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FirstRand Limited -
FirstRand Limited
Incorporated in the Republic of South Africa
Registration number: 1966/010753/06
Share Code: FSR ISIN: ZAE 0000 14973
("FirstRand" or the "company")
Announcement to shareholders
1. Capital raising by FirstRand
In order to facilitate the re-organisation of the FirstRand group and the
underwriting of Discovery Holdings Limited ("Discovery") claw-back offer, as
discussed below, FirstRand will issue approximately R1,4 billion of redeemable
cumulative preference shares ("the preference shares"), by no later than 30
September 2003. The issue of the preference shares by FirstRand enables it to
raise the capital cost-effectively and to optimally allocate it between its
three operating entities being Momentum, Discovery and the FirstRand Banking
Group.
2. Underwriting of the Discovery claw-back offer
Shareholders are referred to the claw-back offer announced by Discovery today,
12 June 2003. Shareholders are advised that the FirstRand group has entered
into an agreement to underwrite the claw-back offer of R875 million.
3. Re-organisation of the FirstRand group
After the financial year ending 30 June 2003, but no later than 30 September
2003, FirstRand"s 62% investment in Discovery, currently held by Momentum, will
be transferred and held directly by FirstRand.
The rationale for the re-organisation is outlined below:
- Momentum has completed a detailed evaluation of its capital management
programme, with the objective of optimising the asset composition of the
shareholders" portfolio. The transfer of Discovery to FirstRand is one of the
first steps in this capital restructuring programme;
- the transfer will improve the diversification of the assets used to back
the statutory capital requirements of Momentum as the investment in Discovery
constituted approximately 30% of the shareholder portfolio of Momentum (as at 31
December 2002); and
- following the introduction of the Financial Services Board"s new prescribed
requirements for the calculation of the value of group undertakings (strategic
investments), the value of Discovery, for Momentum"s statutory solvency
purposes, would be limited to a value less than its market value.
4. Further details
Further details of the capital raising, the re-organisation of the FirstRand
group and the restructuring of the Momentum shareholders portfolio will be
included in FirstRand"s 2003 annual results announcement to be released during
September 2003.
Sandton
12 June 2003
Merchant Bank and Sponsor
RAND MERCHANT BANK
A division of FirstRand Bank Limited
CORPORATE FINANCE
Date: 12/06/2003 02:31:04 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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