| Wed 13 Apr 2005, 9:32 | | Repurchase offer and proposed delisting |
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Insure - Repurchase offer and proposed delisting from the JSE
INSURANCE OUTSOURCING MANAGERS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013121/06
(`Insure` or `the Company`)
ISIN: ZAE000033221 JSE Share Code: INS
REPURCHASE OFFER TO INSURE SHAREHOLDERS AND PROPOSED DELISTING OF INSURE FROM
THE JSE SECURITIES EXCHANGE SOUTH AFRICA (`the JSE`)
1. Introduction
Arcay Corporate Services is authorised to announce that the board of directors
of Insure (`the Insure Board`) has resolved to seek the approval of all holders
of Insure shares (`Insure shareholders`) at a general meeting convened for the
purpose of the delisting of the company`s securities from the JSE, subject to
the conditions precedent set out in paragraph 4 of this announcement (`the
general meeting`). In accordance with the rules and regulations of the JSE,
the Insure Board has furthermore resolved to seek the approval of Insure
shareholders at the general meeting to a specific share repurchase by the
company from Insure shareholders, other than the controlling shareholders and
their associates, of all or any of the shares in the issued share capital of
Insure held by them, at an offer price of 23 cents per share (`the repurchase
offer`), subject to the conditions precedent set out in paragraph 4 of this
announcement.
2. Rationale for the Delisting
The board has taken the following factors into account in regard to the
proposed delisting:
- the management of Insure, as the controlling shareholder, together with
treasury stock and one other large shareholder, hold approximately 92% of
shares and management is committed to fulfilling the management buyout
agreement over the next two years.
- of the 8% shares held by the general public, more than 70% are inactive,
resulting in very low levels of trade in the company`s securities on the
JSE.
- the company does not expect to raise any capital in the foreseeable
future.
- the continued negative impact of macro-economic events, particularly the
decrease in interest rates, has resulted in lower than expected
profitability of the business.
- as a result of the above, the benefits of being a listed entity are out of
proportion to the management time and opportunity costs pertaining
thereto.
The delisting will be effected by way of an application to the listings
division of the JSE in terms of Rule 1.13 of the JSE Listings Requirements and
approval by the requisite majority of shareholders in the general meeting.
Neither the controlling shareholders nor any parties associated with them may
vote on the ordinary resolution approving the delisting of the company.
3. Pro-forma Financial Effects
The unaudited pro forma financial effects have been prepared for illustrative
purposes only, to provide information about how the repurchase offer might have
affected the earnings and net asset value per share of Insure, had the
repurchase offer been effective on 30 November 2004 for the purposes of
earnings and net asset value per share respectively. The financial effects may
not give a true reflection of Insure`s financial position or the effect on
future income.
The table below sets out the unaudited pro forma financial effects on Insure of
the repurchase offer, based on the published audited financial results of
Insure for the nine months ended 30 November 2004.
Before(1) Acceptance % change Remaining as %
of the a shareholder change
repurchase of 1 share in
offer Insure
(cents)(8)
Earnings per 1.69 0.892 -48% 1.765 3.9%
share (cents)
Headline 1.71 0.892 -48% 1.785 3.9%
earnings per
share (cents)
Dividend per 2.00 0.892 -56% 2.166 8.1%
share (cents)
Net asset value 16.49 23.003 39% 15.967 -3.2%
per share
(cents)
Net tangible 15.94 23.003 44% 15.367 -3.6%
asset value per
share (cents)
Market value per 25.004 23.89 -4% 25.00 0.0%
share
Number of shares 111 091 667 8 360 808 -- 102 730 859 --
in issue
Notes:
The `before` financial information is based on published audited results
for the nine months ended 30 November 2004.
Earnings and headline earnings per share are based on the assumption that
the Insure shareholder accepted the repurchase offer on 01 March 2004 and
received interest on the 23 cents for the 9-month period ended 30 November
2004 at an after tax interest rate of 5.15%.
Net asset value and net tangible asset value per share represents the 23
cents per share received, in cash, by an Insure shareholder in terms of
the repurchase offer.
The market value of an Insure share on 11 April 2005.
The earnings and headline earnings per share (excluding minority shares
cancelled on acceptance of the repurchase offer) after taking into account
an interest adjustment at an after tax rate of 5.15% on the cash paid in
respect of the repurchase offer and the reduction in the number of shares
in issue
The dividend per share was recalculated using the number of shares in
issue after the repurchase from minorities.
The net asset value per share (excluding minority shares cancelled on
acceptance of the repurchase offer) and the net tangible asset value per
share (excluding minority shares cancelled on acceptance of the repurchase
offer) after taking into account the cash paid in respect of the
repurchase offer and the reduction in the number of shares in issue.
Values calculated on 102 730 859 shares in issue, which assumes that the
entire body of minority shareholders entitled to accept the repurchase
offer has done so and the repurchased shares have been cancelled.
4. Conditions Precedent
The repurchase offer and the delisting of the company from the JSE are subject
to the following conditions precedent:
- The furnishing by the JSE, the Securities Regulation Panel (`the SRP`) and
any other requisite regulatory authority of all consents and authorities
required by them in respect of the repurchase offer and delisting of the
company either unconditionally or on conditions acceptable to the Insure
Board;
- The company submits a guarantee to the SRP, prior to the posting of the
circular to shareholders, confirming that it has sufficient cash resources
available to it to meet all of its financial obligations in terms of the
repurchase offer;
- The passing at the general meeting by the requisite majority of Insure
shareholders, excluding the controlling shareholders, of the ordinary
resolution required to implement the delisting;
- The passing at the general meeting by the requisite majority of Insure
shareholders, excluding the controlling shareholders and their associates,
of the special resolution required to implement the specific repurchase
and the registration thereof by the Registrar of Companies;
5. Opinions
In accordance with the JSE Listings Requirements and the Securities Regulation
Code on Takeovers and Mergers, the Insure Board will appoint a Professional
Expert to review the terms and conditions of the repurchase offer. The opinion
of the Professional Expert will be included in the circular to shareholders
referred to in paragraph 6 below.
6. Further Announcement and Documentation
Subject to the necessary approvals from the JSE, the SRP and the South African
Reserve Bank, a circular, containing full details of the delisting and
repurchase offer, together with a notice convening a meeting of shareholders
will be posted to Insure shareholders. A further announcement setting out the
salient dates and times of the repurchase offer and the general meeting will be
published in due course.
7. Offer in terms of Section 440K of the Act
The company is considering its options with regard to invoking the provisions
of Section 440K of the Act in the event of the repurchase offer being accepted
by at least 90% of the shares subject to such offer and is currently awaiting
legal opinion as to whether this is achievable in conjunction with a specific
repurchase of shares. Shareholders will be updated in this regard in due
course. Following delisting the company will continue as a public unlisted
company.
Warning statement
In accordance with AltX Listings Requirements, shareholders are advised of the
risks of investing in a company listed on the AltX and that the JSE does not
guarantee the viability or the success of a company listed on the AltX. In
terms of the JSE Listings Requirements, a Designated Advisor has to be retained
by the company. The Designated Advisor is required, inter alia, to attend all
board meetings held by the company to ensure that all the JSE Listings
Requirements and applicable regulations are complied with, approve the
financial director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Advisor it must make arrangements to appoint a new Designated Advisor within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Advisor is not appointed within 30 days of its
suspension, the company faces the termination of its listing without an offer
to minorities.
Johannesburg
13 April 2005
Designated Advisor
Arcay Corporate Services
