| Wed 16 Apr 2003, 9:57 | | M&z - Disposal And Proposed Voluntary Termination |
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M&Z - Disposal and Proposed Voluntary Termination Of Listings And The Proposed
Offer To Minorities
Metje & Ziegler Limited
Incorporated in the Republic of Namibia
South African share code: MZG and MZGP
Namibian share code: MAZ and MAZP ISIN: ZAE000031274
(Registration number: 196)
("M&Z" or "the Company")
ANNOUNCEMENT: DISPOSAL OF THE HARDWARE & BUILDING MATERIALS DIVISION, THE
PROPOSED VOLUNTARY TERMINATION OF LISTINGS AND THE PROPOSED OFFER TO MINORITIES
1. INTRODUCTION
Further to the cautionary announcements that were released on SENS on 26
February and 31 March 2003, and published in the press on 26 February and 1
April 2003, it is announced that M&Z has reached an agreement, subject to the
conditions precedent set out in paragraph 5 below, in terms of which certain
major assets in its Hardware & Building Materials Division ("H&B Division") are
to be disposed of to M Pupkewitz & Sons (Pty) Limited and/or its nominees
("Pupkewitz") and, following which, the operations of the H&B Division are to be
discontinued ("the disposal").
In addition, the directors of M&Z have proposed that they be authorised to
apply for the voluntary delisting of M&Z"s shares on both the JSE Securities
Exchange South Africa ("JSE") and the Namibian Stock Exchange ("NSX") with
effect from Tuesday, 20 May 2003 ("the voluntary delisting"). This will follow
the proposed offer by Herta Ernst Investments (Pty) Limited ("Herta Ernst"), the
majority shareholder in M&Z, to purchase from all the shareholders their M&Z
shares ("the purchase offer").
2. THE DISPOSAL
2.1 Rationale for the disposal
The directors are of the opinion that the contribution of the H&B Division to
the returns required by shareholders is not acceptable and that the H&B
Division, in terms of the restructuring process which is currently underway,
will cease to form part of the core business activities of the M&Z Group.
2.2 Particulars of the disposal
M&Z will, subject to the conditions precedent under paragraph 5 below,
dispose of certain major assets in its H&B Division to Pupkewitz for a disposal
consideration which has been determined as follows:
Settlement of disposal
Notes consideration N$
Properties 1 Date of transfer 9 200 000
Fixed assets 2 7 May 2003 1 148 198
Stock (estimate) 3 7 May 2003 11 455 000
Aggregate estimated
disposal consideration 21 803 198
Notes:
1. The properties that are to be disposed of, and from which the H&B Division
currently conducts its operations, include Erven 235A, 235B and 236B, Lderitz,
in respect of which the selling price will be N$1 100 000, as well as erf
697, Windhoek, in respect of which the selling price will be N$8 100 000.
2. Fixed assets are comprised of the movable assets of the H&B Division.
3. Stock counts will be conducted on or before 25 April 2003 in Lderitz and
29 April 2003 in Windhoek, following which the exact stock values will be
determined in terms of the relevant provisions of the sale of assets agreement.
The total value of the stock at those dates is estimated to be N$11 455 000.
This estimate is based on December 2002 actuals and is not expected to differ
materially from the final figure.
4. All amounts are exclusive of value-added tax.
In terms of the sale of assets agreement, M&Z shall give notice of termination
of service to all H&B Division employees and accept full and sole responsibility
in respect of any and all amounts due to any employee in respect of any period
of service prior to the effective date. Pupkewitz will accept applications for
employment and issue invitations to those employees it wishes to employ in terms
of a new contract of employment.
The disposal, which will become effective at 08:00 on the day following the
day of completion of the stock counts in Lderitz and Windhoek, is a disposal as
contemplated in terms of section 228 of the Companies Act 61 of 1973, as amended
("the act"), which requires the approval of the Company in general meeting.
The cash proceeds from the disposal will be applied to further reduce debt
and to strengthen the M&Z Group"s cash resources.
2.3 Financial effects of the disposal
The disposal of certain major assets in the H&B Division, for an estimated
consideration of N$21 803 198, would have had the following effect on earnings
per share ("EPS") and headline EPS of M&Z for the six months ended 31 December
2002, assuming that the transaction had been implemented on 1 July 2002, and on
net asset value ("NAV") per share of M&Z, assuming that the transaction had been
implemented at 31 December 2002:
Before the After the Percentage
disposal disposal increase/
(cents per share) (cents per share) (decrease)
EPS 133,2 258,9 94,4
Headline EPS 16,8 60,5 260,1
NAV per share 784,0 881,0 12,4
Notes:
1. Based on the unaudited interim financial results of M&Z for the six months
ended 31 December 2002.
2. After adjusting earnings for the six months ended 31 December 2002 on the
assumption that the transaction was implemented on 1 July 2002 for the purpose
of calculating EPS and headline EPS, and on 31 December 2002 for the purpose of
calculating NAV. Assuming also costs of N$1 997 000 associated with the
discontinuance of the H&B Division and an interest saving of N$1 228 000 (on
reduction of bank overdraft) following the disposal.
3. Number of shares in issue for purpose of calculations is 6 484 958.
There are no intangible assets. Accordingly, the net tangible asset value is
the same as NAV.
3. THE VOLUNTARY DELISTING
3.1 Suspension and termination of listings on the JSE and NSX
The directors propose that, subject to the conditions precedent set out in
paragraph 5 below, they be authorised to apply for the termination of the
listings of M&Z"s ordinary and preference shares on both the JSE and NSX.
It is expected that the listings of M&Z shares will be suspended with effect
from the commencement of trade on Monday, 12 May 2003, and terminated with
effect from the commencement of trade on Tuesday, 20 May 2003.
3.2 Rationale for the termination of the listings
The small market capitalisation status of M&Z, together with the relatively
small free float, have resulted in limited tradeability and low liquidity in M&Z
shares. The directors are of the opinion that, given the illiquidity of the
share, the negative sentiment towards small capitalisation shares listed on the
JSE and NSX and the high costs associated with maintaining the listings, there
is little justification for the continued listing of M&Z shares.
3.3 Shareholders in an unlisted company
Following the implementation of the purchase offer, those M&Z shareholders
who do not accept the offer will hold shares in an unlisted entity. M&Z
shareholders are cautioned that in an unlisted environment, the tradeability of
their M&Z shares will be limited as there will no longer be any recognised
market on which to trade such shares.
4. THE PURCHASE OFFER
Herta Ernst has offered to purchase from all potential accepting
shareholders, all of the M&Z shares held by them, or such lesser number of M&Z
shares as such shareholders may wish to sell, for a purchase offer consideration
of 980 cents per ordinary share and 110 cents per preference share, both of
which are to be settled in cash.
The acceptance of this purchase offer is subject to the fulfilment of the
conditions precedent set out in paragraph 5 below.
5. CONDITIONS PRECEDENT
The proposal is subject to the fulfilment of the following conditions
precedent:
* the ratification of the disposal by the shareholders of M&Z in general meeting
(termed an extraordinary meeting in terms of the Articles of Association of M&Z)
on Friday, 2 May 2003, as required in terms of section 228 of the act;
* the approval by the requisite majority (refer to paragraph 6 below) of M&Z
shareholders, in extraordinary meeting, of the voluntary delisting of M&Z from
both the JSE and NSX; and
* the approval by the JSE and NSX of the suspension and termination of the
listings of M&Z shares on the JSE and NSX.
The implementation of the purchase offer is subject to and conditional upon
the ratification of the disposal as well as the approval of the voluntary
delisting.
6. IRREVOCABLE UNDERTAKINGS
With regard to the disposal, the directors as well as the employees who
exercised their share options, together with the controlling shareholder, being
Herta Ernst, all of whom represent 90,2% of the issued ordinary share capital of
M&Z, have given undertakings and a proxy respectively to vote in favour of the
resolution. In terms of the act, a simple majority, being more than 50% of the
votes of all M&Z shareholders present or represented by proxy, is required in
order to pass the resolution.
In terms of the JSE Listings Requirements, the resolution regarding the
voluntary delisting requires the approval of more than 50% of the votes of all
M&Z shareholders present or represented by proxy, excluding any controlling
shareholder, its associates and any party acting in concert. Minority
shareholders beneficially holding, in aggregate, 9,1% of the issued ordinary
share capital of M&Z, and representing 63,4% of the minority shareholders, have
given written undertakings that they will vote in favour of the voluntary
delisting.
7. SALIENT DATES AND TIMES
2003
Purchase offer opens Thursday, 17 April
Last day to lodge forms of proxy for extraordinary
meeting by 16:00 on Tuesday, 29 April
Extraordinary meeting of shareholders at 09:00 on Friday, 2 May
Last day to trade M&Z shares to qualify to
participate in purchase offer Friday, 9 May
Listings of M&Z shares on the JSE and NSX
suspended at the commencement of trade on Monday, 12 May
Purchase offer closes at 16:00 on Friday, 16 May
Record date (subject to valid acceptance
of the purchase offer by Friday, 16 May 2003,
shareholders will be paid within 5 business days
of receipt of such acceptances) Friday, 16 May
Listings of M&Z on the JSE and NSX terminated at
the commencement of trade on Tuesday, 20 May
Note: The above dates are subject to change. Any changes will be published in
the press.
8. CIRCULAR TO SHAREHOLDERS
A circular, providing full information on the above proposals and containing,
inter alia, a notice of extraordinary meeting, a form of proxy for the
extraordinary meeting, and a form of acceptance and surrender, will be mailed to
M&Z shareholders on or about 17 April 2003.
Windhoek
15 April 2003
D Oram
Company secretary
8th Floor
Metje Behnsen Building
Independence Avenue
PO Box 239, Windhoek, Namibia
Sponsor in South Africa
HSBC
Sponsoring broker in Namibia
HSBC
HSBC Securities (Namibia) (Pty) Limited
Member of NSN
