| Thu 6 Nov 2003, 16:58 | | - PROPOSED SCHEME OF ARRANGEMENT AND FURTHER CAUTI |
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ZARARA ENERGY LIMITED - PROPOSED SCHEME OF ARRANGEMENT AND FURTHER CAUTIONARY
ANNOUNCEMENT
ZARARA ENERGY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/001078/06)
Share code: ZRR
ISIN: ZAE000033080
("Zarara" or "the Company")
PROPOSED SCHEME OF ARRANGEMENT AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the various cautionary announcements dated
16 September 2003, 2 October 2003, 8 October 2003 and 14 October 2003,
respectively, regarding the receipt by the board of directors of Zarara
("Zarara board") of an offer to acquire the entire issued share capital of
Zarara from Northridge Field Operations (Proprietary) Limited
("Northridge"), a company beneficially and indirectly owned by Mr Richard
Shead, a non-executive director of Zarara, and a notice of a firm intention
to make an offer to acquire the entire issued share capital of Zarara
from each of Buccoli Investments CC and Eric Capital Limited ("the three
offers").
In pursuance of the three offers, the Zarara board appointed a sub-
committee comprising two non-executive directors, namely, Mr Hennie
Buitendag and Mr Nicholas Moon ("the sub-committee"). The sub-committee
has since completed its deliberations on the three offers and has concluded
that, notwithstanding that the offer consideration of each of the three
offers is identical, the offer from Northridge will in all likelihood stand
a greater chance of being successfully implemented. This decision is
supported by the receipt of an irrevocable undertaking to accept the
Northridge offer from Helier Investments Inc, which holds 7 009 004 Zarara
shares (34,9% of the issued share capital of Zarara). Having considered the
views of the sub-committee, the Zarara board has, therefore, elected to
proceed with the offer from Northridge, the implementation of which is
subject to the conditions precedent set out in paragraph 3 below.
As Zarara"s duly appointed corporate adviser, PricewaterhouseCoopers
Corporate Finance ("PwC CF") is authorised to announce that Northridge
intends to implement its offer by way of a scheme of arrangement in terms
of section 311 of the Companies Act, 1973 (Act 61 of 1973), as amended
("Companies Act"), between Zarara and its shareholders ("the scheme"), to
acquire all of the shares held by such shareholders ("the scheme
participants") for a cash consideration of 13 cents per share ("the scheme
consideration"). In the event that the scheme becomes unconditional and is
completed, Zarara will be a wholly-owned subsidiary of Northridge and its
listing on the JSE Securities Exchange South Africa ("JSE") will be
terminated.
2. RATIONALE
As stated in the 2002 Annual Report and in previous announcements, it was
the objective of the Zarara board to realise the Company"s assets to best
advantage of shareholders. This process culminated in the capital payment
to shareholders of 285 cents per share during May 2003. Thereafter, in
compliance with the Listings Requirements of the JSE, Zarara was classified
as a "cash company" and its listing on the JSE lists transferred to the
"Financials - Specialty and Other Finance" sub-sector of the JSE lists. On
19 June 2003, shareholders were advised that American Custom Components
Incorporated had issued a summons against Zarara for payment of R7 420 850
together with interest and costs ("the ACCI claim").
Notwithstanding that the Zarara board remains of the opinion that the ACCI
claim will be successfully defended, it is possible that such action may
take a considerable period of time to resolve with consequential delays in
the voluntary winding-up of the Company and in the payment of a liquidation
dividend. In order to obviate the inconvenience and delay for shareholders
and the inevitable risks associated with the ACCI claim, Northridge has
decided to propose the scheme thereby affording shareholders the
opportunity to exit their investment in Zarara in the short term and thus
to realise value.
3. CONDITIONS PRECEDENT TO THE SCHEME
Implementation of the scheme is subject to the fulfilment of the following
conditions precedent, namely:
3.1 the scheme being approved by a majority representing not less than
three-fourths (75%) of the votes exercisable by the shareholders
present and voting, either in person or by proxy, at the meeting to be
convened for the purpose of the scheme;
3.2 the scheme being sanctioned by the High Court of South Africa;
and
3.3 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Companies
Act.
4. FUNDING CONFIRMATION
The Securities Regulation Panel ("the SRP") has received confirmation from
ABSA Bank Limited that Northridge has sufficient cash resources available
to it to settle the scheme consideration of R2 610 776.
5. UNAUDITED PRO FORMA FINANCIAL EFFECTS
The table below sets out the financial effects of the scheme on Zarara
shareholders per each share held.
Per Zarara share Before (cents) After (cents) Change %
Share price1 10 13 30,0
Share price2 12 13 8,3
Net asset value3 8 13 62,5
Notes:
1. The amount in the "Before" column is based on the share price of Zarara on
the JSE Securities Exchange South Africa ("JSE") at the close of business
on Monday, 15 September 2003, being the date prior to the publication on
SENS of the first cautionary announcement of 16 September 2003. The amount
in the "After" column represents the scheme consideration.
2. The amount in the "Before" column is based on the share price of Zarara on
the JSE at the close of business on Thursday, 30 October 2003, being the
last practicable date prior to the publication of this terms announcement.
The amount in the "After" column represents the scheme consideration.
3. The amount in the "Before" column is based on the net asset value per share
as published in the interim financial results of Zarara for the six months
ended 31 March 2003, adjusted for the capital repayment of 285 cents per
share as detailed in the announcement of 5 May 2003. The amount in the
"After" column represents the scheme consideration.
Zarara is expected to publish its results for the year ended 30 September
2003 during December 2003. As this will be subsequent to the posting of a
document containing full details of the scheme ("the document"), Zarara
will publish a reviewed balance sheet as at 30 September 2003 ("reviewed
balance sheet") prior to posting the document. Zarara will publish an
updated pro forma financial effects of the scheme simultaneously with the
reviewed balance sheet.
6. OPINIONS AND RECOMMENDATIONS
PwC CF has been appointed by the Zarara board as an independent adviser to
advise the Zarara board as to whether the terms and conditions of the
scheme are fair and reasonable to shareholders.
7. DOCUMENTATION AND FURTHER ANNOUNCEMENT
The document, which is subject to the prior approval of the SRP and the
JSE, will be posted to shareholders of Zarara on or about 21 November 2003.
An announcement will appear in the press on or about the same date, setting
out the salient dates of the scheme and other matters as may be pertinent
thereto.
8. CAUTIONARY
Shareholders are advised that, until the full details of the proposed
scheme and the results of the Company to 30 September 2003 have been
published, they should continue to exercise caution in dealing in the
company"s securities.
Krugersdorp
6 November 2003
Corporate and independent adviser and sponsor:
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Attorneys:
Cliffe Dekker
Date: 06/11/2003 04:41:05 PM Produced by the JSE SENS Department
