| Mon 23 Dec 2002, 12:36 | | Laser - Announcement |
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Laser - Announcement
THE LASER GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1971/010431/06)
(Share code: LSR ISIN: ZAE000017166)
("Laser")
- An offer to purchase Laser`s Logistics and Human Resources businesses.
- A distribution to Laser shareholders, in anticipation of winding-up, of 296
cents per share.
- An offer to purchase options to subscribe for shares in Laser.
- A member`s voluntary winding-up of Laser and de-listing.
1. INTRODUCTION
1.1 The board of directors of Laser has received an offer ("the offer") from
Choice Decisions 217 (Proprietary) Limited ("CDPL"), a company representing a
consortium led by Laser`s CEO, Michael Fuller and comprising certain Laser
directors and operational management ("the Consortium"), to acquire certain of
the assets of Laser, being Laser`s Logistics and Human Resource businesses as
going concerns and/or the shares of Laser`s subsidiaries or a combination
thereof ("the disposal").
1.2 Upon implementation of the disposal, Laser will distribute to its
shareholders ("shareholders"), in anticipation of winding-up, a dividend of 296
cents per share ("the distribution").
1.3 Furthermore, CDPL will extend an offer to purchase the outstanding
options to subscribe for shares in Laser ("the option offer").
1.4 Upon conclusion of the disposal and distribution, Laser will be wound-up
in terms of a members` voluntary winding-up ("the winding up") and will apply to
the JSE Securities Exchange South Africa ("the JSE") for the termination of its
listing.
1.5 Collectively the disposal, the distribution, the option offer and the
winding-up are referred to hereinafter as "the transaction".
1.6 The transaction is conditional upon the fulfilment of the conditions
precedent set out in Paragraph 11 below.
2. RATIONALE FOR THE TRANSACTION
2.1 Shareholders are referred to the announcement by Commercial Finance
Company Limited ("CFC"), Laser`s largest shareholder, which appeared in the
press on 19 November 2002, setting out the terms of CFC`s proposed members`
voluntary winding-up. The likely disposal by CFC of its 34,3% shareholding in
Laser, in conjunction with the reasons set out in Paragraph 2.2 below, has
prompted the Consortium to extend the offer and propose the transaction.
2.2 A number of factors, including negative market sentiment towards
companies with low market capitalisation have, inter alia, adversely affected
the trading liquidity and market value of Laser shares. It is unlikely that this
sentiment will change materially in the near future. Furthermore, the costs of
maintaining a listing on the JSE, both in terms of Rand value and executive
time, are relatively high and can no longer be justified. Accordingly, the
transaction provides shareholders with the opportunity to unlock value in their
Laser shares.
3. TERMS OF THE DISPOSAL
3.1 The effective date of the disposal will be the first business day
following the fulfilment of all the conditions precedent set out in Paragraph
11.1 ("the effective date").
3.2 The purchase consideration for the disposal shall be that which, together
with the net assets of Laser as at the effective date, will return, in the case
of a members` voluntary winding-up, an amount of 296 cents on distribution. The
directors anticipate that the purchase consideration will amount to
approximately R64 million.
3.3 The disposal is only for certain assets of Laser and therefore excludes
the following assets and liabilities as at the effective date:
- net cash balances on hand;
- the amount due to Laser by the Laser share trust;
- any Laser shares held by a wholly-owned subsidiary of Laser, which shares are
to be cancelled;
- any liabilities of Laser in respect of vehicle instalment sale liabilities;
and
- any tax liabilities.
3.4 The purchase consideration will be settled by CDPL in part by way of the
creation of an indefinite period interest free claim by Laser against CDPL
("the claim"), being equal to the aggregate monetary value of the distribution
that will become payable to shareholders who are members of the Consortium, and
the balance by a way of a payment in cash within 7 (seven) days after the
effective date.
4. TERMS OF THE OPTION OFFER
4.1 There are 4 362 500 options that have been granted to Laser employees in
terms of the Laser Employee Share Scheme to subscribe for shares in Laser ("the
outstanding options") of which the members of the Consortium hold in aggregate
approximately 3 185 000. The outstanding options have been issued at a weighted
average exercise price of 208 cents per Laser share.
4.2 In terms of the option offer, CDPL will offer to acquire the outstanding
options from the holders thereof at an amount equal to the difference between
the exercise price of each option and the distribution ("the option gain"). It
is CDPL`s intention to cancel the outstanding options for which the option offer
is accepted.
4.3 The option gain will be settled by CDPL in part by way of the creation of
a claim against CDPL, in the case of selected members of the Consortium, and a
payment in cash within 7 (seven) days after the effective date, as the case may
be.
5. TERMS OF THE DISTRIBUTION, VOLUNTARY WINDING-UP AND DE-LISTING
5.1 Subject to the implementation of the disposal, Laser will distribute, in
anticipation of winding-up, a dividend of 296 cents per share. Shareholders who
are members of the Consortium will receive the claim in lieu of a cash
distribution while the remaining shareholders will receive a payment in cash
within 7 (seven) days after the effective date.
5.2 In the event that the distribution is not paid by 10 March 2003 for any
reason other than delays caused by regulatory authorities, the distribution will
bear interest at the prime overdraft rate of interest quoted from time to time
by Absa Bank Limited until the date of payment.
5.3 Thereafter, Laser will be wound-up in terms of a member`s voluntary
winding-up and will apply to the JSE for the termination of its listing.
6. FINANCIAL EFFECTS
6.1 The table below sets out the pro forma financial effects on shareholders
of the distribution based on the market price of Laser`s share.
Actual
before the The
distribution distribution Change
Notes (cents) (cents) (%)
Market value (Current) 1 270 296 9,6
Market value (60-day) 2 266 296 11,3
Market value (120-day) 3 251 296 17,9
Notes:
1. The "before" column reflects the closing price of a Laser share on the JSE on
Thursday, 19 December 2002, the day immediately preceding the publication of
this announcement.
2. The "before" column reflects the volume weighted average trading price of a
Laser share on the JSE for the 60 days preceding Thursday, 19 December 2002.
3. The "before" column reflects the volume weighted average trading price of a
Laser share on the JSE for the 120 days preceding Thursday, 19 December 2002.
6.2 The table below sets out the pro forma financial effects on shareholders
of the distribution based on Laser`s published audited financial results for the
financial year ended 31 March 2002.
Actual Pro forma
before the after the
distribution distribution Change
Per share figures Notes (cents) (cents) (%)
Basic earnings 1 41,3 20,7 (49,9)
Headline earnings 1 67,5 20,7 (69,3)
Net asset value 2 421 296 (29,7)
Net tangible asset value
(excluding intangible assets) 2 327 296 (9,5)
Net tangible asset value
(fully diluted and incorporating
the STC liability arising as a
result of the distribution) 3 296 296 -
Notes:
1. The "after" column reflects the after-tax interest income that a shareholder
would have earned by investing the distribution on the basis of the following
assumptions:
- the distribution took place on 1 April 2001;
- the proceeds of the distribution were invested at 10%, being the average
effective 12-month fixed deposit rate as at 1 April 2001; and
- an average tax rate of 30%.
2. The "before" column reflects the net asset value per Laser share ("NAV`)
calculated on 25 016 309 shares in issue as at 31 March 2002 which is net of
treasury shares.
3. The "before" column reflects the net tangible asset value ("NTAV") per Laser
share using the same number of shares as the NAV calculation and assuming that
all outstanding options are exercised and recognising the Secondary Tax on
Companies ("STC") liability that arises as a result of the distribution.
Accordingly, Laser`s NTAV has been decreased by R3.839 million, being the cash
value of the option gain, while an approximate STC liability of R4 million has
been recognised.
6.3 The table below sets out the pro forma financial effects on shareholders
of the distribution based on Laser`s published unaudited interim financial
results for the six months ended 30 September 2002:
Actual Pro forma
before the after the
distribution distribution Change
Per share figures Notes (cents) (cents) (%)
Basic earnings 1 & 4 24,8 10,9 (56,0)
Headline earnings 1 & 4 41,4 10,9 (73,7)
Net asset value 2 450 296 (34,2)
Net tangible asset value
(excluding intangible assets) 2 356 296 (16,9)
Net tangible asset value
(fully diluted and incorporating
the STC liability arising as a
result of the distribution) 3 324 296 (8,6)
Notes:
1. The "after" column reflects the after-tax interest income that a shareholder
would have earned by investing the distribution on the basis of the following
assumptions:
- the distribution took place on 1 April 2002;
- the proceeds of the distribution were invested at 10,5%, being the average
effective six- month fixed deposit rate as at 1 April 2002; and
- an average tax rate of 30%.
2. The "before" column reflects the NAV per Laser share calculated on 24 371 669
shares in issue as at 30 September 2002 which is net of treasury shares.
3. The "before" column reflects the NTAV per Laser share using the same number
of shares as the NAV calculation and assuming that all outstanding options are
exercised and recognising the STC liability that arises as a result of the
distribution. Accordingly, Laser`s NTAV has been decreased by R3,839 million,
being the cash value of the option gain, while an approximate STC liability of
R4 million has been recognised.
4. Shareholders are referred to Laser`s interim financial statements for the six
months ended 30 September 2002 and in particular the commentary relating to the
discontinuance of the royalty and property revenue streams and the effect
thereof on Laser`s earnings per share.
6.4 The effects of taxation on shareholders has not been taken into account
in the calculations set out above as each shareholder will have a different tax
profile. Shareholders who are in any doubt as to the tax implications of the
distribution should consult their professional advisors.
7. RELATED/CONCERT PARTIES
7.1 The members of the Consortium hold in aggregate 3 273 718 Laser shares
constituting approximately 13,5% of the issued ordinary shares of Laser net of
Laser shares held by a wholly-owned subsidiary of Laser ("treasury shares").
7.2 CDPL does not own or control any shares in Laser.
7.3 The disposal is regarded by the JSE as a related party transaction.
7.4 The members of the Consortium, for the purposes of the Rules of the
Securities Regulation Panel ("SRP"), are regarded as acting in concert with
CDPL.
7.5 Accordingly, in terms of both the JSE Listings Requirements and the Rules
of the SRP, shareholders who are members of the Consortium and their associates
will not be taken into account in determining a quorum and will be precluded
from voting in respect of the resolutions to approve the disposal.
7.6 The Consortium has pre-emptive rights over the shareholding of CFC. The
SRP has not ruled that CFC is a concert party and therefore CFC, from the SRP`s
perspective, shall be entitled to vote on all resolutions relating to the
transaction. The JSE has not yet ruled on whether CFC is a related party.
8. UNDERTAKINGS
Shareholders who own or control 43% of the issued share capital of Laser net
of treasury shares have given irrevocable commitments to CDPL to vote in favour
of the disposal, distribution and winding-up.
9. CONFIRMATION TO THE SRP
In terms of rule 21.7 of the Rules of the SRP, Absa Corporate and Merchant
Bank Corporate Finance as advisor to the Consortium, has taken reasonable steps
to assure itself that, subject to the conditions precedent, the Consortium and
Laser will have sufficient cash resources to fulfil its obligations in terms of
the transaction.
10. INDEPENDENT EXTERNAL ADVISOR
In accordance with the Rules of the SRP, the Laser directors who do not form
part of the Consortium, namely Messrs W J McAdam and W J Swain, have appointed
Moores Rowland Chartered Accountants (SA) as independent external advisor to
advise shareholders on the fairness and reasonableness of the terms and
conditions of the transaction. Moores Rowland`s opinion will be included in a
circular that will be mailed to shareholders in due course.
11. CONDITIONS PRECEDENT
11.1 The disposal is subject to and conditional upon the fulfilment of the
following conditions precedent:
11.1.1 the conclusion of formal disposal agreements between Laser and
CDPL;
11.1.2 the conclusion by CDPL of the requisite loan agreements with
FirstRand Bank Limited, being the primary funder to CDPL;
11.1.3 approval by the JSE and SRP of the requisite documentation to be
mailed to shareholders;
11.1.4 the passing of the ordinary resolution required in terms of
Section 228 of the Companies Act (No 61 of 1973), as amended; and
11.1.5 approval of the disposal by the Competition Authorities, in
terms of the Competition Act, 1998 (Act 89 of 1998), either unconditionally or
subject to such terms and conditions as may be acceptable to CDPL.
11.2 The option offer, distribution and winding-up are subject to and
conditional upon the fulfilment of the following conditions precedent:
11.2.1 the fulfilment of the conditions precedent as set out in
Paragraph 11.1 above; and
11.2.2 the passing and, where applicable, registration of the ordinary
and special resolutions required to approve the distribution and winding-up.
12. DOCUMENTATION AND FURTHER ANNOUNCEMENT
A circular containing full details of the transaction and convening the
required general meeting of Laser to consider and, if deemed fit, approve the
resolutions necessary to implement the transaction, will be mailed to
shareholders as soon as possible. A further announcement setting out the salient
dates of the transaction will be published in due course.
Cape Town
20 December 2002
Sponsor to Laser
BOE Merchant Bank
A Division of BOE Bank Limited
Co. Reg. No. 1951/000847/06
Reporting accountants to Laser
KPMG
Independent advisor to Laser shareholders
Moores Rowland
Chartered Accountants (SA)
Legal advisor to the Consortium
Bernadt-Vukic-Potash & Getz Attorneys
Advisor to the Consortium
ABSA Corporate and Merchant Bank
Corporate Finance
(Registration number 1986/004794/06)
Date: 23/12/2002 08:01:00 AM Produced by the JSE SENS Department
