| Fri 23 Apr 2004, 14:46 | | ANNOUNCEMENT TO PRIMEDIA SHAREHOLDERS AND WITHDRAW |
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PRIMEDIA - ANNOUNCEMENT TO PRIMEDIA SHAREHOLDERS AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
Primedia
Primedia Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/003355/06)
Share code: PMA ISIN: ZAE000035119
Share code: PMN ISIN: ZAE000035127
("Primedia")
ANNOUNCEMENT TO PRIMEDIA SHAREHOLDERS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Primedia shareholders are referred to the further cautionary announcement
published by Primedia on 15 April 2004 ("the further cautionary announcement").
Pursuant to the further cautionary announcement, Primedia shareholders are
advised that Primedia has entered into an agreement relating to the acquisition
by Primedia Broadcasting (Proprietary) Limited ("Primedia Broadcasting"),
subject to the fulfilment of the conditions precedent set out in paragraph 2.5
below, of 100% of the issued share capital of New Africa Media Holdings
(Proprietary) Limited ("NAMH"), including all claims which New Africa
Investments Limited ("NAIL") may have against NAMH at the effective date as
defined in paragraph 2.3 below ("the effective date") ("the NAMH acquisition").
Details of the NAMH acquisition are set out in paragraph 2 below.
2. The NAMH acquisition
2.1 Details of the NAMH acquisition
Primedia Broadcasting will, subject to the fulfilment of the conditions
precedent set out in paragraph 2.5 below, acquire 100% of the issued share
capital of NAMH, including all claims which NAIL may have against NAMH at the
effective date.
Prior to the NAMH acquisition, NAIL has undertaken to dispose of/transfer all of
the assets out of NAMH ("the NAMH restructure") such that its only remaining
asset will comprise:
- 66.5% of the entire issued share capital of KFM (Proprietary) Limited ("KFM"),
including all claims held by NAIL against KFM at the effective date and any
other financial interests held by NAIL in KFM; and
- all the preference shares held by NAIL in the issued share capital of Main
Street 69 (Proprietary) Limited ("SPV"), including all claims held by NAIL
against SPV and any other financial interests held by NAIL in SPV at the
effective date. SPV owns 28.5% of KFM and is owned by Broadcape Investments
(Proprietary) Limited,
collectively "the KFM asset".
2.2 Nature of business of NAMH
The KFM asset will be the sole asset of NAMH after the NAMH restructure. KFM is
the number one adult contemporary music radio station in the Western Cape with
over one million listeners based on the past seven days listenership figures.
Over the last five years, the station has consistently increased its
listenership, profits and free cash flow.
2.3 Purchase consideration
The total amount payable to NAIL by Primedia Broadcasting in terms of the NAMH
acquisition is essentially:
2.3.1 R208.8 million in cash, plus an amount equal to Nedbank Limited"s publicly
quoted prime interest rate ("the prime rate") multiplied by R208.8 million,
compounded monthly in arrears from 1 July 2004 to the effective date; minus
2.3.2 any distributions and/or dividends, from 3 October 2003 to the effective
date, declared and or paid to NAIL attributable to the KFM asset plus an amount
equal to the prime rate multiplied by the amount of such distributions and/or
dividends, compounded monthly in arrears from the date on which the
distributions and/or dividends are made to the effective date, which are
estimated to be at least R15 million,
("the acquisition consideration"). The acquisition consideration will be
adjusted having regard to any over or under provision for taxation.
The implementation date of the NAMH acquisition will be the fifth business day
after the later of the date of fulfilment of the last of the conditions
precedent referred to in paragraph 2.5 below and the date on which all the
assets other than the KFM asset have been transferred out of NAMH in terms of
the NAMH restructure ("the implementation date"). The effective date of the NAMH
acquisition is the day immediately preceding the implementation date.
The acquisition consideration has been underpinned by Primedia in the event that
Primedia does not implement the NAMH acquisition.
2.4 Rationale for the NAMH acquisition
Primedia is a leading media company in South Africa with key positions in the
radio industry and KFM is highly complementary to Primedia"s activities in this
sector. The NAMH acquisition will also materially advance Primedia"s strategic
objective of diversifying its media portfolio, making the group less reliant on
any one asset for performance. Primedia believes that it will be able to add
value to KFM, which should further benefit Primedia shareholders through a
meaningful contribution to both earnings and free cash flow.
2.5 Conditions precedent
The NAMH acquisition is subject to the fulfilment of the following conditions
precedent:
2.5.1 insofar as may be necessary, the Independent Communications Authority of
South Africa giving its approval for the NAMH acquisition, either
unconditionally or subject to such conditions as NAIL and Primedia agree in
writing are acceptable to them;
2.5.2 insofar as may be necessary, the approval of the Competition Commission
and/or the Competition Tribunal, as the case may be, for the NAMH acquisition,
either unconditionally or subject to such conditions as NAIL and Primedia agree
in writing are acceptable to them;
2.5.3 insofar as may be necessary, the obtaining of any other regulatory
approvals (other than those described in paragraphs 2.5.1 and 2.5.2 above),
required to implement the NAMH acquisition;
2.5.4 insofar as may be necessary in terms of the Listings Requirements of the
JSE Securities Exchange South Africa, the shareholders of NAIL and Primedia
approving the implementation of the NAMH acquisition; and
2.5.5 the successful completion of a due diligence investigation on NAMH within
20 business days from 22 April 2004.
2.6 Financial effects of the NAMH acquisition
The table below sets out the financial effects of the NAMH acquisition based on
the unaudited interim results of Primedia for the six months ended 31 December
2003:
Per Primedia share Before After Change
(cents) (cents) (%)
Headline earnings (1) 32.1 36.1 12.5
Basic earnings (1) 39.6 41.2 4.0
Net asset value (2) 157.3 157.3 -
Net tangible asset value 67.0 (18.0) (126.9)
(2)
Notes:
1. The "Before" column reflects the headline earnings and basic earnings per
Primedia share for the six months ended 31 December 2003 calculated on the basis
of a weighted average number of 216.364 million shares in issue throughout the
period. The "After" column assumes that the NAMH acquisition was implemented on
1 July 2003 and reflects the after tax earnings of Primedia which would have
been earned had the after tax earnings of the KFM asset been included for the
six months ended 31 December 2003. In addition, the "After" column assumes that
all the intangible assets acquired as a result of the NAMH acquisition are
attributable to goodwill. On determination of the fair value of the assets
acquired in accordance AC131 (Business Combinations) the headline earnings per
share may be subject to adjustment.
2. The "Before" column reflects the net asset value and net tangible asset value
per Primedia share at 31 December 2003 calculated on the basis of 216.364
million shares in issue at 31 December 2003. The "After" column assumes that the
NAMH acquisition was implemented on 31 December 2003 and includes the KFM asset
at 31 December 2003.
3. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Primedia shareholders are referred to the further cautionary announcement and to
this announcement, which provides details relating to the NAMH acquisition.
Accordingly, the further cautionary announcement has been withdrawn.
Sandton
23 April 2004
Investment Sponsor Corporate law
bank Investec Bank advisers and
Investec Bank Limited consultants
Limited Edward Nathan &
Friedland (Pty)
Limited
Date: 23/04/2004 02:39:17 PM Produced by the JSE SENS Department
