| Tue 31 Aug 2004, 11:14 | | Firm intention to make an offer |
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Forim/Alliance - Firm intention to make an offer to shareholders in Forim andAlliance and further cautionary announcementForim Holdings Limited Alliance Pharmaceuticals LimitedIncorporated in the Republic of South Incorporated in the Republic of SouthAfrica AfricaRegistration number 1986/004111/06 Registration number 1981/006145/06Share code FOM Share code ALN and ACNISIN Number ZAE000002689 ISIN Number ZAE000011847 and(`Forim`) ZAE000011110(`Alliance`)Firm intention to make an offer to shareholders in Forim and Alliance andfurther cautionary announcement1. IntroductionFurther to the cautionary dated 27 August 2004, shareholders of Forim andAlliance are advised that Thebe Health Care (Proprietary) Limited for and onbehalf of Thebe Pharmaceuticals (Proprietary) Limited (`Thebe`) has submitted afirm offer to the board (`the Boards`) of directors of Forim and Alliance toacquire the entire issued share capital of Forim and Alliance other than theissued share capital held by Thebe and the Alliance shares held by Forim (the`affected shares`) (`the transaction`) for a cash consideration of 68 cents perForim share and 40 cents per Alliance ordinary and `N` ordinary share(`consideration`) subject to certain conditions precedent detailed below. Theconsideration is post the capital distribution by Forim and Alliance of 34 centsand 32 cents respectively as announced in the press on 22 July and 26 August2004.The transaction will be implemented either by way of a scheme of arrangement(`the scheme`) in terms of section 311 of the Companies Act No 61 of 1973, asamended (`the Act`) to be proposed by Thebe between Forim and Alliance and itsshareholders or in terms of section 440 (`offer`) of the Act (`thetransaction`).2. Rationale for the transactionShares of Forim and Alliance have traditionally traded at a discount to the fairvalue of their underlying assets. The discount has largely been due to Forimand Alliance having been classified as small capitalised companies and beingilliquid shares. The transaction therefore offers shareholders of both Forimand Alliance an opportunity to unlock value in respect of their Forim andAlliance shareholdings.The cash consideration and the capital distribution to be received by Forimshareholders represents a premium of:* 2,0% to the closing price of 100 cents per Forim shares on Thursday, 26August 2004, the last trading date before the publication of the cautionaryannouncement; and* 20,5% to the closing price of 84,7 cents per Forim shares based on a 30-day weighted average trading price for the period preceding Thursday, 26 August2004.The cash consideration and capital distribution to be received by Allianceshareholders represents a premium of:* 16,1% to the closing price of 62 cents per Alliance shares on Thursday, 26August 2004, the last trading date before the publication of the cautionaryannouncement; and* 19,2% to the closing price of 60,4 cents per Alliances shares based on a 30 day weighted average trading price for the period preceding Thursday, 26August 2004.3. Opinions and recommendationsThe board of directors of Forim and Alliance have formed separate independentsub-committees to ensure appropriate governance throughout any ensuing processand to consider the offers received from Thebe. The board sub-committees arealso in the process of appointing independent advisors to assist it in its tasksand to provide it with external advice as may be required in terms of theSecurities Regulation Code and by the Rules of the Securities Regulation Panel.Pro forma financial effectsThe table below sets out the illustrative pro forma financial effects of thescheme on Forim shareholders assuming that the scheme had been concluded forincome statement purposes from 1 March 2003 and for balance sheet purposes at 29February 2004.The pro forma financial effects have been prepared for illustrative purposesonly, to provide information about how the transaction might have affected thefinancial information presented and, because of their nature, may not give atrue reflection of the financial effects of the transaction:Before the After the % changetransaction transaction (cents per (cents pershare) share)Market value per share and cash 100,0 102,0 2received (1)30-day volume weighted average 84,7 102,0 20,5market value per share and cash 9,5 7.9 (16.8)received (2) 13,2 7.9 (40.2)Earnings per share (3) 0 7.9 100Headline earnings per share (3) 116,2 102,0 (12,2)Dividend per share (4) 62,0 102,0 64,5Net asset value per share and cashreceived (5)Net tangible asset value per shareand cash received (5)Notes:1 The `Before the transaction` column reflects the closing JSE market value per Forim share on Thursday, 26 August 2004 being the day immediatelypreceding publication of the firm intention announcement. The `After thetransaction` column shows the consideration to be received per Forim shareand the Forim capital distribution.2 The `Before the transaction` column reflects the 30-day volume weightedaverage JSE market value per Forim share calculated for the 30 dayspreceding Thursday, 26 August 2004 being the day immediately precedingpublication of the firm intention announcement. The `After the transaction` column shows the consideration to be received per Forim shareand the Forim capital distribution.3 The `Before the transaction` column reflects the audited earnings andheadline earnings per share for the year ended 29 February 2004. The `After the scheme` column shows the after tax interest income that a Forimshareholder would have earned had the consideration been received per Forimshare and the Forim capital distribution been invested at an after-tax 12month fixed deposit compounded interest rate of 7.7% per annum.4 The `Before the scheme` column reflects the dividend distributed per sharefor the year ended 29 February 2004. The `After the transaction` columnshows the after tax interest income that a Forim shareholder would haveearned had the consideration and the Forim capital distribution been received per Forim share been invested at an after-tax 12-month fixeddeposit compounded interest rate of 7.7% per annum.The `Before the transaction` column reflects the audited net asset value and nettangible asset value per share at 29 February 2004. The `After the scheme`column shows the consideration and the Forim capital distribution been receivedper Forim share.The table below sets out the illustrative pro forma financial effects of thescheme on Alliance shareholders assuming that the scheme had been concluded forincome statement purposes from 1 March 2003 and for balance sheet purposes at 29February 2004.The pro forma financial effects have been prepared for illustrative purposesonly, to provide information about how the transaction might have affected thefinancial information presented and, because of their nature, may not give atrue reflection of the financial effects of the transaction:Before the After the % changetransaction transaction (cents per (cents pershare) share)Market value per share and cash 62,0 72,0 16,1received (1) 30-day volume weighted average 60,4 72,0 19,2market value per share and cash 10,6 5,5 (48.1)received (2) 11,8 5,5 (53.4)Earnings per share (3) 0,0 5,5 100 Headline earnings per share 3 79,3 72,0 (9,2)Dividend per share (4) 62,6 72,0 15,0Net asset value per share andcash received (5) Net tangible asset value pershare and cash received (5)Notes:1 The `Before the scheme` column reflects the closing JSE market value per Alliance share on Thursday, 26 August 2004 being the day immediatelypreceding publication of the firm intention announcement. The `After thetransaction` column shows the consideration to be received per Allianceshare and the Alliance capital distribution.2 The `Before the transaction` column reflects the 30-day volume weightedaverage JSE market value per Alliance share calculated for the 30 dayspreceding Thursday, 26 August 2004 being the day immediately precedingpublication of the firm intention announcement. The `After the transaction` column shows the consideration to be received per Allianceshare and the Alliance capital distribution.3 The `Before the transaction` column reflects the audited earnings andheadline earnings per share for the year ended 29 February 2004. The `After the scheme` column shows the after tax interest income that aAlliance shareholder would have earned had the consideration to be receivedper Alliance share and the Alliance capital distribution been invested atan after-tax 12 month fixed deposit compounded interest rate of 7.7% per annum.4 The `Before the scheme` column reflects the dividend distributed per sharefor the year ended 29 February 2004. The `After the transaction` columnshows the after tax interest income that a Alliance shareholder would have earned had the consideration to be received per Alliance share and theAlliance capital distribution been invested at an after-tax 12-month fixeddeposit compounded interest rate of 7.7% per annum.The `Before the transaction` column reflects the audited net asset value and nettangible asset value per share at 29 February 2004. The `After the scheme`column shows the consideration to be received per Alliance share and theAlliance capital distribution.Irrevocable commitmentsThebe has received irrevocable undertakings from Forim shareholders holdingapproximately 40% of the issued share capital to accept the Thebe offer.Conditions precedent to the transactionThe transaction remains subject to the fulfilment of the following conditionsprecedent:* the approval of the transaction by all regulatory authorities if and to theextent necessary, including the South African Reserve Bank, the CompetitionCommission, the Securities Regulation Panel (`SRP`) and the JSE Securities Exchange South Africa;* the acceptance by not less than nine tenths of the holders of the affectedshares in terms of section 440 of the Companies Act No.61 of 1973, asamended (the `Act`) alternatively, the approval by majority representing not less than three fourths of the votes exercisable by the holders of theaffected shares (`scheme members`) present and voting either in person orin proxy at a meeting of scheme members in terms of section 311 of the Act(the `schemes`);* the High Court of South Africa sanctioning the schemes in terms of the Act,where applicable; and* certified copies of the Orders of Court sanctioning the schemes beingregistered by the Registrar of Companies in terms of the Act, where applicable.SRP confirmationThe SRP has been given appropriate confirmation (in terms of its requirements)that Thebe will have sufficient cash resources available to satisfy theconsideration in terms of the Transaction.Further announcement, documentation and renewal of cautionaryA further announcement setting out the details of the transaction, salient datesand times of the transaction will be made in due course.A circular containing full details of the transaction will be posted to theshareholders of Forim and Alliance within 28 days of this announcement.As the transaction is subject to conditions precedent, shareholders areaccordingly advised to exercise caution in dealing in Forim and Alliance sharesuntil a further announcement is made in this regard.Johannesburg31 August 2004Corporate adviser and investment bank to ThebeNedbank Capital, a division of Nedbank LimitedLegal adviser to ThebeBell Dewar & HallSponsor to Forim and AllianceSasfin Corporate Finance, a division of Sasfin Bank LimitedDate: 31/08/2004 11:00:12 AM Produced by the JSE SENS Department
