| Mon 19 Jul 2004, 14:53 | | Admiral - Proposed Scheme Of Arrangement And De-Li |
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Admiral - Proposed Scheme Of Arrangement And De-Listing
Admiral Leisure World Limited
(Incorporated in the Republic of South Africa)
JSE code: ADL ISIN: ZAE000010229
(Registration number 1938/011493/06)
(`Admiral` or `the company`)
PROPOSED SCHEME OF ARRANGEMENT AND DE-LISTING
1. Introduction
Grant Thornton Corporate Finance (Proprietary) Limited is authorised to
announce that Austrian Gaming Industries GmbH, a company incorporated in Austria
(`AGI`) will propose a scheme of arrangement (`the scheme`) in terms of section
311 of the Companies Act, 1973 (Act 61 of 1973), as amended (`Companies Act,
1973`) between Admiral and its shareholders, to acquire all of the shares held
by such shareholders, other than those held by AGI and senior management for a
consideration of 32 cents per Admiral share (`the scheme consideration`).
During 2002, AGI became the controlling shareholder in Admiral. At that
time an offer was made to the minority shareholders to acquire their shares at
32 cents per share. Some investors may have elected to retain their shares,
anticipating a revival in Admiral following AGI`s investment. As a result of
these expectations, despite the subsequent poor performance of the company, AGI
has elected to establish the scheme consideration at 32 cents.
The scheme is being proposed as an exit mechanism for shareholders, as set
out below, pursuant to the proposed de-listing of the company from the JSE
Securities Exchange South Africa (`JSE`).
2. Rationale
Following the first democratic elections in 1994 and the restructuring of
the casino industry in South Africa to eradicate illegal gambling and to include
the Transkei, Bophuthatswana, Venda and Ciskei states, Admiral positioned itself
in the market to fill three main roles: as a potential route operator and
supplier into the Limited Payout Machines (`LPM`) market, to apply for possible
casino licenses and to supply Novomatic equipment to casinos in South Africa.
Admiral currently has operations in Botswana, Namibia and Swaziland.
However, the size and potential of these operations do not justify Admiral
continuing as a listed company. Admiral has also not been able to penetrate the
casino sales market due to the fact that it has also applied for casino licenses
and the other casino operators have always viewed Admiral as a potential
competitor.
The operations and future sales into the casino market will not be
sufficient to recover the debt and losses that have been incurred by Admiral.
There is potential for Admiral to be turned into a moderately profitable small
business, but this will require further investment and a recapitalisation of the
company.
Consequently, based on the above, the very small market capitalisation of
the company, the fact that no benefits are anticipated to arise from the company
by maintaining its listing on the JSE and the lack of resources within the
company to ensure compliance with the corporate governance standards expected of
a JSE listed company, the directors of Admiral are of the opinion that the
continued listing of the shares of the company on the JSE and the associated
costs thereof are no longer justifiable.
3. Conditions precedent
3.1 The scheme will be subject to the following conditions precedent:
- The scheme being approved by a majority representing not less than 75% of
the votes exercisable by the scheme members present and voting, either in person
or by proxy at the scheme meeting;
- The Court sanctioning the scheme;
- A certified copy of the Order of Court sanction the scheme being registered
by the Registrar of Companies in terms of the Companies Act; and
- The approvals of the JSE, the Securities Regulation Panel (`SRP`), the
South African Reserve Bank and any other regulatory authorities, to the extent
required.
4. Financial effects of the scheme
Notes Before After Percentage
(cents) (cents) change
Loss per share 1 (15,17) 2,81 118,5%
Headline loss per share 1 (15,30) 2,81 118,4%
Net asset value per 2 1,69 32,00 1 792,0%
share
Market value per share 3 12,00 32,00 166,7%
Notes:
The amount in the `Before` column is based on the financial results of Admiral
for the sixteen months ended 31 December 2003. The amount in the `After` column
represents the after-tax interest which a Admiral shareholder with a marginal
tax rate of 30% would have earned, had the Admiral shareholder invested an
amount equal to the scheme consideration for the sixteen months ended 31
December 2003 at the average 32 day call interest rate over that period, being
8,9%, compounded monthly in arrears.
The amount in the `Before` column is based on the net asset value as per the
reviewed financial results of Admiral at 31 December 2003. The amount in the
`After` column represents the scheme consideration.
The amount in the `Before` column is based on the share price of Admiral shares
at the close of business on 13 July 2004, the last practicable date on which
Admiral shares were quoted on the JSE prior to the finalisation of this
announcement. The amount in the `After` column represents the scheme
consideration.
5. Irrevocable undertakings
Irrevocable undertakings to vote in favour of the scheme, have been
obtained from scheme members representing, collectively, 72% of the votes
exercisable by scheme members.
6. Opinions and recommendations
An independent adviser has been appointed to advise the board on whether it
considers the terms and conditions of the scheme to be fair and reasonable to
Admiral shareholders who will participate in the scheme.
7. Cash confirmation
The SRP has been provided with written confirmation that AGI has sufficient
resources at its disposal to satisfy full payment of the scheme consideration to
Admiral shareholders who will participate in the scheme.
8. Documentation and further announcement
A circular containing full details of the scheme and the proposed de-
listing will be posted to Admiral shareholders within 28 days of the publication
of this announcement. Further announcements including the salient dates
pertaining to the scheme and the proposed de-listing will be published on the
Securities Exchange News Service and in the press in due course.
Johannesburg
19 July 2004
Sponsor Attorneys
GRANT THORNTON CORPORATE FLUXMANS INC.
FINANCE (PROPRIETARY) LIMITED
Reporting accountants and
auditors
PAPILSKY HURWITZ
Date: 19/07/2004 02:38:59 PM Produced by the JSE SENS Department
