| Thu 12 Aug 2004, 8:32 | | Acquisition of a pro rata portion of Reunert ordin |
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Reunert Limited - Acquisition of a pro rata portion of Reunert ordinary shares
by way of a scheme of arrangement and withdrawal of cautionary
announcement
REUNERT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1913/004355/06)
Share code: RLO ISIN: ZAE000005914
(`Reunert` or `the company`)
ACQUISITION OF A PRO RATA PORTION OF REUNERT ORDINARY SHARES BY WAY OF A SCHEME
OF ARRANGEMENT AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Reunert shareholders are referred to the announcement released on the
Securities Exchange News Service (`SENS`) of the JSE Securities Exchange
South Africa (`the JSE`) on Tuesday, 29 June 2004 (`the cautionary
announcement`) in terms of which it was announced that Reunert and its
wholly-owned subsidiary, Bargenel Investments Limited (`Bargenel`), will
acquire, in terms of sections 85 and 89 of the Companies Act, 1973 (`the
Act`), a pro rata portion of the company`s ordinary shares in issue, net of
treasury shares, by way of a scheme of arrangement in terms of section 311
of the Act (`the scheme`).
2. THE TERMS OF THE SCHEME
2.1 Basic characteristic
The basic characteristic of the scheme is that, subject to the
conditions precedent set out in paragraph 3 below, the holders
(`Reunert ordinary shareholders`) of ordinary shares in the issued
share capital of Reunert (`Reunert ordinary shares`), other than
Bargenel, who are recorded in the register of Reunert at the close of
business on the record date of the scheme (`scheme participants`),
which date is expected to be Thursday, 23 September 2004 (`the scheme
record date`), will dispose of 1 Reunert ordinary share per 10 Reunert
ordinary shares held by each scheme participant on the scheme record
date (`the scheme shares`) to Reunert and Bargenel in return for the
payment of 2 500 cents for each scheme share disposed of (`the scheme
consideration`).
2.2 Rationale
Reunert made a distribution of R568 million (including STC) in 1999
and over the course of the following five years to 2004 has invested
in excess of R1 billion on acquisitions and the acquisition of Reunert
ordinary shares on the JSE. The company has maintained a steady flow
of dividends to Reunert ordinary shareholders, with the dividend cover
ratio of Reunert ranging between 1.9 to 1.5 times of headline
earnings. Notwithstanding the investments and payments set out above,
the company`s cash resources are in excess of its current investment
requirements.
The Reunert board has considered the various alternatives available in
order to distribute this excess cash, and has taken cognisance of all
its stakeholders` various considerations. The scheme, which if
implemented, will result in all Reunert ordinary shareholders (other
than Bargenel) being treated equally and will maintain their
proportionate percentage shareholding in Reunert relative to each
other.
In addition, the scheme will ensure that Reunert`s future earnings
growth will be properly reflected without the need to restate
historical financial information for comparative purposes, and allows
for the tax efficient distribution of Reunert`s excess cash. To the
extent to which the scheme consideration is paid out of Reunert`s
share premium account, Reunert will have an approximate STC saving of
R30 million in comparison with a regular dividend payment.
2.3 Order of Court
The High Court of South Africa (Witwatersrand Local Division) (`the
Court`) has ordered that a meeting in terms of section 311(1) of the
Act (`the scheme meeting`) of the Reunert ordinary shareholders, other
than Bargenel (`scheme members`), recorded in the register on the
close of business on Thursday, 2 September 2004 (`voting record
date`), be convened for the purposes of considering, and if deemed
fit, agreeing to, with or without modification, the scheme.
3. CONDITIONS PRECEDENT
The scheme is subject to the fulfilment of the following conditions
precedent before it becomes operative:
3.1 the special resolution approving Reunert`s acquisition of certain of
the scheme shares being duly passed at a general meeting of Reunert
shareholders (`the general meeting`) in accordance with the Act and
the Listings Requirements of the JSE, and the registration of such
special resolution by the Registrar of Companies;
3.2 the special resolution approving Bargenel`s acquisition of certain of
the scheme shares being duly passed at the general meeting in
accordance with the Listings Requirements of the JSE, and the
registration of such special resolution by the Registrar of Companies;
3.3 the scheme being approved at the scheme meeting by a majority
representing not less than three-fourths of the votes exercisable by
scheme members present and voting in person or by proxy;
3.4 the Court sanctioning the scheme; and
3.5 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Act.
4. JSE LISTING
The scheme shares acquired by Reunert (being approximately 17 168 058
Reunert ordinary shares) will be cancelled and accordingly application will
be made for the delisting of these shares from the JSE from the
commencement of business on the operative date of the scheme, which is
expected to be Monday, 27 September 2004. Should the scheme become
unconditional Reunert will be issued with a new ISIN, being ZAE000057428.
5. FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the
scheme on the unaudited earnings and headline earnings of Reunert for the
six months ended 31 March 2004, and the net asset value and net tangible
asset value at that date:
Before the After the
scheme scheme %
Per Reunert ordinary share Note (cents) (cents) change
Earnings 1 133.2 137.7 3.4
Headline earnings 1 136.9 141.8 3.6
Net asset value 2 660 438 (33.6)
Net tangible asset value 2 495 256 (48.3)
The unaudited pro forma financial effects have been prepared for
illustrative purposes only, in order to provide information on how the
scheme might affect the financial results and position of a Reunert
ordinary shareholder and, because of their nature, may not give a true
reflection of the actual financial effects of the scheme. The pro forma
financial effects have been calculated on the basis set out below.
Notes:
1. The `Before` column reflects the earnings and headline earnings per
Reunert ordinary share for the six months ended 31 March 2004,
calculated on the basis of the fully diluted weighted average number
of 192,1 million Reunert ordinary shares in issue throughout the
period. The `After` column assumes that the scheme was implemented
with effect from 1 October 2003 and excludes investment income that
was received at a rate of 7,0% per annum on the aggregate amount of
the scheme consideration and the taxes payable by Reunert thereon,
calculated on the basis of a fully diluted weighted average number of
173,0 million Reunert ordinary shares in issue.
2. The `Before` column reflects the net asset value and the net tangible
asset value per Reunert ordinary share as at 31 March 2004, and is
based on 190,3 million Reunert ordinary shares in issue at 31 March
2004. The `After` column assumes that the scheme was implemented on
31 March 2004, calculated on the basis of 171,2 million Reunert
ordinary shares in issue.
6. TAX IMPLICATIONS FOR SCHEME PARTICIPANTS
Scheme participants are advised that a portion of the scheme consideration
will, for the purposes of the Income Tax Act, 1962 as amended (`Income Tax
Act`), constitute a dividend. Further details of the composition of the
scheme consideration for purposes of the Income Tax Act will be set out in
the circular which was posted to Reunert shareholders today.
7. SALIENT DATES OF THE SCHEME
2004
Last day to trade Reunert ordinary shares on the JSE in
order to be recorded in the register of Reunert or in
the sub-registers of Reunert administered by Central
Security Depository Participants (`CSDP`s`) to vote
at the scheme meeting (see note 1 below) Thursday, 26 August
Voting record date Thursday, 2 September
Last day to lodge forms of proxy for the scheme meeting
(by 10:00) (see note 2 below)
and the general meeting (by 10:30) Thursday, 2 September
Scheme meeting held (at 10:00) Friday, 3 September
General meeting held (at 10:30 or 10 minutes after the
conclusion or adjournment of the scheme meeting, whichever
is later) Friday, 3 September
Publish results of the scheme meeting and general meeting
on SENS (expected date) Friday, 3 September
Publish results of the scheme meeting and the general meeting
in the press (expected date) Monday, 6 September
Court hearing to sanction the scheme (at 10:00 or as soon
thereafter as Counsel may be heard) Tuesday, 14 September
Publish results of Court hearing on SENS Tuesday, 14 September
Publish results of Court hearing in the press Wednesday, 15 September
If the scheme is sanctioned and becomes effective:
Last day to trade Reunert ordinary shares on the JSE in order
to be recorded in the register of Reunert or in the
sub-registers of Reunert administered by CSDPs to participate
in the scheme Thursday, 16 September
Record date of the scheme to determine participation in
the scheme Thursday, 23 September
Operative date of the scheme from the commencement
of business Monday, 27 September
Scheme consideration transferred or posted and new share
certificates posted to certificated scheme participants
(if documents of title are received on or prior to the record
date of the scheme) or, failing that, within five business days
of receipt of the relevant documents of title by the
transfer secretaries Monday, 27 September
Dematerialised scheme participants will have their accounts
Updated and the scheme consideration credited to their
account held at their CSDP or broker Monday, 27 September
Notes:
1. Shareholders should note that, as Reunert ordinary shares now settle
in the STRATE environment, settlement for trade takes place five
business days after trade. Therefore, Reunert ordinary shareholders
who acquire Reunert ordinary shares after Thursday, 26 August 2004
will not be eligible to vote at the scheme meeting.
2. If a form of proxy is not received by the time and date shown above,
it may be handed to the chairman of the scheme meeting by no later
than 10 minutes before the scheme meeting is due to commence (or
recommence, if adjourned).
3. No dematerialisation or rematerialisation of Reunert ordinary shares
will take place after Thursday, 16 September 2004. Dematerialisation
and rematerialisation of Reunert ordinary shares will recommence after
Monday, 27 September 2004.
4. Any change to the above dates and times will be agreed upon by Reunert
and Bargenel and advised to shareholders by notification on SENS and
in the press.
5. All times indicated above are South African times.
8. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
The directors of Reunert have considered the terms and conditions of the
scheme and are of the unanimous opinion that those terms and conditions are
in the best interests of the Reunert ordinary shareholders. Accordingly,
the board of directors of Reunert supports the scheme and recommends that
Reunert shareholders vote in favour of the scheme and the resolutions to be
proposed at the general meeting. The directors of Reunert who hold Reunert
ordinary shares intend to vote in favour of the scheme at the scheme
meeting and the resolutions to be proposed at the general meeting in
respect of their own holdings of Reunert ordinary shares.
Reunert ordinary shareholders who, as at 29 June 2004, controlled, in
aggregate, 60,9% of the issued ordinary share capital of Reunert, have
given their written support for the scheme and the resolutions to be
proposed at the general meeting.
9. NOTICE OF MEETINGS
The scheme meeting has been convened for Friday, 3 September 2004 at 10:00,
at the registered office of Reunert, Lincoln Wood Office Park, 6 - 10
Woodlands Drive, Woodmead, Sandton, 2196. The general meeting is to be held
at the same venue at 10:30, on Friday, 3 September 2004, or 10 minutes
after the conclusion or adjournment of the general meeting, whichever is
the later.
10. DOCUMENTATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The documentation relating to the scheme, which contains the notice of the
scheme meeting, was posted today to Reunert shareholders.
Reunert shareholders are advised that as a result of the publication of
this announcement, the cautionary announcement is now withdrawn.
Sandton
12 August 2004
Merchant bank and transactional sponsor
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Lead sponsor to Reunert
Rand Merchant Bank
Corporate Finance
A Division of FirstRand Bank Limited
Attorneys
Bowman Gilfillan Attoneys
Reporting accountants and auditors
Deloitte & Touche Chartered Accountants (SA)
Registered Accountants and Auditors
Date: 12/08/2004 07:47:17 AM Produced by the JSE SENS Department
