| Mon 22 Sep 2003, 15:29 | | Cautionary Announcement |
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New Africa Investments Limited, Kagiso Media Limited, Johnnic Communications
Limited & Caxton And Ctp Publishers And Printers Limited - Joint Detailed
Cautionary Announcement
New Africa Kagiso Media Johnnic Caxton and CTP
Investments Limited Communications Publishers and
Limited Limited Printers Limited
Incorporated in Incorporated in Incorporated in the Incorporated in the
the Republic of the Republic of Republic of South Republic of South
South Africa South Africa Africa Africa
(Registration (Registration (Registration (Registration
number number number number
1993/002467/06) 1957/000036/06) 1889/000352/06) 1947/025989/06)
Share code: Share code: KGM Share code JCM Share code CAT
NAI and NAN
ISIN: ISIN: ISIN Number ISIN Number
ZAE00012134 ZAE000014007 ZAE000024584 ZAE000017182
("NAIL") ("Kagiso Media ") ("Johncom") ("Caxton")
Joint Detailed Cautionary Announcement
1. Introduction
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited ("PwC-CF")
is authorised to advise the holders of ordinary and "N" ordinary NAIL
shares ("Shareholders") that the Board of Directors of NAIL (the "Board")
has concluded deliberations around the bid process originally announced on
SENS on 28 May 2003 and arising therefrom has received an offer (the
"Offer") from a consortium comprising Kagiso Media, Johncom and Caxton (the
"Consortium"), the details of which are furnished in paragraph 2 below. The
Board has accepted the Offer and will proceed with its implementation
subject, inter alia, to Shareholder approval.
The objective of the Offer is to provide Shareholders with approximately
R7.21 per share (based on the closing prices of NAIL"s listed investments
at close of trade on Friday, 19 September 2003) by way of a
decapitalisation of the Company at the earliest practical date following
Shareholder approval and thereafter to allow Shareholders to accept a fixed
share offer of R3.45 per share, equating to a total payment to shareholders
of approximately R10.66 per share, or retain their shareholding or a
portion thereof, and participate in any upside after the initial
decapitalisation.
In this regard it is the intention of the Board and the Consortium to
embark on a process to return capital to Shareholders through a series of
distributions.
2. Details of the Offer
The Offer has two components:
* An agreement requiring approval by Shareholders under section 228 of
the Companies Act (Act 61 of 1973) (the "Act"), in terms of which the
Consortium will, subject to the fulfilment of certain conditions
precedent (the "Asset Conditions"), acquire from NAIL substantially
all of its media assets (the "Selected Media Assets") for a cash
purchase consideration of R381.3 million subject to upward or downward
adjustment in relation to changes in net working capital balances
residing in those assets up to fulfilment of the last of the Asset
Conditions (the "Asset Offer"); and
* A general share offer, in terms of which Johncom and Caxton shall,
subject to the fulfilment of certain conditions precedent including
the passing of a resolution of shareholders of NAIL to implement a
decapitalisation (the "Decapitalisation") of the Company as detailed
in paragraph 3 (the "Share Conditions"), extend an offer to all of the
Shareholders to acquire their ordinary and "N" ordinary shares
("Shares") in NAIL for a cash consideration of R3.45 per Share (the
"Share Offer").
In addition, the Consortium has undertaken, subject to the fulfilment of
the Asset Conditions, to acquire all of the other unlisted assets of NAIL
not the subject of the Selected Media Assets (the "Non-Core Assets") if
NAIL fails to dispose of these assets by the later of 31 December 2003 or
the time of fulfilment of the Asset Conditions (the "Put Option"). To the
extent that these assets are realised by the Board for a consideration in
excess of the Put Option such surplus will also form part of the
distribution made by NAIL to shareholders who had elected not to accept the
Share Offer.
3. Proposed decapitalisation of NAIL ("Decapitalisation")
As noted above, it is an express term of the Offer that NAIL embarks on the
Decapitalisation. Subject to the approval of the Shareholders in general
meeting, the Board will distribute capital to all Shareholders registered
as such on the relevant record date to trade pro rata to their holdings:
* The cash balances held in NAIL at the time of the Decapitalisation;
plus
* The proceeds of a sale process to be undertaken in relation to NAIL"s
holdings in its listed investments, failing which such listed
investments shall be distributed in specie to Shareholders; minus
* An amount to be retained in reserve ("Reserve Balance") up to the time
of fulfilment of the Asset Conditions to meet the expected taxation
implications of the Asset Offer, the costs of the disposal process and
closure of the NAIL head office and related expenditure as required in
terms of the Offer.
Such distribution would be made to Shareholders as soon as practically
possible following approval at the general meeting.
4. Calculation of the effective offer price and timing of cash flows to
Shareholders
The Decapitalisation amount is partially dependent upon the market values
of NAIL"s holdings in MTN Group Limited, New Africa Capital Limited and
Johnnic Holdings Limited. Presently, the Decapitalisation is expected to
return an amount of approximately R7.21 per Share (based on the closing
prices of NAIL"s listed investments at close of trade on Friday, 19
September 2003) or approximately R7.28 per Share (based on the 10 day
volume weighted average prices of NAIL"s listed investments up to Friday,19
September 2003) to Shareholders forthwith after the general meeting called
to approve the Decapitalisation and the Asset Offer (the "General
Meeting").
The Share Offer shall open once the necessary approvals have been obtained
in the General Meeting. For those Shareholders who elect to accept the
Share Offer, the combination of the Decapitalisation proceeds and the Share
Offer is expected to result in a total payment of approximately R10.66 per
Share to Shareholders (the "Effective Offer Price"), an 82% premium to the
NAIL ordinary share price of R5.86 and a 64% premium to the NAIL "N"
ordinary share price of R6.50 at close on 28 May 2003, the last business
day prior to announcement of a possible sale process in the press, and a
premium of 9.3% and 5.2% respectively to the closing prices of NAIL
ordinary and "N" ordinary shares of R9.75 and R10.50 respectively on
Friday, 19 September 2003 the last practical date before the publication of
this announcement.
While the Asset Conditions are in the process of being fulfilled, the NAIL
Board intends to embark on a disposal process of the Non-Core Assets,
failing which it will exercise the Put Option. Thereafter NAIL will affect
a final distribution/s to the then Shareholders being the sum of:
* the proceeds of the Asset Offer;
* the proceeds of the disposal of the Non-Core Assets;
* the interest generated by the the Reserve Account and the cash
amount the subject of the Decapitalisation up to the Decapitalisation;
* the movement in the attributable net working capital in the Selected
Media Assets; and
* any final balance on the Reserve Balance not required to meet the
estimated final winding up costs of NAIL.
As the Decapitalisation will not be subject to any material regulatory
approvals, this payment to Shareholders shall be made sooner than payment
under any offer for all of the Shares in, or assets of, NAIL.
5. Opinions and funding confirmation
The independent members of the Board have considered the terms and
conditions of both the Asset Offer and the Share Offer and are of the
unanimous opinion that the terms of both are fair and reasonable to
Shareholders. Accordingly, the directors will recommend that Shareholders
vote in favour of the resolutions necessary to approve and affect the Asset
Offer and the Decapitalisation, provided that no improved share offer
emerges.
PwC-CF has been appointed by the Board as its independent advisor to advise
the Board on whether the terms and conditions of the Asset Offer and the
Share Offer are fair and reasonable to Shareholders. PwC-CF has considered
the terms and conditions of the Asset Offer and the Share Offer and is of
the opinion that they are fair and reasonable to Shareholders.
The Consortium has provided the Securities Regulation Panel ("SRP") with a
cash confirmation, in the required form, that the Consortium has the
necessary resources to implement both the Asset Offer and the Share Offer.
6. Asset Conditions
The Asset Offer is conditional on the fulfilment or waiver (as the case may
be) of the following conditions precedent:
* the entering into of a sale agreement. The parties have undertaken to
enter into an agreement having the principle terms set out in the
Offer;
* the approval of the necessary majority of Shareholders in the General
Meeting;
* the approval of the requisite majority of shareholders of Kagiso Media
to the purchase of those NAIL assets assigned to Kagiso Media. In this
regard, shareholders holding more than 50% of the ordinary share
capital of Kagiso Media have irrevocably undertaken in writing to vote
in favour of the necessary resolutions;
* the approval of the SRP, JSE Securities Exchange South Africa ("JSE")
and the South African Reserve Bank ("SARB") to the extent necessary;
and
* the approval of such other regulatory bodies as may be required,
including the necessary approval of the Competition Authorities and
the Independent Communication Authority South Africa ("ICASA"). With
regard to ICASA approval, certain correspondence has been entered into
between ICASA and the parties to the effect that, as there will not be
a direct change of control of any of the licencees concerned, an
expedited ICASA approval process shall be provided for. The Consortium
has also structured its offer in such a manner that none of the cross
media or multiple FM licence restrictions of the Independent
Broadcasting Authority Act (Act 153 of 1993) will be breached.
7. Share Conditions
The Share Offer is conditional on the fulfilment or waiver (as the case may
be) of the following conditions precedent:
* the approval of the necessary majority of Shareholders in the General
Meeting of the resolutions required to approve the Asset Offer and the
Decapitalisation;
* the approval of ICASA and the Competition Commission to the extent
required depending on the level of acceptance of the Share Offer; and
* the approval of the SRP, JSE and SARB to the extent necessary.
8. Cautionary
A further announcement will be published once the relevant sale agreement
has been entered into and a circular is expected to be published shortly
thereafter.
Shareholders of NAIL, Kagiso Media and Johncom are accordingly advised to
continue to, and shareholders of Caxton are advised to, exercise caution in
their dealings in their shares until such time as a further announcement is
made.
Johannesburg
22 September 2003
Corporate and Corporate Law
Independent Adviser and
Adviser and Consultants
Sponsor to NAIL
PWC Edward Nathan
Investment bank to Sponsor to Sponsor to Attorneys to
the Consortium and Caxton Kagiso Media Kagiso Media and
sponsor to Johncom Johncom
Nedbank Corporate Sasfin Investec Bank Webber Wentzel
Bowens
ICASA attorneys to Attorney to
the Consortium Caxton
Mahlangu Nkomo Fluxmans Inc
Mabandla
Ratshimbilani
Attorneys
Date: 22/09/2003 02:45:54 PM Produced by the JSE SENS Department
