| Tue 23 Nov 2004, 15:01 | | Uniserv - A plan of merger and further cautionary |
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Uniserv - A plan of merger and further cautionary announcement
UNITED SERVICE TECHNOLOGIES LIMITED
(Incorporated in the British Virgin Islands)
(International Business Company number 3896)
Share code: USV ISIN: ZAE000012431
(`Uniserv` or `the Company`)
DETAILS REGARDING A PLAN OF MERGER PROPOSED IN TERMS OF THE INTERNATIONAL
BUSINESS COMPANIES ACT 1984 (CAP 291) OF THE BVI (THE `ORDINANCE`) BETWEEN
SUPPLY SOLUTIONS LIMITED (`SS LIMITED`) (A COMPANY INCORPORATED IN THE BVI UNDER
THE ORDINANCE) AND UNISERV (THE `PLAN OF MERGER`) AND FURTHER CAUTIONARY
ANNOUNCEMENT
1. Introduction
Uniserv shareholders are referred to the cautionary announcement issued by
Uniserv on the Securities Exchange News Service (`SENS`) on Friday, 29 October
2004.
Uniserv has as its only material asset an approximate 30% shareholding in UTi
Worldwide Inc. (`UTi`), a global supply chain solution provider that is quoted
on the NASDAQ National Market in the United States of America (`NASDAQ`) under
the symbol `UTIW`. There are approximately 5.888526 Uniserv shares in issue and
outstanding for each UTi share held by Uniserv (`Equivalency Ratio`).
For a considerable time now, Uniserv`s shares have traded at a significant
discount to the value implied by the UTi share price as quoted on the NASDAQ.
For the year prior to the Last Practicable Date (as defined below), based on the
equivalent of the closing price of a UTi share price on the NASDAQ and the
closing price of a Uniserv share on the JSE Securities Exchange South Africa
(`JSE`) and taking into account the Equivalency Ratio, the average discount of
the Uniserv share price to the UTi share price was 28.28%. The Uniserv
Directors have been approached by a number of Uniserv shareholders to consider
ways of eliminating this discount and thereby unlocking the underlying value of
their investment in Uniserv.
Having regard to the foregoing, the Uniserv Directors have undertaken an
extensive investigation into the various options available to Uniserv. The
Uniserv Directors are now able to announce that a mechanism has been identified
to address these issues, in the form of the Plan of Merger, which utilises the
merger provisions of the Ordinance which are available to Uniserv as a BVI-
domiciled company.
2. The Plan of Merger and its rationale
2.1 Pursuant to the Plan of Merger, SS Limited is to merge into Uniserv
(`Merger`) after the filing and registration of the Articles of Merger by
Uniserv and SS Limited with the Registrar of Corporate Affairs in the BVI
(`Registrar`) in terms of the Ordinance, (`Articles of Merger`) which filing and
registration will take place following approval of the Plan of Merger at the
Merger Meeting (as defined below) with the following results:
2.1.1 SS Limited will be merged into Uniserv so that SS Limited ceases to exist;
2.1.2 the sole shareholder of SS Limited will receive a cash payment in the
amount of US$14 500 in consideration for the cancellation of its SS Limited
shares and will therefore not acquire any shareholding in Uniserv as a result of
the Merger;
2.1.3 Uniserv survives with its own pre-Merger assets and liabilities together
with the pre-Merger assets and liabilities of SS Limited;
2.1.4 the Uniserv shares held by Uniserv shareholders, other than PTR Holdings
Inc. (`PTR`), recorded in the register of shareholders of the Company
(`Register`) at the close of business on Friday, 31 December 2004 (`Merger
Consideration Record Date`) (such Uniserv shareholders other than PTR being
referred to as `Merger Participants`) if the Resolutive Condition (referred to
in paragraph 8 below) is not exercised, will each be converted into a right to
receive the consideration in terms of the Formula, referred to in paragraph 3
below (`Merger Consideration`);
2.1.5 the cancellation of the Uniserv shares held by Merger Participants
(`Merger Shares`) will take place against payment or tender of the Merger
Consideration, which is expected to be made to Merger Participants on or prior
to Friday, 4 February 2005 (`Payment Date`) and which payment is subject to the
Resolutive Condition not being exercised; and
2.1.6 the Uniserv shares currently held by PTR will remain in issue and
outstanding.
2.2 Assuming that the per share price (`UTi Sale Price`) to the public at which
UTi shares are placed by the Funders (as defined in paragraph 4 below), in a
public offering, which offering is expected to close (if at all) on or before
16:00 (New York time) on Friday, 28 January 2005 (`UTi Sale Price Date`), would
have been equal to the price of a UTi share quoted on the NASDAQ at the close of
business on Friday, 12 November 2004, being the last practicable date in terms
of the circular posted to Uniserv shareholders today (`Last Practicable Date`),
on the basis of a Rand/US$ conversion rate of R6.10 on that date, the Formula
would have resulted in a consideration of approximately R64.77 per Merger Share
(`Indicative Merger Consideration`). However, the UTi Sale Price may be
different than the price of UTi shares quoted on the NASDAQ on the Last
Practicable Date and, as a result, the Merger Consideration per Merger Share on
the Payment Date may be different than the Indicative Merger Consideration;
2.3 The rationale for the Plan of Merger is principally to realise a value more
reflective of the Equivalency Ratio for Merger Participants. As of the Last
Practicable Date, the Uniserv shares have traded at a discount to the
Equivalency Ratio of between 16.2% and 36.7% over the past 12 months. In terms
of the Plan of Merger, the Merger Participants will receive the Merger
Consideration calculated pursuant to the Formula. The Indicative Merger
Consideration would have represented a premium of 117.71% over the lowest
trading price of Uniserv shares and 2.73% over the highest trading price of
Uniserv shares over the past 12 months if the UTi Sale Price would have been
equal to the closing price of the UTi shares quoted on the NASDAQ on the Last
Practicable Date. However, the UTi Sale Price may vary from the price for UTi
shares quoted on the NASDAQ on the Last Practicable Date and, as a result, the
premium over the highest and lowest trading price for Uniserv shares may be
different from the premiums that would be payable if such UTi Sale Price was
equal to the closing price for UTi shares quoted on the NASDAQ on such date.
3. The Formula
The formula will be the quotient of (a) 90% of the UTi Sale Price and (b) the
Equivalency Ratio (the `Formula`), but which amount will not be less than the
Rand equivalent of US$8.41 (the `Minimum Price`).
4. Funders
The funders are Credit Suisse First Boston LLC, a Delaware limited liability
company, and Bear, Stearns & Co. Inc., a Delaware corporation, and/or one or
more of their respective affiliated entities (`Funders`). The Funders will make
available the credit facilities under which, if the UTi Sale Price is achieved
and the other conditions precedent to the Credit Facilities are satisfied,
Uniserv will exercise the right to borrow funds in US$s to enable Uniserv to
discharge the Merger Consideration (`Draw Down Right`), which ability is subject
to the Resolutive Condition not being exercised (collectively, `Credit
Facilities`).
5. Special meeting of Uniserv shareholders to consider the Plan of Merger
A notice convening a meeting to be held at the premises of Maitland Luxembourg
SA, 6 Rue Adolphe Fischer, L 1520, Luxembourg at 10:00 (Luxembourg time) on
Wednesday, 15 December 2004 (`Merger Meeting`), for the purpose of considering
and, if deemed fit, approving, with or without modification, the Plan of Merger
together with a circular containing full details of the Plan of Merger, has been
posted to Uniserv shareholders today.
6. Dissenting Uniserv shareholders
Under the Ordinance, Uniserv shareholders are entitled to dissenters` rights if
they do not wish to participate in the Merger. Such dissenters rights are
described in the Circular.
7. Suspensive conditions
The Plan of Merger is subject to the fulfilment of the following suspensive
conditions (`Suspensive Conditions`):
7.1 the Plan of Merger having been approved by a majority representing more than
50% of the votes exercisable by:
7.1.1 Uniserv shareholders as of the Merger Meeting record date (`Merger
Members`) present and voting, either in person or by proxy, at the Merger
Meeting; and
7.1.2 Merger Members other than PTR, present and voting, either in person or by
proxy, at the Merger Meeting;
7.2 the Articles of Merger having been filed with, and registered by, the
Registrar in terms of the Ordinance whereupon the Registrar will issue a merger
certificate in terms of the Ordinance and the Merger will be implemented and
will become binding on all parties.
8. Resolutive Condition
If the Suspensive Conditions are fulfilled and the Plan of Merger is
implemented, then the Funders shall be entitled to exercise the Resolutive
Condition by delivering notice to Uniserv on or prior to 16:00 New York time on
Friday, 28 January 2005, if, (i) by that time, the Funders are unable, for any
reason whatsoever, to close a public offering of approximately 5 500 000 UTi
shares at a price to the public of at least US$55 per UTi share on or prior to
the UTi Sale Price Date (`Minimum UTi Sale Price`), or (ii) any other condition
precedent to the Draw Down Right has not been satisfied, provided always that
the Funders shall be entitled, at any time, to waive this entitlement by giving
written notice of such waiver to Uniserv. If the Resolutive Condition is
exercised, then:
8.1 Uniserv will not pay the Merger Consideration to Merger Participants; and
8.2 the Merger Shares will not be cancelled,
and the provisions of the Plan of Merger relating to the foregoing shall fall
away and be of no further force or effect and the Merger Participants shall
retain their Merger Shares, which shall be relisted by the JSE at the
commencement of business on the following business day.
9. Financial effects of the Plan of Merger
The table below sets out the illustrative pro forma financial effects of the
Plan of Merger on Merger Participants assuming that the Plan of Merger had been
concluded for income statement purposes for the six month period ended 31 July
2004 and for balance sheet purposes at 31 July 2004. The pro forma financial
information contained below is indicative only and may not give a true
reflection of the financial effects of the Plan of Merger as at the Payment Date
when the Merger Consideration is paid or tendered and the Merger Shares are
cancelled (see note 6 below). The unaudited pro forma financial information is
based on available information and certain assumptions as set out in the notes
below which Uniserv believes are reasonable under the circumstances. The
unaudited pro forma financial information does not purport to represent what
Uniserv`s results of operations or financial condition would actually have been
had all of the events described in this Announcement occurred on the dates
indicated, nor does it purport to project the results of operations or financial
condition of Uniserv for any future period or as of any future date.
After the After the Plan
Plan of Merger - of Merger -
Before the Minimum UTi Indicative Merger
Plan of Merger Sale Price Consideration
(Rand per (Rand (Rand
Uniserv per Percentage per Percentage
share) Uniserv share) change Uniserv share) change
Market value per
Uniserv share
and Indicative Merger
Consideration per
Merger Share received1 56.00 51.28 (8.43) 64.77 15.66
30 day volume
weighted average
market value per
Uniserv share
and Indicative Merger
Consideration per Merger
Share received2 47.76 51.28 7.37 64.77 35.61
Earnings per Uniserv
share and headline
earnings per Uniserv
share3 1.03 1.18 15.00 1.50 45.26
Dividend per
Uniserv share4 0.125 2.36 +100.00* 3.00 +100.00*
Net asset value per
Uniserv share
and Indicative Merger
Consideration per
Merger Share received5 14.47 51.28 +100.00* 64.77 +100.00*
Net tangible asset
value per Uniserv
share and Indicative
Merger Consideration
per Merger Share
received5 14.47 51.28 +100.00* 64.77 +100.00*
*Any percentage above 100.00% has been reflected as +100.00%
Notes:
1. The `Before the Plan of Merger` column reflects the closing JSE market value
per Uniserv share the day immediately preceding publication of the first
Cautionary Announcement of Uniserv on SENS on Friday, 29 October 2004. The
`After the Plan of Merger-Minimum UTi Sale Price` column shows the Minimum Price
to be received per Merger Share, therefore assuming that the UTi Sale Price is
equal to the Minimum UTi Sale Price. The `After the Plan of Merger - Indicative
Merger Consideration` column shows the Indicative Merger Consideration to be
received per Merger Share.
2. The `Before the Plan of Merger` column reflects the 30 day volume weighted
average JSE market value per Uniserv share calculated for the 30 days preceding
the publication of the said first Cautionary Announcement published on SENS on
Friday, 29 October 2004. The `After the Plan of Merger-Minimum UTi Sale Price`
column shows the Minimum Price to be received per Merger Share, therefore
assuming that the UTi Sale Price is equal to the Minimum UTi Sale Price. The
`After the Plan of Merger - Indicative Merger Consideration` column shows the
Indicative Merger Consideration to be received per Merger Share.
3. The `Before the Plan of Merger` column reflects the unaudited earnings and
headline earnings per Uniserv share for the six months ended 31 July 2004. The
`After the Plan of Merger-Minimum UTi Sale Price` column shows the Minimum Price
to be received per Merger Share, therefore assuming that the UTi Sale Price is
equal to the Minimum UTi Sale Price. The `After the Plan of Merger - Indicative
Merger Consideration` column shows the after tax interest income that a Merger
Participant would have earned had the Indicative Merger Consideration to be
received per Merger Share been invested at 7.7% per annum less tax at 40%.
4. The `Before the Plan of Merger` column reflects the dividend distributed per
Uniserv share for the year ended 31 January 2004. The `After the Plan of Merger
Minimum UTi Sale Price` column shows the Minimum Price to be received per Merger
Share, therefore assuming that the UTi Sale Price is equal to the Minimum UTi
Sale Price. The `After the Plan of Merger - Indicative Merger Consideration`
column shows the after tax interest income that a Merger Participant would have
earned had the Indicative Merger Consideration to be received per Merger Share
been invested at 7.7% per annum less tax at 40%.
5. The `Before the Plan of Merger` column reflects the unaudited net asset value
and net tangible asset value per Uniserv share calculated from the unaudited
Balance Sheet for the interim period ended 31 July 2004. The `After the Plan of
Merger-Minimum UTi Sale Price` column shows the Minimum Price to be received per
Merger Share, therefore assuming that the UTi Sale Price is equal to the Minimum
UTi Sale Price. The `After the Plan of Merger - Indicative Merger
Consideration` column shows the Indicative Merger Consideration to be received
per Merger Share.
6. The Merger Consideration to be paid on the Payment Date will depend on the
UTi Sale Price on the UTi Sale Price Date.
The UTi Sale Price is likely to be different from the price for UTi shares
quoted on the NASDAQ on the Last Practicable Date and, as a result, the value of
the Merger Consideration received is likely to be different to the value that
would have been computed pursuant to the Formula if such UTi Sale Price was
equal to the price for UTi shares quoted on the NASDAQ on such date.
10. Salient dates and times
2004
Last day to trade in order to vote at the Merger Meeting Friday, 3 December
Record date to vote at the Merger Meeting at the close
of business on Friday, 10 December
Last day to lodge proxies for the Merger Meeting Monday, 13 December
Last day to receive Written Objection, defined in note 4
below, to dissent by mail, at 10:00 (South African time)
on Tuesday, 14 December
Merger Meeting will be held in Luxembourg at 10:00
(Luxembourg time) on Wednesday, 15 December
Results of the Merger Meeting are expected to be
released on SENS on Wednesday, 15 December
Results of the Merger Meeting are expected to be
published in the South African press on or about Friday, 17 December
Announcement of the implementation of the Plan of
Merger and confirmation of issue of the certificate
of Merger by the BVI Registry of Corporate Affairs is
expected to be published on SENS on or about Wednesday, 22 December
If all Suspensive Conditions are fulfilled and the
Plan of Merger is implemented:
Last day to trade for Merger Participants to be
eligible to receive the Merger Consideration on Thursday, 23 December
Suspension of trading of Uniserv shares at the
commencement of business on Friday, 24 December
Record date on which Merger Participants must be
recorded in the Register in order to receive the
Merger Consideration by the close of trade on the
JSE on Friday, 31 December
2005
Last day for termination or exercise of the Resolutive
Condition on or prior to 16:00 (New York time) on Friday, 28 January
If the Resolutive Condition is not exercised:
* Establishment by the Funders of the UTi Sale Price
will be not later than 16:00 (New York time) on Friday, 28 January
* the date on which Uniserv exercises its Draw Down
Right, which may be earlier but shall not be later than Friday, 28 January
* Announcement released on SENS confirming the total amount
of funding available in terms of the Draw Down Right by
no later than Monday, 31 January
* Merger Consideration in Rand is expected to be announced
by no later than the close of business on Thursday, 3 February
2005
* Payment Date being the date of payment of the Merger
Consideration will be made by no later than five business
days after the Draw Down Date and is expected to be no
later than Friday, 4 February
* Merger Consideration will be posted to Certificated
Merger Participants (if documents of title are received
on or prior to the Payment Date) by no later than or,
failing receipt of documents of title on or prior to
the Payment Date, within five business days of receipt
thereof by the Transfer Agents, defined in note 4 below Friday, 4 February
* Dematerialised Merger Participants and Own Name
Dematerialised Merger Participants will have their
accounts held at their CSDP or broker credited
with the Merger Consideration on the Payment Date
which date will be no later than Friday, 4 February
* Termination of listing of the Uniserv shares on the
JSE will be at the commencement of business on the
first business day following the Payment Date and is
expected to be no later than Monday, 7 February
Notes:
1. These dates and times are subject to change but in no event will the Payment
Date be later than Friday, 4 February 2005. Actual dates, to the extent that
they vary from those set forth above, will be released on SENS. In particular
they may change due to delays beyond the control of Uniserv. Any reference to
time is a reference to time in South Africa, unless specified otherwise.
Uniserv shareholders should note that as Uniserv is settling on STRATE,
settlement for trade takes place five business days after such trade. Therefore
persons who acquire Uniserv shares after Friday, 3 December 2004 will not be
eligible to vote at the Merger Meeting.
2. Uniserv shareholders should note that no dematerialisation or
rematerialisation of Uniserv shares may take place after Friday, 3 December
2004.
3. Merger Members should note that in the event of the Suspensive Conditions
being fulfilled and the Plan of Merger being implemented, they will be unable to
trade Uniserv`s shares during the period of the suspension by the JSE which will
commence on Thursday, 23 December 2004.
4. A written notice to be given in accordance with the provisions of Section
83(2) of the Ordinance, by a Merger Member to Uniserv at the offices of the
Transfer Agents, being Computershare Investor Services 2004 (Proprietary)
Limited Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051,
Marshalltown, 2107) (`Transfer Agents`) by the close of business on the first
business day prior to the Merger Meeting or, prior to the vote at the Merger
Meeting, of the Merger Member`s objection to the Plan of Merger and indicating
their intention to dissent from the proposed vote on the Plan of Merger
(`Written Objection`).
If the Resolutive Condition is exercised, then the listing of Uniserv shares on
the JSE will be reinstated on the business day following such exercise.
11. Opinions and recommendations
11.1 A special committee comprising Messrs D.R. Morris and C.P. Spencer being
independent non-executive Uniserv Directors, was established on Monday, 24 May
2004 to consider and report on the terms and conditions of the Plan of Merger
(`Special Committee`).
11.2 Details of the members of the Special Committee are as follows:
Appointed
as Uniserv
Name Age director in Occupation Qualification
D.R. Morris 66 1987 Director of companies MBA
C.P. Spencer 54 2003 Director of companies Fellow of the
Institute of Chartered
Accountants in England
and Wales
None of the members of the Special Committee have any interest or association
with PTR or UTi or are in any manner related to any of the Uniserv Directors or
major shareholders in PTR or UTi.
11.3 The Special Committee appointed ABSA Bank Limited, acting through the
Corporate Finance Department of its ABSA Corporate & Merchant Bank Division,
(`Independent Financial Adviser`) as an independent expert to assist in
determining the fairness and reasonableness of the Plan of Merger to the Merger
Participants.
11.4 In connection with the Plan of Merger, the Special Committee on behalf of
the Uniserv Board received a written opinion from the Independent Financial
Adviser (the `Fair and Reasonable Opinion`) confirming that the Plan of Merger
is fair and reasonable. The Fair and Reasonable Opinion states that, as of the
date of such opinion and based upon and subject to certain matters stated
therein, the terms and conditions of the Plan of Merger are fair and reasonable
to the Merger Participants.
11.5 The Special Committee has considered the terms and conditions of the Plan
of Merger and, taking into account the Fair and Reasonable Opinion, is of the
opinion that the terms and conditions thereof are fair and reasonable to the
Merger Participants. The Special Committee has recommended to the Uniserv Board
that it recommend to the Merger Participants that they vote in favour of the
Plan of Merger at the Merger Meeting.
11.6 After careful consideration of the terms of the Plan of Merger, the
recommendation of the Special Committee and the Fair and Reasonable Opinion, the
Board has approved the Plan of Merger and authorised its submission to the
Merger Members for their approval. The Board recommends that Merger Members
vote in favour of approving the Plan of Merger.
11.7 Mr. M.J. Wessels, a founding member of the UTi group of companies and a
director of UTi and PTR, has recused himself from deliberations regarding the
Plan of Merger due to potential conflicts of interest.
12. Undertakings of support
Uniserv has received undertakings of support to vote in favour of the Plan of
Merger in respect of the following shareholdings:
Number of Percentage of total
Uniserv shareholders Uniserv shares Uniserv shares in issue
Old Mutual Asset Managers
(South Africa) (Pty) Limited 7 983 432 14.63%
Polaris Capital (Pty) Limited 4 500 000 9.89%
The beneficial holders of the PTR shares are the founding members of the UTi
group of companies and are committed to promoting the business of the UTi group.
It is PTR`s desire to maintain its strategic shareholding in UTi, including,
through its ownership of Uniserv shares and other direct and indirect interests
in UTi. Accordingly PTR will not receive the Merger Consideration as a result
of the proposed Merger. PTR has indicated that it intends to vote in favour of
the Plan of Merger subject to certain conditions, including the condition that
the percentage of Uniserv shares that are the subject of a Written Objection do
not exceed an acceptable percentage. As a result of the approval of the
proposed Merger, PTR will become a 100% shareholder in Uniserv and, if the
Resolutive Condition is not exercised, such shares will become the only shares
of Uniserv issued and outstanding.
13. Cautionary Announcement
13.1 Uniserv shareholders are advised to exercise caution when dealing in
Uniserv shares until the result of the Merger Meeting on Wednesday, 15 December
2004 has been released on SENS on or about the same day.
13.2 The transactions described in this Announcement, including the Merger, are
subject to numerous risks and uncertainties, many of which are beyond the
control of Uniserv. These risks and uncertainties relate to:
13.2.1 the required approval of the Plan of Merger by Merger Members and by
Merger Members other than PTR;
13.2.2 the satisfaction of the closing conditions (including satisfaction of the
conditions precedent to the Credit Facilities which include the completion of a
public offering of UTi shares in the United States at or above the Minimum UTi
Sale Price);
13.2.3 the receipt and timing of regulatory approval from the Registrar in the
BVI;
13.2.4 the timing of the payment (if at all) of the Merger Consideration;
13.2.5 the UTi Sale Price; and
13.2.6 the exchange rate realised by Uniserv in its conversion of the Merger
Consideration from US$ to Rand.
13.3 Uniserv posted a circular today containing full details of the Plan of
Merger and Uniserv shareholders are advised to read that document in its
entirety, including the annexures, because it contains important information
about the Plan of Merger and the risks associated with the Plan of Merger.
13.4 This announcement shall not constitute an offer to sell or the solicitation
of an offer to buy, nor shall there be any sale of Uniserv or UTi shares in any
jurisdiction in which such offer, solicitation or sale would be unlawful, prior
to registration or qualification under the Securities Laws of any such
jurisdiction.
23 November 2004
Luxembourg
Corporate Adviser and Transactional Sponsor
NEDBANK CAPITAL
South African Attorneys
WEBBER WENTZEL BOWENS
BVI Attorneys
HARNEYS
Independent Financial Adviser
ABSA Corporate and Merchant Bank
Corporate Finance
(Registration number 1986/004794/06)
Reporting Accountants and Auditors
Deloitte & Touche Chartered Accountants (SA)
Registered Accountants and Auditors
Date: 23/11/2004 02:59:14 PM
Produced by the JSE SENS Department
