| Mon 26 Jun 2006, 16:00 | | RAH - Further announcement regarding the unsolicit |
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RAH
RAH
RAH - Further announcement regarding the unsolicited conditional offer by Sun
International Limited for all of the shares in RAH
REAL AFRICA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/003919/06)
SHARE CODE: RAH & ISIN: ZAE000008702
("RAH")
FURTHER ANNOUNCEMENT REGARDING THE UNSOLICITED CONDITIONAL OFFER BY SUN
INTERNATIONAL LIMITED FOR ALL OF THE SHARES IN RAH ("THE OFFER")
Shareholders are referred to the announcement released by Sun International
Limited ("Sun International") on the Securities Exchange News Service ("SENS")
of the JSE Limited on Tuesday, 20 June 2006, stating that "in the absence of the
offer RAH"s trading price would in all likelihood have decreased to
approximately 451 cents per share in line with the devaluation in the Sun
International trading price" (the "Sun International announcement").
RAH board recommendation
The RAH board of directors refers shareholders to their recommendation, not to
accept the offer, as contained in the RAH response circular dated and posted to
shareholders on Monday, 19 June 2006 (the "circular") and released on SENS on
the same day. This recommendation was based, inter alia, on the opinions of
RAH"s independent sub-committee and RAH"s independent external advisers. The
independent external adviser opined that the minimum value for RAH is 640 cents
per share, excluding any value in the SunWest International (Proprietary)
Limited shares which are the subject matter of current litigation against Sun
International. In arriving at this opinion, use was made of detailed valuation
methodologies including, inter alia, a capitalisation of earnings calculation, a
discounted cash flow and a net asset value calculation. These valuation
methodologies measured RAH"s intrinsic value on a long-term basis and
accordingly took account of circumstances as they existed at the opinion date.
Furthermore, use of more than one valuation methodology provides corroborating
evidence to support the calculated minimum fair value. Shareholders are referred
to the circular, which contains the full text of the independent external
advisers" opinion, in order to fully appreciate the basis of the opinion.
RAH"s net asset value
Shareholders are referred to RAH"s announcement of its financial results for the
year ended 31 March 2006, released concurrently with this announcement (the
"results announcement"). As contained in the results announcement, RAH"s
reported net asset value as at 31 March 2006 is 676 cents per share and, as is
customary, the basis upon which this is determined has also been detailed. RAH"s
gaming assets are valued principally by discounting future cash flows at
appropriate discount rates. The resultant values are then benchmarked to the
market. This method has consistently been applied and reflects the long-term
value RAH places on its gaming assets.
Sun International"s implied value of RAH
The Sun International announcement attempts to predict a value for RAH based
solely on the recent decline of Sun International"s share price. By applying the
same principle, were Sun International"s current dividend yield of 2.92%,
applied to the dividends received by RAH (net of minorities) for the latest 12
months from its gaming assets of R65,2 million, the implied value of these
assets would be R2,23 billion. Aggregating this result with the value of RAH"s
non-gaming assets detailed in the results announcement, RAH would be valued at
808 cents per share. Based on this imputed value the offer price of 590 cents
per RAH share represents a discount of approximately 37%.
Johannesburg
26 June 2006
FINANCIAL ADVISER
NM Rothschild & Sons (South Africa) (Pty) Ltd
SPONSOR
Rand Merchant Bank (A division of Firstrand Bank Limited)
LEGAL ADVISORS
Deneys Reitz
INDEPENDENT EXTERNAL ADVISER TO THE BOARD
Standard Bank
Date: 26/06/2006 04:00:15 PM Produced by the JSE SENS Department
