| Thu 3 Apr 2003, 12:16 | | G&i Termination Of Listing; Conditional Offer To M |
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G&I TERMINATION OF LISTING; CONDITIONAL OFFER TO MINORITY SHAREHOLDERS; AND
CAUTIONARY
GUBB & INGGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No: 1916/001495/06)
("G&I" or "the company")
JSE Code: GUB - ISIN CODE: ZAE000003208
PROPOSED TERMINATION OF G&I"S LISTING;
A CONDITIONAL OFFER TO G&I"S MINORITY SHAREHOLDERS;
AND A CAUTONARY ANNOUNCEMENT
1. INTRODUCTION
The Janus Corporation (Pty) Limited is authorised to announce that the board of
directors of G&I ("the board") has resolved, subject to the requisite
shareholder approval, that the directors be authorised to make written
application to the JSE Securities Exchange South Africa ("the JSE") for G&I"s
listing on the JSE to be terminated.
Merwool (Proprietary) Limited ("Merwool"), the controlling shareholder of G&I,
has furnished the board with an irrevocable written undertaking that it (or
their nominee) will make an offer to purchase from G&I shareholders all the
issued shares in the company not under their control ("the offeree shares") for
a cash amount of 1 800 cents per share, conditional on the delisting application
succeeding.
2. RATIONALE FOR THE DELISTING
The directors have considered the rationale for the listing of the company and
have come to the conclusion that the benefits of having the company listed are
significantly outweighed by the disadvantages. The directors recommend that the
listing be terminated for the following reasons:
-G&I is classified as a small cap stock by institutional investors, and
accordingly is not viewed as a desirable portfolio investment.
-G&I has only been able to pay dividends twice in the last 6 years. As the last
dividend of 50 cents per share was paid for the year ended 20 June 2001, the
attractiveness of the counter to the market remains low, which in turn
exacerbates the share"s non-tradability.
-The listing costs are high and were about R350 000 for the financial year
ending 2002, with no benefit to G&I or its shareholders.
-The disclosure requirements of the JSE and the King Commission put G&I on an
unequal footing with regard to the disclosure of sensitive market information in
that G&I"s competitors, both locally and internationally, are private companies
that do not need to comply with public disclosure requirements.
-G&I is a commodity-based company in the wool and mohair industry, a declining
industry with limited prospects in the South African economy. At the time of
listing the South African wool and mohair industry produced in excess of 100,000
tons of product, but by 2001 this had reduced to less than 50,000 tons.
-The nature of G&I"s business necessitates cyclical periods of high gearing (the
current gearing ratio is 156%) which is typical of a commodity-trading
organisation. Equity capital is not an effective form of funding for such a
company.
-G&I no longer complies with the JSE"s listings requirements in terms of issued
shares in that G&I has 2 031 030 ordinary shares in issue compared to 25 000 000
required in terms of the JSE Listings Requirements.
THE PROPOSAL
3.1 Delisting
The board will convene a general meeting of the shareholders of the company to
propose that it be authorised to apply to the JSE for the listing of the company
to be terminated.
3.2 The offer
The proposed delisting will be coupled with a conditional offer from Merwool (or
their nominee) to purchase from the shareholders of G&I, other than Merwool and
The Stucken Family, all the offeree shares for a cash amount of 1 800 cents per
share.
The offer is conditional on, inter alia, the delisting application succeeding.
It is anticipated that the offer will close shortly after the outcome of the
delisting application becomes known, the intention being that shareholders who
accept the offer will be paid the offer consideration as soon as possible after
the fulfilment of all the conditions precedent. Merwool has furnished the board
with an irrevocable written undertaking that they shall exercise the voting
rights attaching to the shares in the company under their control in such a
manner and grant such approvals as may be required to fulfil this condition.
In terms of the JSE Listings Requirements Merwool and the Stucken Family will be
required not to vote their shares in respect of the delisting resolution.
3.3 Future participation
There will be no obligation on G&I shareholders to accept the offer. Those G&I
shareholders who wish to remain as shareholders in the company following the
termination of its listing will be able to do so. Shareholders should however
note that they will hold shares in an unlisted company and as there will be no
ready market for their shares, tradability in their shares will be limited.
3.4 Cash confirmation
The Securities Regulation Panel ("SRP") has been satisfied that Merwool has
sufficient cash resources to honour its commitments in terms of the offer and
the compulsory acquisition
4. FINANCIAL EFFECTS
The pro forma comparison of the financial effects on a G&I shareholder accepting
the offer or remaining a shareholder of the Company, based on the notes and
assumptions set out below, are as follows:
Accepting Not Change if Percentage
the offer accepting the offer Change
(cents) the offer accepted
(cents) (cents)
Market value 1 800 1 200 600 50%
(3)
Income/dividends 165 - 165 >100%
(4)
Earnings (2) 165 350.8 (185.8) (53,0)%
Net asset value 1 800 5 082.6 (3 282.6) (64.58)%
(5)
Notes and assumptions:
(1) The financial effects are based on the published unaudited interim results
of the Company for the six month period ended 31 December 2002.
(2) Earnings and headline earnings are the same and are based on the 12 month
period ended 31 December 2002. The effect on earnings per share are calculated
on the assumption that the purchase consideration is placed in an interest
bearing account, earning interest at the 3 month JIBAR rate of 13,416% less
taxation at the average rate of 35%, on a NACM basis.
(3) The price is based on the closing price of the G&I shares on the JSE on
Friday, 28 March 2003, the last day on which a G&I share traded.
No dividends were declared or paid by G&I in respect of the financial period
ended 31 December 2002.
The net asset value has been based on the unaudited interim results for the six
months ended 31 December 2002.
5. CONDITIONS PRECEDENT
The delisting proposal and the offer will be subject to the fulfilment of the
following conditions precedent:
-obtaining the requisite approval from the JSE and the Securities Regulation
Panel ("SRP") for the circular containing details of the proposal to be mailed
to G&I shareholders
-obtaining approvals from the shareholders of the company and the JSE for the
termination of the listing of the company;
-obtaining the approvals of the competition authorities and any other regulatory
authorities having jurisdiction over the proposals, to the extent required;
-neither G&I nor the directors of G&I entering into any contract regarding the
sale, alienation or other disposal of any material assets of G&I for the
duration of the offer period;and
-the delisting proposal is dependent on the offer being implemented.
Merwool reserves the right, at any time prior to or after the date for the
fulfilment of the conditions precedent, to;
-waive the conditions precedent mentioned above to the extent that they are able
to do so;
-invoke the provisions of section 440K of the Companies Act should acceptances
be received in respect of at least 90% of the offer shares and should all
regulatory approvals have been received.
6. INDEPENDENT OPINION
Fisher Hoffmann PKF have been appointed by the board to advise whether the terms
of the offer are fair and reasonable to the shareholders. Their opinion will be
included in the circular to G&I shareholders as contemplated below. The
directors, other than the Stucken Family will, express their views on the
merits of the offer in the circular and following its assessment of the fair and
reasonable opinion,.
7. FURTHER DOCUMENTATION
A further announcement detailing the salient dates and times of the
transaction will be published shortly. A circular to G&I shareholders containing
details of the delisting proposal and the offer and incorporating a notice of
general meeting of G&I shareholders will be prepared and will be mailed to G&I
shareholders, subject to the approval of the JSE, within 28 days of this
announcement or on such later date as agreed to by the JSE and the SRP.
CAUTIONARY
G&I shareholders are advised to exercise caution when dealing in their G&I
shares until a further detailed announcement is made.
03 April 2003
Johannesburg
Corporate Finance Adviser and Sponsor
The Janus Corporation (Pty) Ltd
