| Tue 5 Jul 2005, 10:51 | | m Cubed - Disposal Announcement |
|
m Cubed - Disposal Announcement
This announcement is released again due to technical errors that occurred
during publication of the announcement released on 4 July 2005.
m Cubed Holdings Limited
Registration number: 1998/014568/06
Share code: MCU
ISIN: ZAE000033353
(`m Cubed` or `the company`)
DISPOSAL OF:
- M CUBED LIFE LIMITED AND ASSOCIATED DIVISIONS (`m Cubed Life`);
- AUTOMATED OUTSOURCING SERVICES LIMITED (`AOS`);
- M CUBED UNIT TRUST MANAGEMENT COMPANY LIMITED (`m Cubed UTM`);
- M3 CAPITAL MANAGEMENT (GUERNSEY) LIMITED (`M3 Guernsey`)
- Policy exchange (PROPRIETARY) LIMITED (`Polex`); AND
- 74,99% OF ESCHER UK ASSET MANAGEMENT LIMITED (`Escher UK`)
1. INTRODUCTION
1.1 Further to the cautionary announcement dated 16 May 2005, as renewed
on SENS on 2 June 2005, PSG Capital is authorised to announce that m
Cubed has entered into agreements (`the agreements`) to dispose of
the entire issued share capitals in (and, in certain instances,
claims against) m Cubed Life, AOS, m Cubed UTM, m3 Guernsey and Polex
and 74,99% of the issued share capital of, and all m Cubed`s claims
against Escher UK, for an aggregate disposal consideration of R234
million, payable in cash (collectively `the disposals`).
1.2 m Cubed Life provides linked investment products and portfolios.
1.3 AOS provides outsourcing services to offshore clients and unitised
liability outsourced administration services to internal and external
clients.
1.4 m Cubed UTM creates and markets retail and institutional unit trusts.
1.5 m3 Guernsey manages mutual funds.
1.6 Polex trades in pre-owned insurance policies.
1.7 Escher UK is based in the United Kingdom and provides multi-manager
solutions to institutional clients.
2. THE DISPOSALS
2.1 In terms of the agreements, subject to the fulfilment of the relevant
conditions precedent set out in paragraph 5 below (`the conditions
precedent`), m Cubed will dispose of all its shares in each of m
Cubed Life, AOS, m Cubed UTM, m3 Guernsey and Polex, and its holding
of 74,99% of the shares in and all its claims against Escher UK, as
follows:
2.1.1 in terms of an agreement dated 14 June 2005, 100% of the
shares in m Cubed Life, to Fidentia Holdings (Proprietary)
Limited (`Fidentia`), for a consideration of R139 million
(`the m Cubed Life disposal`);
2.1.2 in terms of agreements dated 9 June 2005, 100% of the
shares in and claims against AOS, m Cubed UTM and m3
Guernsey to Fidentia, for considerations of, respectively,
R18,5 million, R16,5 million and R10 million.
2.1.3 in terms of an agreement dated 14 June 2005, 100% of the
shares in Polex, to Fidentia, for a consideration of R10
million; and
2.1.4 in terms of an agreement dated 17 June 2005, 74,99% of the
shares in and all m Cubed`s claims against Escher UK, to
the management of Escher UK, for a consideration of R40
million (`the Escher UK disposal`).
2.2 Each of the disposals is a separate and divisible transaction and the
effective date of each of such disposals will be the first business
day following the date on which the conditions precedent in respect
of that disposal have been fulfilled, which date is expected to be no
later than 1 October 2005.
2.3 The disposal consideration in respect of each disposal (with the
exception of Escher UK where a letter of undertaking has been
received) has been paid and will be held in trust by a firm of
attorneys pending the effective date of each relevant disposal.
2.4 The respective disposals are made ex dividends, amounting in
aggregate to approximately R63 million, payable to m Cubed by some of
the companies being disposed of.
2.5 m Cubed Life realised a loss of R6,783 million for the year ended 28
February 2005. m Cubed Life`s shareholders` funds, at 28 February
2005, was R108,5 million.
2.6 Escher UK realised profit after tax of R4,662 million for the year
ended 28 February 2005. Escher UK had negative shareholders` funds,
at 28 February 2005, of R3,4 million.
2.7 AOS, m Cubed UTM, m3 Guernsey and Polex realised, in aggregate,
profit after tax of R3,206 million for the year ended 28 February
2005 and had negative aggregate shareholders` funds, at 28 February
2005, of R20,85 million.
3. RATIONALE
3.1 While the disposals represent a continuation of the process of
unlocking and realising value for m Cubed shareholders, which began
with the merger of the asset management operations of m Cubed with
those of Momentum Group Limited (`Momentum`), the disposals now also
include m Cubed Life. An unsolicited, irrevocable offer at a price
and on terms which the board of m Cubed believes are attractive to m
Cubed and in the best interests of shareholders, had been received
for m Cubed Life.
3.2 These disposals will leave m Cubed with a substantial amount of cash
and provide the company with several future options which will be
considered and evaluated.
4. FINANCIAL EFFECTS
4.1 Set out below are the pro forma financial effects of, respectively,
the m Cubed Life disposal, the Escher UK disposal and the disposals,
in aggregate, on the earnings, headline earnings, net asset value and
net tangible asset value per m Cubed share, based on the assumptions
that:
4.1.1 for purposes of the earnings and headline earnings per
share calculations:
- the relevant disposals were effective for the full
financial year ended 28 February 2005; and
- the proceeds of the relevant disposals have been
invested at an after-tax interest rate of 5,5%;
4.1.2 for purposes of the net asset value and tangible net asset
value per share calculations, the relevant disposals were
effected on 28 February 2005.
Audited Pro Change Pro Change Pro forma Change
Before forma After forma After After the After the
(cents) After the m After the disposals disposals
(1) the m Cubed the Escher (cents) (%)
Cubed Life Escher (UK)
Life disposal UK disposal
disposal (%) disposal (%)
(cents) (cents)
Earnings 10,4(2) 11,6 11,5 10,1 (2,9) 12,1 16,3
per
share
Headline 5,6(3) 6,2 10,7 5,2 (7,1) 6,3 12,5
earnings
per
share
Net 46,2 54,3 17,5 52,1 12,8 57,3(4) 24,0
asset
value
per
share
Tangible 33,8 45,4 34,3 39,8 17,8 54,4(4) 61,0
net
asset
value
per
share
(1) Extracted from the audited consolidated results of m Cubed for the
financial year ended 28 February 2005.
(2) Based on a weighted average number of 726,774 million m Cubed shares in
issue during the financial year ended 28 February 2005 and on an
attributable profit of R75,862 million for the year then ended.
(3) Based on a weighted average number of 726,774 million m Cubed shares in
issue during the financial year ended 28 February 2005 and on headline
earnings of R40,342 million for the year then ended.
(4) Includes m Cubed`s 50% interest in Advantage Asset Managers (Proprietary)
Limited (`Advantage`)at original carrying value of R51,8 million.
4.2 The financial effects contained in the table in 4.1 above:
4.2.1 have been prepared for the purposes of illustrating how
each of the m Cubed Life disposal and the Escher UK
disposal, as well as all of the disposals in aggregate,
would have affected the relevant financial ratios of m
Cubed for the historic financial period indicated and are
pro forma only. Accordingly, such effects do not
necessarily represent a true reflection of the financial
effects of the respective or aggregate disposals on m
Cubed`s current and future earnings and net asset value;
and
4.2.2 take into account the estimated costs associated with the
disposals, the dividends declared to m Cubed prior to the
disposals as set out in 2.4 above and estimated Capital
Gains Tax implications.
5. CONDITIONS PRECEDENT
The disposals are subject to:
5.1 in the case of m Cubed Life, a limited due diligence investigation
into the business and affairs of m Cubed Life, the approval of m
Cubed shareholders in general meeting and the approval of the
applicable statutory authorities in South Africa;
5.2 in the case of AOS, the approval of the applicable statutory
authorities in South Africa;
5.3 in the case of m Cubed UTM, the approval of the Financial Services
Board and any other applicable statutory authority that may be
required;
5.4 in the case of m3 Guernsey, the approval of the applicable statutory
authorities in South Africa, Guernsey or elsewhere;
5.5 in the case of Polex, a limited due diligence investigation into the
business and affairs of Polex and the approval of the applicable
statutory authorities in South Africa; and
5.6 in the case of Escher UK, the approval of the Financial Services
Authority in the UK and applicable statutory authorities in South
Africa.
6. CIRCULAR TO m CUBED SHAREHOLDERS
A circular to m Cubed shareholders, containing details of the disposals
and notice of a general meeting to be convened for purposes of shareholder
approval of the m Cubed Life disposal as a category 1 disposal in terms of
the Listings Requirements of JSE Limited (`the JSE`) and the disposals as
a disposal in terms of section 228 of the Companies Act, No. 69 of 1973,
as amended, will, subject to approval of the JSE and the Securities
Regulation Panel (`the SRP`) be mailed to shareholders within 28 days of
this announcement or within such longer period as the JSE and/or the SRP
may allow in the circumstances.
7. INDEPENDENT EXPERT ADVICE
As required by the Securities Regulation Code on Takeovers and Mergers of
the SRP, the board of m Cubed will appoint an independent expert adviser
to advise it on the fairness and reasonableness of the terms of the
disposals. Such advice will be included in the circular to m Cubed
shareholders referred to in 6 above.
8. REMAINING BUSINESSES
8.1 After implementation of the disposals, m Cubed`s business interests
will be as follows:
8.1.1 a 50% equity interest in Advantage, the joint venture with
Momentum created in early 2005, which provides multi-
manager asset management, structured products and other
services, primarily to the institutional sector;
8.1.2 AOS Employee Benefits, which provides individual investment
choice employee benefit administration for umbrella and
private benefit schemes;
8.1.3 Specialised Investments, which provides customised
investment solutions for institutions, corporates and high
net worth individuals; and
8.1.4 Specialised Lending, which provides bespoke lending
solutions to high net worth individuals and corporates who
invest with m Cubed.
8.2 The dispute referred to in the audited group results for the year
ended 28 February 2005 has not yet been resolved.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement dated 16 May 2005, as renewed on 2 June 2005,
is hereby withdrawn.
Johannesburg
4 July 2005
Corporate Adviser and Sponsor
PSG CAPITAL LIMITED
Attorneys
PRINSLOO, TINDLE & ANDROPOULOS INC.
Reporting Accountants
PKF (Jhb)
Date: 05/07/2005 10:45:24 AM
Produced by the JSE SENS Department
