| Tue 3 May 2005, 16:42 | | Transpaco - Terms And Conditions Of The BBBEE T |
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Transpaco - Terms And Conditions Of The BBBEE Transaction With Ceppwawu
Investments And Withdrawal Of Cautionary Announcement
Transpaco Limited
(Incorporated in the Republic of South Africa)
Registration number: 1951/000799/06
Share Code: TPC
ISIN: ZAE000007480
(`Transpaco`)
TERMS AND CONDITIONS OF THE BROAD-BASED BLACK ECONOMIC EMPOWERMENT (`BBBEE`)
TRANSACTION WITH CEPPWAWU INVESTMENTS (PROPRIETARY) LIMITED (`CEPPWAWU
INVESTMENTS`) AND A SPECIFIC PRO RATA SHARE REPURCHASE OFFER BY TRANSPACO AND
ITS WHOLLY-OWNED SUBSIDIARY TRANSPACO FINANCIAL AND ADMINISTRATIVE SERVICES
(PROPRIETARY) LIMITED (`TAFS`)
1. INTRODUCTION
1.1 In a detailed cautionary announcement dated 21 April 2005 it was announced
that Transpaco has reached an agreement in principal with Ceppwawu Investments,
which will result in Ceppwawu Investments, through its subsidiary Amalgum
Investments 36 (Proprietary) Limited (`Amalgum`), acquiring an effective
approximate 27% shareholding in Transpaco (`the BBBEE transaction`). Andisa
Capital is authorised to announce that the main agreement pertaining to the
acquisition of such shareholding has been signed.
1.2 Ceppwawu Investments is wholly-owned by the Ceppwawu Development Trust, the
beneficiaries of which are the 70,000 members of the Chemical, Energy, Paper,
Printing, Wood and Allied Workers Union of which a majority of Transpaco`s
employees and many of the employees of certain of Transpaco`s customers are
members.
1.3 The approximate 27% interest being acquired by Amalgum will consist of 4 968
190 new listed ordinary shares and 3 312 126 new unlisted voting convertible
redeemable cumulative preference shares (`voting preference shares`). The total
cash consideration payable by Amalgum to Transpaco will amount to approximately
R38.3 million.
1.4 At present TAFS owns 2 962 908 ordinary shares (`the existing treasury
shares`) constituting approximately 9.8% of Transpaco`s issued share capital. As
referred to in 3.3, Transpaco will repurchase the existing treasury shares which
will then be delisted and cancelled.
1.5 Transpaco and TAFS will offer to repurchase on a pro rata basis from all
shareholders, cum the dividend which Transpaco is expecting to declare during
August 2005, 18% of each shareholder`s shareholding in Transpaco, for a cash
consideration of R6.30 per ordinary share (`repurchase offer`).
1.6 The BBBEE transaction and repurchase offer are each conditional on the other
being implemented.
The above transactions are collectively referred to as `the transactions`.
2. RATIONALE FOR THE TRANSACTIONS
Transpaco is committed to the principles of BBBEE. To ensure the necessary level
of BBBEE in Transpaco, Ceppwawu Investments was identified by Transpaco as a
BBBEE group eminently suitable to be Transpaco`s BBBEE partner. The BBBEE
transaction makes Transpaco one of the first major packaging groups in South
Africa to achieve BBBEE at group level.
3. KEY TERMS OF THE TRANSACTIONS
3.1 The specific issue of ordinary shares to Amalgum
Transpaco will issue 4 968 190 ordinary shares at R4.62 per ordinary share to
Amalgum for cash, aggregating approximately R23 million. Application will be
made to the JSE Securities Exchange South Africa (`JSE`) for the listing of
these ordinary shares.
3.2 The specific issue of voting preference shares to Amalgum
Transpaco will issue 3 312 126 voting preference shares at R4.62 per voting
preference share to Amalgum for cash, aggregating approximately R15.3 million.
The voting preference shares are voting convertible redeemable cumulative
preference shares with a coupon rate of 72% of the prime overdraft interest rate
and compulsorily convertible on a 1:1 basis into ordinary shares on the 7th
anniversary of the date of issue. Amalgum will have the right to call for
conversion of the voting preference shares into ordinary shares on the same
basis between the 5th anniversary and the 7th anniversary of the date of issue.
For a period of 7 years from the date of issue, Amalgum is prohibited from
disposing of any of its ordinary shares or voting preference shares. The voting
preference shares will have the same voting rights as the ordinary shares. The
Independent Professional Expert (`IPE`), in regard to the terms and conditions
of the voting preference shares, Moores Rowland (CA) SA is in the process of
compiling a fair and reasonable opinion.
The necessary funding for the BBBEE transaction will be provided to Amalgum (as
to R3.6 million) by Ceppwawu Investments and (as to the remaining R34.7 million)
by the Industrial Development Corporation of South Africa Limited (`IDC`).
The issue price of R4.62 per ordinary and voting preference share represents a
discount of -
- 16.8% to the 30-day weighted average traded price of R5.55 per ordinary share
on 29 April 2005 (the trading day prior to the date of this announcement);
- 7.6% to the last traded price of R5.00 per ordinary share as at 7 October
2004, the day on which it was announced that the BBBEE transaction was being
negotiated.
3.3 The repurchase of existing treasury shares
Because of TAFS` holding of 2 962 908 existing treasury shares (constituting
approximately 9.8% of Transpaco`s issued ordinary share capital including the
existing treasury shares) and to allow TAFS to participate in the repurchase
offer, Transpaco will purchase the 2 962 908 existing treasury shares held by
TAFS at R5.40 per ordinary share, the last traded price at close of business on
29 April 2005. These shares will then be delisted and cancelled.
3.4 The repurchase offer
Transpaco and TAFS will offer to purchase in whole or in part, through a pro
rata specific share repurchase offer, 18% of each shareholder`s shareholding in
Transpaco for a cash consideration of R6.30 per ordinary share. This repurchase
offer will result in Transpaco and TAFS repurchasing up to 5 246 054 ordinary
shares at R6.30 per ordinary share, aggregating approximately R33.1 million,
which will be funded out of Transpaco`s cash resources.
Shareholders may tender more ordinary shares than 18% of their existing
shareholdings. If the repurchase offer is not accepted in whole by certain
shareholders and additional ordinary shares are tendered by other shareholders
resulting in total acceptances and tenders for more than 5 246 054 ordinary
shares, the additional ordinary shares tendered will be allocated in proportion
to the respective numbers of ordinary shares tendered in excess of 18% of the
shareholdings of those shareholders who tender additional ordinary shares. Not
more than 5 246 054 ordinary shares will be repurchased by Transpaco and TAFS.
The ordinary shares repurchased will be acquired by Transpaco, delisted and
cancelled or acquired by TAFS (in such proportions as are determined by the
directors). A maximum of 3 037 841 ordinary shares will be repurchased by TAFS
and held as treasury shares. The balance or if so determined by the directors,
the full 5 246 054 of the ordinary shares repurchased, will be acquired by
Transpaco, cancelled and delisted.
The offer price of R6.30 per ordinary share represents a 16.7% premium to the
last traded price of R5.40 per ordinary share at the close of business on 29
April 2005, the trading day prior to the date of this announcement.
After the implementation of the repurchase offer, Transpaco will still have the
required shareholder spread in terms of the JSE Listings Requirements.
The salient dates and times of the repurchase offer are set out in paragraph 7
below.
Transpaco`s articles of association authorises share repurchases. The directors
are in the process of issuing a working capital statement which will be signed
off by the lead sponsor.
4. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
The unaudited pro forma financial effects of the transactions have been prepared
for illustrative purposes only. The directors are responsible for the unaudited
pro forma information. The transactions would have had the following effect on
the earnings per share (`EPS`) and headline earnings per share (`HEPS`) of
Transpaco for the six months ended 31 December 2004, assuming that the
transactions had been implemented on 1 July 2004, and on net asset value (`NAV`)
and net tangible asset value (`NTAV`) per share of Transpaco, assuming that the
transactions had been implemented on 31 December 2004:
Before the After the %
transactions transactions Change
(cents per (cents per
share)(1) share)(2&3)
EPS* 49.0 48.7 (0.6)
Diluted EPS* 45.6 41.7 (8.6)
HEPS* 48.7 48.3 (0.8)
Diluted HEPS* 45.3 41.4 (8.6)
NAV per ordinary share 392.2 354.6 (9.6)
NTAV per ordinary share 390.1 352.4 (9.7)
* In terms of Generally Accepted Accounting Practice of South Africa (`GAAP`)
AC133 the future EPS, diluted EPS, HEPS and diluted HEPS may be affected
positively or negatively by any possible fair value movement arising from an
embedded interest rate swap in the capital portion of the voting preference
shares.
1. The financial information set out in the `Before` column is based on the
unaudited interim financial results of Transpaco for the six months ended 31
December 2004. For purposes of the calculations, the consolidated weighted
average number and the consolidated diluted weighted average number of ordinary
shares in issue and the actual number of ordinary shares in issue (net of
treasury and the share incentive trust scheme shares) are 27 319 199, 29 375 488
and 27 353 574, respectively.
2. The financial information set out in the `After` column is based on the
assumption that the transactions were implemented on 1 July 2004 for the purpose
of calculating EPS and HEPS. The adjustments to NAV and NTAV are based on the
assumption that the transactions were implemented on 31 December 2004. For
purposes of the calculations, the consolidated weighted average number and the
consolidated diluted weighted average number of shares in issue and the number
of shares in issue (net of treasury and the share incentive trust scheme shares)
are 27 041 335, 32 409 750 (including the conversion of the voting preference
shares) and 27 075 710, respectively.
3. Transfer duties and other taxes, although immaterial, have been taken into
account. An interest rate of 8.5% per annum has been assumed on any net surplus
cash arising out of the transactions.
If the International Financial Reporting Interpretations Committee rules that
BEE transactions should be accounted for under IFRS2 (Share Based Payments),
Transpaco`s first IFRS compliant financial statements which will be for the year
ending 30 June 2006 will reflect comparatives for the 2005 financial year after
adjustment in accordance with IFRS2.
5. CONDITIONS PRECEDENT
The implementation of the transactions is subject, inter alia, to the fulfilment
of the following conditions precedent:
5.1 the signature of the agreements between Transpaco, Ceppwawu Investments,
Amalgum and the IDC ancillary to the main agreement referred to in paragraph
1.1;
5.2 the necessary regulatory approvals are obtained, including the JSE; and
5.3 the approval by shareholders in a general meeting and registration, where
required, of all the necessary resolutions to give effect to the transactions.
6. IRREVOCABLE UNDERTAKINGS
Transpaco shareholders holding approximately 13.9 million ordinary shares
(constituting approximately 50.6% of the voting issued share capital of
Transpaco) have consented to the transactions and have undertaken to vote in
favour of the resolutions required to give effect to the transactions and to
accept the repurchase offer for not less than 18% of their shareholdings.
7. SALIENT DATES AND TIMES
2005
Declaration date - posting of a circular Thursday, 12 May
Repurchase offer opens at 09:00 Thursday, 12 May
Proxy forms for the general meeting to be received
by transfer secretaries by 09:00 Wednesday, 1 June
General meeting to be held at 09:00 Thursday, 2 June
Lodge special resolutions with Registrar of
Companies Thursday, 2 June
Results of the general meeting and finalisation
information released on SENS Thursday, 2 June
Results of the general meeting and finalisation
information published in the press on
Friday, 3 June
Listing of 4 968 190 ordinary shares on the JSE
list Tuesday, 7 June
Delisting of 2 962 908 ordinary shares on the JSE
list Tuesday, 7 June
Issue of 4 968 190 ordinary shares to Amalgum
Wednesday, 8 June
Issue of 3 312 126 voting preference shares to
Amalgum Wednesday, 8 June
Repurchase by Transpaco of 2,962,908 ordinary
shares from TAFS Wednesday, 8 June
Last day to trade to be eligible to participate in
the repurchase offer Thursday, 9 June
No dematerialisation or rematerialisation between, Friday, 10 June and
both days inclusive Friday, 17 June
Securities starts trading ex rights Friday, 10 June
Record date of repurchase offer Friday, 17 June
Closing date of repurchase offer at 12:00 Friday, 17 June
Payment of cash. Accounts at CSDP`s updated and
balance of share certificates posted, if
applicable Monday, 20 June
Delisting of up to 5 246 054 ordinary shares on
the JSE list Tuesday, 21 June
8. GENERAL MEETING
A general meeting of Transpaco shareholders will be held at the offices of
Transpaco at 331 6th Street, Wynberg, Sandton on Thursday, 2 June 2005 at 09:00
for the purpose of considering, and if deemed fit, passing, with or without
modification, the necessary resolutions to approve and ratify the transactions.
A notice convening such general meeting will form part of the circular to be
posted to Transpaco`s shareholders.
9. CIRCULAR TO SHAREHOLDERS
A circular, providing further information on the transactions and incorporating
a notice to convene a general meeting, form of proxy and a form of acceptance
and surrender will be posted to Transpaco`s shareholders on or about 12 May
2005.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Transpaco shareholders are advised that caution is no longer required to be
exercised when dealing in their securities.
Sandton
3 May 2005
Financial adviser and lead sponsor: Andisa Capital
Attorneys: Werksmans Inc.
Reporting accountants: Ernst & Young
Independent Professional Expert: Moores Rowland
Sponsor: Investec Bank Limited
Date: 03/05/2005 04:06:20 PM
Produced by the JSE SENS Department
