| Thu 13 May 2004, 17:51 | | ACQUISITION OF AN EFFECTIVE 18% INTEREST IN Aon SO |
|
BRIMSTONE - ACQUISITION OF AN EFFECTIVE 18% INTEREST IN Aon SOUTH AFRICA
(PROPRIETARY) LIMITED
BRIMSTONE INVESTMENT CORPORATION LIMITED
(Registration number 1995/010442/06)
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE000015277 Share Code: BRT
ISIN Number: ZAE000015285 Share Code: BRN
(Brimstone or the Company)
ACQUISITION OF AN EFFECTIVE 18% INTEREST IN Aon SOUTH AFRICA (PROPRIETARY)
LIMITED (Aon South Africa)
Introduction
Holders of ordinary shares and N ordinary shares in Brimstone (Brimstone
shareholders) are advised that Brimstone has entered into an agreement with Aon
Holdings BV (Aon Holdings) to acquire an effective 18% interest in Aon South
Africa (the Acquisition) through its 60% held subsidiary Business Venture
Investments No 863 (Proprietary) Limited (Business Ventures). Business
Ventures has acquired a 30% interest in Aon South Africa for an aggregate
consideration of R15,51 million.
Aon Holdings is the Dutch-registered holding company of Aon South Africa and
held 100% of the shares in Aon South Africa prior to entering into the agreement
regarding the Acquisition.
The Acquisition will be effective from the third day following the fulfilment of
the condition precedent referred to below, which is expected to be not later
than 31 May 2004 (the Effective Date).
Nature of business of Aon South Africa
Aon South Africa provides a range of niche insurance broking and consulting
operations. Aon South Africa has an extensive regional network and is
represented in all major centres, with its head office based in Johannesburg.
Aon South Africa serves a range of market segments including large multi-
national and national groups, parastatals, small, medium and large organisations
and individuals. Globally the Aon group is one of the pre-eminent providers of
insurance broking and related consulting operations.
Business Ventures
In line with the approach adopted in relation to Brimstones investment in The
Lion of Africa Insurance Company Limited, the remaining 40% interest in Business
Ventures is held by Commlife Holdings (Proprietary) Limited (Commlife).
Commlife is owned by the family trust of F Robertson, a director of Brimstone. F
Robertson recused himself from the decision to proceed with the Acquisition
taken by the Brimstone board of directors.
Rationale for the Acquisition
The Acquisition is in line with Brimstones strategy of acquiring stakes in
quality financial service businesses to which it can add value. Brimstone
believes that, given the Aon groups global presence and expertise, there is
potential for significant capital growth in its investment in Aon South Africa.
The result of the Acquisition is that Aon South Africa will be a black empowered
company, as envisaged by the Black Economic Empowerment charter adopted by the
South African financial sector.
Terms
Brimstone will fund its pro rata share of the aggregate purchase consideration,
amounting to R9,3 million, in cash as follows:
a first tranche of R3,0 million will be due on the Effective Date;
a second tranche of R1,8 million is payable on the first anniversary of the
Effective Date;
a third tranche of R2,1 million is payable on the second anniversary of the
Effective Date; and
the balance, being R2,4 million, is payable on the third anniversary of the
Effective Date.
Financial effects
Based on the published consolidated reviewed results of Brimstone for the year
ended 31 December 2003, the pro forma financial effects of the Acquisition on
Brimstones earnings, headline earnings, net asset value (NAV) and tangible
NAV per share are set out below. The pro forma financial information has been
prepared for illustrative purposes only and because of its nature may not give a
true picture of Brimstones financial position and results of operations.
Per Brimstone Before the After the Percentage
ordinary share and Acquisition Acquisition Change
N ordinary share (1) (2)
(cents)
Earnings 21,8 21,1 (3) (3,2)%
Headline earnings 14,8 14,5 (3) (2,0)%
NAV per share 140,3 140,3 0.00%
Tangible NAV 106,9 104,1 (2.6)%
Notes
Based on the published consolidated reviewed results of Brimstone for the 12
months ended 31 December 2003.
Based on the assumption that the Acquisition was effected on 1 January 2003 for
income statement purposes and 31 December 2003 for balance sheet purposes.
Earnings and headline earnings have been adjusted to include the pro forma
equity accounted loss attributable to Brimstone from Aon South Africa for the
year ended 31 December 2003. Further to this, adjustments have been made to take
into account interest forgone on the first tranche of the aggregate acquisition
consideration of R3,0 million at the 12-month deposit rate, compounded monthly,
applicable on 1 January 2003 and to take into account the amortisation of the
total goodwill of R3,3 million relating to the Acquisition.
Aon South Africas results for 2003 included significant once-off costs and
charges arising from changes in accounting policies that should not recur in
future years.
Conditions precedent
The Acquisition is conditional upon the obtaining of the necessary approvals
from the South African Reserve Bank.
Cape Town
13 May 2004
Investment bank and Legal advisers to Legal advisers to Aon
sponsor Brimstone Holdings BV
Nedbank Capital Hofmeyr Herbstein & Hector North
Gihwala Inc Incorporated
Date: 13/05/2004 04:57:04 PM Produced by the JSE SENS Department
