| Fri 25 Feb 2005, 14:10 | | TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT |
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CET - TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
CAPE EMPOWERMENT TRUST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/014606/06)
JSE Code CAE
ISIN ZAE000016952
(`CET` and `the company`)
TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT REGARDING
POTENTIAL ACQUISITION OF AN INTEREST IN SANCINO PROJECTS
LIMITED
1. TRADING UPDATE
Shareholders are advised that the headline earnings and
earnings of CET for the year ending 31 December 2004 are
expected to be between 250% and 350% higher than that for
the previous comparable period.
The increase in earnings can be mainly ascribed to the
securing of new long term leases in respect of, and a
consequent increase in the market value of, the property
known as the `Foretrust Building` situated in Cape Town
and in which the company has a 20% interest.
The financial information on which this trading statement
is based has not been reviewed or reported on by the
company`s auditors. The company`s year end results are
expected to be published on or about 31 March 2005.
2. POTENTIAL ACQUISITION OF AN INTEREST IN SANCINO
PROJECTS LIMITED
2.1 Background and rationale
Sancino Projects Limited (`Sancino`) is an unlisted
Western Cape based empowerment company.
Sancino`s principal assets are Sancino Litho
(Proprietary) Limited, which conducts a printing
business, and a 13% interest in Grand Parade Investments
Limited (`GPI`) which holds minority interests in certain
Western Cape based gaming and leisure assets, including
the GrandWest Casino and the Table Bay Hotel.
Although its ordinary shares are held by a broad base of
individual shareholders, Sancino is presently controlled
by Sanlam Life Insurance Company Limited (`Sanlam`), by
virtue of the voting rights attaching to certain
preference shares in the capital of Sancino held by it
and which have been in arrears for some time.
It appears that Sancino has for some time experienced
financial difficulties, and that its management has found
it difficult to generate value for its shareholders.
Shaun Rai, the Chairman of CET, was the first auditor of
GPI, and is familiar with its assets and shareholders.
CET believes that Sancino has solid assets, that the
interest in GPI in particular is of strategic
significance, and CET wishes to obtain an investment
exposure to such assets by acquiring ordinary shares in
Sancino. CET believes that it can add value to Sancino
and its assets, and intends to work with Sancino`s
directors and shareholders in order to realise this goal.
CET also believes that opportunities exist to acquire
unrelated direct interests in GPI, and intends to pursue
such opportunities with a view to acquiring a total non-
controlling interest in GPI of at least 20%.
2.2 The potential transactions
2.2.1 Offer to capitalise Sancino by subscribing for
new ordinary shares
CET, on 21 February, submitted to the directors of
Sancino an offer to subscribe, in cash, for 4 285 714 new
Sancino ordinary shares at R1.40 per share, ie for a
total cash consideration of R 6 million (`the
subscription transaction`). Such shares, when issued,
will represent approximately 54% of all the Sancino
ordinary shares in issue.
The subscription transaction, if concluded, would be
subject to the fulfilment of following conditions
precedent -
- the passing and registration of a special resolution
of Sancino shareholders to increase its authorised share
capital to be able to implement the subscription
transaction;
- the approval of CET shareholders in general meeting;
- arrangements between Sancino and Sanlam regarding
Sancino`s outstanding preference share obligations being
made to CET`s satisfaction,
by not later than 30 June 2005.
The subscription price will be paid, and the new Sancino
ordinary shares issued, upon fulfilment of the last of
the conditions precedent.
The other terms and conditions of the subscription
transaction are considered to be standard in transactions
of such nature.
The subscription transaction would, in terms of the JSE`s
Listings Requirements, be classified as a Category 1
transaction, and therefore requires CET shareholders
approval. The holders of the majority of the CET shares
comprising the CET voting pool, which in turn comprises
the majority of CET shares in issue, have indicated that
they will vote in favour of the subscription transaction.
The directors of CET accordingly have no reason to
believe that CET shareholders approval will not be
obtained.
The board of directors of Sancino has not yet formally
responded to CET`s offer.
The holders of the majority of the Sancino ordinary
shares in issue have undertaken in writing to support the
subscription transaction and to vote in favour of the
shareholders resolutions necessary to give effect
thereto.
Depending on the response of the board of directors of
Sancino to CET`s offer, a further announcement,
containing full details of the subscription transaction
and the financial effects thereof on CET, shall be made.
2.2.2 Selective acquisitions of Sancino ordinary
shares
It is the intention of CET, irrespective of whether or
not the subscription transaction is concluded and
implemented, to enter into direct negotiations with
certain Sancino ordinary shareholders and to acquire a
significant number of the Sancino ordinary shares in
issue.
In this regard, Sanlam has already undertaken to sell to
CET its Sancino ordinary shares, which comprise
approximately 10% of the total number of Sancino ordinary
shares in issue, at a price of R1.40 per share.
Further announcements will be made in the event that any
material acquisitions of Sancino ordinary shares are
made.
2.3 Further cautionary announcement
In the circumstances shareholders are advised to exercise
caution when dealing in the company`s securities until a
further detailed announcement is made.
Cape Town
25 February 2005
Sponsor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
Date: 25/02/2005 02:00:10 PM
Produced by the JSE SENS Department
