| Wed 13 Apr 2005, 17:13 | | Introduction Of A Black Economic Empowerment Partn |
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SA Eagle - The Introduction Of A Black Economic Empowerment Partner To SA Eagle
And withdrawal of cautionary announcement
South African Eagle Insurance Company Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1965/006764/06)
Share code: SAE ISIN: ZAE000006243
(`SA Eagle` or `the company`)
THE INTRODUCTION OF A BLACK ECONOMIC EMPOWERMENT PARTNER TO SA EAGLE
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcements published on 3 February 2005 and 17
March 2005 in which shareholders were advised that Zurich Financial Services
Group (`Zurich`), the majority shareholder of SA Eagle, had entered into
negotiations in relation to a Black Economic Empowerment (`BEE`) transaction,
The Standard Bank of South Africa Limited is authorised to announce that an
agreement has been reached between Zurich and Royal Bafokeng Finance
(Proprietary) Limited (`RBF`), a company wholly-owned by the Royal Bafokeng
Nation (`RBN`), to acquire an initial 10% interest in the issued share capital
of SA Eagle from Zurich, with an option to increase its shareholding in the
company (`the transaction`). The transaction will enable SA Eagle to meet the
requirements of direct and indirect ownership of financial institutions
operating in South Africa in terms of the Financial Sector Charter (`the
Charter`).
2. RATIONALE FOR THE TRANSACTION
The transaction achieves the objectives of BEE through, inter alia, the
following:
* the beneficiaries are broad-based by virtue of the nature of RBN;
it complies with the Charter`s ownership requirements and other empowerment
guidelines currently being proposed;
* RBF has the capacity to partner SA Eagle in a transaction that embodies the
company`s vision to move beyond legislated targets and deliver on the South
African Government`s envisaged transformation outcomes; and
* RBF is able to utilise its own capital resources in acquiring its interest
in SA Eagle.
The transaction underscores Zurich`s commitment to the South African market and
Government`s initiative for BEE. The goal of BEE, as set out in the Charter, is
to strengthen South Africa`s democracy through broadening economic participation
and creating opportunities for black people.
In RBF, Zurich believes it has identified a partner that embodies the spirit and
meets the requirements of the Charter, whilst having the ability to be a
proactive business partner to SA Eagle.
3. BACKGROUND ON THE PARTIES TO THE TRANSACTION
3.1 SA EAGLE
SA Eagle is a majority-owned subsidiary of Zurich, an insurance-based financial
services provider with a global network. Zurich has its headquarters in Zurich,
Switzerland and offices in more than 50 countries. SA Eagle forms part of
Zurich`s International Businesses Division, which provides a key presence in
potentially high growth markets.
SA Eagle operates in both the domestic and commercial markets, transacting in
all classes of short-term insurance. The company markets its products through
brokers and agents. It has a network of offices throughout South Africa,
subsidiary insurance companies in Botswana and Zimbabwe, and has interests in
insurance companies in Mauritius and Swaziland.
3.2 RBN
RBN is a community of approximately 300 000 people based in the Rustenburg
valley region in North West Province (`the region`). During the 1860`s, RBN
started a land-buying programme funded by the young men of the community that
went to work in the Kimberley diamond fields. In the 1920`s, substantial
platinum group metal reserves were discovered on RBN land in the region. Over
the years, royalties paid by mining companies operating on RBN land in the
region have been spent by RBN on the development of substantial physical
infrastructure that has benefited all the inhabitants of the region.
Notwithstanding the high degree of mining activity in the Rustenburg valley, the
region still faces substantial socio-economic developmental challenges. RBN has
formulated Vision 2020, which is a long-term plan to address these challenges
through creating opportunities for the people of the region over the next two
decades to become economically self-sufficient participants in the regional and
national economy. RBN is working with all major stakeholders on an ambitious,
multi-level strategy for sustainable economic development that focuses on the
development of land, people and business activities.
3.3 RBF
The fortunes of the region and RBN are closely linked to the mining industry.
In order to reduce its reliance on mining and increase its participation in the
national economy, RBN established RBF in 2004. RBF has been set up to hold the
non-mining commercial assets of RBN.
4. SALIENT FEATURES OF THE TRANSACTION
RBF will acquire 10% of the issued shares in SA Eagle from Zurich`s existing
interest in the company utilising its own capital resources. RBF has an option
for six months, post the third anniversary of the date of the acquisition of the
initial 10% interest, to acquire from Zurich sufficient additional shares in SA
Eagle, to increase its interest to meet the long-term ownership requirements of
the Charter.
SA Eagle, Zurich and RBF will collaborate in assessing opportunities to, inter
alia, develop new distribution channels and products that will provide
historically disadvantaged people further access to short-term insurance
services.
RBF shall initially be entitled to nominate one director to the board of
directors of SA Eagle (`the SA Eagle Board`). If RBF increases its interest in
SA Eagle to more than 20% of the company`s issued share capital, it shall be
entitled to nominate another director to the SA Eagle Board. RBF shall be
entitled to chair a transformation sub-committee and be represented on the
investment and other sub-committees of the SA Eagle Board.
RBF shall, as long as it is the empowerment partner of SA Eagle in terms of the
Charter, be afforded certain minority protections by Zurich, in accordance with
its level of interest in the company.
The company has undertaken in line with the terms of the Charter to fund
specific projects nominated by RBF, subject to approval by the SA Eagle Board.
These projects include, but are not limited to, corporate social investment,
enterprise development and empowerment financing projects.
5. OPINION OF THE SA EAGLE BOARD
The SA Eagle Board is of the opinion that the terms and conditions of the
transaction are in the best interest of SA Eagle`s stakeholders and unanimously
support its conclusion.
6. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
SA Eagle shareholders are advised that it is no longer necessary to exercise
caution when dealing in their SA Eagle ordinary shares and accordingly the
cautionary announcement referred to above is withdrawn.
Bryanston
13 April 2005
Investment bank to SA Eagle
Standard Bank
Sponsor to SA Eagle
Rand Merchant Bank
(A division of FirstRand Bank Limited)
Legal advisor to SA Eagle
Bell Dewar & Hall
Corporate advisor to RBF
Metier
