| Fri 14 Jan 2005, 17:24 | | AVI - Unbundling of Consol, payment from share pre |
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AVI - Unbundling of Consol, payment from share premium and notice of general
meeting
AVI Limited
(Formerly Anglovaal Industries Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1944/017201/06)
Share code: AVI ISIN: ZAE000049433
(`AVI` or `the Group`)
ANNOUNCEMENT REGARDING THE PROPOSED UNBUNDLING AND SEPARATE LISTING OF
CONSOL LIMITED (`CONSOL`), A PAYMENT TO AVI SHAREHOLDERS OF 64 CENTS PER AVI
SHARE AND NOTICE OF A GENERAL MEETING
1. INTRODUCTION
On Tuesday, 12 October 2004 the board of directors of AVI (`the board`)
announced its intention to unbundle AVI`s entire shareholding in Consol to AVI
ordinary shareholders (`AVI shareholders`) and to list Consol separately on the
JSE Securities Exchange South Africa (`the JSE`) by March 2005, subject to
regulatory and shareholder approvals (`the unbundling`).
The board has resolved, subject to the fulfilment of the conditions precedent
detailed in paragraph 3.3 below (`the conditions precedent`), to distribute 315
386 460 Consol ordinary shares (`the Consol distribution shares`) to AVI
shareholders and for application to be made for the separate listing of the
Consol distribution shares on the JSE.
The Consol distribution shares will, subject to the fulfilment of the
conditions precedent, be distributed to AVI shareholders in the ratio of one
Consol distribution share for every AVI ordinary share (`AVI share`) held by an
AVI shareholder recorded in the register of AVI shareholders (`the register`) on
Friday, 4 March 2005 (`the record date`).
2. RATIONALE FOR THE UNBUNDLING
It has been AVI`s strategy, since the reorganisation of the Anglovaal
Industries group in 1999, to focus on branded consumer products and services.
The Group has, however, continued to manage material assets that were
historically part of the Group, but are not directly aligned to this strategy.
Consol, South Africa`s largest glass packaging company, and Vector Logistics
(Proprietary) Limited (`Vector`), a leading third party distribution and
logistics business, were substantially restructured by AVI in the years
following 1999 and have become profitable market leaders in their respective
categories.
Having established sound fiscal and market positions for both Consol and
Vector, the board has determined that it is an opportune time to fully align the
Group`s portfolio of assets to the branded consumer products and services
strategy by:
* disposing of Vector; and
* unbundling and separately listing Consol.
The board believes that this strategic alignment of the Group`s portfolio has a
number of benefits:
* AVI will attain its long-stated objective of becoming a focused, branded
consumer products and services group. This, together with its portfolio of
leading brands, depth of operational management and strong balance sheet will
support ongoing growth through innovation and acquisition;
* the relisting of Consol creates a substantial, focused packaging company
with the financial strength to pursue an independent long-term strategy; and
* shareholder choice is enhanced.
3. SALIENT TERMS OF THE UNBUNDLING
The board has resolved to unbundle all of the shares held by AVI in Consol to
AVI shareholders recorded in the register on the record date. The unbundling
will involve the distribution in specie to AVI shareholders of the Consol
distribution shares in the ratio of one Consol distribution share for every AVI
share held on the record date. The unbundling will be undertaken in terms of
section 90 of the Companies Act, 1973 (Act 61 of 1973), as amended, and in
accordance with section 46 of the Income Tax Act, 1962 (Act 58 of 1962), as
amended, by way of a reduction of AVI`s share premium and distributable
reserves.
3.1 Implementation
A general meeting of AVI shareholders and holders of unlisted convertible
redeemable preference shares in AVI (`preference shareholders`) will be held at
19 Impala Road, Chislehurston, Sandton, at 11.30 on Monday, 7 February 2005
(`the general meeting`) as set out in paragraph 7 below to consider and, if
deemed fit, pass the resolutions required to implement the unbundling.
3.2 Listing of Consol
Subject to the unbundling becoming operative, the JSE has granted approval for
the listing of Consol in the `Support Services` sector of the JSE list, under
the abbreviated name `Consol`, with effect from the commencement of trade on
Monday, 28 February 2005.
3.3 Conditions precedent
The unbundling is subject to the fulfilment of the following conditions
precedent by no later than Friday, 11 February 2005 or such later date as the
board may, in its discretion, determine:
3.3.1 the approval by the requisite majorities of AVI shareholders and, where
appropriate, preference shareholders at the general meeting of the resolutions
necessary to:
* repurchase and cancel the 27 369 006 AVI shares held by a wholly-owned
subsidiary of AVI (`the treasury shares`), prior to the unbundling being
implemented;
* amend the share incentive schemes of AVI to enable them to take into account
the impact of the unbundling and to authorise the consequent amendments to the
articles of association of AVI (`the articles`); and
* effect the unbundling; and
3.3.2 the registration, where necessary, of such resolutions by the Registrar of
Companies.
4. PAYMENT FROM SHARE PREMIUM
The board, having considered the balance sheet strength and cash generation of
the Group, together with its desire to fund future expansion from borrowings in
order to improve AVI`s return on shareholders` funds, intends, subject to AVI
shareholder approval, to distribute an amount of 64 cents per AVI share to AVI
shareholders by way of a payment from share premium (`the payment from share
premium`) prior to the implementation of the unbundling. This payment will also
be in lieu of AVI`s interim dividend (which in the prior year amounted to 26
cents per AVI share) and any interim dividend that would have been paid by
Consol, and will be made in accordance with the timetable set out in paragraph 8
below, subject to the requisite approval being obtained at the general meeting.
5. PRO FORMA FINANCIAL EFFECTS
After the implementation of the unbundling and the payment from share premium,
AVI shareholders will be in substantially the same position as before as regards
the aggregate earnings, net asset value (`NAV`) and tangible NAV (`TNAV`) per
AVI share, but with the benefit of directly holding Consol shares and having
received the payment from share premium.
In preparation for the unbundling, the following steps have been or will be
undertaken prior to the record date:
* the purchase by AVI of the 19,26% shareholding in Consol of Owens-Illinois,
Inc., as announced on 12 October 2004, for a net cash consideration of
R506,2 million;
* the redemption of the R200 million variable rate cumulative redeemable
preference share investment in AVI held by Consol and the declaration of this
amount to AVI by way of a special dividend;
* the payment of further dividends of R200 million by Consol to AVI prior to
the unbundling being implemented;
* the payment from share premium as set out in paragraph 4 above; and
* the payment of the anticipated costs associated with the unbundling,
(collectively, `the transactions`).
The unbundling and the transactions will have an impact on AVI as the
unbundling and the payment from share premium will reduce its capital base. The
illustrative pro forma financial effects set out below have been prepared to
assist AVI shareholders to assess the impact of the unbundling and the
transactions on the earnings per AVI share (`EPS`), headline EPS (`HEPS`) and
NAV and TNAV per AVI share, in respect of their AVI shares only. The material
assumptions are set out in the notes following the table. Due to the nature of
the pro forma financial effects, they may not fairly present AVI`s financial
position after the unbundling and the transactions, nor the effect on AVI`s
future earnings. The pro forma financial effects are provided for illustrative
purposes only.
Before After Change
(cents) (cents) (%)
EPS 179,51 87,92 (51,0)
HEPS 186,21 95,72 (48,6)
NAV per AVI share 1 007,43 501,44 (50,2)
TNAV per AVI share 942,43 436,84 (53,7)
Notes:
1. The EPS and HEPS, as set out in the `Before` column of the table, have been
extracted from the audited financial statements of AVI for the year ended
30 June 2004 and have been calculated based on a weighted average of
315 809 761 AVI shares in issue, which excludes the treasury shares and shares
held in AVI`s share incentive trusts.
2. The EPS and HEPS, as set out in the `After` column of the table, have been
calculated based on a weighted average of 317 838 273 shares in issue, excluding
the treasury shares and shares held in AVI`s share incentive trusts, but
including the 2 028 512 AVI shares arising from the proposed conversion of the
507 128 preference shares in terms of the Anglovaal Industries Limited Equity
Participation Plan (`the EPP`), assuming that the transactions took effect on 1
July 2003.
3. The NAV and TNAV per AVI share, as set out in the `Before` column of the
table, have been extracted from the audited financial statements of AVI for the
year ended 30 June 2004 and calculated based on 309 981 206 AVI shares in issue
at 30 June 2004, which excludes the treasury shares and shares held in AVI`s
share incentive trusts.
4. The NAV and TNAV per AVI share, as set out in the `After` column of the
table, have been calculated based on 312 009 718 AVI shares in issue at
30 June 2004, excluding the treasury shares and shares held in AVI`s share
incentive trusts, but including the 2 028 512 AVI shares arising from the
proposed conversion of the 507 128 preference shares in terms of the EPP and
assuming that the transactions took effect on 30 June 2004.
5. Should the payment from share premium not be effected, the pro forma
financial effects on EPS and HEPS would be an increase of 5,5 cents and NAV and
TNAV per share would increase by 64 cents.
6. The cancellation of the treasury shares has no effect on the unaudited pro
forma financial information.
6. DIRECTORS` OPINION AND RECOMMENDATIONS
The directors of AVI (`the directors`) are of the opinion that the terms and
conditions of the unbundling will be to the benefit of AVI shareholders and
recommend that AVI shareholders and preference shareholders vote at the general
meeting in favour of all the resolutions necessary to implement the unbundling.
The directors intend to vote in favour of all the resolutions necessary to
implement the unbundling in respect of all the AVI shares and preference shares
held by them.
7. GENERAL MEETING
A general meeting of AVI shareholders and preference shareholders will be held
at 11:30 on Monday, 7 February 2005 at 19 Impala Road, Chislehurston, Sandton,
the registered office of AVI, to consider and, if deemed fit, pass, with or
without modifications, the resolutions required, inter alia, to:
* cancel the treasury shares;
* amend the share incentive schemes of AVI and implement the consequent
amendments to the articles;
* effect the payment from share premium; and
* effect the unbundling.
8. SALIENT DATES AND TIMES
The salient dates and times of the general meeting, the payment from share
premium and the unbundling and listing of Consol are as follows:
2005
Last day for lodging of forms of proxy for the general meeting
by 11:30 on Friday, 4 February
General meeting to be held at 11:30 on Monday, 7 February
Results of the general meeting announced on SENS on Monday, 7 February
Results of the general meeting published in the
press on Tuesday, 8 February
Last day to trade in AVI shares on the JSE in order
to be entitled to the payment from share premium on Friday, 18 February
AVI shares trade `ex` the entitlement to the payment
from share premium on Monday, 21 February
Payment record date to receive the payment from
share premium on Friday, 25 February
Last day to trade in AVI shares on the JSE in order to
participate in the unbundling on Friday, 25 February
Payment date of the payment from share premium on Monday, 28 February
AVI shares trade `ex` the entitlement to the Consol
distribution shares from the commencement of trade on Monday, 28 February
Listing of Consol from the commencement of trade on Monday, 28 February
Announcement of ratio of apportionment of base cost
for Capital Gains Tax purposes on Wednesday, 2 March
Record date to participate in the unbundling on Friday, 4 March
Consol share certificates will be posted to holders of
certificated AVI shares, by registered post, at the
risk of the shareholders concerned, and holders of
dematerialised AVI shares will have their safe custody
accounts at their Central Securities Depository
Participant or broker updated on Monday, 7 March
Notes:
1. The abovementioned times and dates are South African times and dates and are
subject to change. Any such change will be announced on SENS and published in
the press.
2. AVI shares may not be dematerialised or rematerialised from Monday, 21
February 2005 to Friday, 4 March 2005, both days inclusive.
9. CIRCULAR TO AVI SHAREHOLDERS
A circular, including the notice convening the general meeting, containing full
details of the unbundling, has been posted to AVI shareholders today together
with Consol`s pre-listing statement.
Copies of the circular and the Consol pre-listing statement may be obtained
during normal business hours from Friday, 14 January 2005 to Monday, 28 February
2005 from:
* The Standard Bank of South Africa Limited, Entrance 2, Fifth Floor, 3
Simmonds Street, Johannesburg;
* Computershare Investor Services 2004 (Proprietary) Limited, Ground Floor, 70
Marshall Street, Johannesburg;
* Taback and Associates (Proprietary) Limited, 26 Sturdee Avenue, Rosebank,
Johannesburg;
* AVI corporate office, 19 Impala Road, Chislehurston, Sandton;
* Consol head office, Consol House, Osborn Road, Wadeville; and
* all broking members of the JSE.
Sandton
14 January 2005
Investment bank and sponsor
STANDARD BANK
Corporate law advisors
TABACKS
Independent reporting accountants and auditors
KPMG
Investor relations advisors
COLLEGE HILL
