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LAN LAR
LAR
L.A. Group Limited - Increase Of The Offer Price To 855 Cents For Each L.A.
Group Share
L.A. GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1936/008786/06)
Share Code: LAR & ISIN: ZAE000028676
Share Code: LAN & ISIN: ZAE000028684
("L.A. Group" or "the company")
INCREASE OF THE OFFER PRICE TO 855 CENTS FOR EACH L.A. GROUP SHARE
1.) INTRODUCTION
L.A. Group shareholders are referred to the announcement dated 3
February 2006, which contained details of an offer by Clifton Dunes
Investments 327 (Proprietary) Limited ("Newco"), in terms of which
Newco will acquire all the shares in the issued share capital of L.A.
Group ("L.A. Group Shares"), other than those already held by Robben
Island Management (Proprietary) Limited ("Robben Island"), Greyhouse
Trust, Rimaz Investments (Proprietary) Limited, AF Peer Family Trust,
Miss Alia Peer, Miss Nazlia Peer, Mr Mohamed Peer, Mr Riyadh Peer and
Mrs Fazlyn Peer (collectively, "the Peer Family Shareholders") and any
subsidiaries of L.A. Group ("the Scheme Shares") ("the Offer").
The Offer to be proposed by Newco will be implemented by way of a
scheme of arrangement in terms of section 311 of the Companies Act No.
61 of 1973, as amended ("the Scheme"), between L.A. Group and all of
its shareholders other than Robben Island, the Peer Family
Shareholders and any subsidiaries of L.A. Group ("Scheme Members").
The salient dates and times and supplementary information relating to
the Scheme were announced on the Securities Exchange News Service of
the JSE Limited on 24 March 2006, whilst a circular containing full
details of the Scheme and the actions required by L.A. Group
shareholders was posted to those shareholders on the 24 March 2006
("the Scheme Circular").
2.) INCREASE OF THE OFFER PRICE
2.1 On Tuesday, 11 April 2006, Newco advised the board of directors
of L.A. Group ("the L.A. Group Board") that it has increased the
consideration payable in terms of the Offer from 800 cents per
L.A. Group Share to 855 cents per L.A. Group Share. Furthermore,
if payment of the scheme consideration is delayed for any reason
beyond 22 June 2006, Newco has agreed to pay interest on the
scheme consideration at the prevailing minimum lending rate of
interest per annum, charged by Absa Bank Limited on the unsecured
overdrawn current accounts of its most favoured corporate
clients.
2.2 The total consideration payable by Newco for the L.A. Group
Shares amounts to approximately R211.3 million. In addition,
Newco intends to reach agreement with the holders of L.A. Group
ordinary share options and `N" ordinary share options ("options")
so as to settle the outstanding options by means of cancelling
the options. Using a settlement price of 855 cents per option,
this is estimated to cost Newco in total R12.4 million.
2.3 L.A. Group shareholders will still have the opportunity to elect
a cash consideration or reinvestment alternative, as follows:
2.3.1 Each L.A. Group shareholder, other than Robben Island,
the Peer Family Shareholders and any subsidiaries of
L.A. Group, recorded in the share register of L.A.
Group on the consideration record date of the Scheme
("Scheme Participants"), will have the opportunity to
receive a cash consideration of 855 cents per L.A.
Group Share from Newco ("the Cash Consideration"); or
2.3.2 to elect a reinvestment alternative to subscribe for
unlisted cumulative redeemable preference shares
("Newco Scheme Preference Shares") to be issued by
Newco ("the Reinvestment Alternative"); or
2.3.3 a combination of the Cash Consideration and the
Reinvestment Alternative.
2.4 It was a condition precedent to the Scheme that Scheme
Participants subscribed for Newco Scheme Preference Shares in an
amount of not less than R90 million. As a result of the
increased funding requirement, it will now be a condition
precedent to the Scheme that Scheme Participants subscribe for
Newco Scheme Preference Shares in an amount of not less than R98
million. Subscriptions in aggregate for the Newco Scheme
Preference Shares are also now limited to a maximum of R145
million and thus if applications in excess of R145 million are
received, Newco will allocate Newco Scheme Preference Shares on a
pro rata basis to the applications received, subject however to
Newco"s right to reject applications for additional Newco Scheme
Preference Shares as detailed in the Scheme Circular.
2.5 Newco will also be raising a maximum of R128 million of funding
from The Standard Bank of South Africa Limited ("Standard Bank")
to fund the Offer, by way of Newco issuing cumulative redeemable
preference shares to Standard Bank ("Bank Preference Shares").
As detailed in the Scheme Circular, Newco will also issue to
Standard Bank, at nominal value, a further class of preference
share which will rank behind the Bank Preference Shares and the
Newco Scheme Preference Shares in respect of dividends and
capital. The formula for the redemption of such preference
shares has been changed to recognise the increased Standard Bank
funding requirement.
2.6 Newco will also lodge with the Registrar of Companies the special
resolutions necessary to increase the authorised share capital of
Newco to cater for the issuance of additional Newco Scheme
Preference Shares and Bank Preference Shares and to cater for the
change in the redemption formula for the further class of
preference share to be issued to Standard Bank by Newco referred
to above. The registration of the special resolutions by the
Registrar of Companies will occur prior to the posting of the
Election and Surrender Circular.
2.7 To the extent that subscriptions for Newco Scheme Preference
Shares exceed R98 million, the funding procured by way of the
issue of Bank Preference Shares will be commensurately less,
subject to a minimum issue of Bank Preference Shares of R80
million.
2.8 Other than as set out above, the conditions precedent and other
terms contained in the Scheme Circular, will remain the same.
2.9 Copies of the documents recording the details of the increased
offer price and any other amendments to the Scheme set out herein
are available free of charge at the offices of L.A. Group, being
Colinton House, The Oval, Oakdale Road, Newlands, Cape Town, 7700
or at the sponsor Sasfin Capital, a division of Sasfin Bank
Limited, 4th Floor, Southern Life Centre, 8 Riebeeck Street, Cape
Town, 8001.
3. IMPORTANT DATES AND TIMES
The important dates and times remain as previously published.
Therefore, the Scheme meeting at which Scheme Members will be
requested to vote on the Scheme ("Scheme Meeting") will still be
convened at 10:30 on Tuesday, 18 April 2006 at The Boardroom, 21st
Floor, No. 2 Long Street, Cape Town.
4. CONFIRMATION OF SUFFICIENT FUNDS
The Securities Regulation Panel has been given appropriate
confirmation, in terms of its requirements, that Newco has sufficient
resources to discharge its obligations in terms of the Offer.
5. REVISED FINANCIAL EFFECTS OF THE SCHEME
The unaudited pro forma financial effects on L.A. Group shareholders
have been prepared for illustrative purposes only, in order to provide
information about how the Scheme might have affected the historical
financial information presented by L.A. Group. Due to their nature,
the unaudited pro forma financial effects may not give a true
reflection of L.A Group"s historical financial position. The
directors of the company are responsible for the preparation of the
unaudited pro forma financial effects. The table below sets out the
unaudited pro forma financial effects of the Scheme on L.A. Group
ordinary and `N" ordinary shareholders, based on the assumptions set
out below:
5.1 Unaudited pro forma financial effects of the Cash Consideration
Before the After the Change
Scheme Scheme (%)
(cents) (cents)
Earnings per L.A. Group 39.4 20.02 -49.2
Share1
Headline earnings per L.A. 39.5 20.02 -49.4
Group Share1
Net asset value per L.A. 565.2 855.06 51.3
Group Share3
Net tangible asset value per 463.5 855.06 84.5
L.A. Group Share3
Market value per ordinary
share4
- preceding Thursday, 11 680.0 855.06 25.7
August 2005
- 30-day volume weighted 555.5 855.06 53.9
average price, preceding
Thursday, 11 August 2005
- Thursday, 2 February 2006 900.0 855.06 -5.0
Market value per `N" ordinary
share4
- preceding Thursday, 11 650.0 855.06 31.5
August 2005
- 30-day volume weighted 596.8 855.06 43.3
average price, preceding
Thursday, 11 August 2005
- Thursday, 2 February 2006 900.0 855.06 -5.0
Notes:
1. The amount in the "Before the Scheme" column is based on the
unaudited financial results of L.A. Group for the six months
ended 31 August 2005. These comply with International Financial
Reporting Standards and were adopted with effect from 1 March
2005.
2. The amount in the "After the Scheme" column represents the after-
tax interest which an L.A. Group shareholder with a marginal tax
rate of 29% would have earned, had the L.A. Group shareholder
invested an amount equal to the Cash Consideration for the six
months ended 31 August 2005 at the average 32-day call interest
rate over that period, being 6.5%, compounded monthly in arrears.
3. The amount in the "Before the Scheme" column is based on the net
asset value and net tangible asset value as per the unaudited
financial results of L.A. Group at 31 August 2005. The amount in
the "After the Scheme" column represents the Cash Consideration.
4. The amount in the "Before the Scheme" column is based on the last
trading date prior to the publication of the first cautionary
announcement on 11 August 2005, the 30-day volume weighted
average share prices of the L.A. Group shares prior to the
publication of the first cautionary announcement on 11 August
2005 and the closing market price of L.A. Group shares on 2
February 2006, the last trading date before the publication of
the announcement dated 3 February 2006. The amount in the "After
the Scheme" column represents the Cash Consideration.
5. No effect has been given to Capital Gains Tax that may be
applicable to L.A. Group ordinary and `N" ordinary shareholders.
6. Offer price.
5.2 Unaudited pro forma financial effects of the Reinvestment
Alternative
Before the After the Change
Scheme Scheme (%)
(cents) (cents)
Earnings per L.A. Group Share 39.4 45.9 16.5
Headline earnings per L.A. 39.5 45.9 16.2
Group Share
Net asset value per L.A. 565.2 855.02 51.3
Group Share1
Net tangible asset value per 463.5 855.02 84.5
L.A. Group Share1
Dividend per Newco Scheme - 89.8 100.0
Preference Share3
Notes:
1. The amount in the "Before the Scheme" column is based on the net
asset value and net tangible asset value as per the unaudited
financial results of L.A. Group at 31 August 2005. These comply
with International Financial Reporting Standards and were adopted
with effect from 1 March 2005.
2. The amount in the "After the Scheme" column represents the
Reinvestment Alternative.
3. The amount in the "After the Scheme" column is based on the Newco
Scheme Preference Share which will earn a dividend rate
equivalent to 100% of the prevailing Standard Bank prime
overdraft rate (currently 10.5% nominal annual compounded
monthly) on the subscription amount.
4. No effect has been given to Capital Gains Tax that may be
applicable to L.A. Group ordinary and `N" ordinary shareholders.
6. SHAREHOLDER SUPPORT
6.1 Letters expressing support to vote in favour of the Scheme have
been received from L.A. Group shareholders holding 7 110 622 L.A.
Group ordinary shares and 8 154 563 L.A. Group `N" ordinary
shares, collectively representing 74.4% of the Scheme Shares held
by Scheme Members.
6.2 Letters expressing support have also been received from L.A.
Group shareholders holding 5 486 342 L.A. Group ordinary shares
and 6 039 672 L.A. Group `N" ordinary shares to subscribe for
Newco Scheme Preference Shares, in aggregate totalling R98.5
million, representing 57% of the Scheme Shares held by Scheme
Members.
6.3 L.A. Group Shareholders are advised that one Scheme Meeting will
be held at which L.A. Group `N" ordinary shares count one
hundredth of the vote of L.A. Group ordinary shares.
7. FAIR AND REASONABLE RECOMMENDATIONS
7.1 The L.A. Group sub-committee of independent non-executive
directors has considered the increased offer price and taking
into account the PKF Corporate Finance (Proprietary) Limited fair
and reasonable letter dated 2 February 2006, in which the
original offer price of 800 cents per L.A. Group Share was
considered fair and reasonable, is of the unanimous opinion that
the revised offer price of 855 cents per L.A. Group Share is fair
and reasonable to Scheme Members. The independent sub-committee
advised the L.A. Group Board accordingly. The L.A. Group Board,
taking into account the views of the independent sub-committee,
recommends that Scheme Members vote in favour of the Scheme.
7.2 The L.A. Group Board, to the best of their knowledge and belief,
is not aware of any material facts which would make any statement
in this announcement false or misleading and that all reasonable
enquiries to ascertain such facts have been made.
Cape Town
12 April 2006
Investment bank to Newco Attorneys to the Scheme
Standard Bank Bernadt Vukic Potash and Getz
Independent adviser to L.A. Auditors and reporting accountants to
Group L.A. Group
PKF Grant Thornton
Sponsor to L.A. Group Attorneys to Standard Bank
Sasfin Capital Prinsloo, Tindle & Andropoulos Inc
Date: 12/04/2006 04:10:52 PM Produced by the JSE SENS Department
