| Wed 22 Jan 2003, 11:35 | | Nando`s Group Holdings Limited - Proposed scheme o |
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Nando`s Group Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/007318/06)
Share code NDS ISIN ZAE000029765
("NGH" or "the Company")
Proposed scheme of arrangement
1. Introduction
Further to the cautionary announcements dated 14 August 2002, 10 September
2002, 22 October 2002 and 29 November 2002, Rand Merchant Bank is
authorised to announce that Brozent Holdings (Pty) Limited ("Brozent") will
propose a scheme of arrangement in terms of section 311 of the Companies
Act, 1973 (Act 61 of 1973), as amended ("Companies Act") between NGH and
its shareholders other than Brozent, NER Investments (Pty) Limited ("NER"),
Max Brozin Investment Corporation (Pty) Limited ("MBI"), Circuit Finance
(Pty) Limited, Brozent Securities (Pty) Limited, Brotrade (Pty) Limited and
certain members of management ("the excluded parties") to acquire all of
the shares held by such shareholders ("minority shareholders") for a cash
consideration of 70 cents per share ("the scheme consideration") ("the
scheme").
If the scheme becomes operative NGH will be wholly-owned by the excluded
parties and NGH`s listing on the JSE Securities Exchange South Africa
("JSE") will be terminated.
In the event that the scheme does not become operative for any reason and
subject to fulfillment of the condition precedent set out in 3.2.1.2, a
substitute offer will be deemed to be made by Brozent to the minority
shareholders at the same purchase consideration as the scheme consideration
payable in terms of the scheme ("substitute offer").
The scheme and the substitute offer are collectively referred to as ("the
proposal").
2. Rationale
The controlling shareholders of NGH, together with management, hold
approximately 72% of NGH`s issued share capital. A further 17% is held
between Brimstone Investment Corporation Limited ("Brimstone") and Rand
Merchant Bank, a division of FirstRand Bank Limited ("RMB"). On 6 September
2002 Brimstone announced that it had for some time been considering the
disposal to an institutional investor of its non-core holding of some 12%
of the issued share capital of NGH. Capricorn Ventures (Pty) Limited, a
company in the same group as NER ("Capricorn"), expressed interest in
acquiring such shares. Such an acquisition would have increased the
controlling shareholders` stake in NGH with the free float thus being
further reduced. RMB expressed its willingness to consider proposals for
the disposal of its 5% holding in NGH due to the illiquidity of NGH shares
and limited exit opportunities that exist.
In light of the limited number of shares in NGH held by the general public
and the historically thin trade in NGH shares, the board of NGH believes
that the continued listing of NGH serves no purpose either for NGH or for
investors. The controlling shareholders therefore resolved to propose or
cause to be proposed a scheme of arrangement between NGH and the minority
shareholders pursuant to which the shares of such shareholders ("scheme
shares") would be acquired by the controlling shareholders and NGH would be
delisted.
3. Conditions precedent
3.1. The scheme
The scheme is subject to the fulfilment of the following conditions
precedent:
3.1.1. the scheme being approved by a majority representing not less than 75%
of the votes exercisable by the minority shareholders present and
voting, either in person or by proxy, at a meeting of minority
shareholders to be convened for the purpose of considering the scheme;
3.1.2. the scheme being sanctioned by the Court;
3.1.3. a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar in terms of the Companies Act;
3.1.4. the approval by the shareholders of Brimstone in general meeting of
the disposal of the 77 688 700 NGH shares held by Brimstone and the
acquisition by Brimstone from Capricorn, pursuant to a specific
authority in terms of section 85(2) of the Companies Act of 3 599 400
ordinary shares and up to 71 937 034 "N" ordinary shares in the share
capital of Brimstone, in terms of an agreement entered into on or
about 11 September 2002 between Brimstone, Capricorn and a consortium
of Brimstone shareholders ("the Brimstone transaction") *;
3.1.5. the approval of The Exchange Control Division of South African Reserve
Bank being obtained; and
3.1.6. the approval of the Securities Regulation Panel ("SRP") and JSE being
obtained.
3.2. The substitute offer
3.2.1. The making of the substitute offer is conditional on:
3.2.1.1. the scheme not becoming operative; and
3.2.1.2. Brimstone shareholders approving the Brimstone transaction at a
general meeting of Brimstone shareholders*.
3.2.2. The implementation of the substitute offer is conditional upon
shareholders other than the excluded parties accepting the substitute offer
by the closing date in respect of not less than 90% of the shares which are
the subject of the substitute offer ("offer shares"). Brozent, in its
discretion may waive this condition in which event it will acquire so many
offer shares as has been tendered in terms of the substitute offer.
3.2.3. Should the substitute offer be accepted by offerees in respect of 90%
or more of the offer shares, as the case may be, Brozent will invoke the
provisions of section 440K of the Companies Act to compulsorily acquire
those offer shares in respect of which the substitute offer was not
accepted.
4. Cash confirmation
The SRP has received confirmation from Absa Bank Limited that Brozent has
sufficient cash resources available to satisfy the consideration payable in
terms of the proposal.
5. Financial effects
The table below sets out the financial effects of the scheme on the market
value of NGH shares.
Per ordinary NGH share Notes Before After Change
(cents) (cents) %
Earnings (and Headline Earnings) 1 2.63 2.53 -3.80
Net asset value 2 16.35 70.00 328.13
Net tangible asset value 3 12.32 70.00 468.18
Share price (13 August 2002) 4 61.00 70.00 14.75
Share price (21 January 2003) 5 61.00 70.00 14.74
Share price 6 53.49 70.00 30.87
(30 day moving average)
Notes:
1.) The amount in the "Before" column is based on the interim financial
results of NGH for the six months ended 31 August 2002. The amount in the
"After" column represents the after-tax interest which a minority
shareholder with a marginal tax rate of 30% would have earned, had the
minority shareholder invested an amount equal to the scheme consideration
for the six months ended 31 August 2002 at the average 32 day notice
deposit rate over that period, being 10.1% compounded monthly in arrears.
2.) The amount in the "Before" column is based on the net asset value as per
the interim financial results of NGH at 31 August 2002. The amount in the
"After" column represents the scheme consideration.
3.) The amount in the "Before" column is based on the net tangible asset value
as per the interim financial results of NGH at 31 August 2002. The amount
in the "After" column represents the scheme consideration.
4.) The amount in the "Before" column is based on the share price of NGH at
the close of business on 13 August 2002, the last practicable date prior to
the publication of the first cautionary announcement pertaining to the
scheme on 14 August 2002. The amount in the "After" column represents the
scheme consideration.
5.) The amount in the "Before" column is based on the share price of NGH at
the close of business on 21 January 2003, the last practicable date on
which NGH shares traded on the JSE prior to the publication of this terms
announcement. The amount in the "After" column represents the scheme
consideration.
6.) The amount in the "Before" column is based on the 30 day weighted moving
average share price of NGH on 13 August 2002, the last practicable date
prior to publication of the first cautionary announcement, pertaining to
the scheme on 14 August 2002. The amount in the "After" column represents
the scheme consideration.
6. Opinions and recommendations
6.1. Nedbank Corporate, a division of Nedbank Limited ("Nedbank Corporate"), has
been appointed by the board of directors of NGH as an independent advisor
to advise the board on whether the terms and conditions of the scheme or,
failing implementation thereof, the substitute offer, are fair and
reasonable to minority shareholders. Nedbank Corporate has considered the
terms and conditions of each of the scheme and the substitute offer and is
of the opinion that they are fair and reasonable to minority shareholders.
6.2. Messrs R C Brozin, L Z Brozin and R A G Enthoven are concert parties with
the controlling shareholders and the controlling shareholders`
representatives on the NGH board. Messrs F J Robertson and M A Brey have
equity interests in and are directors of Brimstone. All of the directors
with the exception of Messrs F J Robertson and M A Brey are excluded
parties and will thus not participate in the scheme or accept the
substitute offer.
6.3. The directors of NGH whose interests will be fully disclosed in the
circular referred to in paragraph 8 have considered the terms and
conditions of the proposal and the opinion of the independent advisor and
are of the opinion that the terms and conditions of the proposal are fair
and reasonable to the minority shareholders.
6.4. Messrs F J Robertson and M A Brey in respect of their holdings of shares
intend voting in favour of the scheme, or if the scheme does not become
operative, accepting the substitute offer.
7. Undertakings
Undertakings to vote in favour of the scheme in respect of their holdings
of shares at the date of the scheme meeting, failing which to accept the
substitute offer, have been received from the following shareholders:
Number of shares held on Percentage of
Shareholder the last practicable date scheme shares (%)
Brimstone+* 77 688 700 42.79
RMB 30 000 000 16.54
+ This undertaking is conditional on Brimstone shareholder approval for the
Brimstone transaction.
8. Documentation and further announcement
A circular containing full details of the proposal will be posted to NGH
shareholders on or about 21 February 2003. An announcement will appear in
the press on the same day, setting out the salient details of the proposal
and the timetable for its acceptance.
* In an announcement by Brimstone, relating to the Brimstone transaction,
which is being made simultaneously with this announcement, it is reflected
that Brimstone shareholders holding in aggregate 18 337 858 Brimstone
ordinary shares and 30 658 099 Brimstone "N" ordinary shares, representing
a total of 50.3% of the votes entitled to be cast at the Brimstone
shareholder meetings, have given irrevocable undertakings to vote in favour
of the resolutions required to give effect to the Brimstone transaction.
Sandton
22 January 2003
Merchant bank and sponsor to NGH
RAND MERCHANT BANK
A division of FirstRand Bank Limited
Corporate Finance
Attorneys to NGH
WERKSMANS
INCORPORATED
(Registration number 1990/007215/21)
Corporate law advisors and consultants to NER and Capricorn
EDWARD NATHAN & FRIEDLAND (PTY)LTD
(Registration number 1999/026464/07)
www.enf.co.za
Independent advisor
NEDBANK CORPORATE
Advisor and lender to Brozent
Investec Bank Limited
(Registration number 1969/004763/06)
Date: 22/01/2003 11:02:51 AM Produced by the JSE SENS Department
