| Tue 23 Mar 2004, 12:07 | | Acquisition By Black Economic Empowerment ("Bee") |
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Cadiz Holdings Limited - Acquisition By Black Economic Empowerment ("Bee")
Partner Of 10% Of The Issued Share Capital Of Cadiz And Reserving Of 10% Of The
Issued Share Capital Of Cadiz For Black Employees
Cadiz Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/007258/06)
Share code: CDZ ISIN: ZAE000017661
("Cadiz" or "the Company")
ACQUISITION BY BLACK ECONOMIC EMPOWERMENT ("BEE") PARTNER OF 10% OF THE ISSUED
SHARE CAPITAL OF CADIZ AND RESERVING OF 10% OF THE ISSUED SHARE CAPITAL OF CADIZ
FOR BLACK EMPLOYEES
1. INTRODUCTION
Cadiz hereby announces that an agreement has been reached in terms of which
Makana Financial Services (Proprietary) Limited ("Makana") will acquire 23 508
749 Cadiz shares from the Cadiz Holdings Employee Share Trust ("CHEST") and from
Cadiz Management Services (Proprietary) Limited ("CMS"), a wholly-owned
subsidiary of Cadiz, for a total consideration of R 41 140 310, which amounts to
an average cost of 175 cents per Cadiz share ("the Transaction").
The Transaction will result in Makana aquiring a strategic investment of 10% in
Cadiz.
Cadiz has also earmarked an additional effective 10% of its issued share capital
to be issued to current and future black employees over the next 5 years with
the intention of attracting and retaining these employees. The result is that
both Makana (immediately) and black employees (in the course of time) will hold
10% each.
2. RATIONALE FOR THE TRANSACTION
Cadiz operates within the financial sector in South Africa and is committed to
the principles of BEE. In line with the BEE requirements of the recently
formulated Financial Sector Charter ("the Charter") and taking into
consideration legislation governing BEE in South Africa, Cadiz has identified a
critical need and business imperative to introduce a BEE partner, Makana, to the
company.
It is envisaged that the Transaction will materially and sustainably transform
Cadiz into an entity that has the profile and capacity to successfully deliver
quality services to all segments of the South African business community,
including corporate, government, institutional and state owned enterprises
clients, thereby facilitating growth in earnings and shareholder value on an
ongoing basis. Makana will assist in championing transformation within Cadiz,
specifically with regard to issues such as employment equity, affirmative
procurement and in attracting and retaining high quality black professionals.
The Transaction demonstrates not only Cadiz"s continuing commitment to growing
its business in South Africa, but also its commitment to meaningful
transformation at all levels of the business.
CHEST currently holds unallocated shares, which the JSE has required it to
dispose of. These shares, together with the treasury shares held in CMS, are
being used to facilitate the Transaction.
3. BACKGROUND TO MAKANA
Makana has been established for this Transaction and is a 60% held subsidiary of
Makana Investment Corporation (Proprietary) Limited ("MIC"). The other
shareholders of Makana are Autshumatu (25%) and Wild Orchard (15%). All the
shareholders in Makana are black companies. MIC is 51% owned by the Makana
Trust, with the balance owned by MIC management. The Makana Trust was conceived
on 11 February 1995, the 5th anniversary of Nelson Mandela"s release, when
former political prisoners gathered on Robben Island. In his address to the
former inmates former President Mandela remarked about the unsatisfactory
economic state of most former political prisoners. He turned to his former co-
accused Ahmed Kathrada to lead an initiative to address the plight of these
people.
The following former prisoners were elected to serve on the Ex-Political
Prisoners Committee: Ahmed Kathrada (Chairperson), Patrick Lekota, Jeff Radebe,
Tokyo Sexwale, Dikgang Moseneke, Thandi Modise, Saki Macozoma, Kwedi Mokalipi,
Barbara Hogan, Peter-Paul Ngwenya, Soto Ndukwana and Ben Fani.
In order to formalise the above structure a constitution was drawn up and the
Makana Trust was created. The trust was named after Makana, a Xhosa General who
led his warriors against the British during the resistance wars and was jailed
on Robben Island. The trustees have included Ahmed Kathrada (founder), Jeff
Radebe, Patrick Lekota and Tokyo Sexwale who is the current chairperson. The
current trustees include Peter-Paul Ngwenya, Soto Ndukwana, Margaret Octavia
Ndlovu and Nolitha Yvonne Vukuza-Linda.
In order to enable the former prisoners to participate in the various sectors of
the South African economy and beyond, a commercial vehicle, MIC, was formed with
the Trust being the majority 51% shareholder. It is led by a former Robben
Island inmate, Peter-Paul Ngwenya, as its Executive Chairperson. MIC has
interests in Media, Transport & Logistics and Telecommunications. Subsequent to
the Transaction, MIC will also have an interest in the financial sector.
MIC is mandated to procure lucrative investment opportunities to enable the
Makana Trust to meet its goals and to contribute to its financial resources.
MIC"s approach to investment is "to promote value creation rather than value
consumption". As a broad-based empowerment investment vehicle, MIC strives to be
challenging and effective in meeting the needs and expectations of its partners,
whilst reflecting and pursuing the goals of social and economic transformation
of South African society. It is their wish that the directors take an active
interest in the management of companies into which it invests.
4. TERMS OF THE TRANSACTION
As a result of the Transaction, Peter-Paul Ngwenya has been nominated as the
Makana representative on the board of Cadiz. Sfiso Buthelezi will be his
alternate.
Whilst Cadiz appreciates that the purchase price of 175 cents per share offered
to Makana represents a substantial discount to the current Cadiz share price, it
believes that the purchase price is reasonable given the requirements of the
Charter, the fact that Makana will be unable to dispose of its Cadiz shares for
a predefined period and the value that Makana will add to the Cadiz group of
companies.
The Cadiz board views the long-term benefits which Makana is likely to bring to
Cadiz as significantly outweighing any dilution that may arise as a result of
the Cadiz shares being sold to Makana at a discount to the current market value.
5. FINANCIAL EFFECTS OF THE TRANSACTION
The table below sets out the pro forma financial effects of the Transaction on a
Cadiz shareholder, based on the assumptions set out below:
Actual Pro Change
forma
"Before" "After" (%)
(Note 1) (Note 2)
Earnings per share (cents)
- Basic 35.1 32.7 -6.85
- Diluted 33.3 31.2 -6.32
Headline earnings per share
(cents)
- Basic 36.2 33.6 -6.98
- Diluted 34.3 32.1 -6.45
Net asset value per share (cents) 173.2 173.4 0.12
Net tangible asset value per 152.0 154.6 1.68
share (cents)
Notes:
1. The "before" financial information has been extracted, without adjustment,
from the audited financial results of Cadiz for the year ended 31 December 2003.
2. The basic and headline earnings per share calculations have been based on
the assumption that the purchase was implemented on 1 January 2003.
3. The net asset value and net tangible asset value per share calculations
have been based on the assumption that the purchase was implemented on 31
December 2003.
4. In terms of the basic and headline earnings calculations, it has been
assumed that the proceeds of the purchase amounted to R 41 140 310 and was
invested on 1 January 2003 in an interest-bearing account at an after-tax rate
of 7.65% for the year ended 31 December 2003.
6. CONDITIONS PRECEDENT
The Transaction is subject to inter alia the passing of the requisite
resolutions by shareholders in general meeting and approval by the JSE
Securities Exchange South Africa ("the JSE").
7. OPINIONS AND RECOMMENDATIONS
The directors of Cadiz have considered the terms and conditions of the
Transaction and are of the opinion that the Transaction is in the best interests
of all of Cadiz"s key stakeholders, including shareholders, customers,
suppliers, staff and funders and, accordingly recommend that the Cadiz
shareholders vote in favour of the resolutions required to implement the
Transaction.
Members of the board who beneficially own and/or control Cadiz shares intend to
vote in favour of the resolutions to implement the Transaction.
8. GENERAL MEETING
A circular to shareholders setting out details of the Transaction, a notice of
general meeting and form of proxy will be posted to shareholders in due course.
Newlands
23 March 2004
Sponsor Attorneys Advisor
Investec Bank Limited Cliffe Dekker Cadiz Corporate Solutions
(Registration number
1969/004763/06)
Date: 23/03/2004 12:00:07 PM Produced by the JSE SENS Department
