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Adcorp Holdings Limited -
Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
(Share code: ADR ISIN: ZAE00000139)
("Adcorp")
EMPOWERMENT CONSORTIUM PARTNERS ADCORP IN CORPORATE COMMUNICATIONS DIVISION
Adcorp, which offers human capital management and marketing advisory services,
today announced a significant empowerment deal involving a consortium of Black
Management Forum Investments Company (BMFI), the investment arm of the Black
Management Forum and Tshirundu Investment Holdings (Pty) Limited, a black owned
investment holding company.
The deal is subject to inter alia, Adcorp shareholder and applicable regulatory
authority approval and involves the introduction of the empowerment consortium
as 25% shareholders in the Group"s corporate communications division which
includes leading brands such as Simeka TWS Communications and Graphicor. The new
empowerment business, which is a significant division of Adcorp contributing
some 23% of operating profits, is to be known as Adcorp Communication Solutions.
The transaction has been made possible by way of an innovative structure
enabling the empowerment partners to participate in the fruits of their
endeavours from the first year with an option to convert their investment in
Adcorp directly into the Adcorp listed entity after a five year period.
Mr George Negota will represent the BMFI-Tshirundu consortium on the Adcorp
Holdings Board, with Thendo Ratshitanga, executive director of Tshirundu serving
as chairman of Adcorp Communication Solutions. Viccy Baker remains as Chairman
of Simeka TWS Communications while Martin Chauke remains as Managing Director of
Graphicor.
The agreement significantly enhances the empowerment profile of Adcorp and could
act as a model for other empowerment transactions. The transaction is the second
such deal at Adcorp this year and will benefit all existing shareholders of
Adcorp.
The communication division of Adcorp is a leader in black economic empowerment
and recently appointed a black Managing Director to head up Graphicor, one of
the larger companies in the group. By concluding this agreement close on the
heels of the flexible staffing BEE deal announced earlier this year, Adcorp has
once again demonstrated its commitment to empowerment.
STRUCTURE OF THE ADCORP EMPOWERMENT DEAL
The Adcorp Holdings Limited (Adcorp) empowerment transaction has been effected
by way of the effective sale of all of the communication businesses of Adcorp
into a new entity, to be renamed Adcorp Communication Solutions, in which the
empowerment consortium comprising Black Management Forum Investments (BMFI) and
Tshirundu is to hold 25% of the shares whilst Adcorp will hold the other 75%.
A separate class of shares is to be issued to Adcorp in settlement of the
purchase consideration of R93,5 million, which will entitle Adcorp to the pre
deal or "base" profits of the business on an ongoing basis. A second class of
shares enabling all profits in excess of the base profits derived by the
business after the deal, to be known as the "super profits", will be held 50% by
the empowerment consortium and 50% by Adcorp.
After a period of five years, the empowerment partners will have the opportunity
of converting their stake in the empowered communication entity into the Adcorp
Holdings listed entity on the basis of a "value-for-value" swap of their
shareholding.
FINANCIAL EFFECTS
The empowerment partners will be able to participate in the fruits of their
endeavours right from the first year, as the deal is being funded internally by
Adcorp whilst the communication division, already performing well, should
receive added impetus from its BEE credentials. As the base profits flow
directly to Adcorp, there is no dilution of earnings for existing Adcorp
shareholders. As such neither the current level of earnings of Adcorp nor the
net asset value of Adcorp will be negatively affected by this transaction, which
is effective 1 November 2003. The net asset value of the companies involved in
the transaction was R21 million at 30 June 2003.
CIRCULAR TO SHAREHOLDERS
A circular outlining the details of the transaction will be distributed to
shareholders in due course.
Johannesburg
24 November 2003
FINANCIAL COMMUNICATIONS
Simeka TWS Communications
CORPORATE AND LEGAL ADVISORS
Nucleus Corporate Finance
SPONSOR
Deloitte & Touche Sponsor Services (Pty) Ltd
Date: 24/11/2003 09:00:04 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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