| Fri 5 Dec 2003, 11:10 | | SANLAM LIMITED - JOINT DETAILED CAUTIONARY ANNOUNC |
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SANLAM LIMITED - JOINT DETAILED CAUTIONARY ANNOUNCEMENT
Sanlam Limited
(Incorporated in the Republic of South Africa)
(Registration number 1959/001562/06)
(Share code: SLM)
(ISIN code: ZAE000028262)
("Sanlam" or "the company")
JOINT DETAILED CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement published on 31 October 2003, Sanlam
shareholders are advised that Sanlam has reached an agreement in principle with
Ubuntu-Botho Investments Limited ("Ubuntu-Botho"), led by Patrice Motsepe, to
conclude an empowerment transaction that will result in Ubuntu-Botho acquiring
an initial 10% equity holding in Sanlam. In addition, Ubuntu-Botho will play a
direct and visible role in Sanlam"s leadership and future development.
The transaction highlights Sanlam"s commitment to become the leading financial
services institution in South Africa.
RATIONALE
The transaction is based on social and business imperatives and is in line with
Sanlam"s commitment to a value enhancing broad-based empowerment strategy and
demonstrates Sanlam"s firm belief in the future of South Africa. The transaction
will allow Sanlam to remain competitive and retain its leadership position in
the financial services sector through forming value-enhancing alliances based on
sound business principles with established entrepreneurs and the broader
community.
Working together with Patrice Motsepe and Ubuntu-Botho, Sanlam will be able to
strengthen its relative position in its traditional life, short-term insurance
and asset management markets and leverage this platform to access new business
opportunities.
For Patrice Motsepe and Ubuntu-Botho, the transaction provides an opportunity:
- to contribute to the positioning of Sanlam as the leading financial services
institution in South Africa;
- to assist and facilitate broad-based empowerment in the financial services
sector;
- to assist Sanlam to provide financial services to the new emerging market in
the country; and
- to strategically position Sanlam as a truly South African company.
The transaction, if successfully implemented, will position Sanlam as the
leading financial services institution with quality Black Economic Empowerment
("BEE") leadership and a comprehensive strategy to ensure meaningful and
sustainable broad-based participation throughout South Africa. Ubuntu-Botho will
comprise various interest groups representing South Africa"s nine provinces and
include respected business, traditional and community leaders, women, church,
youth and trade union groups, and other successful empowerment companies. Poor
and unemployed South Africans will also benefit from the transaction through the
Sanlam Ubuntu-Botho Community Development Trust, which will advance and support
community upliftment and development projects, BEE initiatives and corporate
social investment programmes after the loans of Ubuntu-Botho have been repaid.
THE PROPOSED TRANSACTION AND RESULTANT STRUCTURE
Ubuntu-Botho will be a newly incorporated company which will acquire, subject to
the fulfilment of the conditions precedent detailed in paragraph 6 below, a
minimum of 10% which may increase to a maximum of 12% of the issued share
capital of Sanlam, in the following manner as one indivisible transaction:
1.1. Approximately 169 million Sanlam ordinary shares, which will constitute
approximately 6% of Sanlam"s issued share capital, will be acquired by Ubuntu-
Botho for a consideration of R1.3 billion. Approximately 26 million of those 169
million ordinary shares will be funded by a cash contribution of R200 million
from the Patrice Motsepe Group through Sizanani-Thusanang-Helpmekaar
(Proprietary) Limited ("Sizanani"). The consideration is based on a price of
765 cents per Sanlam ordinary share, which was the 60 day volume weighted
average price of a Sanlam ordinary share on the JSE Securities Exchange, South
Africa ("the JSE") on 21 October, 2003, when a Memorandum of Understanding was
signed. The sources of these shares will be a combination of new shares issued
by Sanlam, existing treasury stock and shares to be acquired from the Sanlam
Demutualisation Trust. Details of these acquisitions will be made available in
due course.
1.2. A further 56 million Sanlam ordinary shares (which will be equivalent to
approximately 2% of Sanlam"s issued share capital) will be issued by Sanlam to
Ubuntu-Botho, in exchange for 20% of Ubuntu-Botho"s issued share capital. Sanlam
will then transfer those Ubuntu-Botho ordinary shares to the Sanlam Ubuntu-Botho
Community Development Trust, which is being created to advance community
upliftment and development projects, sustainable BEE initiatives and Sanlam"s
and Ubuntu-Botho"s other corporate and social investment programmes.
1.3. Approximately 56 million Sanlam Deferred Shares ("deferred shares"), which
are to be created for the transaction and will constitute approximately 2% of
Sanlam"s issued share capital, will be issued as a first tranche to Ubuntu-Botho
for cash at their par value. The salient terms of the deferred shares are:
1.3.1. the deferred shares will carry the same voting rights (pro rata) as the
Sanlam ordinary shares;
1.3.2. the deferred shares" dividend rights will initially be limited, but will
permit increases in accordance with a cumulative value formula which will be
linked to Sanlam"s new business; and
1.3.3. to the extent that the targets set by the cumulative value formula are
met within ten years, the deferred shares will be converted into Sanlam ordinary
shares and listed on the JSE; and to the extent that those targets may not be
met by the end of ten years, the deferred shares will be redeemed at their
original par value.
1.4. If the targets set by the cumulative value formula for the first tranche of
deferred shares are met before the end of the applicable ten year period, a
second tranche of 56 million deferred shares (also approximately 2% of Sanlam"s
issued share capital) will be issued to Ubuntu-Botho. These shares will have
substantially the same rights as those of the first tranche, but will have to
reach their targets by the end of the same ten year period.
1.5. All the above issues of shares by Sanlam (except for the issue referred to
in paragraph 3.2 above), will be effected as specific issues of shares for cash
which will require approval by a resolution passed by a 75% majority of Sanlam
shareholders in general meeting. The creation of the deferred shares will
require an amendment to Sanlam"s Articles of Association which will require a
special resolution.
3.6 THE RESULTANT STRUCTURE
For a diagrammatic explanation of the resultant structure please refer to the
paid announcement to be published on 4 December 2003.
2. FUNDING ARRANGEMENTS
The Patrice Motsepe Group will through Sizanani make a R200 million cash
contribution to Ubuntu-Botho in consideration for its stake and to enable and
facilitate the participation of the broad-based empowerment groups.
Ubuntu-Botho intends to secure additional funding through the issue of
preference shares (the "Ubuntu-Botho Preference Shares"). The funding
arrangements are currently being negotiated and will be disclosed in a circular
to shareholders.
3. BOARD REPRESENTATION
Patrice Motsepe will be appointed to the Board of Sanlam as non-executive Deputy
Chairman on completion of the transaction.
Upon completion of the transaction, Ubuntu-Botho will, in consultation with the
Sanlam Board, be entitled to nominate a further two representatives to the
Sanlam Board and additional members of the Consortium leadership team to serve
on the Boards of the following Sanlam major subsidiaries: Sanlam Life Insurance
Limited, Sanlam Investment Management Limited and Santam Limited.
4. CONDITIONS PRECEDENT
Implementation of the transaction will be subject, inter alia, to:
- the obtaining of the necessary regulatory approvals;
- the obtaining of the requisite shareholder approval in general meeting for the
entering into and implementation of the proposed transaction;
- finalisation of the Ubuntu-Botho funding arrangements;
- the entry into all legal agreements giving effect to the proposed transaction;
and
- satisfactory completion of the due diligence by Ubuntu-Botho.
5. OPINIONS AND RECOMMENDATION
The board of directors of Sanlam will appoint an independent advisor to advise
Sanlam minority shareholders in respect of the proposed transaction as required
by the Listings Requirements of the JSE for specific issues of shares for cash.
6. FURTHER CAUTIONARY ANNOUNCEMENT
A further announcement will be made on SENS and in the press as soon as the
funding arrangements and financial effects have been finalised and the requisite
legal agreements have been entered into. Accordingly, Sanlam shareholders are
advised to continue to exercise caution when dealing in their securities until
such time as a further announcement is made.
Cape Town
4 December 2003
Financial adviser and sponsor to Sanlam Limited
Deutsche Securities
Member of the Deutsche Bank Group
Deutsche Securities (SA) (Proprietary) Limited
(Registration number 1995/011798/07)
Financial adviser to Ubuntu-Botho Investments Limited
JP Morgan
Attorneys to Sanlam Limited
Jowell Glyn & Marais
Attorneys to Ubuntu-Botho Investments Limited
Bowman Gilfillan
Invitation to attend a presentation by Sanlam Limited and Ubuntu-Botho
Investments Limited TODAY
You are invited to attend a presentation by Johan van Zyl, the CEO of Sanlam
Limited, and Patrice Motsepe, today, 4 December at 11:00 am.
Johannesburg: Ballroom, Hilton Hotel, Sandton
Cape Town: Ballroom, Mount Nelson, Cape Town
Please contact Di Munro, Heidi Geldenhuys or Gareth Sharp at Brunswick for
additional information on (011) 268 5750
Copies of the Press Release and SENS statement will be available on the Sanlam
website: www.sanlam.co.za
Those unable to attend the presentation, can click on
http://antfarm.co.za/sanlam/december_2003 for a webcast at 11:00. The webcast
will be available on the Sanlam website - www.sanlam.co.za - approximately three
hours after the presentation
