Remgro Limited - Press Announcement
Remgro Limited
(Registration number 1968/006415/06)
JSE Code : REM
ISIN : ZAE000026480
R&R Holdings SA to issue secured call warrants exercisable into ordinary shares
of British American Tobacco p.l.c.
11 December 2002
Remgro announces that its associated company, R&R Holdings SA is to offer 120.9
million secured European-style call warrants exercisable only upon maturity, at
the option of the warrant holder, into ordinary shares of British American
Tobacco p.l.c. (`BAT`). The warrants, which will expire in May 2004, are
exercisable at 675p per warrant.
Remgro holds 33.3% of R&R Holdings SA, a Luxembourg company, which in turn owns
604.3 million ordinary shares and 120.9 million convertible redeemable
participating preference shares (`the preference shares`) in BAT. The ordinary
shares and preference shares represent some 31.5 per cent of the issued share
capital of BAT. The remaining 66.7% of R&R Holdings SA is owned by Compagnie
Financiere Richemont SA.
The BAT preference shares will automatically convert into ordinary shares on a
one for one basis on any sale by R&R Holdings SA to a third party, failing which
they will be redeemed by BAT on 7 June 2004 at 675p per share. The issuance of
the call warrants realises the value of the option rights embedded in the terms
of the preference shares.
In June 2004, therefore, R&R Holdings SA will receive GBP 816 million, either
upon exercise of the warrants by warrant holders or through the redemption of
the preference shares by BAT. The share of the proceeds of the disposal or
redemption attributable to Remgro will amount to GBP 272 million.
R&R Holdings SA`s interest in the 604.3 million BAT ordinary shares will not
change as a result of this transaction.
From the closing date, Remgro will equity account only its one third interest in
the 604.3 million BAT shares which are not subject to the warrants. In respect
of those BAT shares which are the subject of the warrant issue, dividend income
will continue to be receivable. Remgro will account for its attributable share
of the exceptional gain to be recorded by R&R Holdings SA in the current year,
after the necessary accounting adjustments at the Remgro level.
The offer is expected to close on 23 January 2003, subject to customary closing
conditions.
Commenting on the offer, Mr Johann Rupert, Chairman of both Richemont and
Remgro, said:
"When we merged Rothmans International with BAT in 1999, we asked for the
compulsory redemption terms for the preference shares as a quid pro quo for the
fact that the shares were non-voting. Absent any major capital increase in BAT,
which would have allowed R&R Holdings to convert its holding of preference
shares into ordinary shares, Richemont and Remgro were therefore effectively
forced to sell the preference shares or have them redeemed in 2004.
The warrant issue effectively crystalises the proceeds to be received in 2004
and realises for us the time value of the option element. Through its holding of
604.3 million ordinary shares, R&R Holdings SA will continue to hold a
significant stake in BAT and will thus benefit from the substantial cash flow
generated by this investment."
Date: 11/12/2002 12:36:00 PM Produced by the JSE SENS Department
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