| Thu 13 Oct 2005, 14:07 | | Glenrand M.I.B announces strategic empowerment dea |
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Glenrand M.I.B announces strategic empowerment deal
Glenrand MIB Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008001/06)
Share code: GMB & ISIN: ZAE000018529
("the company" or "Glenrand MIB")
Glenrand M.I.B announces strategic empowerment deal
Insurance broking and financial services group Glenrand M.I.B has concluded a
strategic black economic empowerment (BEE) transaction that will increase BEE
shareholding in the group to 27.4%.
The transaction introduces two new broad-based BEE groups - Ayavuna Women"s
Investments and Matemeku Investments - and increases the shareholding of
Glenrand M.I.B"s long-standing BEE partner, Kunene Brothers.
Kunene Finance Company already owns 6,1% of Glenrand M.I.B (prior to dilution of
shares), and a further 5,9% (post issue of new shares and repurchase) will be
acquired by its holding company, Kunene Brothers Holdings (KBH). This gives the
Kunene group an effective 11,3% (post issue of new shares and repurchase) in
Glenrand M.I.B.
The transaction has been struck at a price of 215c per Glenrand M.I.B share. The
total cost of the transaction has been contained to 4.3% of Glenrand M.I.B"s
market capitalisation.
The transaction has been structured so that each of the three empowerment groups
- Kunene Brothers Holdings (KBH), Ayavuna Women"s Investments, and Matemeku
Investments - acquires 5,9% (post issue of new shares and repurchase) each of
the equity in Glenrand M.I.B in three separate transactions worth R103 million
in total.
Glenrand M.I.B will acquire the remaining shares not already owned in its 50,1%
subsidiary Glenrand M.I.B Makgulong (Pty) Limited. Thereafter, the Glenmib
Employee Empowerment Trust (the Trust), which currently owns 0.7% of the shares
in Glenrand MIB, will propose a Scheme of Arrangement in terms of which it will
acquire an additional 3.6% of the shares in Glenrand M.I.B. The Trust will then
issue shares to historically disadvantaged staff of Glenrand M.I.B.
Collectively, these transactions will raise Glenrand M.I.B"s BEE ownership to
27.4%.
The transaction will be funded through the issue of new shares to the partners
on a notional funding basis. The partners will receive capitalisation shares in
lieu of cash dividends for the 10-year duration of the agreement. Glenrand M.I.B
will repurchase shares equivalent to the value of the outstanding notional
funding at the end of the 10-year period. Each partner may settle the notional
funding in full at any point provided they retain a minimum shareholding of 5,9%
in Glenrand M.I.B for the 10-year period.
A Special Purpose Vehicle (SPV) has been created for each partner to give effect
to the transaction. Each partner will be required to pay a 2% cash deposit of
some R689 000 towards the acquisition of the Glenrand M.I.B shares. The funding
for the transaction will attract interest at the rate of 9,3% a year, calculated
in accordance with NACA. No cash will flow between Glenrand M.I.B and the SPVs,
which will instead receive capitalisation shares in lieu of their dividends.
Glenrand MIB Chief Executive Officer Steve von Roretz says "We believe this is
an elegantly structured transaction that meets several objectives at once. It
allows our partners to acquire shares in Glenrand M.I.B without placing undue
demands on their cash resources, and will enhance the growth capacity of the
group in the evolving SA socio-economic climate".
"Glenrand M.I.B as a group is committed to transformation in South Africa, both
at the shareholder level and throughout the group. We are also committed to the
goals of the FSC, which we regard as setting minimum standards for financial
sector participants. We therefore regard this transaction as part of a journey
of transformation rather than an end point."
Moss Mashishi, who is chairman of Matemeku Investments, and Hixonia Nyasulu,
chairman of Ayavuna Women"s Investments, will be invited to join the board of
Glenrand M.I.B. KBH is already represented at board level by Dr Dudu Kunene.
To mitigate the dilutory effect of issuing new subscription and capitalisation
shares to the partners, Glenrand M.I.B (subject to shareholder approval) will
propose a Scheme of Arrangement to repurchase 7.5% of its shares.
Von Roretz says the transaction is crucial to the group"s medium and long-term
business success. "Our partners have undertaken to assist us in identifying new
business opportunities and enhance our growth strategy. As an empowered company
we will be better positioned for growth, and new opportunities will be open to
us.
"Our partners have also undertaken to assist us in accelerating transformation
across the group in areas such as human capital and capacity building at
managerial level."
The transaction has been structured to minimise the dilutory effect on earnings.
Post the transaction, the pro forma fully diluted earnings per share will fall
to 3,9 cents (prior to the transaction: 4,3 cents), and fully diluted HEPS will
fall to 11,1 cents (prior 11,8 cents).
Ends
ISSUED FOR: GLENRAND M.I.B LIMITED
CONTACT : Steve von Roretz, CEO: 011 329 1427 / 083 326 6319
FAX NO : 011 293 2755
E-MAIL : svonroretz@glenrandmib.co.za
WEBSITE : www.glenrandmib.co.za
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart: 011 325 4195 / 082 443 6399
FAX NO : 011 325 4199
E-MAIL : tish@tspr.co.za
DATE : 13 October 2005
Date: 13/10/2005 02:07:17 PM Produced by the JSE SENS Department
