| Mon 27 Mar 2006, 17:55 | | Sun International - Potential cash offer to acquir |
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SUI
SUI
Sun International - Potential cash offer to acquire all the ordinary shares in
Real Africa Holdings Limited and cautionary announcement
SUN INTERNATIONAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1967/007528/06)
Share code: SUI
ISIN: ZAE000070678
("Sun International")
ANNOUNCEMENT REGARDING THE POTENTIAL CASH OFFER TO ACQUIRE ALL THE ORDINARY
SHARES IN REAL AFRICA HOLDINGS LIMITED ("RAH") AND CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders of Sun International are advised that Sun International has
submitted a written notice to the board of directors of RAH wherein Sun
International has expressed its interest in making an offer to acquire the
entire issued ordinary share capital of RAH from the shareholders of RAH
("the RAH shareholders") ("the proposed acquisition"). The Board of
Directors of RAH has been requested to provide a response to Sun
International regarding the proposed acquisition by Friday, 7 April 2006.
Sun International is proposing to acquire all the issued ordinary shares in
RAH for a cash consideration of 590 cents per RAH share on the basis that
the proposed acquisition will be implemented by the end of August 2006.
2. Rationale for the proposed acquisition
RAH"s primary investment is a 66.2% shareholding (approximately 90%
economic interest) in Afrisun Leisure Investments (Pty) Limited
("Afrisun"). Afrisun holds minority interests in a number of Sun
International"s subsidiaries namely, Afrisun Gauteng (Pty) Limited
(Carnival City casino) (21.0% effective economic interest), Afrisun KZN
(Pty) Limited (Sibaya casino) (11.5% effective economic interest), Emfuleni
(Pty) Limited (Boardwalk casino) (2.3% effective economic interest) and
Sunwest (Pty) Limited (GrandWest casino and Table Bay Hotel) (14.1%
effective economic interest) as well as shareholdings in the National
Casino Resort Manco (Pty) Limited (21.8% effective economic interest) and
the Gauteng Casino Resort Manco (Pty) Limited (19.9% effective economic
interest).
Afrisun currently accounts for approximately 75% of the net asset value of
RAH and as such an acquisition of RAH is predominantly an acquisition of
minority interests in Sun International"s existing operations.
The proposed acquisition will create a single listed point of entry into
the Sun International Group whilst simultaneously increasing Sun
International"s exposure to its own existing core gaming activities.
Sun International believes that the proposed acquisition together with a
potential future restructuring of the underlying shareholdings in certain
of Sun International"s casino companies post implementation of the proposed
acquisition, could enhance the Black Economic Empowerment status of Sun
International
In addition, there are limited expansion opportunities in South Africa for
Sun International to develop new casinos or to acquire existing casinos and
therefore the proposed acquisition represents a good investment opportunity
for Sun International in South Africa.
RAH also has investments in inter alia Ocfish Holdings Company Limited, the
holding company of the Oceana Group Limited ("Oceana"), a fishing company,
and Life Esidimeni (previously Lifecare) an associate providing healthcare
services in the public sector (collectively "the other assets"). The
intention is that following the implementation of the proposed acquisition
Sun International would dispose of the other assets held by RAH other than
its shareholding in Afrisun within a period of 12 to 24 months.
3. Terms of the proposed acquisition
3.1 The proposed acquisition consideration
The proposed acquisition consideration will be a cash consideration of
590 cents per RAH share. This represents a 14.6% premium to the
closing market price on Friday, 24 March 2006 of 515 cents per share
and 12.0% premium to the 30 day volume weighted average trading price
of RAH for the period to Friday, 24 March 2006 of 527 cents per share.
The proposed acquisition consideration will be escalated by an annual
interest factor of 8.0% for every completed month or part thereof that
the proposed acquisition takes to be implemented following 31 August
2006.
The proposed acquisition consideration will be reduced by the per
share amount of any distributions declared or paid by the board of
directors of RAH to RAH shareholders in the interim period between 27
March 2006 and the final implementation date of the proposed
acquisition.
3.2 Mechanism
It is Sun International"s preferred route that the proposed
acquisition be implemented by way of a scheme of arrangement ("a
Scheme") in terms of section 311 of the Companies Act, 1973 (Act 61 of
1973), as amended, ("the Act") to be proposed by Sun International
between RAH and the RAH ordinary shareholders ("Scheme Members") in
terms of which Sun International, or another company in the Sun
International Group, will acquire all of the ordinary shares in RAH
("the RAH shares").
Should a Scheme be implemented, RAH will become a wholly-owned
subsidiary of Sun International and the listing of its shares on the
JSE Limited ("JSE") will be terminated.
Should a Scheme not become operative, Sun International will make an
offer to all RAH shareholders in terms of Section 440 of the Act ("a
Section 440 Offer").
4. Irrevocable undertakings
Certain RAH shareholders holding at least 93 152 752 RAH shares,
representing approximately 25.6% of the voting rights of RAH"s
shareholders, have indicated their support for the proposed acquisition and
have irrevocably undertaken to vote in favour of a Scheme ("the RAH
irrevocable undertakings").
In addition to the RAH irrevocable undertakings, Allan Gray Limited has
undertaken to recommend to its clients on behalf of which it manages RAH
shares, holding 91 409 349 RAH shares, which represent approximately 25.2%
of the voting rights of RAH"s shareholders, to support the proposed
acquisition and to vote in favour of a Scheme.
5. Conditions precedent
In the event that Sun International proceeds with the proposed acquisition,
a Scheme, or, if applicable, a Section 440 Offer, will be subject to, inter
alia, the fulfillment or waiver at Sun International"s election (where
possible) of the following conditions precedent:
5.1 insofar as may be necessary, the consent of the JSE, the Securities
Regulation Panel ("SRP"), the South African Reserve Bank and such
other regulatory authorities as may be necessary;
5.2 the approval of the proposed acquisition by the Competition
Authorities as contemplated in the Competition Act, No 89 of 1998, as
amended;
5.3 all relevant gaming boards approving of the proposed acquisition;
5.4 a Scheme, if applicable, being approved by a majority representing not
less than 75% (three fourths) of the votes exercisable by Scheme
Members present and voting either in person or by proxy, at the Scheme
Meeting or, if applicable, a Section 440 Offer being accepted by RAH
shareholders holding at least 50.1% of the RAH shares;
5.5 a Scheme, if applicable, being sanctioned by the High Court of South
Africa; and
5.6 if applicable, a certified copy of the Order of the Court sanctioning
the Scheme being registered by the Registrar of Companies in terms of
the Act.
6. Further announcement and cautionary
This announcement does not constitute a firm intention to make an offer for
the purposes of the Securities Regulation Code on Takeovers and Mergers.
The expression of a firm intention to make an offer (and the proposed
acquisition) is subject to the satisfactory completion by Sun International
of a high level due diligence investigation in respect of RAH and its
assets.
A further announcement of Sun International"s intentions will be released
on the Securities Exchange News Service of the JSE and published in the
press in due course.
Should Sun International proceed with the proposed acquisition, it could
have an impact on the price at which Sun International shares trade on the
JSE.
Shareholders of Sun International are accordingly advised to exercise
caution when dealing in their Sun International shares until a further
announcement is made.
Sandton
27 March 2006
Investment Bank
(Investec Corporate Finance)
Attorneys
(Hofmeyr)
Sponsor
(Investec Bank)
Date: 27/03/2006 05:55:07 PM Produced by the JSE SENS Department
