| Tue 5 Aug 2003, 18:05 | | Adcorp Holdings Limited - Empowerment Consortium A |
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Adcorp Holdings Limited - Empowerment Consortium Adcorp In Flexible Staffing
Release Date: 05/08/2003 13:58:02 Code(s): ADR
Adcorp Holdings Limited - Empowerment Consortium Adcorp in flexible Staffing
Division
Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
(Share code: ADR
ISIN: ZAE00000139)
("Adcorp")
EMPOWERMENT CONSORTIUM PARTNERS ADCORP IN FLEXIBLE STAFFING DIVISION
Adcorp Holdings Limited, which offers human capital management and marketing
advisory services, today announced a significant empowerment deal involving a
consortium of Black Management Forum Investments Company (BMFI), the investment
arm of the Black Management Forum and Zungu Investments Company (ZICO), a black
owned investment holding company.
The deal is subject to Adcorp shareholder and applicable regulatory authority
approval and involves the introduction of the empowerment consortium as 25%
shareholders in the Group"s flexible staffing division, which includes leading
brands such as Quest Flexible Staffing Solutions, Emmanuels Staffing Services,
Capacity, Charisma Nursing Services and Ikhwezi Staffing Solutions. The new
empowerment business, which is the largest division of Adcorp contributing some
65% of operating profits, is to be known as Adcorp Flexible Staffing Solutions.
The transaction has been made possible by way of an innovative structure
enabling the empowerment partners to participate in the fruits of their
endeavours from the first year with an option to convert their investment in
Adcorp Flexible Staffing Solutions directly into the Adcorp listed entity after
a five year period.
Mr Bheki Sibiya, President of the Black Management Forum, will represent the
ZICO-BMFI consortium on the Adcorp Holdings Board, with Bonga Zungu, executive
director of ZICO serving as alternate director to Bheki Sibiya.
The agreement significantly enhances the empowerment profile of Adcorp and could
act as a model for other empowerment transactions. The transaction is unique in
its structure and will benefit all existing shareholders of Adcorp.
The flexible staffing division of Adcorp is a leader in black economic
empowerment. It employs and trains over 18 000 people at any one time, the
majority of whom are black. Quest recently appointed a black MD, Francis
Khubedu. By concluding this agreement Adcorp has once again demonstrated its
commitment to empowerment.
Bheki Sibiya will assume the position of Chairman while Bonga Zungu is to be
appointed an executive director of Adcorp Flexible Staffing Solutions. Nelis
Swart remains as Chief Executive Officer of the business.
STRUCTURE OF THE ADCORP EMPOWERMENT DEAL
The Adcorp Holdings Limited (Adcorp) empowerment transaction has been effected
by way of the sale of all of the flexible staffing businesses of Adcorp into a
new entity, Adcorp Flexible Staffing Solutions, in which the empowerment
consortium comprising Black Management Forum Investments (BMFI) and Zungu
Investments Company (ZICO) is to hold 25% of the shares whilst Adcorp will hold
the other 75%.
A separate class of shares is to be issued to Adcorp in settlement of the
purchase consideration of R320 million, which will entitle Adcorp to the pre
deal or "base" profits of the business on an ongoing basis. A second class of
shares enabling all profits in excess of the base profits derived by the
business after the deal, to be known as the "super profits", will be held 50% by
the empowerment consortium and 50% by Adcorp.
After a period of five years, the empowerment partners will have the opportunity
of converting their stake in the empowered flexible staffing entity into the
Adcorp Holdings listed entity on the basis of a "value-for-value" swap of their
shareholding.
FINANCIAL EFFECTS
The empowerment partners will be able to participate in the fruits of their
endeavours right from the first year, as it is being funded internally by Adcorp
whilst the flexible staffing division, already in a growth phase, should receive
added impetus from its BEE credentials. As the base profits flow directly to
Adcorp, there is no dilution of earnings for existing Adcorp shareholders. As
such neither the current level of earnings of Adcorp nor the net asset value of
Adcorp will be negatively affected by this transaction, which is effective 1
August 2003. The net asset value of the companies involved in the transaction
was R102,1 million at 30 June 2003.
CIRCULAR TO SHAREHOLDERS
A circular outlining the details of the transactions will be distributed to
shareholders in due course.
Financial Communications - Simeka TWS Communications
Corporate and Legal Advisors - Nucleus Corporate Finance
Corporate Advisors to the BEE Consortium - African Harvest Capital (Pty) Limited
Legal Advisors to the BEE Consortium - Werksmans
On behalf of: Adcorp Holdings Limited
Contact: Richard Pike, Chief Executive Officer
Cell: 082 555-9753
Faunce Burd, Financial Director
Tel: (011) 712-9000
Cell: 082 851 6570
