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Glenrand M#I#B - Disposal of the Reinsurance Consultants and Intermediaries
business and further cautionary
Glenrand M#I#B Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008001/06)
Share code: GMB & ISIN: ZAE000018529
("the company" or "Glenrand M#I#B")
DISPOSAL OF THE REINSURANCE CONSULTANTS AND INTERMEDIARIES BUSINESS AND FURTHER
CAUTIONARY
1. Introduction
Shareholders are advised that Glenrand M#I#B, and its wholly-owned
subsidiary Reinsurance Consultants and Intermediaries (Proprietary) Limited
("RCI") ("the sellers") have entered into an agreement with Main Street 338
(Proprietary) Limited, a subsidiary company of Willis Group Holdings
Limited.("Willis") dated 5 October 2005 ("the agreement"). In terms of the
agreement, the sellers will dispose of the business of the reinsurance
consultants and intermediaries division as a going concern ("the disposal")
to Willis. The business includes certain assets, contracts, employees and
trade creditors, as well as its 49% shareholding in Motheo Reinsurance
Consultants (Pty) Limited and its 70% shareholding in Reinsurance
Consultants and Intermediaries (Mauritius) Limited (collectively "the
reinsurance business"). The disposal will be effective from the first day of
the month following the fulfillment or waiver of all suspensive conditions,
as mentioned in paragraph 6 below, provided that such date is not later than
28 February 2006.
2. Nature of business
The reinsurance business operates from Hyde Park in Johannesburg and is
focused on giving advice relating to the placement and purchasing of
reinsurance on a treaty and facultative basis for a host of clients
including insurance companies, underwriting agencies, commercial and retail
outlets, financial service companies and banking institutions. Business is
placed in the local and international markets. RCI is a leader in its field
in South Africa and provides certain of the above services into Southern
Africa.
Further to the above, an increasing amount of work has been carried out in
financial modelling and self-insurance structuring in response to clients"
changing needs, as well as providing administration assistance to many
clients relating to their reinsurance needs.
3. Rationale for the disposal
The nature of the reinsurance business and its client base requires access
to various technical tools that are available in the international arena.
The future marketing of clients" portfolios also needs a shareholder that
has ready access to an internationally represented organisation to
facilitate the further growth and development of the business in the
handling of existing business and sourcing of new opportunities.
It is the considered view of the Glenrand M#I#B Board of Directors and
management of the reinsurance business that the inability to achieve the
above two objectives would have held back the progress of the reinsurance
business in a more competitive global market environment.
The business is well equipped in terms of intellectual capital and is likely
to benefit substantially from the linkage to a global leader in the
reinsurance arena.
4. Consideration
The consideration for the disposal is R76 million to be settled in cash
("the consideration"). Further to the consideration, an additional
consideration will be payable in four annual installments following the
effective date, should brokerage fees exceed certain limits as set out in
the agreement. The maximum additional consideration receivable in terms of
the agreements is R25 million.
It is the intention of the directors to make a distribution to shareholders
out of the consideration proceeds, the quantum of which will be determined
once the suspensive conditions of the contract have been fulfilled.
5. Financial effects of the disposal
Based on the published consolidated audited results of Glenrand M I B for
the year ended 30 June 2005, the unaudited pro forma financial effects of
the disposal on fully diluted earnings per share ("FDEPS"), fully diluted
headline earnings per share ("FDHEPS"), net asset value per share ("NAV")
and net tangible asset per share ("NTAV") are set out below. This unaudited
pro forma financial information has been prepared for illustrative purposes
only and because of its nature may not give a fair reflection of Glenrand M
I B "s financial position and results of operations, nor of the effect and
impact of the disposal on Glenrand M I B. The preparation of the pro forma
financial information is the responsibility of Glenrand M I B directors.
Before the After the % Change
disposal (1) disposal (2) %
& (6)
FDEPS (cents) 4.3 30.2 (3) 602
,(4) & (5)
FDHEPS (cents) 11.8 8.5 (3 & 4) (28)
NAV (cents) 66.9 93.0 (5) 39
NTAV (cents) 51.0 77.0 (5) 51
Weighted average fully
diluted shares in issue for 242 656 242 656
calculating FDEPS and FDHEPS
("000)
Shares in issue for 241 830 241 830
calculating NAV and NTAV
("000)
Notes
1 Based on the published consolidated audited results of Glenrand M I B for
the year ended 30 June 2005.
2 Based on the assumption that the disposal took place on 1 July 2004 for
income statement purposes and on 30 June 2005 for balance sheet purposes.
3 FDEPS and FDHEPS have been adjusted to exclude the income attributable to
the disposal for the year ended 30 June 2005.
4 A further adjustment has been made to account for the after-tax interest
receivable for twelve months on the proceeds on sale of R76 million.
5 After taking into account profit arising on the disposal.
6 No adjustment has been made for the financial effects of any proposed
distribution to shareholders arising out of the consideration proceeds.
6. Suspensive conditions
The suspensive conditions in terms of the agreement include inter alia the
obtaining of regulatory approvals to the extent required.
7. Categorisation
The disposal is a Category 3 transaction in terms of the JSE Limited
Listings Requirements.
8. Further cautionary announcement
Shareholders are referred to the further cautionary announcement published
on 7 September 2005. Notwithstanding the information regarding the disposal
contained in this announcement, shareholders are advised that Glenrand M I B
is still engaged in negotiations which if successfully concluded may have an
effect on the price of the company"s shares. Accordingly, shareholders are
advised to continue exercising caution when dealing in the company"s shares
until a further announcement is made.
Randburg
7 October 2005
Investment bank and sponsor
Nedbank Capital
Attorneys to Glenrand MIB
Deneys Reitz
Attorneys to Willis
Webber Wentzel Bowens
Date: 07/10/2005 07:45:10 AM Produced by the JSE SENS Department
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