| Fri 15 Aug 2003, 16:05 | | Specific Repurchase Of 23 425 140 Glovil |
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Global Village Holdings Limited -
Ordinary Shares And Further Cautionary Announcement
GLOBAL VILLAGE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/017632/06)
("Glovil" or "the company")
Share Code: GLL
ISIN: ZAE000015426
SPECIFIC REPURCHASE OF 23 425 140 GLOVIL ORDINARY SHARES AND FURTHER
CAUTIONARY ANNOUNCEMENT
1. Introduction
Sasfin Bank Limited is authorised to announce that Glovil and its wholly-
owned subsidiary, Global Village Leisure Retail (Pty) Ltd ("Glovil
Retail"), have entered into an agreement ("the agreement") to repurchase
23 425 140 ordinary shares in the company from a consortium of
shareholders ("the consortium") at a repurchase price of R5 856 285 ("the
purchase consideration") or 25 cents per share ("the share repurchase").
The major member of the consortium is GSR Israelsohn who was formerly a
director of Glovil. He has a beneficial interest in 86.75% of the
consortium"s 23 425 140 ordinary shares.
In terms of the agreement, Glovil will repurchase 15 585 140 ordinary
shares for R3 896 285 which shares shall be cancelled ("the cancelled
shares") and Glovil Retail will repurchase 7 840 000 ordinary shares for
R1 960 000, which shares shall be held in treasury ("the treasury
shares").
2. Rationale for the share repurchase
The board of directors view the share repurchase as an opportunity to
repurchase a significant stakeholding of 24.92% in the company at a price
it believes will enhance long-term value to other shareholders. In
addition, it will resolve a dispute between the company and GSR
Israelsohn. In this regard shareholders are referred to the circular
dated 2 September 2002 which sought approval for a severance package for
GSR Israelsohn. Such approval was not granted, and the legal action
which GSR Israelsohn had already instituted against the company to
enforce payment of the severance package, as disclosed in that circular,
is due to continue to trial. Although Glovil has been advised that such
legal action will not be successful, any action or proceedings instituted
by him howsoever arising out of his employment and / or directorship
will, in terms of the agreement, be withdrawn subject to the fulfilment
of the conditions precedent.
3. Salient terms of the share repurchase
3.1 Settlement of the purchase consideration
The purchase consideration will be settled in cash and is payable in four
tranches. The first tranche of 35% of the purchase consideration (R
2,049,699.75) will be payable on the first business day following the day
that the last suspensive condition is fulfilled or other such date as
agreed between the parties in writing ("the payment date"). The balance
of the purchase consideration will be paid as follows:
30% on the first anniversary of the payment date (R 1,756,885.50);
20% on the second anniversary of the payment date (R 1,171,257.00);
15% on the third anniversary of the payment date (R 878,442.75).
3.2 Cancellation of shares and pledge of treasury shares
Application will be made to the JSE Securities Exchange South Africa
("JSE") for the de-listing of the cancelled shares on a date to be
advised in due course. The treasury shares will be pledged to the
consortium as security for any amounts owing by Glovil and Glovil Retail
in terms of a pledge agreement ("the pledge shares").
3.3 Issue of new ordinary shares in the case of default
In the case of default on any payment by either Glovil and/or Glovil
Retail, the consortium shall be entitled to realise the pledge shares or
to have all outstanding amounts capitalised by the issue of fully paid
new ordinary Glovil shares ("the new ordinary shares"). The number of new
ordinary shares to be so issued will be calculated by dividing the rand
value of the outstanding amounts to be capitalised by 25 cents per share.
3.4 Change in control and waiver of a mandatory offer to minority
shareholders
Prior to the share repurchase, MLR Israelsohn, an executive director of
the company, held a beneficial interest of 33.27% of the issued share
capital of Glovil. As a result of the share repurchase he will hold a
beneficial interest of 44.32%. Glovil minority shareholders will
therefore be entitled to a mandatory offer from him to acquire their
shares at 25 cents per Glovil share in terms of Rule 8.1 of the
Securities Regulation Code on Takeovers and Mergers ("the Code"). The
Securities Regulation Panel ("SRP") has agreed to a waiver of the
mandatory offer provided independant shareholders of Glovil approve, in
general meeting, a waiver of their rights to the mandatory offer in terms
of Rule 8.7 of the Code ("the waiver").
Should MLR Israelsohn increase his shareholding in Glovil to above 49.32%
of Glovil"s issued ordinary share capital within a 12 month period of the
share repurchase, he will be required to make a mandatory offer to
minority shareholders in terms of Rule 8.1 of the Code.
4. Conditions precedent
The share repurchase is conditional upon Glovil shareholders passing the
resolutions in terms of the Companies Act, the Listings Requirements of
the JSE and the SRP and the registration of any special resolutions
required by 1 October 2003.
5. Financial effects of the specific share repurchase
The pro forma financial effects of the share repurchase on Glovil"s
earnings per share, headline earnings per share, net asset value per
share and tangible net asset value per share for the year ended 28
February 2003 are set out below. The effects have been prepared for
illustrative purposes only:
Notes Before(1) After(2) %
change
(Cents) (Cents)
Earnings per share 3 & 4 1.31 1.10 -15.76%
Headline earnings per share 3 & 4 3.21 3.63 13.26%
Net asset value per share 3 & 4 35.71 38.63 8.17%
Tangible net asset value per
share 3 & 4 20.53 18.40 -10.35%
Notes:
1. Extracted from the audited financial statements of Glovil for the
year ended 28 February 2003 and based on a number of shares in issue
before the share repurchase of 94 000 000;
2. Based on a number of 70 574 860 shares in issue post the share
repurchase;
3. The full purchase consideration has been considered as paid on the
payment date utilising existing cash resources;
4. It has been assumed that an after tax interest rate on cash resources
of 7.7% would have been earned on the cash resources utilised to settle
the purchase consideration.
6. Opinions and recommendations
An independent advisor will be appointed by the board of directors of
Glovil to advise minority shareholders as to the fairness and
reasonableness of the terms and conditions of the share repurchase and
waiver. This advice will be included in the circular to shareholders
referred to in paragraph 7 below.
The directors of Glovil are however of the opinion that the terms and
conditions of the share repurchase are fair and reasonable to Glovil
minority shareholders.
The directors of Glovil who hold Glovil shares have undertaken to vote in
favour of the share repurchase and, apart from MLR Israelsohn who is
precluded from voting, the waiver.
7. Circular to shareholders
A circular to shareholders is currently being prepared setting out, inter
alia, details of the share repurchase and a notice of the general meeting
and form of proxy. The circular will be posted to shareholders in due
course. The general meeting will be held at 9:30 on Friday, 26 September
2003.
8. Further cautionary announcement
Shareholders are reminded of the cautionary announcement published on
SENS on Monday, 28 July 2003 where they were advised that Glovil has
acquired two properties subject to certain suspensive conditions ("the
acquisition"). As the suspensive condition relating to the rezoning of
the properties has not yet been met, shareholders are advised to continue
to exercise caution when dealing in the company"s securities until a
further announcement in this regard is made.
Johannesburg
15 August 2003
Sponsor Reporting Legal advisors
Accountants
SASFIN CORPORATE
FINANCE SHAUN NEL ATTORNEYS
HORWATH
A division of LEVETON BONER
Sasfin Bank Limited
Date: 15/08/2003 03:59:57 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
