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Super Group - Cautionary Announcement Regarding Black Empowerment Transaction
Release Date: 08/04/2004 12:08:54 Code(s): SPG
Super Group - Cautionary Announcement Regarding Black Empowerment Transaction
SUPER GROUP LIMITED PEU INVESTMENT GROUP(PROPRIETARY) LIMITED
(Incorporated in the Republic (Incorporated in the Republic
of South Africa) of South Africa)
(Registration number (Registration number 1996/03899/07)
1943/016107/06) ("Peu")
(Share code: SPG)
(ISIN Code: ZAE000011334)
("Super Group" or "the Company")
CAUTIONARY ANNOUNCEMENT REGARDING BLACK EMPOWERMENT TRANSACTION
1. INTRODUCTION
Super Group shareholders are advised that Super Group has signed a Memorandum of
Understanding dated 4 March 2004 with Peu, led by Peter Malungani, to conclude
an empowerment transaction that will result in Peu acquiring an equity holding
of 25.1% in Super Group.
2. RATIONALE
The transaction is based on business imperatives and is in line with Super
Group"s commitment to a value enhancing empowerment strategy. By broadening and
building upon the existing relationship between Super Group and Peu, the
transaction is expected to result in new business opportunities and will assist
Super Group in strengthening its market position in key business areas. With a
25.1% shareholding by Peu, Super Group will be the leading black empowerment
company in the industries in which it operates.
3. PROPOSED TRANSACTION
In terms of the transaction, which will be subject to the conditions precedent
as set out in paragraph 5 below, Peu will acquire 25.1% of the voting share
capital of Super Group in a series of indivisible transactions as follows:
(a)"Share-for-share" transaction
In a "share-for-share" transaction Peu will exchange its current 30%
shareholding in FleetAfrica (Pty) Ltd ("Fleet Africa"), the full maintenance
lease subsidiary of Super Group, in exchange for "A" shares (described below)
and a shareholding of approximately 1.6% in Super Group ordinary shares. The
issue price per Super Group ordinary share will be R8.94, which is a 15%
discount to the 60-day volume weighted average price on the JSE Securities
Exchange, South Africa ("JSE") prior to this announcement.
(b)"A" shares
Super Group will issue "A" shares to Peu equivalent to approximately 15.7% of
the enlarged voting share capital of Super Group. These shares will carry full
voting rights, but will receive no dividends and will not be listed. The term
of the "A" shares will be 4 years, after which period Peu will have the right to
convert the shares into Super Group ordinary shares at a conversion price of
approximately R13.15 (subject to adjustment).
During the four year period Peu will have the ability to "earn-in" on the shares
by introducing new business to Super Group that can be directly attributed to
having been facilitated by Peu. The "earn-in" will be based on the value of new
business calculated on a predetermined formula.
(c)Issue of shares for cash
The Industrial Development Corporation of South Africa ("IDC") has completed an
extensive due diligence investigation and has agreed to provide, via a
Warehousing Agreement, funding of R300 million for the acquisition of an equity
stake of approximately 7.8% in Super Group on behalf of Peu. The funding is
subject to certain conditions precedent.
The ordinary shares (approximately 1.6%) in Super Group obtained by Peu in the
"share-for-share" transaction will be pledged as security for the IDC finance.
The issue will be a new issue of shares by Super Group. The shares will be
issued at a price of R8.94.
Several of the major institutional shareholders have been canvassed and
approval, in principle, to the broad parameters of the transaction has been
obtained.
4. BOARD REPRESENTATION
Peter Malungani has been a director of Super Group since 2001. Following the
transaction, Peu will be given a 25 - 30% representation on the Super Group
Board of Directors and the right to appoint the non-executive chairman. Peu
will also participate in influential committees such as the audit committee,
remuneration committee and transformation policies committee.
5. CONDITIONS PRECEDENT
Implementation of the transaction will be subject, inter alia, to:
- the obtaining of the necessary regulatory approvals;
- the obtaining of the requisite shareholder approvals;
- finalisation of Peu"s financing arrangements;
- completion of all legal agreements giving effect to the proposed transactions;
and
- a fair and reasonable opinion by an independent advisor.
6. RELATED PARTY TRANSACTION
Peu is a material shareholder of FleetAfrica, a subsidiary of Super Group. As a
result the FleetAfrica acquisition and the issue of shares for cash are related
party transactions in respect of Super Group in terms of the Listings
Requirements of the JSE. As a consequence, the board of directors of Super
Group will appoint an independent adviser to advise Super Group shareholders in
respect of the transaction.
7. CAUTIONARY ANNOUNCEMENT
A further announcement will be made on the Stock Exchange News Service and in
the press as soon as the funding arrangements and financial effects have been
finalised and the requisite legal agreements have been completed. Accordingly,
Super Group shareholders are advised to exercise caution when dealing in their
shares, until such time as a further announcement is made.
JOHANNESBURG
8 April 2004
Financial adviser and sponsor
Deutsche Securities (SA) (Proprietary) Limited
Legal adviser
Nucleus Corporate Finance (Proprietary) Limited
