| Tue 3 Jan 2006, 16:13 | | Hosken Consolidated Investments Limited - Specific |
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HCI
HCI
Hosken Consolidated Investments Limited - Specific share repurchase of 2 000 000
HCI shares from the Stanislaus Trust by HCI
Hosken Consolidated Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
(Share code: HCI ISIN: ZAE000003257)
("HCI" or "the company")
SPECIFIC SHARE REPURCHASE OF 2 000 000 HCI SHARES FROM THE STANISLAUS TRUST BY
HCI
1. INTRODUCTION
HCI entered into a settlement agreement with The Stanislaus Trust whereby HCI
was granted the right to purchase 2 000 000 HCI shares from The Stanislaus Trust
before 31 January 2006 at R27.00 per share, through a specific repurchase of
shares in terms of the Companies Act and the JSE Listings Requirements ("the
Call Option). The Stanislaus Trust also agreed to sell all its equity interest
in companies in the HCI Group to HCI, including (but not limited to) 4% in
Formex Industries (Pty) Limited, 4% in Johnson Access (Pty) Limited, 5% in
Ritzshelf 72 (Pty) Limited, 5% in Rowan Tree 4 (Pty) Limited and 4.5% in Tylon
Holdings (Pty) Limited, but excluding Mr Gavin O"Connor"s bare dominium assets
(Mettle Property Investments (Pty) Limited and Ligitprops 109 (Pty) Limited) and
the Stanislaus Trust"s HCI Shares ("carry interests") for an aggregate purchase
consideration of R5 million. The transaction is defined as a related party
transaction as Gavin O"Connor is a beneficiary of the Stanislaus Trust and a
former director of a major subsidiary of HCI, therefore requiring a fair and
reasonable opinion by an independent expert. The transaction was found to be
fair and reasonable to the shareholders of HCI.
2. THE SPECIFIC SHARE REPURCHASE
2.1 Rationale
The HCI board believes that the repurchase consideration represents an
attractive price at which to acquire HCI shares and that the specific share
repurchase will be earnings enhancing for HCI in the short, medium and long-
term.
2.2 Terms of the specific share repurchase
The share repurchase consideration of R54 million is equivalent to 2 700 cents
per HCI share and, should the Call Option be exercised, will be settled in cash
and from the HCI Group"s existing cash resources.
Subsequent to the implementation of the specific share repurchase, the
repurchased shares will be cancelled as issued shares and will revert to
authorised but unissued share capital. The share repurchase will be made before
31 January 2006 and the repurchased shares will be cancelled immediately
thereafter.
2.3 Financial effects of the specific share repurchase
The unaudited pro forma financial effects of the specific share repurchase, for
which the HCI board is responsible, have been prepared for illustrative purposes
only and to provide information on how the specific share repurchase may impact
the historic financial results of HCI. Because of their nature, the unaudited
pro forma financial effects may not give a fair reflection of HCI"s financial
position after the implementation of the specific share repurchase or the effect
on future earnings.
The table below sets out the unaudited pro forma financial effects of the
specific share repurchase on earnings, headline earnings and net asset value per
HCI share, subject to the assumptions set out below.
Per HCI share Before1 After2 Change
(cents) (cents (%)
)
Earnings 131.88 133.33 1.10
Headline earnings 128.69 130.08 1.08
Net asset carrying value3 1 326 1 302 (1.80)
Number of shares in issue 118 197 116 (1.69)
(`000) 197
Weighted issued number of 118 037 116 (1.69)
shares (`000) 037
Notes:
1. The "before" financial information has been extracted, without adjustment,
from the unaudited interim financial results of HCI for the six months ended 30
September 2005.
2. The unaudited pro forma "after" basic and headline earnings per share
calculations have been based on the following assumptions:
- the specific share repurchase was implemented on 1 April 2005; and
- the share repurchase consideration was funded by group cash resources
An adjustment was made to take into account the after tax interest that would
have been received on the share repurchase consideration at average call rates,
applicable during the period 1 April 2005 to 30 September 2005, assuming a
corporate tax rate of 29%..
3. The unaudited pro forma "after" net asset value and tangible net asset value
per share calculations have been based on the assumption that the specific share
repurchase was implemented on 30 September 2005.
4. The financial effects on tangible net asset value have not been disclosed as
they are not material.
2.4 Conditions precedent
The specific share repurchase is subject to the fulfilment of the following
conditions precedent:
- the passing of the requisite resolutions by shareholders in general meeting
approving the specific share repurchase in accordance with the requirements of
the JSE and the Companies Act; and
- the granting of all regulatory approvals for the specific share repurchase, to
the extent required.
3. SALE OF CARRY INTERESTS
The Stanislaus Trust has agreed to sell its carry interests to HCI for an
aggregate purchase consideration of R5 million. The effect on earnings,
headline earnings, net assets and net tangible assets are not disclosed as the
effect of the sale is not significant in terms of the JSE Listings Requirements.
4. NOTICE OF GENERAL MEETING
The general meeting of HCI shareholders will take place at the registered office
of e.tv, 5 Summit Road, Dunkeld, Johannesburg on Wednesday, 25 January 2006 at
10h00, in order to consider and, if deemed fit, pass, with or without
modification, the resolutions required as set out in the notice of general
meeting attached to and forming part of the circular posted to shareholders
today.
By order of the Board
Durban
3 January 2006
Investment bank and sponsor: Investec Bank Limited
Reporting accountants and auditors: PKF (JHB) Inc
Independent expert: Moores Rowland
Date: 03/01/2006 04:13:48 PM Produced by the JSE SENS Department
