPLETON AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Shareholders of both Appleton and PSG are referred to Appleton`s cautionary
announcement of 27 November 2002 (published in the print media on 28 November
2002) as read together with Appleton`s further cautionary announcement of
29 November 2002.
2. Appleton and PSG shareholders are advised that the Appleton board has today
concluded an agreement with PSG Investment Services (Pty) Limited ("PSGIS"), a
95 percent subsidiary of PSG, ("the agreement") in terms of which PSGIS will
propose a scheme of arrangement in terms of section 311 of the Companies Act
(Act 61 of 1973, as amended) between Appleton and its shareholders (other than
PSG and/or its subsidiaries (the "PSG group")) ("the scheme").
3. The scheme consideration to be offered by PSGIS will be an amount of 9 cents
per Appleton share (excluding Appleton`s treasury shares and the PSG Group`s
shareholding in Appleton) amounting to an aggregate scheme consideration of
R67 779 431,73. Such scheme consideration is to be payable within 7 days of the
operative date of the scheme (i.e. the date that the suspensive conditions to
the scheme are fulfilled).
4.The scheme is to be subject to the following suspensive conditions, namely:
4.1 receipt of the requisite regulatory approvals, including, to the extent
necessary, approval of the JSE Securities Exchange South Africa, Securities
Regulation Panel, Financial Services Board, the Competition Authorities and the
South African Reserve Bank, by no later than 15 April 2003;
4.2 the sanctioning of the scheme by the High Court of South Africa by no later
than 30 April 2003;
4.3 that PSG concludes satisfactory arrangements with Wayne Rosenberg and Bruce
Sneddon for their ongoing employment in relation to the Appleton businesses for
a period of up to 12 months from the effective date of the scheme (1 January
2003) on normal terms and conditions given their positions, by no later than
6 December 2002;
4.4 that PSG concludes satisfactory non-client solicitation restraint
arrangements with Wayne Rosenberg, Bruce Sneddon and Stanley Shane which will
endure for a period of 12 months commencing on the date of termination of their
service/consultancy agreements in relation to the Appleton businesses, by no
later than 6 December 2002;
4.5 that PSG receives, by no later than 6 December 2002, irrevocable letters of
undertaking from Appleton shareholders holding at least 75% of the issued share
capital of Appleton (excluding the shares held by the PSG group) to support and
vote in favour of the scheme on the basis that such undertakings shall be
irrevocable unless there is a competitive offer at a higher price and PSG,
within seven days of becoming aware of the competitive offer, elects not to
match or better the higher offer;
4.6 that PSG obtains the necessary guarantee for the total scheme consideration
in the sum of R67 779 431,73, by no later than 9 December 2002;
4.7 that all the parties to the existing Appleton voting pool agreement waive
their pre-emptive rights (in respect of the transfer of any Appleton shares held
by any member of the PSG group) to PSG, by no later than 6 December 2002;
4.8 that Appleton concludes a binding agreement for the sale of the Dublin
operations for a minimum consideration of US$4 million by no later than
13 December 2002, of which US$1.2 million is to be payable upfront, upon terms
and conditions approved in writing by PSG, which approval PSG shall not be
entitled to withhold or delay unreasonably;
4.9 PSG receiving by 13 December 2002 irrevocable letters of undertaking from
Appleton shareholders holding at least 75% of the issued share capital of
Appleton (excluding the shares held by the PSG group) to support and vote in
favour of the Dublin transaction described in paragraph 4.8 above.
The aforesaid dates may be extended by agreement between PSG and Appleton.
5. The agreement contemplates that if the free net cash or cash equivalents of
Appleton (inclusive of various stated assets of the Appleton group at an agreed
value) is, as at 6 January 2003, less than R55 million, the aggregate scheme
consideration will be reduced by the full amount of such shortfall. The Appleton
board does not anticipate any such shortfall.
6. The Appleton board has not received confirmation from either PSG or its
financial advisor or from another appropriate third party that resources are
available to PSG sufficient to satisfy the scheme consideration. The furnishing
of a guarantee by PSG to satisfy the consideration payable on the implementation
of this scheme has been made a condition precedent to the agreement.
7. The PSG group:
7.1 owns or has control over 335 797 839 Appleton shares;
7.2 is not acting in concert with any other third party/ies in respect of the
PSG offer;
7.3 does not hold an option to purchase any other Appleton shares.
8. The agreement contemplates the payment by Appleton to PSGIS of a break fee in
the sum of R650 000,00 (exclusive of VAT) in the event of the Appleton board
receiving a competitive bid and recommending the acceptance of the competitive
bid which results in the scheme failing.
9. The Appleton board has appointed Corpcapital Corporate Finance and Ernst &
Young Corporate Finance (Proprietary) Limited as external advisors to the board.
The board is taking advice on the terms of the proposed scheme as to how it
affects all holders of Appleton shares, including specifically, minority holders
of Appleton shares. The substance of such advice shall be made known to holders
of Appleton shares in due course.
10. Appleton shareholders should continue to exercise caution in dealing in
Appleton shares pending the publication of a further announcement including the
proposed timetable for the implementation of the scheme.
3 December 2002
Lead Corporate Independent Advisor Attorneys to
Advisor and to Appleton Appleton
Transaction Sponsor minorities
to Appleton
Corpcapital Ernst & Young Sonnenberg Hoffman
Corporate Finance Corporate Finance Galombik
(Pty) Ltd
Corporate Advisor Attorneys to PSG
and Transaction
Sponsor to PSG
PSG Capital Hofmeyr Herbstein
Ghiwala
Date: 03/12/2002 04:50:02 PM Produced by the JSE SENS Department