| Fri 10 Sep 2004, 16:44 | | Further Details In Respect Of The Proposed Introdu |
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Liberty Group Limited - Further Details In Respect Of The Proposed Introduction
Of Direct Black Share Ownership To Liberty Life
LIBERTY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1957/002788/06)
Share code: LGL ISIN: ZAE000024543
(`Liberty Life`)
FURTHER DETAILS IN RESPECT OF THE PROPOSED INTRODUCTION OF DIRECT BLACK SHARE
OWNERSHIP TO LIBERTY LIFE
1. INTRODUCTION
Liberty Life shareholders are referred to the announcement of 15 July 2004
relating to Liberty Life`s proposal to facilitate the acquisition of an
effective 10% interest in its South African operations by broad-based black
groupings (`the black ownership initiative`). The participants of the black
ownership initiative comprise:
* black strategic partners, being Safika Holdings (Proprietary) Limited and
Shanduka Group (Proprietary) Limited (formerly known as Millennium Consolidated
Investments (Proprietary) Limited);
* a black managers` trust formed for the benefit of current, as well as
future, black managers of Liberty Life and its subsidiaries and black non-
executive directors of Liberty Life (`the black managers` trust`); and
* a community trust formed for the benefit of community, regional and
educational empowerment groupings,
(referred to as `the black partners`).
Liberty Life has also proposed a general staff scheme (`the general staff
scheme`) in terms of which approximately 4 600 employees and agents of Liberty
Life based in South Africa, (excluding the black managers who will participate
in the black ownership initiative and white managers that participate in the
existing share incentive scheme) (`qualifying staff`), will be awarded 100
Liberty Life ordinary shares (`Liberty Life shares`) each, at no cost to them,
which will be held by an employee trust (`the general staff scheme trust`).
To facilitate the implementation of the black ownership initiative and the
general staff scheme Liberty Life:
* has established four wholly-owned subsidiaries (collectively, `the
empowerment subsidiaries`), whose sole purpose is to acquire and own Liberty
Life shares;
* will propose a scheme of arrangement in terms of section 311 of the
Companies Act, 1973 (Act 61 of 1973), as amended (`the Companies Act`), between
Liberty Life and its shareholders (`the scheme`) for the acquisition by the
empowerment subsidiaries, in terms of section 89 of the Companies Act, of a
total of approximately 25.8 million Liberty Life shares on a pro rata basis (the
repurchase ratio being 9.35 Liberty Life shares for every 100 Liberty Life
shares already held) from shareholders of Liberty Life for an ex-dividend
consideration of 4850 cents per Liberty Life share (`the scheme consideration`);
* will, upon the scheme becoming operative, subscribe for preference shares
with a 20 year term in the capital of each of the empowerment subsidiaries at a
total subscription price of approximately R1.3 billion; and
* will, after the implementation of the scheme, dispose of the ordinary
shares in the empowerment subsidiaries to the black partners (`the subsidiary
disposals`).
The price of 4850 cents per Liberty Life share discussed above represents a
discount of 4.9% to the Liberty Life closing share price on Friday, 9 July 2004
of 5100 cents. After taking into account the interim dividend to be paid to
Liberty Life shareholders on 13 September 2004 of 162 cents per Liberty Life
share, the effective discount to the Liberty Life closing share price on Friday,
9 July 2004 is 1.78%.
This announcement sets out additional details relating to:
* the important dates and times relating to the scheme;
* the pro forma financial effects of the black ownership initiative and the
general staff scheme based on the unaudited interim results for the six-month
period ended 30 June 2004;
* the meetings required to implement the black ownership initiative and the
general staff scheme; and
* the circular to Liberty Life shareholders.
2. IMPORTANT DATES AND TIMES
2004
Last day to trade Liberty Life shares in order to
be recorded in the register to vote at the
scheme meeting, on Wednesday, 6 October
Voting record date to vote at the scheme
meeting, on Wednesday, 13 October
Last day to lodge forms of proxy for the general
meeting by 10:00, on Thursday, 14 October
Last day to lodge forms of proxy for the scheme
meeting by 11:00, on Thursday, 14 October
General meeting to be held at 10:00 at the
Liberty Conference Centre, 1 Anerley Road,
Parktown, Johannesburg, on Friday, 15 October
Scheme meeting to be held at 11:00 at the
Liberty Conference Centre, 1 Anerley Road,
Parktown, Johannesburg, on Friday, 15 October
Announcement of results of general meeting
and scheme meeting on SENS, on Friday, 15 October
Announcement of results of general meeting
and scheme meeting in the press, on Monday, 18 October
Court hearing to sanction the proposed
scheme, on Tuesday, 26 October
Announcement on SENS regarding the
sanctioning of the proposed scheme, on Tuesday, 26 October
Announcement in the press regarding the
sanctioning of the proposed scheme, on Wednesday, 27 October
If the proposed scheme is sanctioned
and implemented:
Last day to trade to participate in the scheme Friday, 29 October
Shares trade ex the scheme consideration Monday, 1 November
Participation record date on which members must
be recorded in the register to become scheme
participants and so become entitled to receive
the scheme consideration, on Friday, 5 November
Operative date of the scheme Monday, 8 November
The scheme consideration expected to be
transferred or posted (as the case may be)
(against the surrender of existing share certificates)
and new share certificates expected to be posted
to certificated shareholders, on or within
5 days after Monday, 8 November
Safe custody accounts to be updated and accounts
credited at the Central Securities Depository
Participant or broker in the case of shareholders
who have dematerialised their Liberty Life
shares, on Monday, 8 November
Notes:
1. The abovementioned times and dates are subject to change. Any such change
will be published on SENS and in the press.
2. If the general meeting and the scheme meeting are adjourned or postponed,
forms of proxy must be received by no later than 24 hours prior to the time of
the adjourned or postponed general and scheme meeting.
3. Shareholders may not dematerialise or rematerialise their existing Liberty
Life shares after Friday, 29 October 2004.
4. New share certificates may be dematerialised or rematerialised after Monday,
8 November 2004.
3. FINANCIAL EFFECTS
The pro forma financial effects set out below have been prepared to assist
Liberty Life shareholders to assess the impact of the black ownership initiative
and the general staff scheme on the earnings per share (`EPS`), headline
earnings per share (`HEPS`), net asset value (`NAV`) per share, tangible net
asset value (`TNAV`) per share, embedded value per share, total return on
equity, headline return on equity and capital adequacy requirement cover. These
pro forma financial effects have been disclosed in terms of the Listings
Requirements of the JSE Securities Exchange South Africa (`JSE`) and do not
constitute a representation of the future financial position of Liberty Life on
implementation of the black ownership initiative and the general staff scheme
and any benefits which may flow there from. The Liberty Life board of directors
is responsible for the pro forma financial effects, which are provided for
illustrative purposes only and, as a result, may not fairly present Liberty
Life`s financial position, changes in equity, results of operations or cash
flows.
Before After the black
the black ownership
ownership initiative
initiative and the
and the general general staff Percentage
staff scheme(1) scheme (4) change
EPS (cents) 181.3 172.6(2) (4.8)
HEPS (cents) 167.2 157.1(2) (6.0)
NAV per share (cents) 3 234.5 3 049.5(3) (5.7)
TNAV per share (cents) 3 144.3 2 950.0(3) (6.2)
Embedded value per
share (cents) 5 759.4 5 834.8(3) 1.3
Total return on equity (%)(5) 11.3 10.5(2) (7.1)
Headline return on equity (%)(5) 10.4 9.6(2) (7.7)
Capital adequacy requirement
cover (times) 2.5 2.2(3)
Notes:
1. The EPS, HEPS, NAV per share, TNAV per share, embedded value per share, total
return on equity, headline return on equity and capital adequacy requirement
cover Before the black ownership initiative and the general staff scheme are
based on the unaudited interim results for the 6 months ended 30 June 2004. In
respect of EPS, HEPS, total return on equity and headline return on equity, the
weighted average number of Liberty Life shares in issue, as per the unaudited
interim results for the 6 months ended 30 June 2004, of 275.3 million was used.
In respect of NAV per share, TNAV per share, embedded value per share and
capital adequacy requirement cover, the number of Liberty Life shares in issue
at 30 June 2004 as per the unaudited interim results for the 6 months ended 30
June 2004, of 275.8 million was used. The Liberty Life shares held in the
Liberty Life Share Trust and Lexshell 615 Investments (Proprietary) Limited
(`Lexshell 615`) as at 30 June 2004, were not classed as treasury shares and
there were no other treasury shares at that date.
2. The EPS, HEPS, total return on equity and headline return on equity After the
black ownership initiative and the general staff scheme are based on the
assumption that the black ownership initiative and the general staff scheme were
implemented on 1 January 2004 using 249.5 million shares in issue (275.3 million
weighted average Liberty Life shares in issue as per the unaudited interim
results for the 6 months ended 30 June 2004 less 25.8 million shares owned by
the black partners).
3. NAV per share, TNAV per share, embedded value per share and capital adequacy
requirement cover After the black ownership initiative and the general staff
scheme are based on the assumption that the black ownership initiative and the
general staff scheme were implemented on 30 June 2004 using 250.0 million shares
in issue (275.8 million shares in issue as per the unaudited interim results for
the six months ended 30 June 2004 less 25.8 million Liberty Life shares owned by
the black partners).
4. The After the black ownership initiative and the general staff scheme column
reflected above, is calculated based on the following assumptions:
- Liberty Life, through its empowerment subsidiaries, acquires 25.8 million
Liberty Life shares at 4850 cents per Liberty Life share in terms of the scheme.
The pro rata share repurchase is funded by approximately R1.3 billion of capital
in Liberty Life;
- the pro rata share repurchase is debited to an empowerment reserve;
- dividends on preference shares paid by the empowerment subsidiaries to Liberty
Life equal the dividends on the Liberty Life shares, paid to the empowerment
subsidiaries;
- the pro rata repurchase of approximately R1.3 billion is financed from
shareholders` funds through Liberty Life`s existing available cash and near
cash, which would have earned an after-tax return of 4.1 % per annum;
- an assumed cost-to-company expense of R33.4 million relating to the general
staff scheme, which will be used by employees to acquire approximately 265 700
treasury shares and which will be used by Liberty Life agents to pay any tax
payable by them in respect of the donation to them of approximately 194 300
shares (shares held by a wholly-owned subsidiary of Liberty Life, Lexshell 615
and/or the Liberty Life Share Trust) and from which the loan from Liberty Life
to Lexshell 615 will be written off. It is assumed that the expense relating to
the general staff scheme will fully impact headline earnings; and
- the estimated costs of R22.5 million associated with the black ownership
initiative and general staff scheme have been taken into consideration in the
calculation of the pro forma financial effects.
5. Return on equity is based on average shareholders` funds for the period.
4. THE SCHEME MEETING, THE GENERAL MEETING AND THE CIRCULAR
4.1 The general meeting
A general meeting will be held at 10:00 on Friday, 15 October 2004 (or at a
later time or date to which the general meeting may be adjourned or postponed)
at the Liberty Conference Centre, 1 Anerley Road, Parktown, Johannesburg, for
the purposes of considering and, if deemed fit, passing, with or without
amendment, the special resolution necessary to implement the pro rata share
repurchase, and the ordinary resolutions necessary to implement the general
staff scheme and subsidiary disposals.
4.2 The scheme meeting
The scheme meeting will be held at 11:00 on Friday, 15 October 2004 at 11:00
(or ten minutes after the conclusion of the general meeting of the shareholders
of Liberty Life to be held at 10:00 on the same date and at the same venue, or
any adjournment thereof, whichever is the later) at Liberty Conference Centre, 1
Anerley Road, Parktown, Johannesburg, at which shareholders will be asked to
consider and, if deemed fit, approve the scheme.
4.3 The circular
A document setting out details of the black ownership initiative and the
general staff scheme was posted to Liberty Life shareholders today.
Johannesburg
10 September 2004
Investment bank and sponsor
STANDARD BANK
Independent financial adviser
J P MORGAN
Lead sponsor
Merrill Lynch
Global Markets & Investment Banking Group
Merrill Lynch South Africa (Pty) Ltd
Registration number 1995/001805/07
Registered Sponsor and Member of the
JSE Securities Exchange South Africa
Attorneys
Werksmans Incorporated
(Registration number 1990/007215/21)
Reporting accountants and auditors
PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration no. 1998/012055/21)
Date: 10/09/2004 03:55:19 PM Produced by the JSE SENS Department
