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Lyons Financial Solutions Holdings Limited - Announcement Regarding The
Release Date: 06/10/2003 08:00:06 Code(s): LYS
LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED - ANNOUNCEMENT REGARDING THE
UNCONDITIONAL OFFER BY ICARUS TO THE SHAREHOLDERS OF LYONS
LYONS FINANCIAL SOLUTIONS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/022117/06)
Share code: LYS
ISIN: ZAE000024709
("Lyons" or "the company")
ICARUS INVESTMENTS
Icarus Nominees (Proprietary) Limited
(trading as Icarus Investment Corporation)
(Incorporated in the Republic of South Africa)
(Registration number 2001/014087/07)
("Icarus")
ANNOUNCEMENT REGARDING THE UNCONDITIONAL OFFER BY ICARUS TO
THE SHAREHOLDERS OF LYONS
1. Introduction
In an announcement released on the Securities Exchange News Service
("SENS") of the JSE Securities Exchange South Africa ("JSE") on Monday,
4 August 2003, Lyons shareholders were advised that the Board of Directors
of Lyons ("the Lyons Board") had received an offer in writing from Icarus
to acquire the following:
* Lyons assets for a total cash consideration of R 17,45 million:
* 45% of the shares in and claims against the Lyons Corporate Lease
Fund Limited ("LCLFL"), directly held by Lyons;
* 100% of the shares in and shareholders" claims against all the
subsidiaries and associates of Lyons; and
* 35% of the shares in and claims against the LCLFL owned by The
Rainmakers Investment Trust, the beneficiary of which is Lyons, for a
cash consideration of R 13,6 million (collectively "the asset offer").
Lyons shareholders were then advised on Tuesday, 5 August 2003, that the
Lyons Board had accepted the asset offer, subject to the conditions
precedent as set out in the announcement relating to the asset offer. It
was the intention of the Lyons Board to make a cash distribution of
approximately 5 cents per Lyons share to Lyons shareholders, pursuant to
the successful conclusion of the asset offer.
On or about Monday, 11 August 2003, the Securities Regulation Panel ("SRP")
advised Icarus that, as a result of Icarus acquiring 64 057 703 Lyons
shares from Corpcapital Investments (Proprietary) Limited and Corpcapital
Investments Two (Proprietary) Limited for a cash consideration of 5 cents
per Lyons share on Friday, 11 July 2003, which shares increased Icarus"
equity interest in the issued share capital of Lyons to 23,1% at that time,
combined with certain corporate actions that were proposed to be undertaken
by Icarus in relation to Lyons, Icarus had acted in concert with certain
other Lyons shareholders and as a result would be required to extend a
mandatory offer to the shareholders of Lyons in accordance with the
Securities Regulation Code on Take-overs and Mergers.
Accordingly, on Tuesday, 19 August 2003 Icarus announced its firm intention
to make an offer to the shareholders of Lyons, other than Icarus and
parties acting in concert with Icarus ("the Lyons minority shareholders")
in terms of section 440 of the Companies Act, 1973 (Act 61 of 1973) ("the
Act"), to acquire the balance of the issued shares (cum any distributions)
in Lyons that it does not already own ("the offer shares") at an offer
price of 5 cents per share, subject to the approval of the relevant
regulatory authorities being received, including but not limited to the
JSE, the SRP and the Competition Authorities ("the offer announcement").
Subsequent to the publication of the offer announcement, Icarus announced
on SENS on:
* Wednesday, 3 September 2003 that it had acquired a further 55 647 176
Lyons shares on the JSE from Mr. Robert Mortimer;
* Tuesday, 30 September 2003 that it had acquired a further 59 025 541
Lyons shares on the JSE. These shares were acquired in terms of
irrevocable undertakings secured by Icarus from certain Lyons minority
shareholders who had, irrevocably and in writing, to accept the offer;
and
* Thursday, 2 October 2003 that it had acquired a further 2 105 584
Lyons shares on the JSE. These shares were acquired in terms of
irrevocable undertakings secured by Icarus from certain Lyons minority
shareholders who had, irrevocably and in writing, undertaken to accept
the offer.
Consequently, the equity interest of Icarus in Lyons has increased to 53,8%
of the issued share capital of Lyons.
2. The Offer
2.1 Terms Of The Offer
Icarus hereby unconditionally offers to acquire all of the offer
shares from Lyons minority shareholders, or such lesser number of
offer shares as such Lyons minority shareholders wish to sell, for a
cash consideration of 5 cents per offer share. The offer opens at
09:00 on Monday, 6 October 2003 and closes at 12:00 on Friday,
31 October 2003 ("closing date"), both dates inclusive. Lyons and
Icarus, with the approval of the SRP and the JSE, reserve the right to
extend the closing date, in which event all amended dates and times
relating to the offer will be announced on SENS and published in the
press. All acceptances of the offer received by Icarus will be
irrevocable and may not be withdrawn.
2.2 Intentions To Invoke The Provisions Of Section 440k Of The Act
In the event that acceptances of the offer are received from the
holders of not less than nine-tenths of the offer shares, Icarus
intends to invoke the provisions of section 440K of the Act in order
to acquire the offer shares in respect of which acceptances have not
been received, compulsorily. In these circumstances, it is the
intention of Icarus to effect the delisting of Lyons shares from the
JSE as soon as reasonably practicable after the implementation of the
offer. In the event that acceptances in terms of the offer are
received from the holders of less than nine-tenths of the offer
shares, the Lyons shares will continue to be listed on the JSE.
2.3 Cash Confirmation
The SRP has been furnished with written confirmation that Icarus has
sufficient cash resources and/or facilities with which to meet its
obligations under the offer, with a maximum exposure of up to
R8 787 047.
2.4 Conditions Precedent
Lyons minority shareholders are advised that all of the conditions
precedent to the offer have been fulfilled and accordingly, the offer
is unconditional.
3. Rationale For The Offer
3.1 Benefits To Icarus
Icarus, an investment holding company, in its continued endeavour to
diversify its investment portfolio is seeking to gain exposure in the
property and financial services market. Taking into account the
prevailing positive market conditions in the property market, and, in
accordance with its strategic initiatives, Icarus has identified Lyons
and the LCLFL as a feasible entry point with which to gain such
exposure. Furthermore, Icarus, through Mr. Garry Fromentin, a former
chief executive officer of Lyons, who has an in-depth understanding of
the business and operations of Lyons, believes that the successful
implementation of the offer would substantially reduce the amount of
time required for Icarus to accumulate a property portfolio of the
same calibre and size as that currently owned by Lyons and the LCLFL.
3.2 Benefits To Lyons Minority Shareholders
The dividend for the financial year ended 31 May 2003 has been passed
and the auditors have raised a question relating to the ongoing
solvency of the company. Furthermore, due to the prevailing negative
sentiment towards small capitalisation stocks and the limited
tradeability of Lyons shares on the JSE up until the announcement of
the offer, Lyons minority shareholders have experienced limited
liquidity in their Lyons shares. The offer should provide Lyons
minority shareholders with the perceived liquidity event needed to
realise cash for their Lyons shares.
4. Pro Forma Financial Effects Of The Offer
Set out below are the unaudited pro forma financial effects of the offer to
Lyons minority shareholders, based on the published reviewed results of
Lyons for the twelve-month period ended 31 May 2003. The unaudited pro
forma financial effects are presented for illustrative purposes only and
may not give a fair reflection of the financial position of the Lyons
minority shareholders" post the implementation of the offer.
Before After
the offer the offer Change
(cent) (cent) (%)
Market value per share 4,7 (1) 5,0 6,4
(Loss)/earnings per share (11,8)(2) 0,4(4) 103,4
Headline (loss)/earnings per share (7,6)(2) 0,4(4) 105,3
Net (liability)/asset value per share (3,5)(3) 5,0 242,9
Net tangible (liability)/asset
value per share (4,0)(3) 5,0 225,0
Notes:
1. Being the weighted average Lyons share price for the five business
days prior to the publication on SENS of the firm intention to make an
offer announcement on Tuesday, 19 August 2003.
2. Being Lyons" reported (loss)/earnings per share and headline
loss)/earnings per share for the twelve-month period ended 31 May
2003.
3. Being Lyons" reported net (liability)/asset value per share and net
tangible (liability)/asset value per share at 31 May 2003.
4. Based on the assumption that the offer consideration of 5 cents per
share had been invested to earn an average after-tax return of 7,5%
during the twelve-month period ended 31 May 2003.
5. The calculations in the above table have been determined on the basis
that:
* the offer was implemented on 1 June 2002 for the purposes of
calculating the (loss)/earnings per share and headline
(loss)/earnings per share;
* the offer was implemented on 31 May 2003 for the purposes of
calculating the net (liability)/asset value per share and net
tangible (liability)/asset value per share;
and
* no account has been taken of Capital Gains Tax or any costs
associated with the offer.
5. Opinions And Recommendations
5.1 The Opinion Of The Independent Advisers
The Lyons Board appointed Grant Thornton Kessel Feinstein Corporate
Finance (Proprietary) Limited ("GTKF") to provide them with advice as
to the fairness and reasonableness of the terms and conditions to the
offer. GTKF has considered the terms and conditions of the offer and
has expressed the opinion ("GTKF opinion") that based on their
assessment of the value of a Lyons share the offer is not fair to
Lyons minority shareholders, however, based on their assessment of the
qualitative factors pertaining to the offer GTKF has expressed the
opinion that the offer is reasonable under the circumstances.
5.2 The Opinion Of The Lyons Board
The Lyons Board has considered the GTKF opinion. The Lyons Board other
than Mr Ian Hewett, after having regard, inter alia, the terms of the
offer, the commercial impact of the offer and the qualitative factors
set out in the GTKF opinion, recommends that the Lyons minority
shareholders accept the offer. The Lyons directors other than
Mr Ian Hewett, who directly or indirectly hold Lyons shares, have
provided Icarus with irrevocable undertakings to sell their Lyons
shares in terms of the offer. The trustees of The Hewett Family Trust
(of which Mr Hewett is a trustee) which holds 89 730 248 shares in
Lyons and is the beneficial holder of those shares registered in
Mr Ian Hewett"s name, have indicated that they have not yet determined
whether or not to accept the offer on behalf of The Hewett Family
Trust.
5.3 Further Cautionary Announcement Regarding The New Offer
The Lyons Board refers Lyons minority shareholders to the information
and further cautionary announcement released on SENS on Tuesday,
30 September 2003, wherein Lyons shareholders were informed that the
Lyons Board had been notified that another offer, either for the
shares in Lyons or for the assets and liabilities of Lyons might be
forthcoming in due course. A revised formal conditional offer has been
received from a consortium comprising Pangbourne Properties Limited
and Mettle Operations Limited, details of which appeared in a SENS
announcement on Friday, 3 October 2003. This offer is currently under
consideration by the Lyons Board. Accordingly, Lyons shareholders are
advised to continue to exercise caution in dealing with their shares.
The Lyons Board will notify Lyons shareholders on SENS and in the
press of any further developments.
6. Salient Dates And Times
The salient dates and times of the offer are as follows:
2003
Offer opens at 09:00 Monday, 6 October
Last day for Lyons minority shareholders to trade
in Lyons shares on the JSE to be eligible to
participate in the offer Friday, 24 October
Shares trade "ex" the offer Monday, 27 October
Record date for participating in the offer Friday, 31 October
Offer closes at 12:00 (Note 2) Friday, 31 October
Results of offer announced on SENS Monday, 3
November
Results of offer published in the press Tuesday, 4
November
Notes:
1. The above dates and times are subject to amendment. Any such amendment
will be released on SENS and published in the press.
2. Dematerialised Lyons minority shareholders are required to notify
their Central Security Depository Participant ("CSDP") or broker, as
the case may be, of their intention to accept the offer in the manner
and time stipulated in the agreement entered into between such
shareholders and their CSDP or broker.
3. In the case of a dematerialised Lyons minority shareholder, payment
will be made by crediting their accounts at the CSDP or broker, as the
case may be, as agreed to between the shareholder and the CSDP, as
soon as possible after, but at least within five business days of
receipt of notification by the transfer secretaries.
4. In the case of a certificated Lyons minority shareholder, such payment
will be made by cheque or deposited directly into the shareholder"s
bank account, whichever a shareholder may instruct, at the risk of the
shareholder concerned, as soon as possible after, but at least within
five business days of the day on which the form of acceptance,
surrender and transfer and relevant documents of title are received.
5. Share certificates may not be dematerialised or rematerialised between
Monday, 27 October 2003 and Friday, 31 October 2003, both days
inclusive.
6. Irrevocable Undertakings:
Set out below are the names of the Lyons minority shareholders
collectively holding 16 379 713 Lyons shares, representing 9,3% of the
offer shares, who have irrevocably and in writing, undertaken to
accept the offer:
Shareholder Number Of Lyons % Of The Offer
Shares Shares
USAT Nominees (Proprietary)
Limited 12 096 380
6,9
R J Mortimer 3 750 000 2,1
M Judin 350 000 0,2
B Davies 100 000 0,1
S Abromowitz 83 333 -
Total 16 379 713 9,3
7. Circular To Shareholders
A circular, containing details of the offer, will be posted to Lyons
shareholders on or about Monday, 6 October 2003.
Sandton
6 October 2003
Sponsor to Lyons:
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Independent reporting accountants and auditors to Lyons:
Deloitte & Touche Chartered Accountants (SA)
Registered accountants and auditors
Merchant bank and corporate adviser to Icarus:
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Corporate law advisers and consultants to Lyons:
Edward Nathan & Friedland (Pty) Ltd
Corporate Law advisers & Consultants
(Registration number 1999/026464/07)
