| Thu 4 Aug 2005, 10:07 | | FirstRand Limited - Terms announcement |
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FirstRand Limited - Terms announcement
FirstRand Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/010753/06)
Ordinary share code: FSR ISIN: ZAE000066304
B Preference share code: FSRP ISIN: ZAE000060141
B1 Preference share code: FSPP ISIN: ZAE000070900
(`FirstRand` or `the Company`)
Terms announcement
1. Introduction
The FirstRand board of directors has resolved to raise capital through the
private placement of variable rate non-cumulative non-redeemable FirstRand B
preference shares. 30 000 000 of the B preference shares are currently in issue
(`preference shares currently in issue`). In addition to the preference shares
currently in issue FirstRand will issue a further 15 000 000 B preference shares
which shall be designated as B1 preference shares (`B1 preference shares`).
These B1 preference shares are a separate class of preference shares and will be
listed separately from the preference shares currently in issue.
The terms, rights and privileges of the B1 preference shares, including the
preference dividend per B1 preference share, are identical to the preference
shares currently in issue with the exception of the issue price and item `B` in
the formula used to determine the preference dividend per B1 preference share.
The issue price of the B1 preference shares is R102 per share whereas the issue
price of the preference shares currently in issue was R100 per share. The effect
of the higher issue price on the B1 preference shares relative to the preference
shares currently in issue is that the yield at which the B1 preference shares
are being issued is 66.67% of prime whereas the yield at which the preference
shares currently in issue were issued was 68% of prime.
FirstRand has received irrevocable undertakings from investors to subscribe for
15 000 000 B1 preference shares to be issued in terms of the private placement
at a subscription price of R102.00 each, thereby raising R1.53 billion.
2. Rationale
The FirstRand group actively manages its capital base in order to enhance
shareholder value through its capital management framework. The issue of the B1
preference shares will further optimise the level and structure of the FirstRand
group capital base.
3. Listing on the JSE Limited (`JSE`)
The JSE has granted FirstRand a listing of 15 000 000 B1 preference shares as
follows:
JSE sector: Specialist Securities - Preference
Shares`
Abbreviated name: `FR B1PREF`
Share code: FSPP
ISIN: ZAE000070900
The listing is subject to the condition precedent that FirstRand is able to
fulfill the spread requirements of the JSE in respect of preference
shareholders, namely a minimum of 50 public preference shareholders, excluding
employees and their associates.
4. The private placement
4.1 Particulars of the private placement
Subscription price per preference share (Rand) 102
Minimum Rand value of subscription per applicant 100 000
acting as principal
Number of B1 preference shares offered 15 000 000
Amount to be raised in terms of the private 1 530 000 000
placement (Rand)
Effective preference dividend rate on the issue 66.67% of prime
price of R102 per share
Nominal preference dividend rate on R100 per share 68.00% of prime
4.2 Salient dates and times
The B1 preference shares will be listed on the JSE at 09:00 on Thursday 11
August 2005. The proposed listing date is subject to change. Any changes will be
published on SENS and in the press.
5. Salient features of the B1 preference shares
5.1 Voting rights
The holders of the B1 preference shares shall not be entitled to vote, either in
person or by proxy, at any meeting of the Company, by virtue or in respect of
the B1 preference shares, unless any one or more of the following circumstances
prevail at the date of the meeting:
- the preference dividend or any part thereof remains in arrear and unpaid after
seven days from the due date thereof;
- a resolution of the Company is proposed which affects the rights attached to
the B1 preference shares or the interest of the holders thereof including, but
not limited to, a resolution for the winding-up of the Company or reduction of
capital or share premium account; or
- the Company proposes or purports to dispose of the whole or substantially the
whole of the undertaking of the Company or the whole or the greater part of the
assets of the Company.
At every general meeting or adjourned general meeting of the Company at which
ordinary shareholders and preference shareholders are present and entitled to
vote, upon a poll, a preference shareholder shall be entitled to that proportion
of the total votes in the Company which the aggregate amount of the nominal
value of the B1 preference shares held by it bears to the aggregate amount of
the nominal value paid on all shares issued by the Company at the relevant time.
5.2 Entitlements to dividends
The B1 preference shares shall confer on the holder thereof the right to receive
out of the profits of the Company a non-cumulative preference cash dividend
which shall accrue on a daily basis but shall not be compounded. The preference
dividend will rank in priority to any dividends which after the date of issue of
the B1 preference shares may be declared in respect of any ordinary shares in
the Company but pari passu in respect of any dividends declared on any other
preference shares in the Company.
Save for the first preference dividend, the preference dividends shall, if
declared, be due and payable six monthly in arrear, on the last Monday of
February and the last Monday of August of each year, provided that if any such
date is not a business day then the immediately preceding day which is a
business day, to preference shareholders recorded in the register on the
business day immediately preceding each dividend payment date.
The first preference dividend, if declared, shall be in respect of the
initial period from the issue date to the last Monday of August 2005 (both days
inclusive). Consequently, the first preference dividend on the B1 preference
shares will be paid on 29 August 2005.
The preference dividend for each of the B1 preference shares shall be
calculated in arrear and amounts to 66.67% of the average prevailing prime rate
for the period calculated on the issue price of R102 per B1 preference share.
More specifically, the preference dividend per B1 preference share will be
calculated in accordance with the following formula:
A = B x C x D x
R102.00
365
Where:
A = the preference dividend per preference
share;
B = such percentage as shall result in the
preference dividend per day for each B1
preference share being the same as that for
the preference shares currently in issue
(such percentage being approximately 66.667%
(sixty-six point six six seven percent),
adjusted by such percentage as shall be
necessary to eliminate any change in the
rate contemplated in C in the formula set
out in Article 8.3.7 between the date on
which a dividend is declared and the
dividend date being the date on which it is
due and payable;
C = the average prevailing prime rate (per
annum, compounded monthly) expressed as a
percentage over the number of days of the
relevant period for which the dividend is
payable; and
D = the number of days of the relevant period
for which the dividend is payable.
If any preference dividend is not declared by the Company in respect of the
period to which such preference dividend relates, the preference dividend will
not accumulate and will accordingly never become payable by the Company whether
in preference to payments to any other class of shares in the Company or
otherwise. Notwithstanding the aforegoing, the Company shall, if it fails to
declare a preference dividend in respect of any applicable period, be obliged to
retain in reserve an amount equivalent to the aggregate amount of profits
generated by the Company during such period.
5.3 Changes to the prime rate
In the event that there is a change to the prime rate between the dividend
declaration date and the dividend payment date, the prevailing prime rate at the
declaration date will be applied from the dividend declaration dividend payment
date.date to the
The effect of the aforementioned will be that the preference dividend will
not be adjusted for any changes in the prime rate between the dividend
declaration date and the dividend payment date. FirstRand undertakes that the
period between the dividend declaration date and the dividend payment date will
not exceed 20 business days.
5.4 Changes to tax status
If there is an amendment or amendments to the Income Tax Act that results
in the preference dividends being taxable in the hands of the holders of the B1
preference shares and which results in payment of the preference dividends
becoming a deductible expense for the Company, provided such amendment is
uniformly applicable to all corporate taxpayers and not only because of the
particular circumstance of the Company or any holder of the B1 preference
shares, the percentage of the prime rate will be increased by the Company. Such
increase will be limited to the extent that the Company incurs less costs in
servicing the B1 preference shares, which cost savings it would not have
obtained but for such amendments to the Income Tax Act.
If such amendments to the Income Tax Act do not result in the Company
incurring lesser costs in servicing the B1 preference shares, then,
notwithstanding that such amendment may result in a decrease in the after-tax
returns of any holder of the B1 preference shares on its holding of B1
preference shares, no change shall be made to the percentage of the prime rate.
The Company shall be entitled to require its auditors to verify whether it is
obliged to increase the percentage of the prime rate in accordance with this
provision. The auditors, in deciding whether such increase is required in terms
of this provision, shall act as experts and not as arbitrators and their
decision shall, in the absence of manifest error, be final and binding on the
Company and all holders of the B1 preference shares. The costs of such auditors
shall be borne and paid by the Company.
6. Placement document
A placement document has not been issued. The rationale for this is that the
terms, rights and privileges of the B1 preference shares are identical to the
preference shares currently in issue except for:
- the effective yield of the B1 preference shares relative to the preference
shares currently in issue; and
- the premium at which the B1 preference shares are being issued relative to the
premium on the preference shares currently in issue were issued.
Interested parties are referred to the pre-listing statement issued by FirstRand
on 1 November 2004 for further information on the terms, rights and privileges
of the B1 preference shares and the preference shares currently in issue. This
pre-listing statement can be viewed on the FirstRand website at
www.firstrand.co.za
Johannesburg
4 August 2005
Merchant bank and sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Legal adviser
Deneys Reitz Inc.
Date: 04/08/2005 10:00:07 AM
Produced by the JSE SENS Department
