| Mon 17 Nov 2003, 9:29 | | Offer by Bidco to acquire the entire share capital |
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Afrox Healthcare Limited - Offer by Bidco to acquire the entire share capital of
Afrox Healthcare Limited
BUSINESS VENTURE INVESTMENTS NO. 790 AFROX HEALTHCARE LIMITED
(PROPRIETARY) LIMITED (Incorporated in the Republic of
(Incorporated in the Republic of South South Africa)
Africa) (Registration number: 1985/001313/06)
(Registration number: 2003/002733/07) Share code: AHH
("Bidco") ISIN: ZAE000022059
("Ahealth")
BRIMSTONE INVESTMENT CORPORATION LIMITED MVELAPHANDA STRATEGIC INVESTMENTS
(Incorporated in the Republic of South (PROPRIETARY) LIMITED (Incorporated
Africa) in the Republic of South Africa)
(Registration number: 1995/010442/06) (Registration number: 1998/007485/07)
Share code: BRT ("Mvelaphanda")
ISIN: ZAE000015277
Share code: BRN
ISIN: ZAE000015285
("Brimstone")
MEDI-CLINIC CORPORATION LIMITED
(Incorporated in the Republic of South
Africa)
Registration number: 1983/010725/06
Share code: MDC
ISIN: ZAE000004370
("Medi-Clinic")
JOINT ANNOUNCEMENT OF AN OFFER BY BIDCO TO ACQUIRE THE ENTIRE ISSUED SHARE
CAPITAL OF AFROX HEALTHCARE ("THE OFFER") AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Pursuant to the further joint cautionary announcement published by African
Oxygen Limited ("Afrox") and Ahealth on the Securities Exchange News Service
("SENS") on Monday, 6 October 2003, Rothschild and Deutsche Securities are
authorised to announce that Bidco has submitted an offer to acquire the entire
issued share capital of Ahealth for a cash consideration per share of R13.85.
The cash consideration shall be escalated at an effective rate of 5.6% per annum
from 1 October 2003, being the effective date, to the scheme operative date or
the day on which the conditions of the alternative offer are fulfilled. For
illustrative purposes, assuming the scheme operative date is 30 April 2004, the
total consideration payable per Ahealth share ("Offer consideration") is as
follows:
R
Cash consideration 13.85
Escalation at an effective rate of 5.6% per 0.45
annum
Offer consideration 14.30
Final dividend declared for the year ended 30 0.40
September 2003*
Composite amount 14.70
* Ahealth shareholders registered as such on 23 January 2004 will receive the
final dividend of 40 cents per share declared by Ahealth on 29 October 2003 in
respect of Ahealth"s financial year ended 30 September 2003.
It is intended that the Offer will be effected by means of a scheme of
arrangement in terms of section 311 of the Companies Act, (Act 61 of 1973) as
amended (the "Act"), between Ahealth and its shareholders (the "Scheme"). If the
Scheme fails to take effect and become operative on or before 31 May 2004,
unless the only outstanding condition on that date is obtaining all of the
approvals in terms of the Competition Act, in which event the date of 31 May
2004 shall be extended to 31 July 2004, an alternative sale will take effect
whereby Bidco will purchase the Ahealth shares held by Afrox, followed by a
mandatory offer to Ahealth minority shareholders ("the alternative offer") in
terms of the Securities Regulation Code on Takeovers and Mergers and the Rules
of the Securities Regulation Panel ("SRP").
Bidco has been incorporated solely for the purpose of acquiring the issued share
capital of Ahealth. A consortium of Black Economic Empowerment investors ("the
BEE Consortium"), led by Brimstone and Mvelaphanda will subscribe for
approximately 75% of Bidco"s equity. The BEE Consortium includes nationally and
regionally based doctor and empowerment groupings ensuring broad based
empowerment. Medi-Clinic, a private hospital company listed on the JSE
Securities Exchange South Africa ("JSE"), will subscribe for a minority non-
controlling shareholding in Bidco of approximately 25%. Medi-Clinic and its
holding company Remgro Limited ("Remgro") are facilitating the transaction
funding provided by ABSA Bank Limited ("ABSA"), which has enabled Bidco to make
the Offer.
BOC Holdings, the controlling shareholder of Afrox, which holds 154,603,934
Ahealth shares being 69% of Ahealth"s issued share capital, has irrevocably
undertaken to vote in favour of the shareholder resolutions necessary to approve
the disposal by Afrox of its shares in Ahealth to Bidco in terms of the Offer.
The Offer is subject to the suspensive conditions set out in 3.3 below.
Upon the Scheme becoming operative, or alternatively Bidco acquiring all of the
issued share capital of Ahealth pursuant to the alternative offer, an
application will be made to the JSE to terminate the listing of the share
capital of Ahealth from the JSE.
2. RATIONALE FOR THE OFFER
Afrox and Ahealth issued a joint cautionary in July 2003 advising that Afrox was
in the process of considering its strategic options with regard to its
shareholding in Ahealth. This represented a unique opportunity for the BEE
Consortium to acquire a business with a strong position in the private hospital
and healthcare industry that would not have been possible to achieve through
organic growth.
Medi-Clinic and its holding company Remgro together with empowerment partners
Brimstone and Mvelaphanda, seized this opportunity to introduce Black Economic
Empowerment on a large scale to the private hospital and healthcare industry.
Bidco will add significant value to Ahealth and its industry leading management
team by constituting Ahealth as the first significant Black Economic Empowerment
owned and controlled private hospital and healthcare group in South Africa. With
the evolving South African national healthcare system, an empowered Ahealth will
be ideally positioned for growth and profitability.
The Offer significantly contributes to empowerment by increasing the spread of
ownership of assets amongst historically disadvantaged persons.
3. TERMS OF THE OFFER
The Offer consideration
In terms of the Offer, Bidco will, subject to the fulfilment of the suspensive
conditions detailed in paragraph 3.3, pay a cash consideration per share of
R13.85. The cash consideration shall be escalated at an effective rate of 5.6%
per annum from 1 October 2003, being the effective date, to the scheme operative
date or the day on which the conditions of the alternative offer are fulfilled.
For illustrative purposes, assuming the scheme operative date is 30 April 2004,
the total consideration payable per Ahealth share is as follows:
R
Cash consideration 13.85
Escalation at an effective rate of 5.6% 0.45
per annum
Offer consideration 14.30
Final dividend declared for the year 0.40
ended 30 September 2003*
Composite amount 14.70
* Ahealth shareholders registered as such on 23 January 2004 will receive the
final dividend of 40 cents per share declared by Ahealth on 29 October 2003 in
respect of Ahealth"s financial year ended 30 September 2003.
3.2 Cash confirmation
Rothschild has provided written confirmation to the satisfaction of the SRP that
Bidco has sufficient resources to discharge its obligations in full in terms of
the Offer.
3.3 Suspensive conditions
The Offer is conditional upon the fulfilment of certain suspensive conditions
including the following:
3.3.1 Afrox shareholders in general meeting approving the disposal by
Afrox of its shareholding in Ahealth to Bidco;
3.3.2 the approval by the competition authorities in terms of Chapter
III of the Competition Act, No. 89 of 1998, of the Offer;
3.3.3 the approval, to the extent necessary, of any regulatory
authorities having jurisdiction over the Offer, including the SRP, the JSE
and the Exchange Control Division of the South African Reserve Bank;
3.3.4 the High Court of South Africa granting an order convening a
meeting (the "scheme meeting") of shareholders of Ahealth at which such
shareholders ("scheme members") will consider and vote on the Scheme;
3.3.5 the Scheme being approved at the scheme meeting by a majority
representing not less than three fourths (75%) of the votes exercisable by
the scheme members present and voting whether in person or by proxy at the
scheme meeting; and
3.3.6 the High Court sanctioning the Scheme.
3.4 Effective date
The effective date, upon the conditions to the Offer being fulfilled, is 1
October 2003.
4. FINANCIAL EFFECTS
The table below illustrates the financial effects of the Offer per Ahealth
ordinary share based on various relevant market prices and the financial results
of Ahealth for the year ended 30 September 2003. The unaudited pro forma
financial effects have been prepared for illustrative purposes only to provide
information on how the Scheme would have impacted an Ahealth shareholder. Due to
the nature of the unaudited pro forma financial effects, it may not give a fair
reflection of an Ahealth shareholder"s financial position after the completion
of the Scheme, nor the effect on their future earnings.
Before Offer Change Composite Change
the Offer consideration (%) amount (%)
(cents) (cents) (cents)
Market prices:
Monday, 14 July 1155 (5) 1385 (1) 19.9 1425 (2) 23.4
2003
30 day weighted 1003 (6) 1385 (1) 38.1 1425 (2) 42.1
average
Thursday, 13 1400 (7) 1394 (3) (0.4) 1434 (4) 2.4
November 2003
Net asset value 596 (8) 1385 (9) 132.4 1425 (9) 139.1
per share:
Net tangible asset 541 (8) 1385 (9) 156.0 1425 (9) 163.4
value per share:
Earnings per
share:
Attributable 136 (8) 87 (10) (36.0) 127 (10) (6.6)
earnings
Headline earnings 138 (8) 87 (10) (37.0) 127 (10) (8.0)
Number of shares 224,117 224,117 224,117
in issue (`000)
Weighted average 223,448 223,448 223,448
number of shares
(`000)
Notes:
1. The "Offer consideration" calculations have been determined based on a cash
consideration of R13.85 at 1 October 2003
2. The "Composite amount" comprises the Offer consideration plus the final
dividend of 40 cents per share declared by Ahealth on 29 October 2003 in respect
of Ahealth"s financial year ended 30 September 2003
3. The "Offer consideration" as at Thursday, 13 November 2004, being the last
practicable date prior the finalisation of this announcement, is escalated from
1 October 2003 to 13 November 2003 by the effective rate of 5.6% per annum
4. The "Composite amount" as at Thursday, 13 November 2004 is the "Offer
consideration" as at Thursday, 13 November 2004 plus the final dividend of 40
cents per share declared by Ahealth on 29 October 2003 in respect of Ahealth"s
financial year ended 30 September 2003
5. The closing market price per Ahealth ordinary share on the last trading
date prior to the publication of the first cautionary announcement on Monday, 14
July 2003.
6. The volume weighted average of the closing price published per Ahealth
ordinary share over the 30 trading days up to the publication of the first
cautionary announcement published on Monday, 14 July 2003.
7. The closing market price per Ahealth ordinary share on Thursday, 13
November 2003, being the last practicable date prior the finalisation of this
announcement.
8. Extracted from the Ahealth published audited results for the year ended 30
September 2003.
9. Assuming the Scheme became operative on 30 September 2003, the net asset
value of the "Offer consideration" and "Composite amount" is the cash
consideration of R13.85.
10. Assuming the Scheme became operative on 1 October 2002, the earnings per
share in the "Offer consideration" assumes that the cash consideration of R13.85
is invested at 9% net of tax of 30%, being an after tax rate of 6.3%, per annum
for the year ended 30 September 2003. The earnings per share in the "Composite
amount" assumes that the cash consideration of R13.85 is invested at 9% net of
tax of 30%, being an after tax rate of 6.3%, per annum for the year ended 30
September 2003 plus the final dividend of 40 cents per share declared by Ahealth
on 29 October 2003 in respect of Ahealth"s financial year ended 30 September
2003.
11. Capital Gains Tax has not been taken into consideration in computing the
pro-forma financial effects set out above.
5. UNDERTAKINGS, RECOMMENDATION AND OPINIONS
Ahealth has appointed Deutsche Securities SA (Pty) Limited ("Deutsche") as
independent adviser to advise the Board of Directors of Ahealth on the terms of
the Offer.
Deutsche has advised the Board of Directors of Ahealth that it has considered
the terms and conditions of the Offer and is of the opinion that the terms and
conditions are fair and reasonable to the Ahealth shareholders other than Afrox.
The Board of Directors of Ahealth has considered the advice provided by Deutsche
and the terms and conditions of the Offer and is of the opinion that the terms
and conditions are fair and reasonable to the shareholders of Ahealth.
Accordingly, the Board of Directors of Ahealth recommends that the Ahealth
shareholders vote in favour of the Scheme, and will be voting their own shares
in favour of the Scheme at the scheme meeting.
Afrox has undertaken to Bidco that it will not dispose of, encumber, or grant
any right over any of the Ahealth shares it owns other than pursuant to the
Offer.
6. DOCUMENTATION AND ANNOUNCEMENTS
The offer document will be posted to all Ahealth shareholders once the necessary
approvals and consents have been obtained from, inter alia, the SRP and the JSE,
and after Ahealth has received the necessary leave to convene the scheme meeting
from the High Court.
A further announcement containing full details of the relevant dates and times
pertaining to the Offer will be published on SENS in due course.
7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The further joint cautionary announcement dated 6 October 2003 regarding the
strategic options of the relationship between Afrox and Ahealth is hereby
withdrawn.
Johannesburg
17 November 2003
Financial adviser to Bidco Independent adviser and transaction
Rothschild sponsor to Ahealth
Deutsche Securities
Legal adviser to Bidco Sponsor to Ahealth
Hofmeyr Herbstein & Gihwala Inc Nedbank Corporate
Financiers Competition law advisers to Ahealth
ABSA Corporate and Merchant Bank Edward Nathan & Friedland
Investor relations to Bidco
College Hill
Reporting accountants
PriceWaterhouseCoopers
Date: 17/11/2003 09:00:10 AM Produced by the JSE SENS Department
