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Profurn Limited
(Incorporated in the Republic of South Africa)
(Registration number 1968/015363/06)
Share code: PON ISIN: ZAE000016481
("Profurn" or "the Company")
Proposed scheme of arrangement and further cautionary announcement
1. Introduction
Further to the cautionary announcement dated 13 December 2002, Rand Merchant
Bank is authorised to announce that JD Group Limited ("JD") will propose a
scheme of arrangement in terms of section 311 of the Companies Act No 61, 1973,
as amended ("Companies Act") between Profurn and its shareholders to acquire all
of the shares held by such shareholders ("Profurn shareholders") for a
consideration of 19.75846 JD shares for every 100 Profurn shares ("the scheme
consideration") ("the scheme"). The total scheme consideration is 53 700 000 JD
shares.
In the event that the scheme does not become operative for any reason a
substitute offer will be deemed to be made by JD to the Profurn shareholders at
the same purchase consideration as the scheme consideration payable in terms of
the scheme ("substitute offer").
If the scheme becomes operative or if the substitute offer is implemented,
Profurn will become a wholly-owned subsidiary of JD and Profurn`s listing on the
JSE Securities Exchange South Africa ("JSE"), the Namibian Stock Exchange
("NSX") and the Botswana Stock Exchange ("BSE") will be terminated.
The scheme and the substitute offer are collectively referred to as the
proposal.
2. Rationale
The acquisition by JD of Profurn has the potential to enhance value for JD and
Profurn shareholders with the extensive increased efficiencies that will result
within JD and at the same time preserve jobs and the supply base in the industry
which are under threat.
3. Conditions precedent
The scheme is subject to the normal conditions precedent that would be
applicable to a transaction of this nature including, inter alia, following:
3.1 the scheme being approved by a majority representing not less than 75%
of the votes exercisable by the scheme members present and voting, either in
person or by proxy, at the scheme meeting;
3.2 the Court sanctioning the scheme;
3.3 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Companies Act;
3.4 approval of the JSE, NSX and BSE, the Securities Regulation Panel, the
South African Reserve Bank and any other regulatory authorities to the extent
required;
3.5 the approval of the resolutions relating to the acquisition by the
requisite majority of JD shareholders at a general meeting; and
3.6 the finalisation of certain facilities arrangements between JD and its
bankers.
4. Financial effects and further cautionary announcement
The financial statements of Profurn are prepared on the historic cost basis in
accordance with the South African Statements of Generally Accepted Accounting
Practice ("GAAP").
The financial statements of JD are prepared on the historic cost basis in
accordance with GAAP and International Accounting Standards (`IAS`). During the
year ended 31 August 2002, JD changed its accounting policy relating to
financial instruments in accordance with IAS 39: Financial Instruments:
Recognition and Measurement.
As a result of the above, a simple aggregation of the financial results of
Profurn and JD may not be an accurate presentation of the financial effects of
the acquisition due to the different bases of accounting. A further announcement
will be made in respect of the financial effects of the scheme after the Profurn
financial results have been restated to be consistent with the accounting
policies of JD. Accordingly, Profurn shareholders are advised to continue to
exercise caution when dealing in their Profurn shares until a further
announcement in this regard is made.
5. Opinions and recommendations
Ernst & Young Corporate Finance (Proprietary) Limited ("Ernst & Young") has been
appointed by the board of directors of Profurn 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 Profurn
shareholders. Ernst & Young has considered the terms and conditions of each of
the scheme and the substitute offer and is currently of the opinion that they
are fair and reasonable to Profurn shareholders.
The directors of Profurn whose interests will be fully disclosed in the circular
referred to in paragraph 0 have considered the terms of the proposal and the
opinion of the independent advisor and are of the opinion that the terms of the
proposal are fair and reasonable to the Profurn shareholders. They intend to
vote in favour of the proposal in respect of their own shareholdings in Profurn,
and recommend that Profurn shareholders do likewise.
6. Irrevocable undertakings
Irrevocable 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 Profurn
shareholders:
Shareholder Number of shares Percentage of
held on the last scheme shares
practicable date (%)
FirstRand Bank Limited 214 181 308 78.8
(`FirstRand")
Daun & Cie. AG 7 457 532 2.7
FirstRand has provided JD with an indemnity in respect of certain identified due
diligence differences, arising out of the due diligence investigation by JD of
Profurn.
Documentation and further announcement
A circular containing full details of the proposal will be posted to Profurn
shareholders within 28 days of the publication of this announcement.
Further announcements, including the financial effects referred to in paragraph
0 above and the salient dates pertaining to the transaction, will be published
on the Stock Exchange News Service and in the press in due course.
Braamfontein
27 January 2003
Merchant Bank to Profurn Attorneys to Profurn
Rand Merchant Bank Fluxmans Inc.
Sponsor to Profurn Independent advisor
Grant Thornton Kessel Ernst & Young Corporate
Feinstein Corporate Sponsors Finance (Proprietary) Limited
(Proprietary) Limited
Attorneys to FirstRand
Brink Cohen Le Roux & Roodt Inc.
Date: 27/01/2003 02:31:02 PM Produced by the JSE SENS Department
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