| Tue 7 Oct 2003, 8:30 | | Conversion and redemption of preference shares |
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Tiger Brands - Conversion and redemption of preference shares
Tiger Brands Limited
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
(Share code: TBS ISIN: ZAE000023560)
(Share code: TBSP ISIN: ZAE000023578)
("Tiger Brands" or "the Company")
Conversion and redemption of the 5.5% cumulative preference shares ("the
Proposal")
1. Terms of the Proposal
The directors have resolved, in terms of the provisions of section 98 of the
Companies Act and subject to the amendment of the articles and the approval of
shareholders in general meeting, to convert and thereafter redeem the entire
holdings of holders of preference shares. Tiger Brands intends to redeem at par,
being 200 cents per preference share, the then redeemable preference shares held
by preference shareholders on the record date.
The implementation of the Proposal is contingent upon:
* the approval of the JSE, including approval of the termination of the listing
of the preference shares;
* the approval by the preference shareholders of the special resolution proposed
at the general meeting;
* the approval by the shareholders of the special resolutions proposed at the
combined general meeting; and
* the registration of the special resolutions passed at the combined general
meeting, by the Registrar of Companies.
2. Rationale for the Proposal
The directors are of the view that the portion of the capital represented by the
preference shares, being 0.04%, is not meaningful as a proportion of
shareholders" interests in the Company. Furthermore, it is considered that the
costs and administration required to service the preference shares do not
justify their continued existence. Moreover, the illiquidity of the preference
shares on the JSE puts into question the rationale of their listing, insofar as
should any preference shareholder wish to dispose of his preference shares, he
may not be able to realise a fair price for his shares.
Consequently, the board is of the view that it is in the interests of both the
Company and the shareholders to do away with the preference shares. The board
has taken advice on the most appropriate method of achieving this objective and
is of the opinion that the Proposal is both effective and fair in this regard.
While the redemption of the redeemable preference shares will result in the
termination of an income stream for preference shareholders, the premium (which
the redemption payment represents to the price at which the preference shares
last traded), of 85% should more than compensate for the loss of this income
stream. In coming to this view, the directors considered the after tax returns
achievable from depositing the redemption payment proceeds on call, which
compare with the preference dividend.
The directors who hold ordinary shares have indicated their intention to vote in
favour of the Proposal at the combined general meeting of ordinary and
preference shareholders. No directors hold preference shares and therefore will
not benefit from the Proposal, nor be able to vote at the general meeting of
preference shareholders.
3. Financial effects of the Proposal
The financial effects of the Proposal on Tiger Brands are immaterial.
The pro forma financial effects on preference shareholders set out below are
provided for illustrative purposes only, to show the effect of the Proposal on
earnings per preference share ("EPS") as if the redemption payment had been made
on 1 October 2002 and net asset value ("NAV") and net tangible asset value
("NTAV") per preference share as if the redemption payment had been made on 1
October 2003 and, because of their nature, may not give a true picture of the
financial position of a preference shareholder. The pro forma financial effects
have been compiled from the Company"s interim financial statements for the six
months ended 31 March 2003 adjusted as described below.
Before the After the Percentage
Measure in Proposal Proposal change
cents
EPS 5.5(1) 5.5(2) 0
NAV and NTAV 108(3) 200(4) 85
per share
Notes:
1. The dividend payable of 5.5% per annum
2. Assumed interest received on 200 cents per share, calculated on the basis of
9% per annum compounding monthly, less taxation at the rate of 40%
3. The ruling price of the preference shares on the JSE on 1 October 2003
4. The redemption payment
4. Notice of general meeting and combined general meeting
A general meeting of preference shareholders and a combined general meeting of
ordinary and preference shareholders will be held at the registered office of
Tiger Brands, 85 Bute Lane, Sandown at 12:00 and 12:15 respectively on 30
October 2003 in order to consider and if deemed fit approve the special
resolutions necessary to implement the Proposal. Preference shareholders are
entitled to attend and vote at the general meeting on the resolution approving
the special resolutions to be proposed at the combined general meeting. Ordinary
and preference shareholders are entitled to attend and vote at the combined
general meeting on the special resolutions, in terms of which the preference
shares will be converted into redeemable preference shares and redeemed at par
(200 cents per redeemable preference share).
A circular to preference and ordinary shareholders containing details of the
Proposal and incorporating notices of the general and combined general meetings
will be posted to Tiger Brands ordinary and preference shareholders today.
In terms of the articles, a quorum for a general meeting of preference
shareholders is 51% of the preference shares in issue. Preference shareholders
are therefore encouraged to either make arrangements to attend the general
meeting or to ensure that proxies in respect of their shares are submitted.
Tiger Brands has also obtained an irrevocable commitment from preference
shareholders holding 53,8% of the preference shares in issue, to attend the
general meeting, either in person or by proxy and to vote in favour of the
resolution to be proposed at that meeting.
5. Important dates and times
Forms of proxy to be lodged no later Wednesday, 29 October 2003
than 12:00 on
General meeting of preference Thursday, 30 October 2003
shareholders to be held at 12:00 on
Combined general meeting of ordinary Thursday, 30 October 2003
and preference shareholders to be held
at 12:15 on
Announcement confirming terms of Thursday, 30 October 2003
Proposal on SENS on*
Announcement confirming terms of Friday, 31 October 2003
Proposal in the press on*
Last day to trade in the preference Friday, 7 November 2003
shares*
Suspension of trade in the preference Monday, 10 November 2003
shares at commencement of trade on*
Record date for the Proposal* Friday, 14 November 2003
Payment and redemption date in terms Monday, 17 November 2003
of the Proposal*
Termination of the listing of the Tuesday, 18 November 2003
preference shares on the JSE at the
commencement of trade*
*Subject to the fulfilment of the conditions precedent.
All the above dates and times, which are South African times, are subject to
amendment, notice of which will be announced on SENS and published in the South
African press. No dematerialisation or rematerialisation of preference share
certificates or transfer of preference shares between the SA and UK register
will be possible after 7 November 2003.
Sandton
7 October 2003
Sponsor
CAZENOVE
Corporate law advisers and consultants
EDWARD NATHAN & FRIEDLAND
EDWARD NATHAN & FRIEDLAND (PTY) LTD
(Registration number 1999/026464/07)
www.enf.co.za
Date: 07/10/2003 07:02:35 AM Produced by the JSE SENS Department
