| Wed 12 May 2004, 18:05 | | OFFER BY KERSAF TO ACQUIRE THE ISSUED SHARE CAPIT |
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KERSAF/ SISA - OFFER BY KERSAF TO ACQUIRE THE ISSUED SHARE CAPITAL OF SUN
INTERNATIONAL (SOUTH AFRICA) LIMITED
KERSAF INVESTMENTS LIMITED LOGO SUN INTERNATIONAL (SOUTH
(Incorporated in the Republic of AFRICA) LIMITED LOGO
South Africa) (Incorporated in Republic of
(Registration number South Africa)
1967/007528/06) Sun International (South
Share code: KER Africa) Limited
ISIN: ZAE000003844 (Registration number
("Kersaf") 1977/071333/06)
Share code: SIS
ISIN: ZAE000010104
("SISA")
OFFER BY KERSAF TO ACQUIRE THE ISSUED SHARE CAPITAL OF SISA THAT IT AND ITS
SUBSIDIARIES DO NOT ALREADY OWN, PURSUANT TO WHICH SISA"S SHARES WILL BE
DELISTED FROM THE JSE SECURITIES EXCHANGE SOUTH AFRICA
1. INTRODUCTION
Kersaf and SISA shareholders are referred to the announcement released on
the Securities Exchange News Service ("SENS") of the JSE Securities
Exchange South Africa ("the JSE") on Tuesday, 6 April 2004 ("the cautionary
announcement") in terms of which Kersaf expressed a firm intention to the
board of directors of SISA to make an offer to acquire the 37,6% of the
issued share capital of SISA which Kersaf and its subsidiaries ("the Kersaf
Group") do not already own ("the SISA minority shares") from the minority
shareholders of SISA ("SISA minority shareholders") ("the proposed
acquisition").
2. THE TERMS OF THE PROPOSED ACQUISITION
2.1 Mechanics
A scheme of arrangement ("the scheme") in terms of section 311 of the
Companies Act, 1973, as amended ("the Act") has been proposed by
Kersaf between SISA and SISA"s minority shareholders for purposes of
the proposed acquisition, in terms of which SISA will become an
indirect wholly-owned subsidiary of Kersaf and the listing of SISA on
the JSE will be terminated.
The implementation of the scheme is subject to the fulfilment of the
conditions precedent set out in paragraph 3 below ("the conditions
precedent").
On the successful implementation of the scheme the SISA minority
shareholders recorded in the register of SISA at the close of business
on the record date of the scheme ("the scheme participants"), which
date is expected to be Friday, 9 July 2004 ("the scheme record date"),
will be entitled to receive the scheme consideration as set out below
and will be deemed to have disposed of their shares in SISA ("the
scheme shares") to Kersaf.
2.2 The scheme consideration
The scheme consideration will consist of:
- 1 ordinary share in Kersaf for every 13 ordinary shares in the
issued capital of SISA ("SISA shares") held by the scheme
participants on the scheme record date, rounded to the nearest
whole number, credited as fully paid up ("the share
consideration"),
or as an alternative, at the election of each scheme participant,
either -
- cash of 350 cents per SISA share held by each scheme participant
limited to a maximum aggregate cash outflow from Kersaf of R400
million ("the cash consideration"); or
- a combination of the share consideration and the cash
consideration (collectively "the scheme consideration").
In the event that a scheme participant does not make a valid election, as
set out above, by 12:00 on the scheme record date, that scheme participant
will be deemed to have elected the share consideration.
To the extent that the aggregate cash consideration elected by scheme
participants exceeds R400 million and assuming a scheme participant has
elected at least 25% of the scheme consideration in cash, a scheme
participant will receive a minimum of 25% of the scheme consideration in
cash and, to the extent that such scheme participant has elected greater
than 25%, such scheme participant will receive a pro rata percentage share
of the balance of the cash consideration available, based on the ratio that
the excess cash amount elected by such scheme participant stands to the
excess cash amount elected by all scheme participants, with any shortfall
being paid in Kersaf ordinary shares.
3. CONDITIONS PRECEDENT
The scheme is subject to the fulfilment, by 30 September 2004, of the
following conditions precedent, namely that:
- in accordance with the requirements of section 311 of the Act:
* the scheme is approved at the meeting to be held on 8 June 2004
("the scheme meeting") by a majority of SISA minority
shareholders representing not less than three-fourths of the
votes exercisable by SISA minority shareholders present and
voting, either in person or by proxy, or by representative, at
the scheme meeting;
* the High Court of South Africa (Witwatersrand Local Division)
("the Court") sanctions the scheme; and
* a certified copy of the Order of Court sanctioning the scheme is
lodged with, and registered by, the Registrar of Companies ("the
Registrar");
- shareholders of Kersaf pass the resolutions at the general meeting to
be held on 8 June 2004 ("Kersaf general meeting") required for the
successful implementation of the proposed acquisition ("the Kersaf
resolutions"), which comprise:
* an ordinary resolution for the approval of the proposed
acquisition and the payment by Kersaf of the scheme
consideration; and
* a special resolution to increase Kersaf"s authorised share
capital to enable the payment of the share consideration ("the
Kersaf special resolution"); and
- the registration of the Kersaf special resolution, by the Registrar;
the JSE approves the listing of the Kersaf ordinary shares to be
issued in terms of the share consideration; and
- all relevant provincial gaming licensing authorities approve the
proposed acquisition.
In the event that the conditions precedent stated above are not fulfilled
by 30 September 2004, the scheme will fail to become operative and will be
of no force and effect.
4. TERMINATION OF SISA"S LISTING ON THE JSE AND THE CHANGE OF KERSAF"S NAME TO
SUN INTERNATIONAL LIMITED
Following the successful implementation of the scheme, the listing of
SISA"s shares on the JSE will be terminated, SISA will become a wholly-
owned subsidiary of the Kersaf Group and those SISA minority shareholders
electing, or deemed to have elected, to receive the share consideration, in
full or part settlement of the scheme consideration, will become
shareholders in Kersaf.
Subject to the successful implementation of the scheme and Kersaf
shareholders considering and passing the required Kersaf special resolution
at the Kersaf general meeting, the name of Kersaf will be changed to "Sun
International Limited". This name has been reserved with the Registrar. The
change of name is expected to be effective on the JSE under the abbreviated
name "SUNINT" in the "Leisure, Hotels and Entertainment" sector of the JSE
list.
5. FINANCIAL EFFECTS
The pro forma financial effects set out below are provided for illustrative
purposes only and, because of their historical nature, may not be a true
reflection of the impact of the scheme on earnings or asset values into the
future.
5.1 Financial effects on a Kersaf shareholder
The table below sets out the pro forma financial effects of the scheme
on Kersaf"s basic earnings per share, headline earnings per share,
adjusted headline earnings per share and net asset value per share,
based on the published unaudited results of SISA and Kersaf for the
six month period ended 31 December 2003, assuming that all the scheme
participants elect to receive the share consideration for 75% of their
scheme shares and for the balance they elect to receive the cash
consideration with the aggregate cash consideration amounting to R400
million:
Before Adjustments After %
the (2) (3) the change
scheme scheme
Basic earnings per share 248 5 253 2,0
(cents) (1) (2)
Headline earnings per 153 (16) 137 (10.5)
share (cents) (1) (2)
Adjusted headline earnings 127 (4) 123 (3.1)
per share (cents)* (1) (2)
Net asset value per share 2 829 179 3 008 6.3
(cents) (3)
* Adjusted headline earnings exclude certain items of income or
expense so as to enable users to obtain a more meaningful comparison
of the group"s performance with prior periods. These adjustments
include pre-opening expenses, earnings and results from discontinuing
operations and material items considered to be outside of the normal
operating activities of the group and/or of a non-recurring nature.
Notes:
(1) Based on the 90 050 306 weighted-average number of Kersaf
ordinary shares in issue for the six month period ended 31
December 2003.
(2) For purposes of calculating attributable earnings, headline
earnings and adjusted headline earnings per share "after the
scheme", it was assumed that:
* the scheme became operational and was effected in full with
effect from 1 July 2003;
* the scheme consideration is settled using R400 million of
cash and the issue of 25 169 710 Kersaf ordinary shares.
* of the R400 million of cash, R100 million of existing cash
resources were utilised and the balance of R300 million was
financed using borrowings at an after tax interest rate of
7,4%.
(3) For purposes of calculating the net asset value per share "after
the scheme", it was assumed that:
* the scheme became operational and was effected in full on 31
December 2003;
* the scheme consideration is settled using R400 million of
cash and the issue of 25 169 710 Kersaf ordinary shares;
* goodwill of R477 million arose as a result of implementing
the scheme;
* Kersaf"s minority shareholders" interest in relation to SISA
"after the scheme" has been reduced by R841 million with
effect from 31 December 2003, to reflect Kersaf"s increase
in shareholding in SISA following implementation of the
scheme (these minority interests represent the value of the
net assets acquired in the terms of scheme); and
* Kersaf ordinary shares have been issued, with effect from 31
December 2003, to the SISA minority shareholders at R36,49
per Kersaf ordinary share, being the closing market price
per Kersaf share on the JSE on the day prior to the date on
which the cautionary announcement was released.
5.2 Financial effects on a SISA shareholder
The table below sets out the pro forma financial effects of the scheme on a
SISA minority shareholder for each 13 SISA shares held by such SISA
minority shareholder, based on the published unaudited results of SISA and
Kersaf for the six month period ended 31 December 2003, assuming that all
the scheme participants elect to receive the share consideration for 75% of
their scheme shares and for the balance they elect to receive the cash
consideration, as well as on the assumption that all the scheme
participants receive the share consideration for 100% of their scheme
shares, with no cash consideration being paid by Kersaf:
Before After scheme % Change After scheme %
scheme assuming R400 assuming no Change
million cash cash
consideration consideration
paid paid
Per 13
SISA
scheme
shares
held by a
SISA
minority
shareholde
r
3 926 3 887 3 649 (7.1)
Attributab
le market
value on
10 March
2004 (1.0)
(cents)
(1)
268 221 (17.5) 246 (8.2)
Attributab
le
earnings
(cents)
(2)
92 135 46.7 137 48.9
Headline
earnings
(cents)
(2)
* Adjusted 113 125 10.6 124 9.7
headline
earnings
(cents)
(2)
Net asset 2 470 3 003 21.6 3 054 23.6
value
(cents)
(3)
Tangible 2 132 1 924 (9.8) 2 105 (1.3)
net asset
value
(cents)
(3)
* Adjusted headline earnings exclude certain items of income or expense so
as to enable users to obtain a more meaningful comparison of the group"s
performance with prior periods. These adjustments include material items
considered to be outside of the normal operating activities of the group
and/or of a non-recurring nature.
Notes:
(1) The closing market price of 13 SISA shares (302 cents for 1 SISA
share) and 1 Kersaf ordinary share (3 649 cents) on 10 March 2004,
being the date prior to the release of the joint cautionary
announcement.
(2) For purposes of calculating attributable earnings, headline earnings
and adjusted headline earnings per share "after the scheme", it was
assumed that:
* the scheme became operational and was effected in full with
effect from 1 July 2003;
* the scheme consideration is settled using R400 million of cash
and the number of Kersaf ordinary shares "after the scheme" has
been increased by 25 169 710 (on the basis of no cash outlay from
Kersaf, the scheme consideration would equate to the issue by
Kersaf of 33 960 918 Kersaf ordinary shares only);
* of the R400 million of the cash outlay by Kersaf, R100 million of
existing cash resources were utilised and the balance of R300
million was financed using borrowings at an after tax interest
rate of 7.4%;
* the relevant portion of the cash consideration of 350 cents per
scheme share had been invested by scheme participants to earn an
after tax return of 5,6% per annum for the six months ended 31
December 2003;
* a goodwill amortisation charge of R12 million for the six months
to 31 December 2003 was incurred on goodwill of R477 million
arising from the acquisition by Kersaf (on the basis of no cash
outlay from Kersaf, a goodwill amortisation charge of R10 million
for the six months to 31 December 2003 would be incurred on
goodwill of R398 million arising from the proposed acquisition);
and
* the portion of the SISA earnings previously attributable to the
scheme participants has been earned by Kersaf for the 6 months to
31 December 2003.
(3) For purposes of calculating net asset value and net tangible asset
value per share "after the scheme", it was assumed that:
* the scheme became operational and was effected in full on 31
December 2003;
* the scheme consideration is settled using R400 million of cash
and the issue of 25 169 710 Kersaf ordinary shares (on the basis
of no cash outlay from Kersaf, the scheme consideration would
equate to the issue by Kersaf of the 33 960 918 Kersaf ordinary
shares only);
* goodwill of R477 million arose as a result of implementing the
scheme (on the basis of no cash outlay from Kersaf, goodwill of
R398 million would arise as a result of implementing the scheme);
* Kersaf"s minority shareholders" interest in relation to SISA
"after the scheme" has been reduced by R841 million with effect
from 31 December 2003, to reflect Kersaf"s increase in
shareholding in SISA following implementation of the scheme
(these minority interests represent the value of the net assets
acquired in the terms of the scheme); and
* Kersaf ordinary shares have been issued, with effect from 31
December 2003, to the SISA minority shareholders at 3 649 cents
per Kersaf ordinary share.
The Kersaf ordinary shares to be issued in terms of the scheme will, from
their date of issue, rank pari passu in all respects (including the right
to receive a dividend, when declared) with all other Kersaf ordinary shares
then in issue.
Kersaf and SISA have undertaken not to declare a dividend until the earlier
of the operative date, being the business day immediately following the
scheme record date, which operative date is expected to be Monday, 12 July
2004 ("the operative date") and the date on which the last of the
conditions precedent is fulfilled.
6. SALIENT DATES AND TIMES
2004
Last day to trade Kersaf and SISA shares on the Friday, 28 May
JSE in order to be recorded in the register on
the record date of the Kersaf general meeting and
the scheme meeting of SISA shareholders
respectively
Record date of the Kersaf general meeting and Friday, 4 June
scheme meeting in order to be able to vote
thereat
Last day to lodge forms of proxy for the scheme Monday, 7 June
meeting (by 9:30) (see note 2 below)
Last day to lodge forms of proxy for the Kersaf Monday, 7 June
general meeting (by 09:00)
Kersaf general meeting (at 09:00) Tuesday, 8 June
Scheme meeting to be held at (9:30) or Tuesday, 8 June
immediately after the conclusion of the Kersaf
general meeting on Tuesday, 8 June 2004,
whichever is the later
Results of Kersaf general meeting and scheme Tuesday, 8 June
meeting to be released on SENS
Results of Kersaf general meeting and scheme Wednesday, 9
meeting to be published in the press June
Scheme chairperson"s report lies open for Monday, 14 June
inspection
Court hearing to sanction the scheme (at 10:00 or Tuesday, 22
as soon thereafter as Counsel may be heard in the June
Court)
Results of Court hearing to be released on SENS Tuesday, 22
June
Results of Court hearing to be published in the Wednesday, 23
press June
Order of Court sanctioning the scheme registered Wednesday, 23
by the Registrar on or about (if the scheme is June
sanctioned)
The dates below are subject to the fulfilment of the conditions
precedent as set out in paragraph 3 above. To the extent that the
conditions precedent are not fulfilled by Wednesday, 23 June 2004,
the dates set out below will be delayed accordingly and any such
changes will be announced on SENS and published in the press.
Finalisation date once all conditions precedent Wednesday, 23
have been fulfilled June
Finalisation date announcement once all Wednesday, 23
conditions precedent have been fulfilled to be June
released on SENS
Finalisation date announcement once all Thursday, 24
conditions precedent have been fulfilled to be June
published in the press
Last day to trade SISA shares on the JSE in order Friday, 2 July
to be recorded in the register on the record date
of the scheme
Last date to trade under the Kersaf name Friday, 2 July
Date of suspension of SISA"s listing on the JSE Monday, 5 July
from the commencement of business
Kersaf name change effected and commencement of Monday, 5 July
trade under the "Sun International Limited" name
Kersaf consideration shares issued in terms of Monday, 5 July
the proposed acquisition to be listed
Record date of the change of name Friday, 9 July
Record date of the scheme to determine Friday, 9 July
participation in the scheme
The election record date on which date the Friday, 9 July
election period closes at 12:00 by which time
scheme participants must have elected to receive
the cash consideration, failing which the scheme
participants will be deemed to have elected the
share consideration
Operative date of the scheme from the Monday, 12 July
commencement of business
Date from which the scheme consideration will be Monday, 12 July
made available or posted to certificated scheme
participants. Dematerialised scheme participants
will have the scheme consideration credited to
their account held at their CSDP or broker on the
operative date.
New share certificates reflecting the change of Monday, 12 July
name posted by registered post to certificated
Kersaf shareholders who have surrended their
documents of title by the record date of the
change of name. Dematerialised Kersaf
shareholders will have their accounts held at
their CSDP or broker updated.
Termination of SISA"s listing on the JSE from the Tuesday, 13
commencement of business July
Notes:
1. Shareholders who hold Kersaf and SISA shares which have been
dematerialised, with "own name" registration, and are registered by
the CSDP on the sub-register kept by that CSDP will be entitled to
attend the respective Kersaf general meeting or the scheme meeting, in
person or if they are unable to attend and wish to be represented
thereat must complete and return the form of proxy, attached to the
circulars to shareholders, to the transfer secretaries in accordance
with the time specified on that proxy form.
2. Dematerialised Kersaf and SISA shareholders other than with "own name"
registration who wish to attend the respective Kersaf general meeting
or scheme meeting should timeously inform their nominees or, if
applicable, their CSDPs or brokers of their intention to attend and
vote at the relevant meeting or to be represented by proxy thereat in
order for their nominees or, if applicable, their CSDPs or brokers to
issue them with the necessary authorisation to do so or should provide
their nominee or, if applicable, their CSDPs or brokers timeously with
their voting instruction should they not wish to attend the relevant
meeting in person in order for their nominees to vote in accordance
with their instructions at the relevant meeting.
3. Dematerialised scheme participants are required to notify their duly
appointed CSDP or broker of their election in the manner and by the
deadline stipulated by their CSDP or broker. Certificated scheme
participants are required to complete the election, surrender and
transfer form included in the circular to be posted to SISA
shareholders on Wednesday, 12 May 2004, to be received by the transfer
secretaries by the scheme record date.
4. No dematerialisation or rematerialisation of SISA or Kersaf shares
will take place after Friday, 2 July 2004.
5. Any change to the above dates and times will be agreed upon by Kersaf
and SISA and advised to Kersaf and SISA shareholders by notification
on SENS and in the press.
6. All times indicated above are South African times.
7. OPINIONS AND RECOMMENDATIONS
SISA has retained Nedbank Capital to act as its independent financial
advisor in connection with the scheme. On Monday, 3 May 2004 Nedbank
Capital delivered to the SISA board of directors an opinion to the effect
that, as of the date of the opinion and based upon and subject to the
factors and assumptions detailed in its letter, the terms and conditions of
the scheme are fair and reasonable to the SISA minority shareholders.
The directors of SISA (other than Mr PD Bacon and Mr DC Coutts-Trotter,
being executive directors of both Kersaf and SISA, who have recused
themselves from making the recommendation) have considered the terms and
conditions of the scheme and, inter alia, the opinion of Nedbank Capital,
and are of the unanimous opinion that the scheme is fair and reasonable to
SISA minority shareholders. Accordingly, the board of directors of SISA
recommends that SISA minority shareholders vote in favour of the scheme.
The directors of SISA who hold SISA shares intend to vote in favour of the
scheme at the scheme meeting in respect of their own holdings of SISA
shares.
8. NOTICE OF MEETINGS
The general meeting of Kersaf shareholders has been convened for Tuesday, 8
June 2004 at 09:00, in the boardroom, 4th Floor, 27 Fredman Drive, Sandown,
Sandton. The scheme meeting to approve the scheme is to be held at the same
venue at 09:30, on Tuesday, 8 June 2004, or immediately after the
conclusion of the Kersaf general meeting, whichever is the later.
9. DOCUMENTATION AND CAUTIONARY ANNOUNCEMENTS
The documentation relating to the scheme, which contains the notice of the
scheme meeting, will be posted to SISA shareholders on Wednesday, 12 May
2004. SISA shareholders are also referred to the notice of scheme meeting,
to be published in the Government Gazette on Friday,14 May 2004 and the
Sunday Times and Rapport on Sunday, 23 May 2004..
The documentation relating to the proposed acquisition by Kersaf, including
Revised Listings Particulars and notice of general meeting, will be posted
to Kersaf shareholders on Wednesday, 12 May 2004.
Kersaf and SISA shareholders are advised that as a result of the
publication of this announcement, the cautionary announcement is now
withdrawn. Notwithstanding this, and following the Kersaf and SISA trading
statements released on SENS on Monday, 26 April 2004, Kersaf and SISA
shareholders are advised to continue to exercise caution when dealing in
their Kersaf and SISA shares.
Sandton
12 May 2004
Independent advisor Merchant bank to Kersaf Reporting accountants and
to SISA board of auditors to Kersaf and
directors SISA
Nedbank Capital Investec Bank Limited PricewaterhouseCoopers
Corporate Finance
Sponsor to SISA Sponsor to Kersaf Transactional sponsor
Nedbank Capital Investec Bank Limited Investec Bank Limited
Corporate law Attorneys to Kersaf Attorneys to the scheme
advisors to SISA
Edward Nathan and Hofmeyr Herbstein & Knowles Husain Lindsay Inc
Friedland (Pty) Gihwala Inc
Limited
Date: 12/05/2004 05:44:21 PM Produced by the JSE SENS Department
