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CORPCAPITAL/ SEARDEL - SPECIFIC REPURCHASE OF SEARDEL `N` SHARES
Corpcapital Limited
(Registration No. 1983/011384/06)
Share code: CPA ISIN code: ZAE000034260
(`Corpcapital`)
Seardel Investment Corporation Limited
Registration no. 1968/011249/06
Share Code: SER ISIN Code: ZAE000029815
Share Code: SRN ISIN Code ZAE000030144
(`Seardel`)
SPECIFIC REPURCHASE OF SEARDEL `N` SHARES
INTRODUCTION
Java Capital is authorised to announce that Seardel and Corpcapital have
concluded an agreement in terms of which, subject to the conditions set out
below, Seardel will repurchase the 9 374 251 Seardel `N` shares (`the Seardel
shares`) owned by Corpcapital (`the transaction`).
The Seardel shares will be repurchased, ex the 14 cent dividend to be paid on
Monday, 22 November 2004, for a purchase price of R3 per share. This will result
in Corpcapital receiving an aggregate of R3.14 per Seardel share (comprising the
R3 consideration and the 14 cent dividend) even if the transaction is
implemented before 22 November 2004. Although it is intended that the
transaction will be implemented prior to 1 December 2004, if for any reason it
is not, the purchase price for the Seardel shares shall bear interest from 1
December 2004 until the date on which Corpcapital receives payment at a rate of
prime minus 1.5%.
If and to the extent that the Seardel shares are repurchased by Seardel and not
by one of its subsidiaries, they will be cancelled and Seardel will make
application to the JSE Securities Exchange South Africa for the termination of
the listing of the shares in question.
RATIONALE FOR THE TRANSACTION
On 28 February 2003 Corpcapital announced a strategy to unlock value for
shareholders by responsible realisation of the company`s investments and the
return of capital to shareholders. The transaction is in line with this
strategy.
The Seardel board has resolved to utilise excess cash to repurchase Seardel
shares as and when opportunities arise. The transaction is in line with this
resolution.
CONDITIONS
The transaction is a specific repurchase and the Seardel shares are being
repurchased at a premium of more than 10% to the weighted average of the market
value for Seardel`s `N` shares for the 5 business days preceding the date on
which the transaction was agreed. As such the transaction is subject to:
1. approval being given in terms of a special resolution by Seardel
shareholders, other than Corpcapital; and
2. a statement from an independent professional expert advising whether or not
the premium paid is fair and reasonable to Seardel shareholders.
In this regard Seardel will send a circular to shareholders including the fair
and reasonable opinion.
UNDERTAKINGS BY DR AARON SEARLL
Dr Aaron Searll has undertaken in favour of Corpcapital that:
1. he will vote his ordinary shares held, comprising approximately 53.5% of
the votes exercisable at a general meeting of Seardel, in favour of all
resolutions necessary to give effect to the transaction; and
2. if the transaction is not approved by the requisite majority of the Seardel
shareholders in general meeting, he will acquire the Seardel shares at the
same price and on the same terms as the transaction.
FINANCIAL EFFECTS ON SEARDEL
The pro forma financial effects of the transaction on the earnings per share,
headline earnings per share, net asset value per share and tangible net asset
value per share of Seardel will be published by Seardel in due course.
FINANCIAL EFFECTS ON CORPCAPITAL
The pro forma financial effects of the transaction set out in the table below
have been prepared for illustrative purposes only to provide information on how
the transaction may have impacted on the results and financial position of
Corpcapital for the six months ended 29 February 2004. Because of their nature
the pro forma financial effects may not give a fair reflection of Corpcapital`s
financial position after the transaction or the effect on future earnings.
Before the After the
transaction transaction Change
(cents) (cents) (%)
Earnings per share 59.9 62.6 4.5
Headline loss per
share (9.0) (6.3) 30.0
Net asset value
per share 81.7 83.9 2.7
Net tangible asset
value per share 79.7 81.9 2.8
Notes:
1. Corpcapital is required, in terms of the Listings Requirements of the JSE
Securities Exchange South Africa, to calculate the effect of the
transaction on earnings and headline earnings as if the transaction was
effected on 1 September 2003 and the effect of the transaction on net asset
value and net tangible asset value as if the transaction was effective on
29 February 2004. These different dates result in anomalies between the
financial effects on earning and headline earning on the one hand and net
asset value and net tangible asset value on the other hand.
2. The figures in the `Before the transaction` column were extracted from the
reviewed interim results of Corpcapital for the six months ended 29
February 2004 (`the period`).
3. The earnings per share and headline loss per share calculation in the
`After the transaction` column are based on the following assumptions:
- the transaction was effective 1 September 2003;
the proceeds from the transaction included the 14 cent dividend to be
received by Corpcapital;
- interest would have been earned on the consideration for the period at
a call rate 7.25% and no tax is payable thereon;
- Corpcapital would have earned a headline profit on the disposal of the
Seardel shares equivalent to R300 000 being the difference between the
consideration for the Seardel shares and Corpcapital`s carrying value
of the Seardel shares as at 31 August 2003 (accounted for as an
investment of Corpcapital at fair value) and no tax is payable
thereon;
- Corpcapital had 335,479 million weighted average shares in issue
during the period.
4. The net asset value per share and the net tangible asset value per share in
the `After the transaction` column are based on the following assumptions:
- the transaction was effective 29 February 2004;
- the proceeds from the transaction included the 14 cent dividend to be
received by Corpcapital;
- the net asset value and net tangible asset value of the Seardel shares
reflected on the balance sheet of Corpcapital as at 29 February 2004
was R21.4million (accounted for as investment of Corpcapital at fair
value);
- Corpcapital had 360,801 million shares in issue at 29 February 2004,
excluding treasury shares.
IMPACT OF REALISABLE NET ASSET VALUE
The transaction will not materially vary the previously published estimate of
the ultimate realisable net asset value of 72.4 cents per Corpcapital share as
at 29 February 2004.
Rosebank
5 October 2004
Sponsor to Corpcapital and Seardel
Java Capital (Proprietary) Limited
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