| Tue 2 Mar 2004, 12:27 | | DISPOSAL OF EFFECTIVE INDIRECT |
|
HOSKEN CONSOLIDATED INVESTMENTS LIMITED - DISPOSAL OF EFFECTIVE INDIRECT
ECONOMIC INTEREST IN AFRICA ON AIR
Hosken Consolidated Investments Limited
(Registration number 1973/07111/06)
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE000003257 Share Code: HCI
("HCI" or the "Company")
DISPOSAL OF EFFECTIVE INDIRECT ECONOMIC INTEREST IN 94.7 HIGHVELD STEREO AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Pursuant to the cautionary announcement dated 24 February 2004, HCI shareholders
are advised that HCI has entered into a sale and cession agreement with Primedia
Limited ("Primedia") relating to the acquisition and acceptance of the cession
by Primedia of all the rights held by HCI in Francolin Investments (Proprietary)
Limited ("Francolin") which represents an effective 42,5% indirect economic
interest in Africa on Air (Proprietary) Limited ("AOA"), which owns 94.7
Highveld Stereo ("the HCI interest").
Primedia has nominated Mineworkers Investment Company (Proprietary) Limited
("MIC") to acquire a portion of the HCI interest equivalent to an effective
economic interest of 12,01% for R50,9 million ("the MIC interest"), resulting in
Primedia retaining an effective 30,49% stake in AOA. Notwithstanding such
nomination, Primedia will remain jointly and severally liable with such nominee
for the due and punctual performance of Primedia"s obligations in terms hereof.
Upon fulfilment of the conditions precedent referred to in paragraph 5 below,
the sale and cession agreement will become effective from 1 January 2004.
2. Nature of business of AOA
AOA is the owner of the terrestrial radio licence operated under the 94.7
Highveld Stereo brand. 94.7 Highveld Stereo is known as Johannesburg"s "number
one all hit radio station", has an audience base of over a million listeners and
has been particularly successful in growing its base of youth listeners.
3. Rationale
The HCI Board considers the disposal of HCI"s interest in AOA as opportune and
the consideration will be used by HCI to fund future investment opportunities.
4. Consideration
The consideration payable by Primedia or its nominee to HCI under the sale and
cession agreement is R180 million, payable in cash on 1 July 2004. In the event
that the consideration is not paid on 1 July 2004, interest will accrue at the
prime overdraft rate, compounded monthly in arrears.
Notwithstanding the above, HCI will facilitate the payment of the consideration
by renouncing all rights to a Primedia vendor placement with a value of R29,1
million in favour of MIC. In terms of the vendor placing, Primedia will issue 3
147 603 Primedia "N" shares at an issue price of R6,30 per share and 1 449 580
Primedia ordinary shares at an issue price of R6,30 per share to HCI, renounced
to MIC.
The consideration payable is subject to a limited downward adjustment pending
the resolution of certain outstanding matters.
5. Conditions precedent
The sale and cession agreement is subject to the fulfilment of, inter alia, the
following conditions precedent:
* obtaining the approval by the requisite majority of HCI shareholders at the
General Meeting referred to in paragraph 7 below;
* obtaining the approval by the requisite majority of Primedia"s shareholders,
to the extent required; and
* obtaining the requisite regulatory approvals including, without limitation,
that of the JSE Securities Exchange South Africa ("JSE").
6. Financial effects
Based on the published consolidated unaudited results of HCI for the 6 months
ended 30 September 2003, the pro forma financial effects of the disposal arising
from the sale and cession agreement on HCI"s earnings, headline earnings and net
asset value ("NAV") are set out below. The pro forma financial information has
been prepared for illustrative purposes only and because of its nature may not
give a true picture of HCI"s financial position and results of operations.
Per HCI Before the After the sale Percentage
ordinary share sale and and cession Change
cession agreement (2)
agreement(1)
Earnings 94,55 186.31(3) 97,05%
(cents)
Headline loss (1,60) (2.70)(3) (68,75%)
(cents)
NAV (cents) 593 686(4) 15,68%
Notes:
1. Based on the published consolidated unaudited results of HCI for the 6 months
ended 30 September 2003
2. Based on the assumption that the disposal, in terms of the sale and cession
agreement, was effected on 1 April 2003 for income statement purposes and on 30
September 2003 for balance sheet purposes and assuming that HCI receives the
sale consideration of R180m.
3. Taking into account the after tax profit on the sale and cession of the
rights held by Francolin of R 100.062m assuming an effective Capital Gains tax
rate of 15%. A further adjustment was made to take into account the after tax
interest received on the disposal consideration at average call rates,
compounded monthly, applicable during the period 1 April 2003 to 30 September
2003, assuming a corporate tax rate of 30%.
4. Taking into account the after tax profit on sale and cession of the rights
held by Francolin of R100.062m, assuming an effective Capital Gains tax rate of
15%.
5. The effect of the disposal in terms of the sale and cession agreement on, Net
Tangible Asset Value has not been included as the effect on thereon is not
materially different to the effect on NAV.
7. Circular to HCI shareholders and renewal of cautionary announcement
Subject to approval by the JSE, a circular containing full details of the sale
and cession agreement will be posted to HCI shareholders in due course ("the
Circular"). The Circular will also include a notice convening a general meeting
("the General Meeting") for HCI shareholders to consider and, if deemed
appropriate, pass the resolutions necessary to give effect to the sale and
cession agreement.
Shareholders are referred to the cautionary announcement dated 24 February 2004
and are advised that the cautionary announcement related inter alia to the sale
and cession agreement. HCI is still involved in other negotiations which, if
successfully concluded, may have a material effect on the price of HCI"s
securities and accordingly, shareholders are advised to continue exercising
caution when dealing in their HCI shares.
Durban
2 March 2004
Sponsor Corporate advisors to HCI
Nedbank Corporate HJS Advisory Services
Date: 02/03/2004 11:54:43 AM Produced by the JSE SENS Department
