| Tue 20 Jun 2006, 16:09 | | Imperial Bank abridged Pre-listing statement |
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Imperial Bank abridged Pre-listing statement
Imperial Bank Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/012641/06)
Preference share code: IBLP ISIN: ZAE000081675
("Imperial Bank" or "the Company")
Abridged Pre-listing statement
This abridged Pre-listing statement is not an invitation to the public to
subscribe for securities, but is issued in compliance with the JSE Limited"s
(the "JSE") Listings Requirements for the purpose of providing information to
the public with regards to Imperial Bank. The JSE has granted a listing of 3 000
000 non-redeemable, non-cumulative, non-participating Imperial Bank preference
shares with a par value of R0.0005 each in the Preference Shares -"Preference
Shares" sector of the JSE list with the abbreviated name "IBL Pref", Preference
share code "IBLP" and ISIN ZAE000081675 with effect from the commencement of
business on Thursday, 22 June 2006. This abridged Pre-listing statement is for
the use of investors participating in the private placing and prospective
investors, post-listing.
1. Introduction
The preference shares are being issued as part of a capital optimization
programme whereby Imperial Bank seeks to optimise the efficiency of its
capital structure, and hence enhance return on capital for its
shareholders, within the regulatory capital constraints as detailed in the
Banks Act, 1990 (Act 94 of 1990), as amended, and regulations thereto. As
part of this programme preference shares will be issued and the proceeds
used to repurchase ordinary share capital. Further details of the proposed
repurchase of share capital is set out in paragraph 4 below.
2. Incorporation, history, nature of business and group prospects
2.1 Incorporation
The Company was incorporated in South Africa on 23 November 1995.
2.2 History
Imperial Bank was initially established as a wholly-owned bank
subsidiary of Imperial Holdings Limited ("Imperial Holdings") with an
initial focus on lending to high net worth individuals and selected
car finance business sourced from Imperial Holdings" dealerships.
During 2000, the Motor Finance Corporation Division was formed as a
specialist dealer-based retail finance division. In January 2001,
Nedbank Limited ("Nedbank") acquired a 50.1% controlling stake in
Imperial Bank, as part of a strategic joint venture agreement with
Imperial Holdings. In 2002, Imperial Bank acquired the entire issued
share capital of New Republic Bank Limited, inclusive of asset-based
receivables, for R670 million from the Receiver of Saambou Bank
Limited which was in liquidation.
2.3 Nature of business
Imperial Bank is a regulated bank with two major shareholders, namely
Nedbank and Imperial Holdings. Imperial Bank is a niche player
primarily engaged in asset-based financing and relies strongly on its
shareholders for support. Nedbank provides the vast majority of the
funding and risk management support while Imperial Holdings directs
business to Imperial Bank through its extensive motor franchises.
Imperial Bank"s strategy has the following objectives to:
- operate in selected niche markets where it has proven expertise
and in which it has built strong relationships;
- access these niche markets by leveraging off the Imperial
Holdings footprint;
- contain costs such that a cost to income ratio below a 40%
threshold is achieved;
- ensure sound risk management; and
- ensure clear accountability.
2.4 Group prospects
The outlook for 2006 is positive. Imperial Bank is well-positioned to
continue benefiting from the favourable market conditions and expects
another year of strong advances growth.
The growth of the last two years has required additional capital, with
shareholders contributing R215 million in 2005. Further capital will
be required during 2006 to support the expected growth. Although the
shareholders are committed to supporting Imperial Bank, the capital
structures are being reviewed in order to optimise the mix of primary
and secondary capital.
Having reduced the cost base in 2005, it is expected that the cost to
income ratio in 2006 will drop below 40%.
The Motor Finance Division will continue to focus on expanding its
motor dealership network and will be looking for opportunities to
further leverage the infrastructure and technology that it has
developed.
Property Finance will maintain levels of activity in residential
development finance. Although there has been a slowing down in demand
for the more expensive residential units, there continues to be strong
demand for units in the middle to lower segment of the market, which
is where the Property Finance Division focuses its activities. The
division will focus on growing its commercial property loan book in
order to increase annuity income, which will shield the division when
the residential development market ultimately slows down.
Medical Finance intends taking advantage of the current favourable
environment to continue its strong growth, while Supplier Asset
Finance will focus on developing sound relationships with the Imperial
group companies as well as other major suppliers in its selected
markets.
With continued assistance from Nedbank, the risk management
structures, processes and procedures are sound, which enables Imperial
Bank to grow its business within acceptable risk parameters. Good
progress has been made with regard to Basel II implementation and it
is expected that Imperial Bank will meet the implementation deadlines.
3. Directors of Imperial Bank
The name, age, qualification, nationality, business address and occupation
and function of each of the directors of Imperial Bank are outlined below:
Name, age, qualification
and nationality Business address Occupation and function
Executive directors
R van Wyk (50) 24 Achter Road Chief Executive Officer
CA(SA), AMP (Insead) Paulshof
(South African) Sunninghill, 2191
P C W Hibbit (57) 24 Achter Road Chief Financial Officer
CA(SA), H.Dip Tax Paulshof
AMP (Harvard) Sunninghill, 2191
(South African)
Non-executive directors
W G Lynch (62) Imperial Place Non-executive chairman of
(Irish) Jeppe Quondam Imperial Bank; chief executive
79 Boeing Road East officer of Imperial Holdings
Bedfordview, 2008
C J W Ball (66) 4 Gardenia Lane Non-executive director;
Dip Luris (Wits), Constantia, 7800 director of Nedbank
MA (Cantab)
(South African)
R G Cottrell (70) Primegro Place Non-executive director;
CA(SA), FCA, FCP 18 Rivonia Road director of Nedbank
(Stanford) (corner Boundary Road)
(South African) Illovo, 2196
Non-executive directors
P A Wessels (48) 135 Rivonia Road Non-executive director;
CA(SA), Dip Adv Bank Law Sandton, 2196 chief risk officer of Nedbank
SAISB
(South African)
M J Croucamp (60) 9 Rory Byrne Close Independent non-executive
IAC, AEP, AMP (Insead) Bedfordview, 2008 director
(South African)
O S Arbee (46) Imperial Place Non-executive director;
CA(SA), Dip Tax Jeppe Quondam member of Imperial Holdings"
IMB (Switzerland) 79 Boeing Road East Executive Committee
(South African) Bedfordview, 2008
H R Brody (41) Imperial Place Non-executive director;
CA(SA) Jeppe Quondam member of Imperial Holdings"
(South African) 79 Boeing Road East Executive Committee
Bedfordview, 2008
M A Enus-Brey (51) 1st Floor, Slade House Non-executive director;
CA(SA) Boundary Terraces director of Nedbank
(South African) 1 Mariendahl Lane
Newlands, 7700
4. The share repurchase
It is intended that upon receipt, the proceeds from the preference shares
will be used to repurchase ordinary shares in the issued share capital of
the Company in terms of section 85 of the Companies Act, 1973 (Act 61 of
1973), as amended ("the Companies Act"). The acquisition of such ordinary
shares will be pro rata from each of the existing ordinary shareholders and
will result in the reduction in the share premium account in the amount of
R299 292 881 in terms of section 85(7) of the Companies Act. The share
repurchase is contemplated on the basis that the Company will, after the
payment, be able to pay its debts as they become due in the ordinary course
of business and the consolidated assets of the Company fairly valued would,
after the payment, exceed the consolidated liabilities of the Company.
5. Details and salient times and dates of the private placing
5.1 Details of the private placing
Prior to the issue of the Pre-listing statement, selected investors gave
irrevocable commitments to subscribe for 3 000 000 preference shares at a
subscription price of R100.00 per preference share ("the private placing"),
details of which are set out below:
Issue and subscription price per preference share R100.00
Number of preference shares offered 3 000 000
Minimum Rand value of subscription per subscriber
acting as principal R100 000
Amount raised in terms of the private placing R300 000 000
5.2 Salient times and dates of the private placing
2006*
Release of abridged Pre-listing statement on SENS on Tuesday, 20 June
Publication of abridged Pre-listing statement in the
press on Wednesday, 21 June
Copies of Pre-listing statement available Wednesday, 21 June
Listing of the preference shares on
the JSE commences on Thursday, 22 June
* The abovementioned times and dates are South African times and dates and
are subject to amendment. Any such amendment will be released on the
Securities
Exchange News Services of the JSE ("SENS") and published in the press.
6. Pro forma financial information
Based on the consolidated audited results of Imperial Bank for the year
ended 31 December 2005, the unaudited pro forma financial effects of the
private placing and share repurchase, on Imperial Bank"s earnings per share
("EPS"), headline earnings per share ("HEPS"), net asset value per share
("NAV") and net tangible asset per share ("NTAV") are set out below. This
unaudited pro forma financial information, being the responsibility of
Imperial Bank"s directors, has been prepared for illustrative purposes only
and because of its nature may not fairly present Imperial Bank"s financial
position and results of operations, nor the effect and impact of the
private placing or share repurchase going forward.
Before After
the private the private Change
placing placing %
Per Imperial Bank ordinary and the share and the share
share (cents) repurchase(1) repurchase(2)
EPS 88.5 103.5(3) 17.0
HEPS 87.1 101.9(3) 17.0
NAV and NTAV 424.3 423.5(3) (0.2)
Weighted average number of shares used
to calculated EPS and HEPS ("000) 332 935 262 223
Number of shares used to calculate
NAV and NTAV ("000) 358 934 288 223
Notes:
1. Based on Imperial Bank"s audited consolidated results for the year ended
31 December 2005.
2. Based on the assumption that the private placing and share repurchase took
place on 1 January 2005 for income statement purposes and 31 December 2005
for balance sheet purposes.
3. After taking into account the issue of 3 000 000 preference shares in terms
of the private placing and the effect of the share repurchase further
details of which are set out in paragraph 4 above.
7. Share capital
Details of Imperial Bank"s share capital before the private placing, after
the private placing and before the share repurchase and after the private
placing and share repurchase are set out below:
R"000
Before the private placing
Authorised
500 000 000 ordinary shares of R0.01 each 5 000
Issued
358 934 487 ordinary shares of R0.01 each 3 589
Share premium 648 285
651 874
After the private placing and before the share repurchase
Authorised
500 000 000 ordinary shares of R0.01 each 5 000
8 000 000 preference shares of R0.0005 each 4
Issued
358 934 487 ordinary shares of R0.01 each 3 589
3 000 000 preference shares of R0.0005 each 1.5
Share premium 946 083(2)
949 673.5
After the private placing and share repurchase(3)
Authorised
500 000 000 ordinary shares of R0.01 each 5 000
8 000 000 preference shares of R0.0005 each 4
Issued
288 222 599 ordinary shares of R0.01 each 2 882
3 000 000 preference shares of R0.0005 each 1.5
Share premium 646 790(2)
649 673.5
Notes:
1. The authorised and unissued shares of the Company are under the control of
the directors of the Company subject to the provision of section 221 of the
Companies Act, and the JSE Listings Requirements.
2. After taking into account the estimated costs of the issue of the
preference shares of R2.2 million, which has been offset against share
premium account.
3. It is intended that, upon receipt, the proceeds from the preference shares
will be used to redeem ordinary share capital.
8. Rights attaching to preference shares
The preference shares are non-redeemable, non-participating and non-
cumulative. Dividends, if declared, at the sole discretion of the
directors, will be payable on the earlier of a date at least seven business
days prior to the date on which the Company pays its ordinary dividends, if
any, in respect of the same period and a date not later than 120 business
days after 30 June and 31 December of each year. Notwithstanding the
aforegoing, the first preference dividend period shall be the period
commencing from the date of the issue and ending on 31 December 2006, and
accordingly the preference dividend for that period, if declared, shall be
paid within 120 days after 31 December 2006, but in any event not later
than seven business days prior to dates upon which the ordinary dividend
declared in respect of the same period is paid.
8.1 Voting rights
Preference shareholders shall not be entitled to vote, either in person or
by proxy, at any general meeting of the Company, by virtue of or in respect
of the preference shares, unless either or both of the following
circumstances prevail at the date of the meeting:
8.1.1 during any period determined as provided for in section 194(2) of the
Companies Act in which any dividend or any part of any dividend on
such preference shares remains in arrear and unpaid; and/or
8.1.2 a resolution of the Company is proposed (in which event the preference
shareholders shall be entitled to vote only on such resolution) which
directly affects the rights attached to the preference shares or the
interests of the holders thereof, including a resolution for the
winding-up of the Company or for the reduction of its capital.
8.2 Entitlements to dividends
Preference shareholders will be entitled to receive out of the profits of
the Company that it determines to distribute, in priority to any payment of
dividends to the holders of any other class of shares in the capital of the
Company not ranking prior to the preference shares, a non-cumulative
preference cash dividend equivalent to 70% of prime multiplied by the
deemed value of the preference shares held by a preference shareholder. The
dividend will not compound and, if declared, will accrue initially in
respect of the period calculated from the date of issue to the period
ending 31 December 2006, and thereafter, in respect of the periods from 1
January to 30 June and 1 July to 31 December. Preference shares that may be
issued in future will be entitled to a pro rata portion of any dividend
declared for the first period in which they were issued. An ordinary
dividend will not be declared by Imperial Bank in respect of any dividend
period unless the preference share dividend for that same dividend period
has been declared in full.
8.3 Changes to tax status
If there is an amendment (or amendments) to the Income Tax Act, 1962
("Income Tax Act"), which results in the preference dividends being taxable
in the hands of the preference shareholders and which results in payment of
the preference dividends becoming a deductible expense for the Company,
then (provided such amendment is uniformly applicable to all corporate
taxpayers and not only because of the particular circumstances of the
Company or any preference shareholder) the percentage of prime payable as a
dividend shall be increased by the Company. The extent of such increase
shall be limited to such an increase that the Company does incur savings in
the costs of servicing the preference shares, which savings it would not
have incurred but for such amendments to the Income Tax Act. If such
amendments to the Income Tax Act do not result in the Company incurring
lesser costs in servicing the preference shares, then, notwithstanding that
such amendment may result in a decrease in the returns of any preference
shareholder on its preference share investment, no amendment shall be made
to the percentage of prime payable as dividend.
Preference shareholders will bear all other risk due to changes in laws or
regulations.
9. Copies of the full pre-listing statement
Copies of the full Pre-listing statement may be obtained during normal
business hours from Wednesday, 21 June 2006 to Friday, 14 July 2006 from
Imperial Bank"s registered office, 24 Achter Road, Paulshof, Sunninghill,
2191 or Nedbank Capital, 3rd Floor F-Block, 135 Rivonia Road, Sandown,
2196. Alternatively electronic copies of the full Pre-listing statement
will also be available on Imperial Bank"s website www.imperialbank.co.za.
Sunninghill
20 June 2006
Investment bank and joint sponsor
Nedbank Capital
Corporate law advisers
Edward Nathan
Corporate Law advisers
Edward Nathan (Proprietary Limited)
Registration No.: 2004/005665/07)
Independent reporting accountants and auditors
Deloitte & Touche
Registered Auditors
Lead sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Date: 20/06/2006 04:09:19 PM Produced by the JSE SENS Department
