| Tue 6 Apr 2004, 17:20 | | PROPOSED SPECIFIC ISSUE OF SHARES AND ODD |
|
Southern Electricity Company Limited - PROPOSED SPECIFIC ISSUE OF SHARES AND ODD
LOT OFFER
Southern Electricity Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/006894/06)
Share code: SLO ISIN: ZAE000041919
("Selco" or "the company")
PROPOSED SPECIFIC ISSUE OF SHARES AND ODD LOT OFFER
1.Introduction
Further to the cautionary announcement dated 12 February 2004, shareholders
are advised that the board of directors of SELCo has proposed, subject to
receiving approval of shareholders at a general meeting convened specifically
for that purpose, to proceed with:
* a specific issue of shares to SELCo"s controlling shareholder, RMMS
Investments (Pty) Limited ("RMMS") ("the specific issue of shares"); and
* an odd lot offer ("the odd lot offer").
2. The specific issue of shares
2.1 Background
On 16 September 2002, shareholders of Brainware Limited ("Brainware")
approved, inter alia:
* the acquisition by Brainware of Southern Electricity Company (Pty) Limited
from RMMS ("the acquisition"); and
* the change of name of the company from Brainware to SELCo.
The acquisition resulted in the issue of 22 209 795 new SELCo shares to RMMS.
Following the acquisition, on 12 August 2003, RMMS notified the board of an
alleged breach in terms of the acquisition agreement. The board appointed an
independent sub-committee to investigate the alleged breach. In terms of the
acquisition agreement, Brainware warrented that it had R3 million in cash
and cash equivalents. However, it did not, the extent of the shortfall being
R1 413 428,30. This shortfall was independently verified by Ashton Chartered
Accountants, who were appointed by the independent sub-committee. As such, the
board therefore proposes to issue 26 384 883 new additional SELCo shares to
RMMS, subject to shareholder approval, at an issue price of 5,35 cents per
share (determined in accordance with the relative values of Brainware and
Southern Electricity Company (Pty) Limited at the time of the conclusion of
the acquisition agreement), in order to remedy the breach. As the specific
issue of shares is to a related party, RMMS, SELCo"s controlling shareholder,
the board is required to obtain an opinion from an independent expert as to
the fairness and reasonableness of the terms and conditions of the specific
issue of shares. Bridge Capital was appointed in this regard and their opinion
will be contained in the circular to SELCo shareholders.
2.2 Financial effects
Set out in the table below are the pro forma financial effects of the
specific issue of shares based on SELCo"s published reviewed results for the
six months ended 31 December 2003. The pro forma financial effects have been
prepared for illustrative purposes only to provide information on how the
specific issue of shares may have impacted the results and financial position
of SELCo. Because of their nature, the pro forma financial effects may not
give a fair reflection of SELCo"s financial position after the specific issue
of shares or the effect on future earnings.
Percentage
Before1 After2 change (%)
Earnings per share (cents) 1,19 0,63 (47,06)
Headline loss per share (cents) (0,01) (0,01) -
Weighted average number of shares in issue 29 617 009 56 001 892
Net asset value and net tangible asset value
per share (cents) 17,85 9,44 (47,11)
Number of shares in issue 29 617 009 56 001 892
Notes:
1. The calculation of earnings per share, headline loss per share, net asset
value per share and net tangible asset value per share in the "Before" column
is based on the published reviewed results for the six months ended 31
December 2003.
2. The calculation of earnings per share and headline loss per share in the
"After" column is based on the assumption that the specific issue of shares
was implemented on 1 July 2003. The calculation of net asset value per share
and net tangible asset value per share in the "After" column is based on the
assumption that the specific issue of shares was implemented on 31 December
2003.
3. Odd lot offer
3.1 Rationale
At 27 February 2004, 9 368 (96%) of the 9 711 registered SELCo shareholders
held less than 3 000 shares. These shareholders held in aggregate 2 307 140
shares (or 7,8%) of the total number of 29 617 009 shares in issue. The
proposed odd lot offer will:
* enable SELCo to decrease the substantial recurring costs of administration
relating to this large number of small shareholdings on the SELCo share
register; and
* enable odd lot shareholders to participate in the odd lot offer, either as
an affordable exit strategy or cost effective means of increasing their
shareholding.
3.2 Mechanism
All shareholders who hold less than 3 000 shares at the close of business on
Friday, 14 May 2004 ("the record date"), will be afforded the opportunity to
participate in the odd lot offer. The odd lot offer will be implemented on the
basis that the odd lot shareholders may, up to 12:00 on Friday, 14 May 2004,
elect either to:
* subscribe for sufficient number of additional shares from SELCo at the offer
price in order to increase their odd lot shareholdings to 3 000 shares; or
* sell their odd lot shareholdings to SELCo at the offer price; or
* retain their odd lot shareholdings.
3.3 Offer price
The offer price will be the price equivalent to the volume weighted average
traded price of SELCo shares on the JSE Securities Exchange South Africa over
the five trading days commencing on Friday, 16 April 2004 and ending on
Thursday, 22 April 2004. The offer price will be announced on SENS after the
close of business on Friday, 23 April 2004 and published in the press on
Monday, 26 April 2004.
3.4 Compulsory sale of odd lot shareholdings
Odd lot shareholders who do not elect, on or before 12:00 on Friday, 14 May
2004, any of the abovementioned alternatives, shall be deemed to have agreed
to sell their odd lot shareholdings to SELCo at the offer price. The documents
of title of certificated odd lot shareholders will have no value after Friday,
14 May 2004, other than to receive the proceeds of the sale of such shares.
3.5 Financial effects of the odd lot offer
Set out in the table below are the pro forma financial effects of the odd lot
offer (ignoring the effect of the specific issue of shares) based on SELCo"s
published reviewed results for the six months ended 31 December 2003. The pro
forma financial effects have been prepared for illustrative purposes only to
provide information on how the odd lot offer may have impacted the results and
financial position of SELCo. Because of their nature, the pro forma financial
effects may not give a fair reflection of SELCo"s financial position after the
odd lot offer or the effect on future earnings.
Percentage
Before1 After2 change (%)
Earnings per share (cents) 1,19 1,29 8,40
Headline loss per share (cents) (0,01) (0,03) 200,00
Weighted average number of shares in issue 29 617 009 27 309 869
Net asset value and net tangible asset value
per share (cents) 17,85 18,85 5,60
Number of shares in issue 29 617 009 27 309 869
Notes:
1. The calculation of earnings per share, headline loss per share, net asset
value per share and net tangible asset value per share in the "Before" column
is based on the published reviewed results for the six months ended 31
December 2003.
2. The calculation of earnings per share and headline loss per share in the
"After" column is based on the assumptions that:
* 2 307 140 shares are repurchased at an assumed offer price of 6 cents per
share in terms of the odd lot offer on 1 July 2003;
* a tax rate of 35% per annum;
* Secondary Tax on Companies of 12,5% per annum.
3. The calculation of net asset value per share and net tangible asset value
per share in the "After" column is based on the assumption that the odd lot
offer was undertaken on 31 December 2003.
4. Salient dates and times
The salient dates and times in respect of the odd lot offer are as follows:
2004
Posting of circular on Wednesday, 7 April
Election period for the odd lot offer opens on Wednesday, 7 April
Offer price finalised and announced on SENS after
close of business on Friday, 23 April
Offer price published in the press on Monday, 26 April
Forms of proxy for the general meeting to be received
by the transfer secretaries by 10:00 on Monday, 26 April
General meeting to be held at 10:00 on Thursday, 29 April
Results of general meeting and finalisation
announcement announced on SENS on Thursday, 29 April
Results of general meeting and finalisation
announcement published in the press on Friday, 30 April
Last day to trade in SELCo shares and be eligible
to participate in the odd lot offer on Friday, 7 May
Record date to determine those shareholders entitled
to participate in the odd lot offer,
at the close of business on Friday, 14 May
Election period for the odd lot offer closes at 12:00 on
(see note 3) Friday, 14 May
Forms of election and surrender (together with relevant
documents of title/cheque/ banker"s draft, as applicable)
in respect of cerrificated shareholders to be received by
the transfer secretaries by 12:00 on Friday, 14 May
Results of the odd lot offer announced on SENS on Monday, 17 May
New share certificates and cheques/electronic
transfers in respect of certificated shareholders
posted/effected against surrender of existing documents
of title from Monday, 17 May
Dematerialised shareholders will have their safe custody
accounts held at their CSDP or broker updated with their
new shareholding and debited/credited with the
cash amount, as the case may be, in respect of the
odd lot offer on Monday, 17 May
Implementation of the odd lot offer takes effect
at the commencement of business on Monday, 17 May
Results of the odd lot offer published in the press on Tuesday, 18 May
Notes:
1. The above dates and times are subject to change. Any changes will be
released on SENS and published in the press.
2. Shareholders may not dematerialise or rematerialise their SELCo shares
between Monday, 10 May 2004 and Friday, 14 May 2004, both days inclusive.
3. Dematerialised shareholders are required to inform their duly appointed
CSDP or broker of their response to the odd lot offer in the manner and time
stipulated in the agreement governing the relationship between the shareholder
and the CSDP or broker.
5. General meeting and circular
The general meeting of SELCo shareholders will be held at 156 Kleine Street,
New Muckleneuk, Pretoria at 10:00 on Thursday, 29 April 2004 for the purposes
of considering and, if deemed fit, passing, with or without modification, the
resolutions necessary to implement the specific issue of shares and the odd
lot offer.
A circular to shareholders containing full details of the specific issue of
shares and the odd lot offer, a notice of general meeting, a form of proxy, a
form of election and a form of surrender, will be posted to shareholders
today.
Pretoria
7 April 2004
Sponsor and independent expert
BRIDGE CAPITAL
Reporting accountants and auditors
SAB & T inc.
Chartered Accountants (SA)
Date: 06/04/2004 05:15:20 PM Produced by the JSE SENS Department
