| Thu 1 Dec 2005, 14:00 | | VenFin/Vodafone - Recommended offer |
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VenFin/Vodafone - Recommended offer
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA OR JAPAN.
VenFin Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1948/031037/06)
(Share code: VNF)
(ISIN Code: ZAE000026498)
("VenFin")
Vodafone Holdings (SA) (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1993/005373/07)
Firm intention announcement - recommended offer for VENFIN and TERMS OF THE
PROPOSED sale of all the assets of VenFin excluding VenFin"s indirect interest
in Vodacom Group (Proprietary) Limited
1. Introduction
In an announcement dated 3 November 2005, VenFin shareholders were advised
that Rembrandt Trust (Proprietary) Limited ("Rembrandt Trust") had informed
the board of directors of VenFin that Vodafone Group Plc had submitted a
proposal to the board of Rembrandt Trust regarding a proposed acquisition
of all of the B ordinary shares in the issued share capital of VenFin (the
"B Shares") for a consideration of R47.25 per B Share, subject to
definitive agreements being entered into between the parties (the "B Share
Sale Agreement").
Vodafone Group Plc announced on 4 November 2005 that it had agreed with the
Rembrandt Trust to purchase all of the issued B Shares for a consideration
of R47.25 per B Share, subject to certain conditions. If completed, this
acquisition will give Vodafone Group Plc (or its nominated subsidiary) a
46.5% voting interest and an 8.0% economic interest in VenFin.
On 30 November 2005, Vodafone Holdings (SA) (Pty) Limited ("Vodafone"), an
indirectly wholly-owned subsidiary of Vodafone Group Plc, advised the board
of directors of VenFin of its firm intention to make an offer to acquire
all the ordinary shares in the issued share capital of VenFin ("VenFin
ordinary shares") (other than those held by Vodafone Group Plc, Vodafone
and any subsidiaries of VenFin at the date hereof) (the "Offer Shares")
from the holders thereof (the "Offerees") for a cash consideration of
R47.25 per Offer Share, subject to certain conditions (the "Offer").
Vodafone Group Plc, VenFin, Business Venture Investments No 951 Limited
("Newco") and Rembrandt Trust have entered into an agreement in terms of
which VenFin will, subject to certain suspensive conditions and after
completion of the Offer, dispose of all the Surplus Assets (as defined in
paragraph 3 below) to Newco for a purchase consideration of R5 billion in
cash (the "Surplus Asset Sale Agreement") ("the Disposal"). The Disposal
constitutes a related party transaction in terms of the JSE Limited ("JSE")
Listings Requirements and VenFin shareholders are therefore required to
approve the Disposal.
VenFin will also undertake an internal restructuring, which will include
the repurchase and cancellation of its treasury shares ("the Specific
Repurchase"). The Specific Repurchase must be approved by VenFin
shareholders by way of a special resolution.
2. Terms of the Offer
2.1 Offer consideration
The Offer is for a cash consideration of R47.25 per Offer Share (the
"Offer Consideration").
The Offer Consideration represents a premium of:
- 30% to the closing share price of VenFin ordinary shares on the JSE on
the trading day prior to publication of the VenFin announcement on 3
November 2005;
- 41% to the 30-day volume weighted average price of VenFin ordinary
shares prior to the publication of the VenFin announcement on 3
November 2005;
- 47% to the 30-day volume weighted average price of VenFin ordinary
shares prior to the publication by VenFin of the first cautionary
announcement on 6 September 2005.
2.2 Conditions precedent
The implementation of the Offer and payment of the Offer Consideration is
conditional upon the fulfilment of the following conditions precedent:
- all regulatory approvals and consents necessary in respect of the
Offer and the B Share Sale Agreement being obtained, including
approvals and consents from the JSE, the Securities Regulation Panel
("SRP"), the competition authorities in South Africa (the "Competition
Authorities") and to the extent necessary, the Independent
Communications Authority of South Africa; and
- Offerees holding not less than 90% (or such lower percentage as may be
elected by Vodafone) of the Offer Shares accepting the Offer, provided
that this condition precedent may be waived or the minimum acceptance
percentage amended downwards, at the sole and absolute discretion of
Vodafone.
2.3 Financial effects of the Offer on the Offerees
Set out below, for illustrative purposes only, are the unaudited pro forma
financial effects of the Offer on Offerees who accept the Offer, based on
the published audited results of VenFin for the twelve months ended 30 June
2005:
Audited Unaudited pro- Change
before the forma after the (%)
Offer and Offer
Disposal (cents)
(cents)
Basic earnings per
VenFin share 247.8 (1) 241.5 (2) (3)
Headline earnings per
VenFin share 189.8 (1) 241.5 (2) 27
Net asset value per
VenFin share 1 811 (3) 4 725 (4) 161
Net tangible asset
value per VenFin
share 1 477 (3) 4 725 (4) 220
Notes:
1. Being the reported audited basic and headline earnings per VenFin ordinary
share for the twelve months ended 30 June 2005.
2. Being the reported pro forma basic and headline earnings per VenFin
ordinary share for the twelve months ended 30 June 2005 based on a pre tax
cash return of 7.2% (after tax cash return of 5.11%) on the Offer proceeds
assuming the Disposal was effected on 1 July 2004.
3. Being the reported audited net asset value per VenFin ordinary share and
net tangible asset value per VenFin ordinary share at 30 June 2005.
4. Being the pro forma asset value per VenFin ordinary share and net tangible
asset value per VenFin ordinary share assuming the Offer Consideration was
received on 30 June 2005.
5. No account has been taken of capital gains tax and other costs or taxes in
the calculation of the pro forma financial effects of the Offer on
Offerees.
2.4 Vodafone"s intentions regarding VenFin
Should the Offer be accepted by Offerees in respect of nine-tenths or more
of the Offer Shares, Vodafone reserves the right to invoke the provisions
of section 440K of the Companies Act, 1973 (Act 61 of 1973), as amended
(the "Act"), to compulsorily acquire all such Offer Shares in respect of
which the Offer was not accepted and apply for the termination of the
listing of VenFin on the JSE.
If section 440K of the Act cannot be invoked or Vodafone elects not to
invoke the provisions of section 440K of the Act, VenFin will continue as a
listed company until a shareholders" resolution to terminate the listing of
VenFin"s shares on the JSE is passed.
Upon the Offer becoming unconditional, Vodafone intends to reconstitute the
board of directors of VenFin to ensure that a proportionate number of the
directors are representatives of Vodafone and, further, to terminate the
VenFin American Depository Receipt programme. Furthermore, Vodafone
intends to implement, inter alia, the Surplus Asset Sale Agreement, details
of which are set out in paragraph 3 below.
3. Newco and the sale of the Surplus Assets
3.1 Sale of the Surplus Assets to Newco
The surplus assets of VenFin, which are to be sold to Newco pursuant
to the Surplus Asset Sale Agreement, will comprise all of the assets
owned by VenFin as at the business day immediately following the date
on which the B Share Sale Agreement becomes unconditional in
accordance with its terms, with the exception of (i) 100% of the
issued share capital in VenFin Telecommunication Investments Limited;
(ii) all the shares held indirectly by VenFin in Vodacom Group
(Proprietary) Limited; (iii) any tax assets; (iv) the proceeds
received by VenFin pursuant to the Surplus Asset Sale Agreement; and
(v) any cash held by VenFin in respect of all known liabilities VenFin
may have as at the effective date of the Surplus Asset Sale Agreement
(the "Surplus Assets").
Newco was incorporated as a public company on 1 December 2004 and has
not traded since its incorporation. Newco has an authorised share
capital identical to that of VenFin, being R9 175 571.70 consisting of
512 493 650 ordinary shares of one cent each and 40 506 352 B ordinary
shares of 10 cents each. The rights attaching to the ordinary shares
and the B ordinary shares in Newco are substantially the same as those
attaching to the VenFin ordinary shares and the B Shares.
3.2 Newco Subscription Offer
In order to provide Offerees who have lawfully and validly accepted
the Offer ("Offer Participants") with an opportunity to participate in
the Surplus Assets after they have been acquired by Newco, Newco has
undertaken to offer to Offer Participants a conditional right to
subscribe for one Newco ordinary share for every one VenFin ordinary
share in respect of which they have accepted the Offer ("the
Subscription Offer"). In terms of the Subscription Offer, Offer
Participants can subscribe for Newco ordinary shares at R11.24 per
share. Rembrandt Trust has irrevocably undertaken in favour of Newco,
VenFin and Vodafone Group Plc to subscribe for 35 506 352 B ordinary
shares of 10 cents each in Newco at an issue price of R11.24 per Newco
B ordinary share.
Rembrandt Trust has also entered into an underwriting agreement with
Newco in terms of which it will underwrite the subscription of 53 461
620 Newco ordinary shares at R11.24 per Newco ordinary share. The
aggregate amount of the subscription price of the Newco shares which
Rembrandt Trust has undertaken to subscribe for and to underwrite is
R1 billion.
The Subscription Offer made to the Offer Participants is subject to
the condition that Offer Participants subscribe for Newco ordinary
shares with an aggregate subscription price of at least R1 billion,
failing which the Subscription Offer shall lapse.
Offer Participants may not accept the Subscription Offer in respect of
more Newco ordinary shares than the number of Offer Shares in respect
of which they have accepted the Offer. The Subscription Offer to be
made by Newco will not be renounceable and accordingly Offer
Participants may not cede, assign or in any other way whatsoever
transfer their rights under the Subscription Offer to any other
person.
3.3 Rationale for the Disposal and Subscription Offer
The Disposal will enable Vodafone to effectively acquire only the 15%
indirect interest in Vodacom Group (Proprietary) Limited held by
VenFin, as Vodafone does not want to hold the Surplus Assets.
The Subscription Offer provides Offer Participants with a conditional
opportunity to participate in the Surplus Assets after the Disposal.
3.4 Terms of the Disposal
The purchase consideration for the Surplus Assets is R5 billion in
cash, payable 5 days after the Surplus Asset Sale Agreement becomes
unconditional.
The Disposal is subject, inter alia, to the following conditions
precedent:
- all regulatory approvals and consents necessary in respect of the
Disposal being obtained, including approvals and consents from
the competition authorities;
- the B Share Sale Agreement becoming unconditional;
- the Offer becoming unconditional; and
- the approval of the Disposal by VenFin shareholders in general
meeting.
3.5 Unaudited pro forma financial effects of the Specific Repurchase and
Disposal on VenFin
The net asset value attributable to the Surplus Assets as at 30 June
2005 was R6.4 billion. The net profit after taxation and outside
shareholders" interests for the twelve months ended 30 June 2005
attributable to the Surplus Assets was R471 million.
Set out below, for illustrative purposes only, are the unaudited pro
forma financial effects of the Specific Repurchase and Disposal on
VenFin:
Column 1 Column 2
Audited Unaudited Change
before pro forma (%)
the after the
Disposal Disposal
(cents) (cents)
Basic earnings per share 247.8 (124.3) (150.2
(1) )
Headline earnings per
share (1) 189.8 210.4 10.9
Net asset value per
VenFin share (2) 1 811 1 487 (17.9)
Net tangible asset value
per VenFin share (2) 1 477 1 428 (3.3)
Number of shares in issue
(millions) (3) 435.9 444.8
Weighted average number
of shares in issue
(millions) (3) 441.6 441.6
Notes:
1. Column 1 reflects the audited basic and headline earnings per share for the
twelve months ended 30 June 2005. Column 2 reflects the pro forma basic
and headline earnings per share for the twelve months ended 30 June 2005
based on a pre tax cash return of 7.2% on the Disposal proceeds assuming
the Disposal was effected on 1 July 2004.
2. Column 1 is extracted or compiled from the audited net asset value per
VenFin share and net tangible asset value per VenFin share at 30 June 2005.
Column 2 reflects the pro forma net asset value per VenFin share and net
tangible asset value per VenFin share at 30 June 2005 assuming the Disposal
was effected on that date.
3. The number of shares in issue and the weighted average number of shares in
issue is shown net of the treasury shares and the shares held by The VenFin
Share Incentive Trust.
4. For purposes of calculating the number of shares in issue it was assumed
that the shares held by The VenFin Share Incentive Trust were taken up by
employees on 30 June 2005.
3.6 Voting in relation to the Disposal
The related parties to the disposal, i.e. those directors of VenFin
who will become material shareholders in Newco, as well as Rembrandt
Trust and its associates, will not be allowed to vote their VenFin
ordinary shares (or VenFin B shares insofar as Rembrandt Trust is
concerned) at the general meeting in respect of the resolution
regarding the Disposal.
4. Opinions and recommendations
The board of directors of VenFin appointed a sub-committee of independent
directors to consider the terms of the Offer and the Disposal (collectively
the "Transaction") and to make a recommendation to VenFin"s board of
directors. The sub-committee appointed The Standard Bank of South Africa
Limited ("Standard Bank") as independent adviser to the board of directors
of VenFin.
Standard Bank has considered the terms and conditions of the Transaction
and is of the opinion that, as at 30 November 2005, the Transaction is fair
and reasonable and has advised the independent sub-committee and the board
of directors of VenFin accordingly.
The independent sub-committee has considered the terms of the Transaction,
taking into account the independent opinion of Standard Bank, and is of the
unanimous opinion that the terms and conditions of the Transaction is fair
and reasonable to VenFin shareholders. The independent sub-committee
advised the board of directors of VenFin accordingly.
The board of directors of VenFin has considered the terms of the
Transaction and, taking into account the opinion of Standard Bank and the
views of the independent sub-committee, is of the opinion that the terms
and conditions of the Transaction is fair and reasonable to VenFin
shareholders and recommends that the Offerees accept the Offer and that
VenFin shareholders vote in favour of the resolutions required to implement
the Disposal.
5. Interest of Vodafone in VenFin
As at the date of this announcement, Vodafone Group Plc owned 30,252,460
VenFin ordinary shares, representing 7.4% of the issued ordinary shares in
VenFin, but excluding the 38,721,948 VenFin ordinary shares held by VenFin
Securities (Proprietary) Limited as treasury shares.
6. Irrevocable undertakings
As at the date of this announcement, irrevocable undertakings to accept the
Offer have been received from VenFin shareholders holding 248,079,473
VenFin ordinary shares (representing 65.5% of the Offer Shares).
All the directors of VenFin have irrevocably undertaken to accept the Offer
in respect of the Offer Shares held by them.
As at the date of this announcement, irrevocable undertakings to vote in
favour of the Disposal have been received from VenFin shareholders holding
59.7% of the VenFin ordinary shares entitled to vote at the general
meeting.
7. Competition approval
Vodafone Group Plc, VenFin and Newco have made a filing with the relevant
Competition Authorities with regard to the Offer and the Disposal.
8. Cash confirmation
The financial advisers to Vodafone have confirmed to the SRP that Vodafone
has sufficient resources to honour its commitments in terms of the Offer.
9. Important dates and times
Set out below are the expected dates and times of the Offer and the VenFin
general meeting:
Offer opens at 09:00 Monday, 5 December 2005
Last day to trade in VenFin Friday, 6 January 2006
ordinary shares on the JSE to be
eligible to participate in the
Offer
VenFin ordinary shares acquired on
the JSE on or after this date will
not be eligible to participate in
the Offer Monday, 9 January 2006
General meeting to be held at 10:00 Wednesday, 11 January 2006
Results of the general meeting
published on SENS Wednesday, 11 January 2006
Results of the general meeting
published in the South African Thursday, 12 January 2006
press
Record date for participating in
the Offer Friday, 13 January 2006
Closing date of the Offer at 12:00
(see note 3 below) Friday, 13 January 2006
Payment date (see note 4 below)
Results of Offer announcement
published on SENS Monday, 16 January 2006
Results of Offer announcement
published in the South African
press Tuesday, 17 January 2006
Notes:
1. Any changes to the above dates and times will be released on SENS and
published in the South African press.
2. All times given are local times in South Africa.
3. Vodafone reserves, in its sole and absolute discretion, the right to extend
the Offer period and therefore the closing date of the Offer, in which
event all amended dates and times relating to the Offer will be released on
SENS and published in the South African press. The SRP has, following a
process of inviting public submissions, ruled that the time periods as laid
down in Rules 28.6 and 28.7 of the SRP Code may be extended.
4. The Offer Consideration due to Offer Participants:
4.1 who hold dematerialised VenFin ordinary shares will be paid into their
accounts with their CSDP or broker at their risk and dealt with in terms of
the custody agreement entered into between the Offer Participant and their
CSDP or broker within 5 business days of the date of (i) the Offer becoming
or being declared unconditional; and (ii) acceptance thereof, whichever is
the later;
4.2 who hold certificated and dematerialised with own name registration
VenFin ordinary shares will, unless prior arrangements have been
agreed to with Vodafone, be posted, by ordinary post, at the risk of
the certificated Offer Participants concerned, within 5 business days
of the date of (i) the Offer becoming or being declared unconditional
and; (ii) acceptance thereof by the Offer Participant, whichever is
the later, provided the form of acceptance, surrender and transfer,
together with the relevant document(s) of title (in negotiable form)
are received by VenFin"s transfer secretaries before 12:00 on the
closing date of the Offer.
10. Documentation
THE OFFER DOCUMENT, INCLUDING THE RESPONSE FROM THE VENFIN BOARD, WILL BE
POSTED TO VENFIN SHAREHOLDERS ON OR ABOUT 5 DECEMBER 2005. A CIRCULAR
CONTAINING THE DETAILS OF THE DISPOSAL AND THE SPECIFIC REPURCHASE AND A
DOCUMENT CONTAINING THE DETAILS OF THE SUBSCRIPTION OFFER WILL BE POSTED TO
VENFIN SHAREHOLDERS AT THE SAME TIME AS THE OFFER DOCUMENT.
11. Withdrawal of VenFin cautionary announcement
The VenFin cautionary announcement dated 3 November 2005 is hereby
withdrawn.
The Netherlands
Stellenbosch
1 December 2005
Financial advisers to Vodafone: UBS and Goldman Sachs
South African attorneys to Vodafone: Webber Wentzel Bowens
International attorneys to Vodafone: Linklaters
Transaction services adviser to Vodafone: KPMG Services (Pty) Ltd
Merchant Bank and Sponsor to VenFin: RAND MERCHANT BANK
(A division of FirstRand Bank Limited)
Attorneys to VenFin: Hofmeyr Herbstein & Gihwala Inc
Independent Adviser to VenFin: Standard Bank
Lead Sponsor to VenFin: PricewaterhouseCoopers Corporate Finance
Independent reporting accountants: PricewaterhouseCoopers Inc
Important information
Neither the Offer nor the Subscription Offer will be made, directly or
indirectly, in or into, or by use of the mails of, or by any other means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce of, or any facilities of a
national securities exchange of, the United States, Australia, Canada or Japan
and neither the Offer nor the Subscription Offer is capable of acceptance by any
such use, means, instrumentality or facility or from within the United States,
Australia, Canada or Japan. Accordingly, neither copies of this announcement nor
any related documentation are being or may be mailed or otherwise distributed or
sent in or into or from the United States, Australia, Canada or Japan.
Date: 01/12/2005 02:00:13 PM Produced by the JSE SENS Department
