| Tue 8 Jun 2004, 9:18 | | The Mandatory Offer |
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Intervid/venfin - Joint Announcement In Respect Of The Mandatory Offer Made By
Release Date: 08/06/2004 08:15:10 Code(s): VNF ITV
Intervid/VenFin - Joint announcement in respect of the mandatory offer made by
VenFin to acquire the entire issued share capital of Intervid (`the
transaction`)
Intervid Limited VenFin Limited
(Incorporated in the Republic (Incorporated in the Republic
of South Africa) of South Africa)
(Registration number (Registration number
1999/011483/06) 1948/031037/06)
Share code: ITV ISIN Share code: VNF ISIN number:
number: ZAE000025615 ZAE000026498
(`Intervid`) (`VenFin`)
Joint announcement in respect of the mandatory offer made by VenFin to acquire
the entire issued share capital of Intervid (`the transaction`)
1. Introduction
1.1 Pursuant to the announcements made by Intervid and VenFin on 1 March
2004, shareholders of Intervid and VenFin are advised that VenFin is proposing a
scheme of arrangement between Intervid and its shareholders, other than VenFin
and its subsidiaries. The terms and salient dates of the transaction are set-
out below.
1.2 VenFin and its subsidiaries are currently the holders and beneficial
owners of 32.4% of the issued ordinary share capital of Intervid. In previous
announcements it was disclosed that VenFin had reached agreement with the Howard
Family (comprising the Howard Family Trust, the James Howard Family Trust and
the Kate Howard Family Trust) to acquire their 30 243 408 Intervid shares (`the
Howard acquisition`). The Howard acquisition was inter alia, subject to the
approval thereof by the competition authorities. The Competition Tribunal has
unconditionally approved the Howard acquisition. As all the conditions precedent
to the Howard acquisition have now been met, VenFin will acquire the 30 243 408
shares from the Howard Family, with effect from 8 June 2004, for a cash
consideration of 34 cents per share. On implementation of the Howard
acquisition, VenFin and its subsidiaries will become the holders and beneficial
owners of 64.92% of the issued ordinary share capital of Intervid.
1.3 In terms of the Securities Regulation Code on Take-overs and Mergers
(`the Code`), VenFin is, as a result of the Howard acquisition, obliged to make
an offer to all Intervid`s other shareholders on terms not less favourable than
those of the Howard acquisition.
1.4 Accordingly, VenFin is proposing a scheme of arrangement in terms of
section 311 of the Companies Act (Act 61 of 1973), as amended (`Companies Act`),
between Intervid and its shareholders, other than VenFin and its subsidiaries
(`scheme`), to acquire the 35.08% of the issued ordinary share capital of
Intervid, which VenFin does not own after the Howard acquisition.
2. Rationale for the offer
2.1 Intervid`s business has not performed well during the last 18 months.
Last year Intervid instituted a turnaround strategy to enhance its sustainable
operating cash flow, through cost reduction and achieving higher quality
revenues, in order to avoid any long term damage to the business. VenFin, being
a significant minority shareholder and creditor of Intervid, was keen to ensure
an effective implementation of the turnaround strategy. However a dispute
developed between certain former shareholders of Intervid, comprising the Howard
Family, and VenFin regarding in particular a recapitalisation of the business.
This was ultimately settled by VenFin agreeing to acquire the Intervid shares
held by the Howard Family, thus allowing VenFin a greater say over the
successful implementation of the turnaround at Intervid.
2.2 VenFin believes that Intervid is still faced with significant
challenges in achieving the goals of the turnaround strategy and to be
successful it needs to be totally flexible in its decision making and execution
abilities. An unlisted environment provides that flexibility. Intervid is
confident that in an unlisted environment, with sufficient capital supplied by
VenFin, the business could be successful in future. Intervid will require
ongoing financial support to return to profitability in the long term and to
repay current debts. VenFin also believes that Intervid has good technology
which may benefit from the convergence of security networks over time.
2.3 Shareholders of Intervid are reminded that RFS Holdings Limited
(`RFS`), a wholly-owned subsidiary of VenFin, holds a convertible loan which may
convert into Intervid shares in June 2005. Should the transaction not take
place and should RFS decide to exercise its aforesaid conversion rights, RFS
would, at the current ruling share price of Intervid of 30 cents, hold 96.4% of
Intervid post the conversion. Intervid shareholders would therefore be diluted
by almost 28 times. Clearly this has a significant influence on the value of
Intervid shares held by current shareholders. In addition, in order for Intervid
to comply with the shareholder spread requirements contained in the Listings
Requirements of the JSE Securities Exchange SA (`JSE`), Intervid is required to
have public shareholders of at least 20% of its listed shares. In order to be
able to comply with these shareholder spread requirements, Intervid`s share
price would have to increase to 1 066 cents per share before VenFin would
(directly and indirectly) hold less than 80% of Intervid`s shares following the
conversion.
3. Terms of the transaction
3.1 Mechanism
VenFin is proposing the scheme between Intervid and its shareholders, other than
VenFin and its subsidiaries.
If the scheme does not become operative for any reason, VenFin will be deemed to
have made an irrevocable offer (`substitute offer`) to shareholders, other than
VenFin and its subsidiaries, recorded in Intervid`s share register on the
opening date of the substitute offer. Full details of the substitute offer and
the terms and conditions applicable thereto are contained in the document
referred to in 0 below.
3.2 Transaction consideration
The scheme consideration, or alternatively the offer consideration as the case
may be, (together referred to as the `transaction consideration`) will, at the
election of Intervid shareholders, be either:
- 34 cents cash per Intervid share held (`cash alternative`); or
- one VenFin share for every 60 Intervid shares held (`scrip
alternative`).
The cash alternative will form the default transaction consideration.
3.3 Conditions precedent
The scheme is subject to the fulfilment of the following conditions precedent:
3.3.1 the approval of the scheme by a majority of Intervid shareholders
representing not less than 75% of the votes exercisable by Intervid shareholders
present and voting, either in person or by proxy, at the scheme meeting;
3.3.2 the approval, to the extent necessary, by the Securities
Regulation Panel (`SRP`), the JSE and the Exchange Control Division of the South
African Reserve Bank (`SARB`);
3.3.3 the sanctioning of the scheme by the High Court of South Africa ;
and
3.3.4 the registration by the Registrar of Companies of a certified
copy of the Order of Court sanctioning the scheme.
The substitute offer is subject to the fulfilment of the following conditions
precedent:
3.3.5 the scheme not becoming operative for any reason whatsoever; and
3.3.6 the approval, to the extent necessary, by the SRP, the JSE and
the SARB;
4. Salient dates and times
2004
Last day to trade in order to vote at Friday 16 July
the scheme meeting on
Record date to vote at the scheme Friday 23 July
meeting at 17:00 on
Last day for receipt of proxies for the Monday 26 July
scheme meeting by 12:00 on
Scheme meeting to be held at 12:00 on Tuesday 27 July
Results of the meeting published on Tuesday 27 July
SENS on or about
Report of chairman of the scheme Wednesday 28 July
meeting available for inspection on
Results of the meeting published in the Wednesday 28 July
press on or about
Court hearing to sanction the scheme on Thursday 5 August
If the scheme is sanctioned:
Announcement of Court sanction of the Thursday 5 August
scheme published on SENS on
Announcement of Court sanction of the Friday 6 August
scheme published in the press on
Last day to trade for shareholders to Friday 13 August
be eligible to receive the scheme
consideration on
Suspension of listing of Intervid Monday 16 August
shares at commencement of trading on
Election of scheme consideration closes Friday 20 August
at 12:00 (see note 3)
Record date on which shareholders must Friday 20 August
be recorded in the register of members
of Intervid in order to receive the
scheme consideration by 17:00 on
Operative date of the scheme at the Monday 23 August
commencement of trading on
Scheme consideration posted to Monday 23 August
certificated scheme participants (if
documents of title are received on or
prior to the consideration record date)
on or about
or, failing receipt of documents of
title on or before the consideration
record date, within five business days
of receipt thereof by the transfer
secretaries.
Dematerialised scheme participants have Monday 23 August
their accounts held at their CSDP or
broker credited with the scheme
consideration on
Termination of listing of Intervid`s Tuesday 24 August
shares on the JSE at the commencement
of trading on
Notes:
1. These dates and times are subject to change. Any such change will be
published on SENS and in the press.
2. No dematerialisation or rematerialisation of Intervid shares may take place
after Monday 16 August 2004.
3. Dematerialised shareholders are required to notify their CSDP/Broker in a
manner and time stipulated in their agreement governing their relationship as to
their election.
4. Should the scheme not become operative for any reason whatsoever, VenFin
will have been deemed to have made the substitute offer.
5. Opinion and recommendations
A committee of the board of Intervid consisting of WF Lambert, JM Pieterse and
WD Jaggard (`the committee`) has been formed to consider the terms and
conditions of the transaction. Deloitte & Touche has been appointed to advise
the board as to the fairness and reasonableness of the transaction. The opinion
of the independent adviser and the opinion and recommendation of the committee
will be contained in the document referred to in section 9 of this announcement.
6. Pro forma financial effects
For shareholders selecting Column 1 Column 2
the cash alternative
Before the After the Change Note
transaction transaction (%)
(cents) (cents)
Market value per share 30 13% 1
(prior to this 34
announcement)
Market value per share (15%) 2
(prior to the first 40 34
announcement indicating a
potential offer in terms
of the Code)
Basic earnings per share (21.2) N/A 3
1.0
Headline earnings per (19.1) N/A 3
share 1.0
Net asset value (`NAV`) (84%) 4
per share 207 34
Net tangible asset value (75%) 4
(`NTAV`) per share 134 34
Adjusted NAV per share (217) N/A 5
34
Adjusted NTAV per share (289) N/A 5
34
Number of shares in issue
(`000) 93,000
Weighted number of shares
in issue (`000) 93,000
Notes:
1. Column 1 reflects the closing JSE market value per share on Friday 4 June
2004. Column 2 shows the transaction consideration.
2. Column 1 reflects the closing JSE market value per share on 27 February
2004, being the last trading day preceding the publication of the first
announcement indicating a potential offer in terms of the Code. Column 2 shows
the transaction consideration.
3. Column 1 reflects the unaudited basic and headline earnings per share for
the six months ended 31 December 2003. Column 2 represents an after tax cash
annual return of 6% on the transaction consideration for a period of six months.
4. Column 1 reflects the unaudited NAV and NTAV per share at 31 December 2003.
Column 2 represents the transaction consideration.
5. Column 1 reflects the unaudited adjusted NAV and adjusted NTAV per share at
31 December 2003. In determining the adjusted NAV and adjusted NTAV the equity
portion of the convertible loan has been deducted, as this portion of the NAV
and NTAV relates to the convertible loan holder and not the ordinary
shareholders. Column 2 represents the transaction consideration.
6. No account has been taken of Capital Gains Tax in the calculation of the
financial effects of the transaction on Intervid shareholders.
For shareholders selecting Column 1 Column 2
the scrip alternative
Before the After the Change Not
transaction transacti (%) e
(cents) on
(cents)
Market value per share 30 33 10% 1
(prior to this
announcement)
Market value per share 40 33 (18%) 2
(prior to the first
announcement indicating a
potential offer in terms of
the Code)
Market value per share 30 35 17% 3
(prior to this announcement
and based on the 30-day
volume weighted average
share price of VenFin)
Basic earnings per share (21.2) 0.4 N/A 4
Headline earnings per share (19.1) 1.2 N/A 4
Net asset value per share 207 27 (87%) 5
Net tangible asset value 134 25 (81%) 5
per share
Adjusted NAV per share (217) 27 N/A 6
Adjusted NTAV per share (289) 25 N/A 6
Number of shares in issue 93 000
(`000)
Weighted number of shares 93 000
in issue (`000)
Notes:
1. Column 1 reflects the closing JSE market value per share on Friday 4 June
2004. Column 2 reflects the effective value accruing to an Intervid shareholder
based on the closing JSE market value per VenFin share on Friday 4 June 2004 and
the swap ratio of 1 VenFin share per 60 Intervid shares.
2. Column 1 reflects the closing JSE market value per share on 27 February
2004, being the last trading day preceding the publication of the first
announcement indicating a potential offer in terms of the Code. Column 2
reflects the effective value accruing to an Intervid shareholder based on the
closing JSE market value per VenFin share on Friday 4 June 2004 and the swap
ratio.
3. Column 1 reflects the closing JSE market value per share of Intervid on
Friday 4 June 2004. Column 2 reflects the effective value accruing to an
Intervid shareholder based on the 30-day volume weighted average price of VenFin
share on the JSE up to and including Friday, 4 June 2004, being 2077 cents and
based and the swap ratio of 1 VenFin share per 60 Intervid shares (`the swap
ratio`).
4. Column 1 reflects the unaudited basic and headline earnings per share for
the six months ended 31 December 2003. Column 2 reflects the effective basic
and headline earnings per share for the six months ended 31 December 2003
accruing to an Intervid shareholder based on the swap ratio of 1 VenFin share
per 60 Intervid shares.
5. Column 1 reflects the unaudited net asset value and net tangible asset
value per share at 31 December 2003. Column 2 reflects the effective net asset
value and net tangible asset value per share on 31 December 2003 accruing to an
Intervid shareholder based on the swap ratio.
6. Column 1 reflects the unaudited adjusted net asset value and adjusted net
tangible asset value per share at 31 December 2003. In determining the adjusted
NAV and adjusted NTAV the equity portion of the convertible loan has been
deducted, as this portion of the NAV and NTAV relates to the convertible loan
holder and not the ordinary shareholders. Column 2 reflects the effective net
asset value and net tangible asset value per share on 31 December 2003 accruing
to an Intervid shareholder based on the swap ratio.
7. No account has been taken of Capital Gains Tax in the calculation of the
financial effects of the transaction on Intervid shareholders. In determining
the above financial affects no account has been taken of the effect that
fractions of VenFin shares might have on Intervid shareholders.
7. Confirmation of sufficient funds
The SRP has been given appropriate confirmation by Cazenove that VenFin has
sufficient resources to discharge its obligations in terms of the transaction.
8. Irrevocable undertakings
Irrevocable undertakings to vote in favour of the scheme have been received from
shareholders of Intervid in respect of a total of 15 750 000 shares,
representing 48.28% of the Intervid shares subject to the transaction.
9. Documentation
A circular providing further information on the transaction and containing,
inter alia, the recommendation of the committee, a notice of the Intervid scheme
meeting, details of the scheme and the substitute offer, a form of proxy and a
form of election and surrender, will be posted to Intervid shareholders on or
about 2 July 2004.
Intervid Limited VenFin Limited
Durban Stellenbosch
8 June 2004 8 June 2004
Merchant bank and sponsor to Financial adviser to VenFin
Intervid CAZENOVE
RAND MERCHANT BANK
(A division of FirstRand Bank Investor relations adviser to
Limited) VenFin
CORPORATE FINANCE COLLEGE HILL
Sponsor to VenFin
Independent financial adviser to RAND MERCHANT BANK
Intervid (A division of FirstRand Bank
Deloitte & Touche Limited)
Corporate Finance Division CORPORATE FINANCE
Deloitte & Touche Chartered
Accountants (SA)
Registered Accountants and
Auditors
Legal adviser to the transaction
Hofmeyr Herbstein & Gihwala Inc.
