| Tue 22 Jun 2004, 9:05 | | TERMS ANNOUNCEMENT IN RESPECT OF THE PROPOSED |
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METRO CASH AND CARRY LIMITED - TERMS ANNOUNCEMENT IN RESPECT OF THE PROPOSED
MANAGEMENT BUY-OUT
Metro Cash And Carry Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021315/06)
JSE Share code: MTC
ISIN number: ZAE000012688
(`Metro`)
TERMS ANNOUNCEMENT IN RESPECT OF THE PROPOSED MANAGEMENT BUY-OUT (`THE
TRANSACTION`)
1. Introduction
Pursuant to the announcement by Metro on 5 May 2004, shareholders are
advised that, at the initiative of RMB Asset Management (`RMBAM`) and
Stanlib Asset Management (`Stanlib`), two of Metro`s major shareholders, a
consortium has agreed to acquire from Metro the entire issued share
capitals of, all claims on loan account against all the subsidiaries
conducting the business of Metro and other assets relating to the business,
save for Metro`s 61% shareholding in Metcash Trading Limited Australia and
the syndicated loan of AU$119 million arising from the acquisition thereof
(`the transaction`). The terms and salient dates of the transaction are
set out below.
2. Consortium
The consortium comprises the following parties -
2.1 a group of executives and others led by Carlos dos Santos and Hilton
Mer;
2.2 a Black Economic Empowerment consortium led by African Renaissance
Holdings Limited; and
2.3 a funding institution, (collectively `the consortium`).
3. Rationale for the transaction
In the opinion of RMBAM and Stanlib, Metro`s share price does not fully
reflect the value of the businesses which form the subject matter of the
transaction (`Metrade`). Metro had already commenced a process to empower
Metrade and list it separately as announced on 4 December 2003. However,
RMBAM and Stanlib subsequently indicated that they would prefer Metro
management to acquire Metrade as they wished to unlock greater value in the
short term.
4. Terms of the transaction
An agreement has been signed with the consortium incorporating, inter alia,
the terms detailed below -
4.1 Mechanism
Metrade will be sold to the consortium as a going concern for cash.
4.2 Transaction consideration
The consortium will pay Metro R1.3 billion (`disposal proceeds`) for
Metrade. The disposal proceeds will, after deduction of costs and
taxes, be distributed to shareholders in the most efficient manner.
The net distribution is estimated to be approximately 61 cents per
Metro share.
4.3 Closing date
The closing date of the transaction, which is the date on which the
transaction will be implemented, will be seven days after the
fulfilment of the conditions precedent detailed in 4.4.
4.4 Conditions precedent
The transaction, which is a related party transaction in terms of the
JSE Securities Exchange South Africa (`JSE`) Listings Requirements, is
subject to the fulfilment of the following conditions precedent -
4.4.1 the approval of the transaction by Metro shareholders in
general meeting; and
4.4.2 the approval, to the extent necessary, of the JSE, the
Competition Authorities and the Exchange Control Division of
The South African Reserve Bank.
4.5 Funding arrangements
Nedbank Capital has agreed to fund the transaction subject, inter
alia, to the following conditions precedent -
4.5.1 conclusion of a satisfactory due diligence investigation
into the business of Metrade;
4.5.2 the finalisation of transaction agreements, including
syndication agreements for senior, mezzanine and empowerment
funding, and such other facilities currently utilised by the
business;
4.5.3 the final approval of the funding by the relevant committees
of Nedbank Capital and its syndication partners.
5. Description of Metrade
Metrade is the largest wholesale distributor of fast moving consumer goods
on the African continent with extensive wholesale and retail interests.
These comprise 263 cash and carry outlets, 13 conventional distribution
operations, 17 hyper stores, 47 liquor outlets and 116 retail stores. In
addition, Metrade is the second-largest franchisor of retail supermarkets
and convenience stores in Southern Africa with approximately 380 outlets.
6. Salient dates and times
2004
Circular posted to shareholders 9 July
General meeting held at 10h00 on 27 July
Results of general meeting announced on 27 July
SENS
Results of general meeting announced in 27 July
the press
Note
These dates and times are subject to change. Any such change will be
published on SENS and in the press. The further salient dates will be
announced in due course.
7. Opinion and recommendations
An independent committee of the board of Metro, comprising Dr F van Zyl
Slabbert, Messrs JR McAlpine and GB Rubenstein (`the committee`), has been
formed to consider and finalise the terms and conditions of the
transaction. EY Corporate Finance (Proprietary) Limited (`EY`) has,
subject to JSE approval, been requested to act as an independent adviser to
the board as to the fairness and reasonableness of the transaction. The
opinion of EY and the opinion and recommendation of the committee will be
contained in the circular referred to in paragraph 10.
8. Pro forma financial effects
The net asset value attributable to Metrade as at 30 April 2004 was R1.145
billion. The net profit after taxation and outside shareholders` interests
for the year ended 30 April 2004 attributable to Metrade was R159.8
million.
The effects of the transaction on shareholders are set out below -
Column 1 Column 2
Before the After the Change Note
transaction transaction (%)
(cents) (cents)
Basic earnings per share 23.0 19.6 (14.8) 1
Headline earnings per share 25.8 22.2 (14.0) 1
Net asset value per share 116.3 119.9 3.1 2
Net tangible asset value per share 57.4 74.3 29.4 2
Number of shares in issue (`000) 1 798 154
Weighted number of shares in issue 1 788 861
(`000)
Notes
1. Column 1 reflects the audited basic and headline earnings per share
for the 12 months ended 30 April 2004. Column 2 reflects the
effective basic and headline earnings per share for the 12 months
ended 30 April 2004 based on an after tax cash return of 6% on the
disposal proceeds assuming the transaction was effected on 1 May 2003.
2. Column 1 reflects the audited net asset value and net tangible asset
value per share at 30 April 2004. Column 2 reflects the effective net
asset value and net tangible asset value per share on 30 April 2004
assuming the transaction was effected on that date, but before any
distribution to shareholders.
3. No account has been taken of Capital Gains Tax and other costs in the
calculation of the financial effects of the transaction on Metro
shareholders.
9. Voting
In terms of the JSE Listings Requirements, the consortium and the Metro
Share Incentive Trusts, controlling 145 004 731 (7.95%) of the shares in
Metro, will not be able to vote on the transaction. Irrevocable
undertakings to vote in favour of the transaction have been received from
shareholders of Metro in respect of a total of 891 152 777 shares,
representing 53.06% of the Metro shares eligible to vote on the
transaction.
10. Documentation
A circular providing further information on the transaction and containing,
inter alia, the opinion and recommendation of the committee, the opinion of
EY, a notice of the Metro general meeting and a form of proxy will be
posted to shareholders on or about 9 July 2004.
Metro Cash and Carry Limited
Johannesburg
22 June 2004
Merchant bank to Metro
Rand Merchant Bank Corporate Finance
(A division of FirstRand Bank Limited)
Independent financial adviser to Metro
EY Corporate Finance (Pty) Ltd
Sponsor to Metro
Sasfin Corporate Finance,
a division of Sasfin Bank Limited
Legal adviser to Metro
Derek H Rabin & Associates (Pty) Ltd
Legal adviser to the consortium
Fluxmans Inc.
Reporting accountants
Ernst & Young
Ernst & Young Chartered Accountants (SA)
Registered Accountants and Auditors
Lead arranger and funder
Nedbank Capital,
a division of Nedbank Limited
Date: 22/06/2004 08:30:06 AM Produced by the JSE SENS Department
