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Glenrand M I B Limited - Update on the Glenrand Black Economic Empowerment
transaction
Glenrand M#I#B Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008001/06)
Share code: GMB ISIN: ZAE000018529
("Glenrand" or "the Company")
Update on the Glenrand Black Economic Empowerment transaction
1. Introduction
On Thursday, 13 October 2005 Glenrand announced that it had concluded agreements
with Ayavuna Women"s Investments (Proprietary) Limited ("Ayavuna"), Kunene Bros.
Holdings (Proprietary) Limited ("KBH") and Matemeku Investments (Proprietary)
Limited ("Matemeku"), (collectively referred to as the Black Business Partners
("BBPs")), to introduce these BBPs as Black Economic Empowerment ("BEE")
shareholders in Glenrand (the "transaction").
Further to the announcement, Glenrand wishes to advise shareholders that
Glenrand and the Glenmib Employee Empowerment Trust ("the Glenmib Trust") have
concluded a due diligence on Glenrand M I B Makgulong (Proprietary) Limited
("Makgulong") and consequently have adjusted the purchase consideration to
R23 000 000 (previously R20 000 000) to acquire the 49.9% of the issued ordinary
share capital of Makgulong that Glenrand does not currently own (the
"acquisition"). As a result, the Glenmib Trust will purchase 11 674 009 Glenrand
shares (previously 9 691 630) and Risk Funding Services (Proprietary) Limited
("RFS"), a 100% owned subsidiary of Glenrand, will purchase 16 279 172 Glenrand
shares (previously 18 261 551) in terms of the proposed scheme (as defined
below).
As such, RFS and the Glenmib Trust will, on a pro rata basis acquire 6.7%
(previously 7.5%) and 4.8% (previously 4.0%) respectively, (pre issue of new
ordinary shares) of the issued ordinary shares from all Glenrand shareholders
other than from Kunene Finance Company Limited ("KFC"), the Glenmib Employee
Scheme and the Glenmib Trust (the "excluded shareholders") (collectively
referred to as the "scheme").
2. Direct black shareholding as a result of the transaction, acquisition and
the scheme
The table below sets out the updated black ownership of Glenrand pursuant to the
implementation of the transaction, acquisition and the scheme.
Number of Transaction Post-issue of new
shares value ordinary shares and
the scheme
(m) (R"m) %
Ayavuna 16.0 34.5 5.85%
KBH 16.0 34.5 5.85%
Matemeku 16.0 34.5 5.85%
Glenmib Trust 13.6 (1) 25.1 4.96%
KFC (existing) 14.8 - 5.39%
Total BEE 76.4 128.6 27.90%
shareholding
Note:
1. Includes 1.9 million existing ordinary shares held by the Glenmib Trust
3. Revised unaudited pro forma financial effects of the transaction,
acquisition and the scheme
The revised unaudited pro forma financial effects of the transaction,
acquisition and the scheme after taking into account the changes set out above
on Glenrand for the financial year ended 30 June 2005 are set out in the table
below. The revised unaudited pro forma financial effects of the transaction,
acquisition and the scheme have been prepared for illustrative purposes only to
show what impact the transaction, acquisition and the scheme might have on the
financial position and results of operations of the Glenrand consolidated
results for the 12 months from 1 July 2004 for Income Statement purposes and at
30 June 2005 for Balance Sheet purposes. These revised unaudited pro forma
financial effects have been presented in accordance with South African Generally
Accepted Accounting Practice. Due to their nature, the revised unaudited pro
forma financial effects may not give a fair reflection of Glenrand"s financial
position, and results of operations after the transaction, acquisition and the
scheme on the Company. The directors of Glenrand are responsible for the
preparation of the revised unaudited pro forma financial effects.
Before After Change After Change After Change
the the (%) the (%) the (%) Cumul-
transa- trans- trans- trans- ative
ction, action action action, change
acqui- (cents) and acqui- %
sition acqui- sition
and the sition and the
scheme (cents) scheme
(cents) (cents)
Basic 4.3 2.6 (39.5) 4.8 84.6 4.4 (8.3) 2.3%
earnings
per
share
("basic
EPS")
(1) (3)
Fully 4.3 2.2 (48.8) 4.2 90.9 3.8 (9.5) (11.6)
diluted
basic
earnings
per
share
(1) (3)
Headline 11.9 10.2 (14.3) 12.4 21.6 12.6 1.6 5.9
earnings
per
share
("HEPS")
(1) (3)
Fully 11.8 8.9(6) (24.6) 10.9 22.5 11.0 0.9 (6.8)
diluted
HEPS (1)
(3) (5)
Net 66.9 66.1 (1.2) 66.1 0.0 54.5 (17.5) (18.5)
asset
value
("NAV")
per
share
(2) (4)
Tangible 51.0 50.1 (1.8) 44.0 (12.2) 30.7 (30.2) (39.8)
NAV per
share
(2) (4)
Notes:
1. The "Before the transaction, acquisition and the scheme" column reflects
the earnings and headline earnings per ordinary share for the year ended 30 June
2005 based on the published consolidated audited results. The "After the
transaction" column reflects the earnings and headline earnings adjusted for the
costs incurred on the transaction as well as the interest foregone (after tax)
on the consideration received on the new ordinary shares issued and on the costs
incurred on the transaction, based on the assumption that the transaction was
implemented on 1 July 2004. "After the transaction and acquisition" column
reflects the earnings and headline earnings further adjusted for the interest
foregone (after tax) on the purchase consideration for the acquisition and the
enhanced earnings resulting from the acquisition, based on the assumption that
the transaction and acquisition was implemented on 1 July 2004. "After the
transaction, acquisition and the scheme" column reflects the earnings and
headline earnings further adjusted for the interest foregone (after tax) on the
payment for the ordinary shares repurchased in term of the scheme, based on the
assumption that the transaction, acquisition and the scheme was implemented on 1
July 2004.
2. The "Before the transaction, acquisition and the scheme" column reflects
the NAV per ordinary share at 30 June 2005 based on the published consolidated
audited results. The "After the transaction" column reflects the NAV per
ordinary share after the consideration received from the new ordinary shares
issued, the costs incurred on the transaction and the enlarged number of
ordinary shares in issue based on the assumption that the transaction was
implemented on 30 June 2005. The "After the transaction and acquisition" column
reflects the NAV per ordinary share after the payment of the consideration for
the acquisition based on the assumption that it was implemented on 30 June 2005.
The "After the transaction, acquisition and the scheme" column reflects the NAV
per ordinary share after the payment of the consideration for the scheme and a
reduced number of ordinary shares based on the assumption that it was
implemented on 30 June 2005.
3. The weighted average number of shares in issue utilised in calculating the
EPS and HEPS in the "Before the transaction, acquisition and the scheme" column
was 240.8 million and in calculating the fully diluted EPS and fully diluted
HEPS was 242.7 million. The weighted average number of shares in issue in
calculating the EPS and HEPS in the "After the transaction" column was 240.8
million and in calculating the fully diluted EPS and fully diluted HEPS was
275.1 million. The weighted average number of shares in issue in calculating the
EPS and HEPS in the "After the transaction and acquisition" column was 240.8
million and in calculating the fully diluted EPS and fully diluted HEPS was
275.1 million. The weighted average number of shares in issue in calculating the
EPS and HEPS in the "After the transaction, acquisition and the scheme" column
was 224.6 million and in calculating the fully diluted EPS and fully diluted
HEPS was 258.8 million.
4. In calculating NAV and Tangible NAV per share in the "Before the
transaction, acquisition and the scheme" column, the number of shares in issue
was 241.8 million. In determining the NAV and Tangible NAV per share in the
"After the transaction" column, the number of shares in issue was 241.8 million.
In calculating NAV and Tangible NAV per share in the "After the transaction and
acquisition" column, the number of shares in issue was 241.8 million and in the
"After the transactions, acquisition and the scheme" column the number of shares
in issue was 225.6 million.
5. The number of ordinary shares utilised in the calculation of the fully
diluted HEPS is based on an assumption of the number of ordinary shares vesting
with the BBPs post the call-back.
6. The reduction of 2.9 cents consists of 1.7 cents relating to reduced
earnings and 1.2 cents relating to an increased fully diluted number of shares
in issue.
7. The adjustments above do not include any adjustments that will be required
once Glenrand adopts IFRS.
4. Conditions precedent to the transaction, acquisition and the scheme
The implementation of the transaction is subject to the fulfilment, inter alia,
of the following conditions precedent:
- approval of the transaction by the requisite majority of ordinary
shareholders in a general meeting;
- obtaining of the necessary regulatory approvals required to implement the
transaction; and
- the fulfilment of other conditions precedent (which are capable of waiver
at Glenrand"s discretion).
The implementation of the acquisition and the scheme is subject to the
fulfilment, inter alia, of the following conditions precedent:
- the approval of the scheme by scheme members representing not less than
three fourths of the votes exercisable by those scheme members present and
voting either in person or by proxy at the scheme meeting;
- the approval of the scheme by all regulatory authorities if and to the
extent necessary, including the South African Reserve Bank and the JSE Limited;
the High Court of South Africa sanctioning the scheme;
- a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Companies Act, 1973
(Act 61 of 1973) as amended; and
- the fulfilment of other conditions precedent, including the implementation
of the scheme (which are capable of waiver at Glenrand"s discretion).
5. Timetable and documentation
Ordinary shareholders will be advised in due course as to the important dates
and times relevant to the transaction, acquisition and the scheme. A circular
setting out the full details of the transaction, acquisition and the scheme will
be posted to ordinary shareholders in due course.
Randburg
17 January 2006
Investment Bank, Transaction Advisor Independent Reporting Accountants
and Sponsor
KPMG
Nedbank Capital
Legal Advisor Independent Advisor
Deneys Reitz EY Corporate Finance
Date: 17/01/2006 02:46:20 PM Produced by the JSE SENS Department
