| Wed 4 Aug 2004, 15:24 | | Announcement To Primedia Shareholders |
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Primedia Limited - Announcement To Primedia Shareholders
Primedia Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/003355/06)
Share code: PMA ISIN: ZAE000035119
Share code: PMN ISIN: ZAE000035127
(`Primedia`)
ANNOUNCEMENT TO PRIMEDIA SHAREHOLDERS
1. INTRODUCTION
Primedia shareholders are referred to the announcement published by
Primedia on 2 March 2004 (`the AoA acquisition announcement`) relating to
the acquisition and acceptance of the cession to Primedia or its nominee of
the economic rights held by Hosken Consolidated Investments Limited (`HCI`)
in Francolin Investments (Proprietary) Limited (`the AoA acquisition`)
which represents an effective 42.5% indirect economic interest in Africa On
Air (Proprietary) Limited (`AoA`) (`the HCI interest`). AoA owns 94.7
Highveld Stereo.
As anticipated in the AoA acquisition announcement, Primedia has nominated
Fleetbridge Investments (Proprietary) Limited (`Fleetbridge`), a wholly
owned subsidiary of the Mineworkers Investment Company (Proprietary)
Limited (`MIC`), which acquired from HCI, a portion of the HCI interest
equivalent to an effective 12.0% economic interest in AoA (`the Fleetbridge
interest`) for R50.9 million payable in cash (`the Fleetbridge
nomination`). The remaining HCI interest, which equates to an effective
30.5% economic interest in AoA (`the Primedia interest`) has been acquired
by Primedia Broadcasting (Proprietary) Limited for a purchase consideration
of R129.1 million (`the AoA purchase consideration`).
The acquisition by Fleetbridge of the Fleetbridge interest has resulted in
the MIC group increasing its effective economic interest in AoA from 2.2%
to 14.2% (`the total MIC group interest`) which, based on the AoA
acquisition price, would currently be valued at R60 million.
2. ARRANGEMENTS BETWEEN PRIMEDIA AND MIC
As referred to in the AoA acquisition announcement, Primedia has entered
into put and call arrangements in respect of the total MIC group interest
(`the MIC arrangements`). The MIC arrangements contained in the AoA
acquisition announcement have been amended, inter alia, so as to enable
Fleetbridge to raise the required funding for acquisition of the
Fleetbridge interest which is imperative in the interests of black economic
empowerment. The key revised terms of the MIC arrangements are as follows:
2.1 The total MIC group interest will be valued with effect from 30 June
2007 at the greater of:
2.1.1 `the minimum value` being R60 million adjusted for
Fleetbridge`s and MIC`s net holding costs taking into
account any dividends received; and
2.1.2 `the formula value` being the value based on the value of
AoA calculated by application of the Profit Before Interest
and Tax (`PBIT`) multiple paid to HCI in terms of the AoA
acquisition based on the average of the PBIT for the years
ended 30 June 2003 and 30 June 2004 (`historical PBIT
multiple`), applied to the PBIT for the year ending 30 June
2007 provided that, in the event that the PBIT for the year
ending 30 June 2007 is not sustainable, the PBIT multiple
used (`the adjusted PBIT multiple`) will be reduced
accordingly;
2.2 Fleetbridge will have a put (`the Fleebridge put`) and Primedia will
have a call, with effect from 30 June 2007, at a price equal to the
minimum value (`the first option purchase price`), on that proportion
of the total MIC group interest equal to the first option purchase
price divided by the value of the total MIC group interest;
2.3 Primedia has warranted to Fleetbridge that the portion of AoA`s
dividends and other distributions in aggregate, paid in respect of the
total MIC group interest for the period 1 July 2004 to 30 June 2007,
shall be such that the value of the Fleetbridge put as at 30 June 2007
shall not exceed R70 million (`the AoA dividend guarantee`);
2.4 MIC has warranted to Primedia that Fleetbridge`s and MIC`s holding
costs will not exceed 12% per annum (multiplied by (1 - tax rate), if
Fleetbridge`s and/or MIC`s funding is by way of preference shares);
2.5 Primedia will have a call, with effect from 30 June 2007, on the
balance of the total MIC group interest at a price based on the excess
of the formula value over the first option purchase price (`the
calculated price`), but reduced by:
2.5.1 any amounts paid by Primedia in terms of the AoA dividend
guarantee;
2.5.2 1/3 in respect of the first R30 million of the calculated
price;
2.5.3 50% in respect of the balance of the calculated price in
excess of R30 million;
provided that the amounts referred to in 2.5.2 and 2.5.3 will be
reduced proportionately in the event that the adjusted PBIT multiple
is less than the historic PBIT multiple; and
2.6 In the event of there being a default in terms of Fleetbridge`s R60
million funding facilities, Primedia will acquire the total MIC group
economic interest from Fleetbridge in consideration for assuming
Fleetbridge`s remaining obligations in respect of its R60 million
funding facilities.
3. LISTING REQUIREMENTS OF THE JSE SECURITIES EXCHANGE SOUTH AFRICA (`JSE`)
MIC currently holds 21.10% of the voting rights of the total issued share
capital of Primedia. MIC is therefore a material shareholder and related
party to Primedia in terms of the Listings Requirements of the JSE. The JSE
has ruled that the Fleetbridge nomination and the Fleetbridge put
arrangement are each small related party transactions in terms of the Rule
10.7 of the Listings Requirements of the JSE. Accordingly, Primedia
appointed Deloitte as an independent professional expert to provide written
confirmation as to whether such transactions are fair and reasonable to
Primedia shareholders.
Deloitte has provided written confirmation that the terms and conditions
of, inter alia, the Fleetbridge nomination and Fleetbridge put arrangement
are fair and reasonable to the shareholders of Primedia (`the fair and
reasonable opinion`). The fair and reasonable opinion will be available for
inspection at the offices of Primedia during normal business hours from
09h00 to 17h00 until 31 August 2004.
4. FINANCIAL EFFECTS
The financial effects of the AoA acquisition remain as contained in the AoA
acquisition announcement.
Sandton
4 August 2004
Investment bank Sponsor Corporate law advisers and
consultants
Investec Bank Limited Investec Bank Limited Edward Nathan & Friedland
Corporate Finance (Pty) Limited
Independent advisers to Legal Advisors to MIC
Primedia MJ King Inc.
Deloitte
