| Wed 17 Dec 2003, 13:21 | | Proposal by Naspers to offer holders of M-Net/ |
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Naspers/ M-Net/ Supersport - Proposal by Naspers to offer holders of M-Net/
Supersport Linked Units
Naspers Limited
(Incorporated in the Republic of South Africa)
(Registration number 1925/001431/06)
Share code: NPN ISIN: ZAE000015889
("Naspers")
Electronic Media Network Limited
(Incorporated in the Republic of South Africa)
(Registration number 1985/002853/06)
Share code: MNS ISIN: ZAE000014304
("M-Net")
SuperSport International Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/004203/06)
Share code: MNS ISIN: ZAE000014304
("SuperSport")
PROPOSAL BY NASPERS TO HOLDERS OF M-NET/SUPERSPORT LINKED UNITS ("M-NET
SUPERSPORT SHARES"), OTHER THAN THOSE HELD BY NASPERS AND NASPERS GROUP
COMPANIES, TO EXCHANGE THEIR SHARES FOR NASPERS SHARES OR ALTERNATIVELY CASH,
PURSUANT TO WHICH THE M-NET SUPERSPORT SHARES WILL BE DELISTED FROM THE JSE
SECURITIES EXCHANGE SOUTH AFRICA AND THE NIGERIAN STOCK EXCHANGE
1. INTRODUCTION AND RATIONALE
The participants in the black economic empowerment share scheme, Phuthuma Futhi
(the "Phuthuma scheme"), hold 10% of the issued M-Net SuperSport shares. The
Phuthuma scheme was established as an opportunity for historically disadvantaged
individuals to become shareholders in M-Net and SuperSport ("the companies").
The earnings volatility of the companies, the technical insolvency of M-Net
as a consequence of the implementation of the AC133 accounting standard and the
consequential possibility that no dividends will be paid in the current
financial year have raised concerns from the trustees of the Phuthuma scheme. In
this respect they have requested the M-Net and SuperSport boards (the "offeree
boards"), as well as the Naspers board of directors (collectively "the boards"),
to cooperate in procuring the realisation now of benefits by the Phuthuma
participants. The boards believe it important to ensure fairness to the members
of the Phuthuma scheme and therefore have agreed to facilitate this request in
order for the participants to realise value. However, the boards are also of the
view that it would not make sense to keep the companies listed without the
Phuthuma scheme participants, as this would exacerbate the illiquidity of the M-
Net SuperSport shares.
Accordingly, Naspers has advised the offeree boards that it wishes to offer
the holders of M-Net SuperSport shares, other than those held by Naspers, MNH
Holdings (1998) (Proprietary) Limited ("MNH98") and MultiChoice Africa
(Proprietary) Limited ("MultiChoice") ("the minority shareholders"), the
opportunity to swop their M-Net SuperSport shares into Naspers class N ordinary
shares ("Naspers shares"), which have a high level of liquidity ("the share
offer"). Alternatively, the minority shareholders can elect to receive cash for
their M-Net SuperSport shares ("the cash offer"). The share offer and the cash
offer are collectively referred to as "the offer" ("the proposed transaction").
The M-Net SuperSport shares trade on the JSE Securities Exchange South Africa
("JSE") and on the Nigerian Stock Exchange ("NSE") and pursuant to the proposed
transaction the M-Net SuperSport shares will be delisted from the JSE and the
NSE.
Naspers currently holds directly and indirectly 40,6% of the M-Net SuperSport
shares.
The proposed transaction is subject, inter alia, to the conditions precedent
set out in paragraph 4 below ("the conditions precedent"). The salient details
of the transaction are set out in this announcement.
2. THE PROPOSED TRANSACTION
The offer will be implemented by means of schemes of arrangement in terms of
Section 311 of the Companies Act, 1973 (No 61 of 1973), as amended ("the
scheme") and will be subject to the conditions precedent.
2.1. The share offer
Naspers will propose schemes between each of M-Net and SuperSport and the
minority shareholders to swop all of their M-Net SuperSport shares for a
consideration to be settled by the issue of new Naspers shares. The number of
Naspers shares to be offered as consideration for the M-Net SuperSport shares
swopped by the minority shareholders in terms of the scheme ("switch ratio")
will be calculated on the weighted average price of Naspers shares for the
period 5 to 23 January 2004 ("the offer period") and a price of R8,50 per M-Net
SuperSport share. To incentivise minority shareholders to become investors in
Naspers, a further discount of 10% will be offered in the switch ratio. Naspers
reserves the right to change the formula if stock markets or Naspers"s share
price is considerably impacted during that period.
For example, if the average Naspers share price for the offer period is
R40, and an M-Net SuperSport share price of R8,50 is assumed, the minorities
will receive 1 Naspers share for every 4,71 M-Net SuperSport shares. Applying a
further incentive discount of 10%, the minority shareholders will benefit by
receiving 1 Naspers share for every 4,24 M-Net SuperSport shares held.
Naspers shares have a high level of liquidity, in excess of 70% of the
total shares in issue having traded over the past 11 months, to a value of R5,1
billion.
2.2. The cash offer
As an alternative to the share offer, the minority shareholders will be
entitled to elect to receive a cash consideration of 850 cents per M-Net
SuperSport share to be disposed of in terms of the schemes. The maximum cash
consideration therefore payable by Naspers equates to R755 million ("cash
consideration").
2.3. Johncom option
Naspers has agreed to grant an option to Johnnic Communications Limited
("Johncom") to acquire up to 35,4% of all M-Net SuperSport shares acquired
pursuant to the scheme at the cash offer price of R8,50 per share, which option
shall be exercised by 31 March 2004 or the finalisation of the proposed
transaction, whichever is the later.
3. INDEPENDENT ADVISOR
The offeree boards will appoint an independent advisor ("the independent
advisor") to consider the terms of the offer to determine whether such offer is
fair and reasonable to the minority shareholders.
4. CONDITIONS PRECEDENT
The proposed transaction is conditional upon the fulfillment of certain
conditions precedent, including inter alia the following:
4.1 the obtaining of an opinion from the independent advisor that the
proposed transaction is fair and reasonable to the minority shareholders,
4.2 the approval of a majority representing three fourths of the votes
exercisable at each scheme meeting,
4.3 the Court sanctioning the scheme,
4.4 the Registrar of Companies registering the Order of Court sanctioning the
scheme, and
4.5 the obtaining of the approval, in so far as may be necessary, of the
Securities Regulation Panel ("SRP"), the JSE, the NSE, the South African Reserve
Bank, other relevant regulatory authorities and any third parties.
5. CASH CONFIRMATION
Investec Bank Limited has confirmed to the SRP that Naspers has adequate cash
resources to implement the proposed transaction.
6. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION
For the purposes of the pro forma financial effects calculation it has been
assumed that the offer has been settled in cash, in full, as the switch ratio
for the share offer has yet to have been determined.
6.1. Naspers
The table below sets out the pro forma financial effects of the proposed
transaction on a Naspers shareholder.
Before the After the
proposed proposed
transaction transaction %
Per Naspers share Note (cents) (cents) change
Earnings 1 7 (13) (286)
Headline earnings 1 57 45 (21)
Net tangible asset value 2 374 374 -
Net asset value 2 1 137 1 137 -
The pro forma financial effects have been prepared for illustrative purposes
only, in order to provide information on how the proposed transaction might
affect the financial position of Naspers shareholders and, because of its
nature, may not give a true reflection of the actual financial effects of the
proposed transaction. The pro forma financial effects have been calculated on
the basis set out below.
Notes:
1. The "Before" column reflects the earnings and headline earnings per
Naspers share for the six months ended 30 September 2003, calculated on the
basis of the weighted average number of 258 million Naspers shares in issue
throughout the period. The "After" column assumes that the proposed transaction
was implemented with effect from 1 April 2003 and incorporates Naspers"s share
of the earnings of M-Net and SuperSport for the six months ended 30 September
2003. Interest paid at a rate of 8,6% per annum (after tax) has been provided
for on the purchase consideration.
2. The "Before" column reflects the net asset value and the net tangible
asset value per Naspers share as at 30 September 2003, and is based on 258
million Naspers shares in issue at 30 September 2003. The "After" column assumes
that the proposed transaction was implemented on 30 September 2003 and
incorporates the additional stake in the equity accounted investment of M-Net
and SuperSport as at 30 September 2003.
6.2. M-Net SuperSport
The table below sets out the pro forma financial effects of the proposed
transaction on a M-Net and SuperSport shareholder.
Before the After the
proposed proposed
Per M-Net and transaction transaction %
SuperSport share Note (cents) (cents) change
Attributable market value
- Value at 12 December 2003 795 850 7
- 30 day weighted average 743 850 14
- 60 day weighted average 698 850 22
Earnings and headline earnings 1 2 42,3 2 015
Net asset value 2 (50) 850 1 800
The pro forma financial effects have been prepared for illustrative
purposes only, in order to provide information on how the proposed transaction
might affect the financial position of M-Net SuperSport shareholders and,
because of its nature, may not give a true reflection of the actual financial
effects of the proposed transaction. The pro forma financial effects have been
calculated on the basis set out below.
Notes:
1. The "Before" column reflects the earnings and headline earnings per M-
Net and SuperSport share added together for the six months ended 30 September
2003, calculated on the basis of the weighted average number of 256 million M-
Net SuperSport shares in issue throughout the period. The "After" column assumes
that the proposed transaction was implemented with effect from 1 April 2003 and
incorporates interest received at a rate of 9,96% per annum (before tax) on the
cash consideration.
2. The "Before" column reflects the net asset value per M-Net and
SuperSport share added together as at 30 September 2003, and is based on 256
million M-Net SuperSport shares in issue at 30 September 2003. The "After"
column assumes that the proposed transaction was implemented on 30 September
2003 and reflects the cash consideration received per M-Net SuperSport share.
No account has been taken of any personal taxes, which might be applicable
to Naspers,
M-Net or SuperSport shareholders in the calculation of the above pro forma
financial effects.
7. FURTHER DOCUMENTATION AND CAUTIONARY ANNOUNCEMENT
A further announcement regarding the final terms of the offer, including the
switch ratio, will be made once the independent advisor has completed its
opinion as to whether the proposed transaction is fair and reasonable to
minority shareholders, which date is expected to be on or about Friday 13
February 2004. The related scheme circular is expected to be posted on the same
day.
Shareholders of M-Net and SuperSport are advised to exercise caution when
dealing in their
M-Net SuperSport shares until a further announcement is made.
By order of the boards
17 December 2003
Sponsor to Naspers and transactional sponsor
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsors to M-Net and SuperSport
Sasfin Frankel Pollak Securities
Wipcapital (Proprietary) Ltd
(Registration number 1997/021195/07)
Legal adviser for the proposed transaction
Read Hope Phillips Attorneys
Merchant Bank to Naspers
Investec Bank Limited
(Registration number 1969/004763/06)
Date: 17/12/2003 05:53:07 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
