| Tue 15 Apr 2003, 18:01 | | COROHOLD/ AFRICAN HARVEST - FURTHER CAUTIONARY ANN |
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Coronation Holdings Limited African Harvest Limited
(Incorporated in the Republic of (Incorporated in the Republic of
South Africa) South Africa)
(Registration number: (Registration number:
1902/001739/06) 1997/013827/06)
(Ordinary share code: CRH) (Share code: AHV)
(ISIN number: ZAE000001772) (ISIN number: ZA000013538)
("N" ordinary share code: CRN) ("African Harvest")
(ISIN number: ZAE000010369)
("Corohold" or "the company")
FURTHER CAUTIONARY ANNOUNCEMENT REGARDING THE PROPOSED
RESTRUCTURING OF
COROHOLD AND AN OFFER FOR
AFRICAN HARVEST SHARES INCLUDING REVISED TERMS
Further to the joint Corohold and African Harvest cautionary announcement
regarding the proposed restructuring of Corohold and an offer for African
Harvest shares, published on SENS on 3 March 2003, this announcement sets out
revisions to the terms of the proposed restructuring ("the Restructuring") and
the offer to African Harvest shareholders.
1. African Harvest
The announcement published on SENS on 3 March 2003 provided that Corohold would
propose a scheme of arrangement between African Harvest and its shareholders in
terms of which Corohold would acquire the African Harvest shares not held by it
for a cash consideration of 192 cents per African Harvest share. Corohold has
agreed to increase the cash consideration to 194 cents per African Harvest share
in recognition of anticipated growth in the African Harvest net assets between
the date of the announcement and the date on which payment will be made to
shareholders, if the scheme of arrangement is approved by shareholders and
sanctioned by the Court.
1.1 Financial effects
The pro-forma financial effects of the African Harvest offer on an African
Harvest shareholder, based on the audited financial statements for the 12 months
ended 30 September 2002, are set out below.
African Harvest shareholder who accepts the African Harvest offer:
Cents Before After %
Change
Basic earnings per 69.5 16.3 (77)
share
Headline earnings per 2.6 16.3 527
share
Net asset value per 218 194 (11)
share
Adjusted net asset per 189 194 3
share
Market value per share 175 194 11
1.2 Assumptions
The financial effects are based on the following assumptions:
* the headline earnings per share achieved by African Harvest for the 2002
financial year have been used as a base;
* the African Harvest share price on 4 February 2003, the day before the first
cautionary announcement was published, has been used as the market value;
* a pre-tax interest rate on cash received of 12% p.a.; and
* a taxation rate of 30%.
The adjusted net asset value per share reflects an estimated cash liquidation
value per African Harvest share at 31 January 2003.
2. Corohold
The announcement published on SENS on 3 March 2003 provided that Corohold would:
* repay share premium of 1600 cents per ordinary and "N" ordinary share, in
cash, to shareholders;
* unbundle the entire issued share capital of Coronation Fund Managers Limited
("CFM") to shareholders in the ratio of five CFM shares per Corohold ordinary
and "N" ordinary share (at an indicative value of 460 cents per CFM share); and
* pay a dividend in anticipation of the voluntary liquidation of Corohold of
1400 cents per Corohold ordinary and "N" ordinary share to shareholders;
together, "the Corohold distributions".
In addition to the Corohold distributions, Coronation Investments and Trading
Limited ("CIT") would offer 500 cents per share, in cash, for each Corohold
ordinary and "N" ordinary share. The effect of this for Corohold shareholders
who accept the CIT offer would be the receipt of five CFM shares, at an
indicative value of 460 cents per share, and 3500 cents in cash, a total of 5800
cents per Corohold ordinary and "N" ordinary share.
In determining the course of action it should recommend to shareholders in
regard to the Restructuring, the Corohold board of directors ("the Corohold
board") considered the recommendations received from the professional firm it
had appointed to advise it on the matter. In forming its recommendations,
Corohold"s advisor considered a variety of matters, including the premium
offered over the ruling share price prior to the first cautionary announcement,
which was published on SENS on 5 February 2003, and the value which Corohold
shareholders would be likely to realise from the Corohold assets, other than
CFM, should those assets be realised for cash in an orderly manner. The
Corohold board was consequently advised that a total cash payment to
shareholders from the Restructuring, including the payment in terms of the CIT
offer, of 3750 cents per Corohold ordinary and "N" ordinary share would be fair
and reasonable. In recognition of this, the Corohold board has elected to
increase the dividend to shareholders in anticipation of liquidation so that the
total cash payment to shareholders from the Restructuring, including the payment
in terms of the CIT offer, is increased from 3500 cents to 3750 cents per
Corohold ordinary and "N" ordinary share. The effect of this for Corohold
shareholders who accept the CIT offer would be the receipt of five CFM shares,
at an indicative value of 460 cents per share, and 3750 cents in cash, a total
of 6050 cents per Corohold ordinary and "N" ordinary share.
CIT will furthermore offer Corohold shareholders the election to apply their
entire proceeds per Corohold ordinary and "N" ordinary share, which has been
increased to 3750 cents and five CFM shares, towards the subscription of two new
ordinary shares in CIT per Corohold share.
The strengthening of the rand against the Euro and the US dollar from 3 March
2003 to the date of this announcement has resulted in a further decline of R70
million in the net asset value of the Corohold Group. In addition, in the same
period, the FINDI 30 declined by 5.7%.
2.1 Financial effects
The pro-forma financial effects on a Corohold shareholder, based on the audited,
consolidated financial statements for the 12 months ended 30 September 2002, are
set out below.
Corohold shareholder who retains CFM shares and cash:
Cents Before After % Change
Basic earnings per 557 594 7
share
Headline earnings per 583 629 8
share
Net asset value per 4 728 6 050 28
share
Market value per share 5 100 6 050 19
Corohold shareholder who elects to acquire shares in CIT (assuming shareholders
holding 50%, comprising 38 188 993 shares, of the shares in Corohold make this
election):
Cents Before After % Change
Basic earnings per 557 328 (41)
share
Headline earnings per 583 346 (41)
share
Net asset value per 4 728 7 611 61
share
Net tangible asset 4 716 5 442 15
value per share
2.2 Assumptions
The financial effects are based on the following assumptions:
* the headline earnings per share achieved by the Corohold Group for the 2002
financial year have been used as a base and have not been adjusted to take
account of dividend payments or share repurchases and cancellations in the
period from 2 October 2002 to the date of this announcement;
* the Corohold share price on 4 February 2003, the day before the first
cautionary announcement was published on SENS, has been used as the market
value;
* a pre-tax interest rate on cash received of 12% p.a.;
* a pre-tax interest rate on borrowings of 15% p.a.;
* a taxation rate of 30%;
* an indicative valuation of the CFM shares of 460 cents per share;
* an investment into CIT of 3750 cents and 5 CFM shares, per Corohold share, in
return for 2 shares in CIT;
* a market value per CFM share equal to the indicative valuation of 460 cents
per share; and
* net tangible asset value per share excludes the goodwill inherent in the
indicative valuation of the CFM shares of 460 cents per share.
2.3 Net asset value
The audited net asset value per Corohold share at 30 September 2002 was 5838
cents. The net tangible asset value per Corohold share at the date was 5827
cents.
2.4 Adjusted net asset value per share
If the audited net asset value per Corohold share at 30 September 2002 is
adjusted to take account of the reduction in the foreign currency translation
reserve of R480 million and the additional provisions of R134 million against
the Corohold Group"s aircraft leasing investments and R90 million against the
Group"s energy investments, as set out in the trading update published on SENS
on 3 March 2003, the dividends to shareholders paid on 9 December 2002 and the
share repurchases announced on 14 November 2002, the net asset value per share
declines from 5838 cents to 4728 cents. Correspondingly, the net tangible asset
value per share declines from 5827 cents to 4716 cents.
3. Circulars
Circulars to Corohold and African Harvest shareholders dealing with the various
aspects of the Restructuring and the offer for the African Harvest shares,
respectively, will be posted to shareholders in due course.
4. Renewal of cautionary announcement
Further to the cautionary announcements dated 5 February 2003 and 3 March 2003,
shareholders of Corohold and African Harvest are advised to continue exercising
caution when dealing in Corohold and African Harvest securities respectively
until a further announcement is made. The cautionary will be withdrawn when the
Securities Regulation Panel is provided with the requisite confirmations in
respect of the Restructuring and the offer to African Harvest shareholders.
Cape Town
15 April 2003
Corporate advisor and sponsor Sponsor to African Harvest
to Corohold Deutsche Securities (SA)
Deutsche Securities (SA) (Proprietary) Limited
(Proprietary) Limited
Legal advisor to Corohold Legal advisor to African
Deneys Reitz Inc. Harvest
Hofmeyr Herbstein & Gihwala
Inc.
Tax advisor to Corohold Independent financial advisor
Sonnenberg Hoffmann Galombik to African Harvest
NM Rothchild & Sons
