| Fri 10 Dec 2004, 14:38 | | Introduction of BEE |
|
Iliad - Introduction of BEE
ILIAD AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA ISIN: ZAE000015038
(`Iliad` or `the company`)
1. Introduction
Further to the cautionary announcement published by Iliad on 18 October 2004,
shareholders are advised that the company has entered into an agreement with a
consortium led and controlled by the Women Private Equity Fund (One) (`the
WPEF`), with a view to introducing a significant Black Economic Empowerment
(`BEE`) shareholder (`the BEE transaction`), such that the WPEF will, over time,
hold a minimum of 10% of Iliad`s issued share capital.
2. Background to the WPEF and rationale for the transaction
The WPEF is a private equity fund which, together with its fund manager, Women
Private Equity Fund Managers (Pty) Limited, is focused on the empowerment of
women. It was founded by respected and experienced black businesswomen with the
aim of promoting gender and black economic empowerment. It is focused on
investing in high growth businesses in sectors where women play and can play a
key role.
Iliad focuses on the sourcing, distributing and retailing of a comprehensive
range of building materials to a range of customers, from large-scale companies
and developers, to do-it-yourself homeowners, who are serviced through a number
of branded stores each concentrating their efforts on an identified customer-
focused market niche. Iliad therefore operates in a sector where women are key
decision-makers and where there is a growing participation by women as
purchasers, suppliers and service providers.
Ms Busi Mabuza of the WPEF`s fund manager, Women Private Equity Fund Managers
(Pty) Limited, which is itself a black owned and controlled enterprise, will
join the Iliad board as a non-executive director and take an active role in
promoting Iliad`s empowerment initiatives.
3. The BEE transaction
3.1 Terms of the BEE transaction
3.1.1 The ordinary share acquisition
The WPEF will acquire from Iliad Africa Investments (Pty) Limited, a wholly-
owned subsidiary of Iliad, 4 081 268 Iliad ordinary shares held by it as
treasury stock at a price of 658 cents per share (`the base price`), being a 10%
discount to the weighted average price of an Iliad ordinary share on the JSE
Securities Exchange South Africa (`the JSE`) for the 30 business days
immediately preceding 14 October 2004, being the date on which the parties
agreed, in principle, the terms of the BEE transaction. The acquisition
consideration of R26.9 million (`the acquisition consideration`) will be paid in
cash by the WPEF to Iliad on the effective date, being seven business days after
the fulfilment of the conditions precedent (`the effective date`).
3.1.2 The `A` share subscription
The WPEF will also subscribe for 12 243 804 `A` shares of no par value (``A`
shares`) in Iliad for a total consideration of R122 438.04. The `A` shares will
entitle the WPEF to one vote per `A` share held at general meetings of Iliad`s
ordinary shareholders. For so long as the WPEF has at least a 10% voting
interest in Iliad, it will be entitled to nominate, subject to approval by
Iliad, one non-executive director to the board of Iliad.
3.1.3 The options
The WPEF will also be granted options as an indivisible part of the `A` shares
to subscribe for 12 243 804 Iliad ordinary shares at the strike price. The
strike price will be calculated as follows:
* the base price; PLUS
* interest calculated at the ruling R153 yield from time to time plus 2.5%,
between the effective date and the date of payment for the options, compounded
annually; LESS
* any `abnormal` dividend made by Iliad between the effective date and the date
of payment for the options. An `abnormal` dividend is defined as any
distribution in excess of Iliad`s normal distribution policy.
The exercise dates for the options are:
* one-third on or after 1 January 2007;
* another third on or after 1 January 2008; and
* the final third on or after 1 January 2009.
Any options not exercised in a particular period can be carried forward and
exercised in a subsequent period. The WPEF will be precluded from selling its
interests in Iliad or any part thereof prior to 31 December 2009.
3.2 Conditions precedent
The BEE transaction is subject to the fulfilment of the following conditions
precedent on or before 28 February 2005:
* the WPEF confirming to Iliad that it has finalised the funding a residual R9
million of the acquistion consideration to purchase the treasury shares referred
to in 3.1.1 above;
* JSE and any other regulatory approvals to the extent legally necessary; and
* approval by the Iliad shareholders in general meeting of all the resolutions
necessary to give effect to, and implement, the transaction described in 3.1
above, including the registration by the Registrar of Companies in Pretoria of
all special resolutions passed at the general meeting.
4. Financial effects of the BEE transaction
Set out in the table below are the pro forma financial effects of the BEE
transaction based on Iliad`s interim results for the six months ended 30 June
2004. The pro forma financial effects have been prepared for illustrative
purposes only to provide information of how the BEE transaction may have
impacted on the results and financial position of Iliad. Because of their
nature, the pro forma financial effects may not give a fair reflection of
Iliad`s financial position after the BEE transaction or the effect on future
earnings.
Before the After the
BEE BEE Percentage
Notes transaction transaction change
(cents)1 (cents)
Earnings per share 2 37.2 36.6 (1.6)
Headline earnings per share 2 38.1 37.5 (1.6)
Diluted earnings per share 3 36.1 35.6 (1.4)
Diluted headline earnings
per share 3 37.0 36.4 (1.6)
Weighted average number of shares
in issue (net of treasury shares) 141 088 279 145 169 547
Net asset value per share 4 290.6 300.9 3.5
Net tangible asset value per share 4 245.2 256.8 4.7
Shares in issue (net of treasury shares)
Notes:
1. Extracted from the unaudited interim results of Iliad for the six months
ended 30 June 2004.
2. Earnings and headline earnings per share are based on the following
assumptions:
* the BEE transaction was effective 1 January 2004;
* 4 081 268 shares acquired by the WPEF at 658 cents per share, being an amount
of R26 854 743.44;
* 12 243 804 `A` shares acquired by the WPEF for R122 438.04; and
* interest receivable on the cash of R26 977 181.48 at 7% per annum for the six
months ended 30 June 2004, reduced by the tax effect thereon at the current tax
rate of 30%.
3. Diluted earnings and headline earnings per share have been calculated on the
basis of recognising only the dilutive effect of staff share options
outstanding. In the case of the options granted to the WPEF, the average fair
value of these options, determined in accordance with the Statement of Generally
Accepted Accounting Practice, is less than the strike price, resulting in an
`anti-dilutive` effect. Accordingly, these options have not been included in the
calculation of diluted earnings and headline earnings per share.
4. Net asset value and net tangible asset value per share are based on the
following assumptions:
* the BEE transaction was effective 30 June 2004;
* 4 081 268 shares acquired by the WPEF at 658 cents per share, being an amount
of R26 854 743.44; and
* 12 243 804 `A` shares acquired by the WPEF for R122 438.04.
5. Documentation and withdrawal of cautionary announcement
A circular, which is subject to the approval of the JSE, will be sent to
shareholders in due course. The circular will contain details of the BEE
transaction and will incorporate a notice of general meeting to Iliad
shareholders.
As details of the BEE transaction have been published, Iliad shareholders are
no longer required to exercise caution when dealing in their Iliad shares.
Johannesburg
10 December 2004
Sponsor
BRIDGE CAPITAL
Reporting accountants and auditors
Grant Thornton
Chartered Accountants (SA)
Accountants, Auditors & Business Advisers
Attorneys
FULLARD MAYER MORRISON
ATTORNEYS
Corporate law advisers and consultants to the WPEF
Edward Nathan & Friedland (Pty) Ltd
Corporate Law advisers & Consultants
(Registration number 1999/026464/07)
Corporate advisor to the WPEF
SOLCOR CAPITAL (PTY) LTD
(Registration number 2003/011551/07)
