| Wed 9 Jul 2003, 10:33 | | THE BIDVEST GROUP LIMITED - MAJOR EMPOWERMENT INIT |
|
The Bidvest Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT ISIN code: ZAE 000008132
("Bidvest" or "the Group")
MAJOR EMPOWERMENT INITIATIVE
AND CAUTIONARY ANNOUNCEMENT
- BEE consortium to make an offer to Bidvest shareholders for 15% of Bidvest -
worth approximately R2 billion
- Proposed offer is inclusive of both local and international assets
- Core BEE consortium members are WDB Investment Holdings, Makana Investments
and Bassap Investments, with substantial provincial empowerment representation
and a Skills Development Trust
- BEE consortium to add value operationally
- Enterprise-Based Bidvest Charter announced, embodying the Group"s empowerment
aspirations
- BEE appointments and restructuring of the Bidvest Board to follow
- Further BEE imperatives include senior HDI appointments, employment equity,
skills development and affirmative procurement
- Shareholders to exercise caution when dealing in Bidvest shares
Johannesburg
July 9 2003
Brian Joffe, Executive Chairman, commented:
"This innovative and unique initiative should position Bidvest for participation
in private and public opportunities providing us with an additional platform for
growth in the future.
This initiative reflects our desire to make a significant contribution to the
economic transformation of South Africa. It allows for a broad-based and
representative empowerment grouping to share and have influence in the
mainstream economy and in the future of Bidvest, both in South Africa and
internationally. It facilitates the ongoing development of employee skills and
participation in value creation across the Group."
Tania Slabbert, CEO WDB Investment Holdings, commented:
"We are very excited to be partners in this unique groundbreaking initiative. We
see this as a deepening of our existing relationships in Bidvest and as an
opportunity to contribute to the further growth and continued transformation of
Bidvest."
Enquiries:
The Bidvest Group Limited Tel: (011) 772 8700
Brian Joffe, Executive Chairman
Jack Hochfeld, Investor relations Tel: (011) 772 8705
David Cleasby, Investor relations Tel: (011) 772 8706
Dinatla Tel: (011) 442 2777
Tania Slabbert
Sonja Sebotsa
Tanja Glavovic Tel: (082) 901 0327
College Hill South Africa Tel: (011) 447 3030
Nicholas Williams
Johannes van Niekerk
MAJOR EMPOWERMENT INITIATIVE AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Bidvest announced in its interim results in February 2003 the pursuit of further
initiatives that would realise the Group"s Black Economic Empowerment ("BEE")
objectives. Bidvest has initiated the introduction of a 15% BEE shareholding,
currently valued in excess of R2,1 billion, at the Group level, enabling BEE
shareholders ("Dinatla") to participate in Bidvest"s South African and foreign
operations.
Dinatla is a new broad-based empowerment entity owned by a consortium of
prominent entrepreneurial black businesses, Historically Disadvantaged
Individuals ("HDI") and Bidvest black employees being fully representative of
the operational diversity of the Group across all provinces in South Africa. The
word "Dinatla" means the "strong ones" and denotes "strength", "willingness to
excel" and "hardworking" in Sotho, and symbolises the essence of the initiative
between Dinatla and Bidvest.
2. RATIONALE FOR THE INITIATIVE
Bidvest has always been fully supportive and committed to the concept of BEE,
which is a South African national and business imperative. This initiative
positions the Group for improved participation in private and public sector
opportunities, thereby providing an enhanced platform for growth.
The national imperative for social and economic transformation is essential to
create jobs, stimulate growth in the economy, expand market access to all South
Africans, and in the long term promote South African competitiveness. Bidvest is
championing the development and emergence of an influential BEE grouping with
significant influence in the mainstream economy, in a major entity listed on the
JSE Securities Exchange South Africa ("JSE").
In order for BEE to be sustainable, the objectives of BEE companies must be
aligned with those of the company and its stakeholders. Accordingly, Bidvest has
facilitated BEE participation at the Group level thereby avoiding any potential
conflicts of interest at an operational level. Bidvest remains committed to its
proven business model, whereby cash flows are harnessed to create the engine for
growth, both locally and internationally.
The form of participation envisaged will not result in any encumbrance on the
Bidvest balance sheet and leaves Bidvest able, together with BEE participation,
to continue to build on its past success.
The BEE consortium and Bidvest management are committed to adding meaningful
value to the activities of Bidvest.
This initiative will significantly raise Bidvest"s BEE ownership profile and
combined with the Bidvest Enterprise-Based Charter ("the Bidvest Charter")
should enable Bidvest to achieve favourable empowerment status in terms of the
balanced scorecard of the Department of Trade and Industry ("DTI") Strategy for
Broad-based BEE ("DTI BEE Strategy").
3 THE BIDVEST CHARTER
Bidvest, together with Dinatla, is developing an Enterprise-Based Charter that
will embody the Group"s empowerment aspirations.
The spirit and principles of the DTI BEE Strategy have been adopted in
developing the Bidvest Charter. The DTI and the Department of Public Enterprises
have been and continue to be consulted for guidance and advice.
The Bidvest Charter will provide an overall framework for the Group"s continuing
BEE transformation. In addition to the BEE ownership at Group level, the Bidvest
Charter will provide goals inter alia; for active BEE participation through
employment equity at executive, divisional and operational levels, skills
development and affirmative procurement.
4. SALIENT FEATURES OF PROPOSED TRANSACTION
Dinatla will, subject to the fulfilment of certain conditions, propose a scheme
of arrangement in terms of section 311 of the Companies Act (Act 61 of 1973)
between Bidvest and its shareholders ("the scheme"). In terms of the scheme,
Dinatla will, with effect from 1 October 2003, acquire 15% of the issued share
capital of Bidvest ex all distributions until 1 October 2006, ("the acquired
Bidvest shares") pro rata from all the Bidvest shareholders ("the scheme
vendors").
The consideration for the acquired Bidvest shares ("the scheme consideration"),
to be discharged in October 2006, will be determined with reference to the 30
day weighted average market price of a Bidvest share traded on the JSE
immediately prior to this date, with a minimum price of R42 and maximum price of
R60 per Bidvest share.
A new company ("Newco") will be established for the specific purpose of owning,
managing and distributing the scheme consideration. This will be achieved by the
assumption by Newco of the obligation to discharge the scheme consideration to
the scheme vendors. Accordingly, the scheme vendors will have a claim for the
scheme consideration ("The Newco securities") against Newco, which will have a
corresponding claim against Dinatla. The scheme consideration due by Dinatla to
Newco will be guaranteed by the pledge of the acquired Bidvest shares. The Newco
securities will be listed on the main board of the JSE in the Specialist
Securities Sector (Investment Products).
In October 2006, Dinatla will settle the scheme consideration to Newco, for the
benefit of the registered Newco securities holders at that time, either by cash
or through the return of the acquired Bidvest shares. The acquired Bidvest
shares owned by Dinatla after settlement of the scheme consideration will be
held for a further period of at least 5 years.
Provision will be made in terms of the scheme to take account of material
adverse market conditions to protect the interests of Bidvest, Newco and Dinatla
stakeholders.
As a further term of the scheme, Bidvest will grant the right to all registered
Bidvest shareholders in October 2006, excluding Dinatla, to subscribe pro rata
to their shareholding for 18 million new Bidvest shares at a strike price of R60
per Bidvest share.
As part of their commitment, Dinatla shareholders will contribute significant
risk capital to the transaction.
The legal agreements implementing the above will contain conditions normally
associated with a transaction of this nature including restraints of activity on
the BEE consortium.
** Newco securities listed on the JSE
5. BEE CONSORTIUM MEMBERS IN DINATLA
The proposed BEE consortium members are broad-based and representative of a
countrywide spectrum of empowerment parties who collectively contribute a wide
range of skills. The key strategic Dinatla shareholders (set out in paragraphs
5.1 to 5.3) have long standing relationships with Bidvest, ranging from 2 to 7
years and have all already made meaningful contributions to the Group.
5.1 WDB INVESTMENT HOLDINGS ("WDBIH")
WDBIH, the wholly owned investment arm of the WDB Trust, was established in 1997
to promote the economic empowerment and social upliftment of women in South
Africa. Its mandate is to build a strong portfolio of businesses in order to
provide a capital base to fund the WDB Trust"s development programmes, which
focus on linking women to resources such as finance, information, training and
entrepreneurship. Strategic investments are held in leisure, energy, IT and
services. WDBIH"s key executives are Sonja Sebotsa, Tania Slabbert and Tandi
Nzimande. WDBIH has been instrumental in assisting Bidvest in developing the
framework for the Bidvest Charter.
5.2 MAKANA INVESTMENT CORPORATION ("MAKANA INVESTMENTS")
Makana Investments is the investment arm of the Makana Trust, a trust
established to benefit approximately 5 000 former political prisoners and their
dependents. Makana Investments is involved in clearing and forwarding,
technology, media and telecommunications. Makana Investments is headed by Peter-
Paul Ngwenya. Key executive directors are Mark Goodger, Naughty Ngcobo and David
Moise.
5.3 BASSAP INVESTMENTS ("BASSAP")
Bassap is a Western Cape based company which is 100% owned and managed by
shareholders from HDI groups. These shareholders include a number of
experienced, skilled professionals and entrepreneurs, as well as community
groups and women"s organisations from the Western, Northwest and Southern Cape.
Bassap"s investment focus is in support services, food production and food
processing. Key executives are Lionel Jacobs and Scott Moahloli.
5.4 BIDVEST-DINATLA SKILLS DEVELOPMENT TRUST
The Bidvest-Dinatla Trust has been founded to serve the educational needs of
Bidvest"s HDI employees. Until such time as the Bidvest-Dinatla Trust is income-
producing, Bidvest has undertaken to provide an initial injection of R1 million
to the Trust to facilitate the education and training of selected HDI Bidvest
employees and their dependents.
5.5 REGIONAL PARTICIPATION
An additional feature of Dinatla is the participation of regional HDI companies
which operate in each of the 9 provinces in South Africa. The regional
participants were identified through a screening and selection process to ensure
their capacity to deliver and contribute to Bidvest.
6 RESTRUCTURING OF THE BIDVEST BOARD AND APPOINTMENT OF BEE EXECUTIVES
It is Bidvest"s intention to restructure its Board of Directors and furthermore,
Bidvest will be appointing additional HDI executives at all levels of the Group.
Full details of these and other appointments will be announced in due course.
7 FINANCIAL EFFECTS
As the scheme is between Dinatla and existing shareholders, there would be no
direct financial effect on Bidvest. The financial benefits to Bidvest emanating
from the BEE initiative are difficult to quantify, but are expected to be
significant in the future.
8 CONDITIONS PRECEDENT
The proposed scheme and its implementation is conditional upon the fulfilment of
a number of conditions precedent, including inter alia; the JSE, the Securities
Regulation Panel, regulatory and shareholder approvals.
9 CAUTIONARY AND FURTHER ANNOUNCEMENTS
A further announcement regarding the proposed scheme, including the timing and
details thereof, will be announced on SENS in due course. Accordingly,
shareholders are advised to exercise caution when dealing in Bidvest"s shares
until a further announcement is made.
Johannesburg
July 9 2003
Merchant Bank to Bidvest and transaction advisers
Investec Bank Limited
Corporate Finance
Lead sponsor to Bidvest
Investec Securities Limited
Sponsor to Bidvest
Deutsche Securities Ù
Legal advisors to the transaction
Edward Nathan & Friedland, Inc (Pty) Limited Ù
Werksmans Inc. Ù
Consultants to the transaction
Nedbank Corporate Ù
SCMB Ù
