| Fri 12 Dec 2003, 17:49 | | CORPORATE BONDS/ ACQUISITION/ |
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STEINHOFF INTERNATIONAL HOLDINGS LIMITED - CORPORATE BONDS/ ACQUISITION/
PARTICIPATION IN THE DE-LISTING
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/003951/06)
("Steinhoff" or "the Company")
JSE Code : "SHF" : ISIN: ZAE 000016176
______________________________________________________________________
ANNOUNCEMENT REGARDING:
* THE ISSUE BY STEINHOFF MANUFACTURING (PROPRIETARY) LIMITED ("STEINMAN") OF
R1 BILLION CORPORATE BONDS;
* THE ACQUISITION BY STEINHOFF AFRICA HOLDINGS (PROPRIETARY) LIMITED
("STEINHOFF AFRICA") OF AT LEAST AN ADDITIONAL 49,62% INTEREST IN PG BISON
HOLDINGS (PROPRIETARY) LIMITED ("PGBH"); AND
* STEINHOFF"S PARTICIPATION IN THE DE-LISTING OF FREEDOM GROUP LIMITED
("FGL") FROM THE AUSTRALIAN STOCK EXCHANGE ("THE ASX")
______________________________________________________________________
INTRODUCTION
It was announced on 11 November 2003 that Steinhoff had successfully placed
145,3 million ordinary shares with non-resident investors at an issue price of
84,365 Euro cents per share, thereby raising an amount of Euro 122,6 million,
before expenses ("the International Offering").
As stated at the time of the implementation of the International Offering, the
directors of Steinhoff are continuously exploring funding alternatives available
to its Southern African operations which will contribute to optimizing the
Steinhoff Group balance sheet structure, reduce the after-tax cost of borrowings
and result in an enhanced financial risk profile. The directors are accordingly
pleased to announce that Steinman has successfully placed R1 billion worth of
10,00% Senior Unsecured Guaranteed Registered Bonds due 28 February 2008 ("the
Bonds") with leading South African financial institutions.
Steinhoff Africa currently holds 34,99% of the issued share capital of PGBH and
has reached agreement to acquire, subject to the conditions precedent referred
to below, at least a further 49,62% of the issued PGBH shares not already held
by it ("the PGBH acquisition").
Pursuant to the International Offering a European subsidiary of Steinhoff
("Steinhoff Europe") will be in a position to participate in the de-listing of
FGL from the ASX ("the FGL transaction"), subject to the requisite regulatory
approval being obtained.
The Bond issue
The Bonds were issued on 8 December 2003 by Steinman, a wholly-owned subsidiary
of Steinhoff Africa, which, in turn, is a wholly-owned subsidiary of Steinhoff.
The Bonds are unsecured but are guaranteed, jointly and severally, by Steinhoff
Africa and Steinhoff (collectively "the guarantors"). The Bonds will bear
interest at a fixed rate of 10,00% per annum applied to a nominal value of R1
billion payable six-monthly in arrear on 28 February and 31 August of each year.
The Bonds will be redeemable at par of R1 billion on 28 February 2008.
An amount of R750 million to R1 billion was on offer and the Bond offering was
oversubscribed. The Bonds were listed on the Bond Exchange of South Africa,
under the bond code "SHF01" with effect from Monday, 8 December 2003.
The issue of the Bonds enables Steinman and the guarantors to repay short-term
indebtedness, fund, from operating cash resources, strategic investments in the
future, notably the PGBH acquisition, and capital expenditure in regard to
Steinhoff Africa"s timber and saw milling activities. It also achieves an
improved capital structure in terms of the matching of funding resources with
the long-term nature of the investments concerned.
THE PGBH ACQUISITION
Agreement in principle has been reached on 10 December 2004 with PGBH
shareholders who, collectively, hold 49,6% of the issued share capital of PGBH,
in terms of which Steinhoff Africa will acquire all of their shares for cash,
subject to the approval, insofar as may be necessary of:
- the Competition Authorities; and
- the Securities Regulation Panel on Take-overs and Mergers ("the SRP").
The executive directors of PGBH who, collectively, hold 21,5% of the issued
capital (included in the 49,6% interest referred to above) have agreed to
receive their sale proceeds on a deferred basis subject to an earn-out based on
PGBH"s headline earnings for the year ending immediately after the 3rd
anniversary of the effective date.
The balance of PGBH shares (not included in the 49,6% referred to above) is
collectively held as to 15,4% of the issued share capital by two trusts on
behalf of employees (collectively "the trusts"). In terms of the Securities
Regulation Code on Take-overs and Mergers administered by the SRP, Steinhoff
Africa will extend a formal offer to the trustees of the trusts.
PGBH has long been identified as an important element in the value chain of
Steinhoff Africa"s timber and sawmilling activities. By including a particle
board and Medium Density Fibre Board manufacturer in Steinhoff"s fold, the
utilization of raw timber resources could be considerably enhanced, accompanied
by a greater recovery of raw material input costs.
The PGBH acquisition opens up the way for a possible major investment project in
the North Eastern Cape to substantially increase capacity which may also
accommodate the export market through Steinhoff"s extensive off-shore marketing
and distribution infrastructure and contacts. This project will be accompanied
by all the concomitant benefits in terms of job creation and fixed capital
investment that should benefit the sub-economy of that region.
The FGL TRANSACTION
Since 1 October 2001 Steinhoff has been in a joint venture with FGL in terms of
their respective 74,9% and 25,1% interests in Steinhoff Pacific (Proprietary)
Limited ("Pacific"). Pacific, a manufacturer of case goods and upholstered
furniture, has an exclusive supply agreement with FGL.
On 24 November 2003 FGL shareholders approved a scheme of arrangement in terms
of which the FGL shares not owned by a Management Consortium comprising the
three Executive Directors, Messrs Rod Walker, Geoff MacIntosh and Michael
Gordon, will be acquired by their investment company ("Manco") for an effective
aggregate scheme consideration of AUD 221,5 million.
Steinhoff Europe has agreed to provide AUD 115 million (approximately R545
million at an exchange rate of AUD1,00: ZAR4,74) towards the total funding
requirements of the FGL transaction. Steinhoff Europe"s investment in Manco
will be made to increase its existing investment in Australia.
The FGL transaction and Steinhoff Europe"s participation therein will
considerably enhance critical mass considerations between the trading and
sourcing operations of FGL and Steinhoff"s existing sourcing interests in China
and South East Asia. This will contribute towards Steinhoff attaining its
stated objective of a 50:50 split in Steinhoff Europe"s revenue between its own
manufactured goods and third party sourced products. The FGL transaction will
also enhance the prospects of FGL sourcing products from Steinhoff"s Southern
African operations.
GENERAL
A further announcement will be published in due course after finality has been
reached in respect of the conditions precedent in relation to the PGBH
acquisition referred to above.
Sandton
12 December 2003
______________________________________________________________________
Company Sponsor
PSG Capital Limited
Joint Lead Managers and Underwriters in respect of the Bonds
Rand Merchant Bank Old Mutual Specialised Finance (Pty) Limited
A Division of First Rand Bank
Limited
Legal Advisers in respect of the Bonds
Joint Lead Managers" and Underwriters" Counsel
Deneys Reitz Incorporated
ISSUER"S COUNSEL
Hofmeyr Herbstein Ghiwala
Date: 12/12/2003 05:39:04 PM Produced by the JSE SENS Department
