| Wed 1 Dec 2004, 17:58 | | Liberty Life / Capital Alliance - Joint Cautionary |
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Liberty Life / Capital Alliance - Joint Cautionary Announcement By Liberty Life
And Capital Alliance In Respect Of The Firm Intention Of Liberty Life To Make An
Offer To Acquire All Of The Issued Ordinary Shares Of Capital Alliance, Other
Than Those Already Held By Liberty Life And Capital Alliance Special Finance
(Proprietary) Limited
Liberty Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1957/002788/06)
Share code: LGL
ISIN: ZAE000057360
(`Liberty Life`)
Capital Alliance Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1952/000756/06)
Share code: CPT
ISIN: ZAE000011904
(`Capital Alliance`)
JOINT CAUTIONARY ANNOUNCEMENT BY LIBERTY LIFE AND CAPITAL ALLIANCE IN RESPECT OF
THE FIRM INTENTION OF LIBERTY LIFE TO MAKE AN OFFER TO ACQUIRE ALL OF THE ISSUED
ORDINARY SHARES OF CAPITAL ALLIANCE, OTHER THAN THOSE ALREADY HELD BY LIBERTY
LIFE AND CAPITAL ALLIANCE SPECIAL FINANCE (PROPRIETARY) LIMITED
1. INTRODUCTION
Further to the Capital Alliance cautionary announcement released on 12 November
2004, Liberty Life and Capital Alliance shareholders are advised that Liberty
Life has submitted to the board of directors of Capital Alliance (`Capital
Alliance Board`) a notice of its firm intention to acquire all the shares in the
issued ordinary share capital of Capital Alliance, other than those already held
by Liberty Life and Capital Alliance Special Finance (Proprietary) Limited
(`Capital Alliance Special Finance`), a wholly-owned subsidiary of Capital
Alliance (`the offer`).
Liberty Life`s intention is to implement the offer by way of a scheme of
arrangement (`the scheme`) in terms of section 311 of the Companies Act No. 61
of 1973, as amended (`the Act`), to be proposed by Liberty Life between Capital
Alliance and all of its ordinary shareholders other than Liberty Life and
Capital Alliance Special Finance (`scheme members`).
Should the scheme be implemented Liberty Life will acquire all of the scheme
members` ordinary shares (`scheme shares`). As a result, Capital Alliance will
become a wholly-owned subsidiary of Liberty Life and the listing of the ordinary
shares of Capital Alliance on the JSE Securities Exchange South Africa (`JSE`)
will be terminated.
2. THE CONSIDERATION AND FINAL DIVIDEND
The consideration payable will be R17.50 in cash per scheme share (`the scheme
consideration`), amounting to a total of approximately R3.1 billion. In
addition, the offer envisages the payment by Capital Alliance of a final
dividend of R1.00 per Capital Alliance issued ordinary share (`the final
dividend`) to Capital Alliance shareholders.
Each scheme member, registered as such on the anticipated record date of the
scheme, will be entitled to receive R17.50 in cash per scheme share from Liberty
Life, together with the final dividend to be paid by Capital Alliance. As a
result, each scheme member will receive a total of R18.50 per scheme share.
The scheme consideration, together with the final dividend, represents a premium
of 37.5% to the 30-day volume weighted average Capital Alliance share price of
R13.46 up to and including 11 November 2004, being the last trading day prior to
the publication of the Capital Alliance cautionary announcement.
3. RATIONALE FOR THE OFFER
The offer provides Liberty Life with, inter alia:
- the opportunity to use its excess capital in an earnings and return on
equity enhancing acquisition;
- access to Capital Alliance`s experience in improving the efficiency of the
administration of life books;
- the potential to achieve certain economies of scale and efficiencies over
time; and
- access to new markets via Capital Alliance`s lower income client base and
sales force.
The offer is a means for scheme members to realise value for their Capital
Alliance shares at a significant premium to the market price prior to the
publication of the Capital Alliance cautionary announcement.
Capital Alliance, as a company, will be better positioned strategically as it
will become an integral part of Liberty Life with full access to the brand,
financial and other resources of Liberty Life.
4. OPINION AND RECOMMENDATIONS
A committee of the Capital Alliance Board consisting of independent directors
(`the independent committee`) has been formed to consider the terms and
conditions of the offer. The independent committee will appoint an independent
financial adviser to advise on whether the terms and conditions of the offer are
fair and reasonable to scheme members. The independent adviser`s final opinion
will be provided in the circular to be posted to scheme members, on the date set
out in paragraph 12 below.
5. PRO FORMA FINANCIAL EFFECTS
Pro forma financial effects on Liberty Life and Capital Alliance shareholders
will be published on SENS and in the press in due course.
6. UNDERTAKINGS BY CAPITAL ALLIANCE
Until the date of the implementation of the scheme, Capital Alliance has
undertaken to:
6.1 continue to operate its business as it has in the recent past and not
engage in any transactions outside the ordinary course of business;
6.2 not engage in any acquisitions of new businesses and/or life insurance
books, unless in consultation with Liberty Life;
6.3 continue to make regularly scheduled payments on its existing debt and not
incur any additional indebtedness, except in the ordinary course of business;
6.4 not make, declare or pay any ordinary dividend, other than the final
dividend of R1.00 per Capital Alliance issued ordinary share, or make any
distribution in respect of its share capital or repurchase any of its shares;
and
6.5 not issue any new shares, options or convertible securities.
7. SUSPENSIVE CONDITIONS
7.1 The making of the offer and therefore the issuing of the circular relating
to the scheme, on the date set out in paragraph 12 below, is subject to the
fulfilment of the following suspensive conditions:
7.1.1 after the receipt of a favourable fair and reasonable opinion from an
independent adviser, but by no later than 14 January 2005, the Capital Alliance
Board formally resolving to recommend the offer to the shareholders of Capital
Alliance and agreeing to take all reasonable steps to implement the scheme;
7.1.2 receipt by Liberty Life of unconditional and irrevocable commitments
to vote in favour of the scheme from all the directors of Capital Alliance in
respect of their direct beneficial shareholdings in Capital Alliance, by no
later than 14 January 2005;
7.1.3 the JSE, the Securities Regulation Panel (`SRP`) and the South African
Reserve Bank approving the necessary documentation to be distributed to the
shareholders of Capital Alliance and Liberty Life; and
7.1.4 the High Court of South Africa (`Court`) ordering the convening of the
meeting of scheme members (`scheme meeting`) to approve the scheme.
7.2 The conditions referred to in paragraphs 7.1.1 and 7.1.2 above are
stipulated for the benefit of Liberty Life and may be waived by Liberty Life at
any time. Liberty Life also has the right to extend the date by which these
suspensive conditions are required to be fulfilled.
7.3 The offer will be subject to the fulfilment of the following suspensive
conditions:
7.3.1 the approval of the scheme by a majority representing not less than
75% of the votes exercisable by scheme members present and voting at the scheme
meeting, either in person or by proxy, and the sanctioning thereof by the Court;
7.3.2 the registration by the Registrar of Companies of a certified copy of
the Order of Court sanctioning the scheme, in terms of the Act;
7.3.3 the approval of the scheme by the Registrar of Long-term Insurance;
7.3.4 the approval of the scheme by all relevant competition authorities,
either unconditionally or subject to such conditions as are acceptable to
Liberty Life;
7.3.5 the obtaining of all other regulatory approvals that may be necessary
for the implementation of the scheme, either unconditionally or subject to such
conditions as are acceptable to Liberty Life; and
7.3.6 that there is no breach of the undertakings given by Capital Alliance
in paragraph 6 above, which condition may be waived by Liberty Life at any time.
7.4 The conditions referred to in 7.3.1 to 7.3.5 are required to be fulfilled
on or before 31 March 2005. Liberty Life has the right to extend this date for
fulfilment of any of these suspensive conditions up to 30 June 2005, with any
further extensions requiring agreement between Liberty Life and Capital
Alliance.
8. RESERVATION OF RIGHTS
The offer may be amended, varied or revised in such manner as Liberty Life in
its sole discretion may determine; provided that no such amendment, variation or
revision shall be made unless the approval of the appropriate regulatory
authorities has, to the extent required, been obtained.
9. CONFIRMATION OF SUFFICIENT FUNDS
The SRP has been given appropriate confirmation (in terms of its requirements)
that Liberty Life has sufficient resources to discharge its obligations in terms
of the offer.
10. SHAREHOLDER SUPPORT
At this stage shareholders holding approximately 40% of the scheme shares have
indicated their intention to support the scheme.
11. HOLDINGS OF SECURITIES
Liberty Life currently owns 4 413 903 ordinary shares in Capital Alliance, which
represents approximately 2.4% of the issued ordinary share capital of Capital
Alliance.
12. FURTHER ANNOUNCEMENTS AND DOCUMENTATION
An announcement of the pro forma financial effects on Liberty Life and Capital
Alliance shareholders will be made in due course.
Subject to the fulfilment of the suspensive conditions referred to in paragraph
7.1 above, a further announcement setting out the salient dates of the scheme
will be made on or about Tuesday, 1 February 2005 and a circular providing
further information on the scheme and containing, inter alia, a notice of the
scheme meeting, a form of proxy and a form of surrender, is expected to be
posted to scheme members on or about Wednesday, 2 February 2005.
These times and dates are subject to change. Any change will be announced on
SENS and published in the press.
13. RESIGNATION OF DIRECTORS
The directors of Capital Alliance have undertaken to resign from the Capital
Alliance Board and its subsidiaries, where appropriate, should the scheme be
implemented.
14. CAUTIONARY ANNOUNCEMENT
Pursuant to this announcement, Liberty Life and Capital Alliance shareholders
are advised to exercise caution when dealing in their Liberty Life and Capital
Alliance shares until a further announcement is made.
Johannesburg
1 December 2004
Investment bank and transactional sponsor to Liberty Life
Standard Bank
Sponsor to Liberty Life
Merrill Lynch South Africa (Pty) Limited
Attorneys to Liberty Life
Werksmans Incorporated
(Registration number 1990/007215/21)
Investment bank to Capital Alliance
Investec Corporate Finance
Sponsor to Capital Alliance
Investec Bank Limited
Attorneys to Capital Alliance
Jowell Glyn & Marais Inc
