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Sun International - Disposal and a Pro Rata Share Buy Back
Sun International Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/007528/06)
Share code: SUI ISIN: ZAE000054995
(`Sun International`)
DISPOSAL OF SUN INTERNATIONAL`S INTEREST IN CITY LODGE HOTELS LIMITED (`CITY
LODGE`) AND A PRO RATA SHARE BUY BACK OF SUN INTERNATIONAL SHARES
1. INTRODUCTION
Sun International shareholders are referred to the announcements released
on the Securities Exchange News Service (`SENS`) of the JSE Limited (`the
JSE`) on Wednesday, 23 March 2005 and Tuesday, 26 July 2005, in terms of
which Sun International announced its intention to dispose of all of the
City Lodge ordinary shares held by Sun International (`the proposed
disposal`), amounting to 38,6% of the total City Lodge shares in issue
(`the City Lodge shares`) at a fixed price of R38,50 per share, equating to
a value of approximately R627 million for the City Lodge shares (`the fixed
price`).
2. THE TERMS OF THE PROPOSED DISPOSAL
2.1 Mechanics
Sun International intends to dispose of the City Lodge shares to the
Sun International shareholders by way of a scheme of arrangement (`the
scheme`) in terms of section 311 of the Companies Act, 1973, as
amended (`the Companies Act`) proposed by 2 wholly-owned subsidiaries
of Sun International (`the Sun International Subsidiaries`), in
exchange for the acquisition by the Sun International Subsidiaries, in
terms of section 89 of the Companies Act of a pro rata portion of Sun
International`s ordinary shares in issue, equivalent in value to the
City Lodge shares disposed of.
On the successful implementation of the scheme, the Sun International
shareholders recorded in the register of Sun International at the
close of business on the record date of the scheme (`the scheme
participants`), which date is expected to be Friday, 23 September 2005
(`the scheme record date`), will be entitled to receive the scheme
consideration as set out in paragraph 2.2. below.
The implementation of the scheme is subject to the fulfilment of the
conditions precedent set out in paragraph 3 below (`the conditions
precedent`).
2.2 The scheme consideration
The scheme consideration due to each scheme participant will comprise
such number of City Lodge shares at the fixed price of R38.50 per
share as will be determined with reference to the market price of Sun
International shares on the JSE at the close of business on the date
on which the scheme becomes unconditional (`the disposal date`), which
disposal date is expected to be Wednesday, 7 September 2005, or such
later date as announced on SENS and in the press.
The resultant number of Sun International shares to be acquired by the
Sun International Subsidiaries will be determined with reference to
the market price of Sun International shares on the JSE at the close
of business on the disposal date (`the purchase ratio`).
3. CONDITIONS PRECEDENT
The scheme will become binding on the disposal date, subject to the
fulfilment of the following conditions precedent, by Monday, 19 September
2005, or such later date as agreed upon between Sun International and the
Sun International Subsidiaries in writing:
3.1 a special resolution required in accordance with the JSE Listings
Requirements approving the acquisition, in terms of section 89 of
the Companies Act, by the Sun International Subsidiaries of
ordinary shares from Sun International ordinary shareholders
pursuant to the scheme, being duly passed by Sun International
ordinary shareholders in a general meeting to be held on Monday,
29 August 2005 (`the general meeting`), and any necessary
registration of such special resolution by the Registrar of
Companies (`the Registrar`);
3.2 special resolutions required to approve the acquisition, in terms
of section 89 of the Companies Act, by the Sun International
Subsidiaries of ordinary shares from Sun International ordinary
shareholders pursuant to the scheme, being duly passed by the
shareholders of the respective Sun International Subsidiaries,
and the registration of such special resolutions by the
Registrar;
3.3 the scheme being approved at the meeting to be held on Monday, 29
August 2005 (`the scheme meeting`) by a majority representing not
less than three-fourths (75%) of the votes exercisable by Sun
International shareholders recorded in the register as such at
the close of business on the record date of the scheme (`scheme
members`) present and voting either in person or by proxy at the
scheme meeting;
3.4 the High Court of South Africa (Witwatersrand Local Division)
(`the Court`) sanctioning the scheme in terms of the Companies
Act; and
3.5 a certified copy of the Order of Court sanctioning the scheme
being lodged with, and registered by, the Registrar in terms of
the Companies Act.
4. FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the
scheme on the earnings per share (`EPS`), headline earnings per share
(`HEPS`), adjusted headline earnings per share (`adjusted HEPS`) and net
asset value (`NAV`) per Sun International share. The material assumptions
are set out in the notes following the table.
These unaudited pro forma financial effects do not constitute a
representation of the future financial position of Sun International on
implementation of the scheme. The unaudited pro forma financial effects are
provided for illustrative purposes only.
Because of the nature of the pro forma financial effects, they may not give
a fair reflection of Sun International`s financial position at 31 December
2004 after the scheme, or the effect on future income.
Before the scheme After the scheme Percentage
(1) (2) (3) Change
EPS (cents) 3 6 270,5 606,9 124,4
HEPS (cents) 3 252,3 252,0 (0,1)
Adjusted HEPS * 202,2 197,5 (2,3)
(cents) 3
3 335 3 345 0,3
NAV (cents) 4
Number of shares in 116 393 107 400 (7,7)
issue (`000)
Weighted average 109 807 100 814 (8,2)
number of shares in
issue (`000)
* Adjusted HEPS exclude certain items of income or expense so as to enable
users to obtain a more meaningful comparison of the group`s performance
with prior periods. These adjustments include pre-opening expenses,
earnings and results from discontinuing operations and material items
considered to be outside of the normal operating activities of the group
and/or of a non-recurring nature.
Notes:
1. The EPS, HEPS, adjusted HEPS, and NAV per ordinary share `Before the
scheme` are based on the unaudited results for the six months ended 31
December 2004.
2. Pro forma financial effects after the scheme.
3. The EPS, HEPS and adjusted HEPS `After the scheme` are based on the
following assumptions:
a. the scheme was implemented on 1 July 2004; and
b. the weighted average number of ordinary shares in issue of 100
814 000 (109 807 000 weighted average ordinary shares in issue as
per the results for the six months ended 31 December 2004 less 8
993 000 shares acquired by the Sun International Subsidiaries).
4. The NAV per ordinary share `After the scheme` is based on the following
assumptions:
a. that the scheme was implemented on 31 December 2004; and
b. the total number of ordinary shares in issue of 107 400 000 (116
393 000 ordinary shares in issue as per the results for the six
months ended 31 December 2004 less 8 993 000 shares acquired by
the Sun International Subsidiaries).
5. The adjustments assume the following events:
a. the Sun International Subsidiaries having acquired 8 993 000
ordinary shares at R69,70 per share, being the Sun International
trading price on the JSE on the last practicable date prior to
the finalisation of the scheme document, being Friday, 22 July
2005 (`the last practicable date`);
b. the disposal of Sun International`s 38,6% shareholding in the
ordinary share capital of City Lodge has been implemented at the
fixed price of R38,50 per share equating to a value of
approximately R627 million for the City Lodge shares which
equates to 7,7% of the Sun International shares in issue as at
the last practicable date;
c. The average prime interest rate used in calculating the financial
effects was 10,5%;
d. The above transactions, unless otherwise stated, are subject to
South African taxes and the tax effects have been accounted for
in the adjustments.
6. The EPS `After the scheme` includes the net profit after tax arising on the
disposal of the City Lodge shares amounting to approximately R338 million.
The financial effects are calculated based on Sun International`s share
price on the last practicable date. The actual financial effects will
depend on the Sun International share price on the disposal date.
5. SALIENT DATES AND TIMES OF THE SCHEME
2005
Last day to trade Sun International shares on Thursday, 18 August
the JSE in order to be recorded in the
register on the record date of the scheme
meeting (see note 1 below)
Record date of the scheme meeting, being the Thursday, 25 August
last date to be recorded in Sun
International`s register of members in order
to be eligible to vote at the scheme meeting
(by 17:00) on
Last day to lodge forms of proxy for the Friday, 26 August
scheme meeting (by 09:00) on (see note 2
below)
Last day to lodge forms of proxy for the Friday, 26 August
general meeting (by 09:30) on (see note 2
below)
Scheme meeting to be held (at 9:00) on Monday, 29 August
General meeting to be held (at 9:30 or 10 Monday, 29 August
minutes after the conclusion or adjournment
of the scheme meeting, whichever is the
later) on
Results of scheme meeting and the general Monday, 29 August
meeting to be released on SENS on
Scheme chairperson`s report lies for Monday, 29 August
inspection
Results of scheme meeting and the general Tuesday, 30 August
meeting to be published in the press on
Registration of the Sun International special Wednesday, 31 August
resolution passed at the general meeting for
the implementation of the scheme by
Court hearing to sanction the scheme (at Tuesday, 6 September
10:00 or as soon thereafter as Counsel may be
heard in the High Court of South Africa
(Witwatersrand Local Division)) on
Results of Court hearing to be released on Tuesday, 6 September
SENS
Results of Court hearing to be published in Wednesday, 7 September
the press
Order of Court sanctioning the scheme Wednesday, 7 September
registered by the Registrar on or about (if
the scheme is sanctioned)
The dates below are subject to the fulfilment of the conditions
precedent as set out in paragraph 3. To the extent that the conditions
precedent are not fulfilled, the dates set out below will be delayed
accordingly and any such changes will be announced on SENS and published
in the press.
Disposal date once all conditions precedent Wednesday, 7 September
have been fulfilled
Disposal date announcement once all Thursday, 8 September
conditions precedent have been fulfilled to
be released on SENS (including details of the
purchase ratio and resultant number of Sun
International shares to be acquired as
determined at close of business on the
disposal date)
Disposal date announcement once all Friday, 9 September
conditions precedent have been fulfilled to
be published in the press
Last day to trade Sun International shares on Friday, 16 September
the JSE in order to be recorded in the
register on the record date of the scheme;
Sun International shares trade `ex` the Monday, 19 September
scheme under the new ISIN of ZAE000070678
Scheme record date to determine participation Friday, 23 September
in the scheme
Operative date of the scheme from the Monday, 26 September
commencement of business
The scheme consideration expected to be
transferred or posted
(as the case may be), and new share
certificates expected to be posted,
to certificated scheme participants whose Monday, 26 September
documents of title are received
by the transfer secretaries before 12:00 on
Friday, 23 September 2005, on or about
or
failing receipt of documents of title before
12:00 on Friday, 23 September 2005, within
five business days of receipt thereof by the Monday, 26 September
transfer secretaries
The scheme consideration expected to be
credited to the dematerialised
scheme participants` accounts held at their
CSDP or broker and share
balances updated on
Notes:
1. Sun International shareholders should note that, as Sun International is
trading in the STRATE environment, settlement for trade takes place five
business days after the relevant trade has taken place. Therefore, Sun
International shareholders who acquire Sun International shares after the
last day to trade Sun International shares on the JSE, being Thursday, 18
August 2005, in order to be recorded in the register of scheme members by
the record date of the scheme meeting, being Thursday,25 August 2005, will
not be eligible to vote at the scheme meeting.
2. Own name shareholders will be entitled to attend the scheme meeting in
person or if they are unable to attend and wish to be represented thereat
may complete and return a form of proxy to the transfer secretaries in
accordance with the time specified on that form of proxy.
3. A beneficial owner of Sun International shares should timeously inform his
nominee or, if applicable, his CSDP or broker of his intention to attend
and vote at the scheme meeting or to be represented by proxy thereat in
order for his nominee or, if applicable, his CSDP or broker to issue him
with the necessary authorisation to do so or should provide his nominee or,
if applicable, his CSDP or broker timeously with his voting instruction
should he not wish to attend the scheme meeting in person in order for his
nominee or, if applicable, his CSDP or broker to vote in accordance with
his instruction at the scheme meeting.
4. Any change to the above dates and times will be advised to Sun
International shareholders by notification on SENS and in the press.
5. No dematerialisation or rematerialisation of existing Sun International
shares will take place after Friday, 16 September 2005.
6. All times indicated above are South African times.
7. Certificated scheme participants are required to complete their surrender
and transfer form to be received by the transfer secretaries by the record
date of the scheme. Documents of title surrendered by certificated scheme
participants prior to the record date of the scheme will be held in trust
by the transfer secretaries pending the scheme becoming unconditional. In
the event that the scheme does not become unconditional for any reason
whatsoever, then the transfer secretaries will, within five business days
of the date upon which it becomes known that the scheme will not become
unconditional, return the documents of title to the certificated
shareholders concerned, by registered post, at the risk of such
shareholders.
6. OPINIONS AND RECOMMENDATIONS
The directors of Sun International have considered the terms and conditions
of the scheme and are of the unanimous opinion that the scheme is fair and
reasonable to Sun International shareholders. Accordingly, the board of
directors of Sun International recommends that Sun International
shareholders vote in favour of the scheme. The directors of Sun
International who hold Sun International shares intend to vote in favour of
the scheme at the scheme meeting in respect of their own holdings of Sun
International shares.
7. NOTICE OF MEETINGS
The scheme meeting to approve the scheme shall be convened for Monday, 29
August 2005 at 09:00, in the boardroom, 4th Floor, 27 Fredman Drive,
Sandown, Sandton. The general meeting of Sun International shareholders is
to be held at the same venue at 09:30, on Monday, 29 August 2005, or
immediately after the conclusion of the scheme meeting, whichever is the
later.
8. DOCUMENTATION AND CAUTIONARY ANNOUNCEMENTS
The documentation relating to the scheme, which contains the notice of the
scheme meeting, will be posted to Sun International shareholders on Friday,
5 August 2005. Sun International shareholders are also referred to the
notice of scheme meeting, to be published in the Government Gazette on
Friday, 12 August 2005 and the Sunday Times and Rapport on Sunday, 7 August
2005.
Sun International shareholders are advised that as a result of the
publication of this announcement, the cautionary announcement released on
SENS and published in the press on Tuesday, 26 July 2005 and Wednesday, 27
July 2005, respectively, is now withdrawn.
Sandton
3 August 2005
Investment Bank
Investec Corporate Finance
Attorneys
Hofmeyr, Herbstein & Gihwala Inc.
Sponsor
Investec Bank
Reporting Accountants and Auditors
PricewaterhouseCoopers Inc.
Date: 03/08/2005 09:25:08 AM
Produced by the JSE SENS Department
