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PGR
PGR
Peregrine - Introduction of a BEE shareholding in Peregrine
Peregrine Holdings Limited
(Registration number 1994/006026/06)
JSE code: PGR ISIN code: ZAE000015152
("Peregrine" or "the company")
INTRODUCTION OF A BLACK ECONOMIC EMPOWERMENT SHAREHOLDING IN PEREGRINE
1. INTRODUCTION
Shareholders are referred to the cautionary announcement, dated 30
September 2005 ("the cautionary announcement") and the detailed
announcement, dated 8 December 2005 ("the terms announcement"), in which
shareholders were advised that the company had conditionally entered into
an agreement to give effect to a Broad-Based Black Economic Empowerment
transaction("BEE transaction"). On implementation the BEE transaction would
have resulted in 29 750 000 Peregrine shares being owned by a BEE
consortium lead by Vunani Capital (Proprietary) Limited ("Vunani Capital")
and Peregrine shareholders would have received an amount which equated to
R6,00 per each share sold by each existing shareholder to the BEE
consortium, which amount of R6,00 represented a premium of 2,4% to the
ruling price of Peregrine shares on the day preceding the cautionary
announcement.
Given the complexity of the BEE transaction, implementation thereof has
taken significantly longer than was originally anticipated. In the interim
market conditions changed, such that it became apparent that the BEE
transaction, on the terms announced in the terms announcement would no
longer be attractive to Peregrine shareholders. Accordingly, the BEE
transaction will not be implemented on the terms as set out in that
announcement.
Peregrine has subsequently entered into a new agreement with Vunani Capital
to give effect to the BEE transaction on revised terms and conditions, as
set out below.
2. THE BEE CONSORTIUM
2.1 Vunani Capital Is A Subsidiary Of Vunani Group (Proprietary) Limited,
Established Through The Management Buy-Out Of African Harvest Capital
In 2004. The Vunani Group, Led By Ethan Dube, Is Black-Owned And
Controlled And Is Active In Black Economic Empowerment Structuring,
Corporate Advisory Services, Private Equity, Capital Raising,
Stockbroking And Property Development.
2.2 The BEE Consortium Will Also Include Herman Mashaba"s Phatsima Finance
(Proprietary) Limited, Black Staff Within The Peregrine Group, A
Women"s Grouping, Community Development Organisations And An
Educational Trust.
It Is Envisaged That Up To Three Individuals Representing The Bee
Consortium Will Be Appointed, As Non Executive Directors, To The Board Of
PeregrINE.
3. TERMS OF THE PROPOSED BEE TRANSACTION
3.1 The Proposed BEE Transaction Entails An Acquisition Of 26,000,000
Shares (The "Scheme Shares") From Existing Shareholders And A Sale Of
4,000,000 Treasury Shares (The "Bee Treasury Shares") By A Subsidiary
Of Peregrine.
3.2 The Acquisition Of The Scheme Shares From Existing Shareholders Will
Be Pursuant To A Scheme Of Arrangement (The "Scheme") To Be Proposed
By The Bee Consortium Between Peregrine And Its Shareholders,
Excluding Holders Of Treasury Shares And Shares Held By Share Trusts
Within The Peregrine Group (Collectively Referred To As "Treasury
Shareholders"). In Terms Of The Scheme, The Scheme Shares Will Be
Acquired For A Consideration Of R7,50 Per Scheme Share. This Will Take
Place After Payment To Shareholders Of The Ordinary Dividend Of R0,30
Per Share, Declared On 30 May 2006 And Payable On 28 August 2006.
3.3 The Acquisition Of The Bee Treasury Shares By The Bee Consortium Will
Be For A Consideration Of R0,001 Per Bee Treasury Share. The Sale Of
The Bee Treasury Shares Will Be Conditional On The Implementation Of
The Scheme.
3.4 The -
3.4.1 BEE Treasury Shares Represent 2,09% Of The Total Number Of
Peregrine Shares In Issue As At The Date Hereof Excluding
Shares Held By The Treasury Shareholders, Being 191,191,418
Shares (The "Net Shares In Issue");
3.4.2 Scheme Shares Represent 13,60% Of The Net Shares In Issue;
And
3.4.3 The BEE Treasury Shares And The Scheme Shares Collectively
(Being 30 000 000 Shares) Represent 15,37% Of The Total
Number Of Peregrine Shares Which Will Be In Issue Following
The Sale Of The Bee Treasury Shares To The Bee Consortium
But Excluding The Remaining Shares Then Held By The Treasury
Shareholders.
3.5 The BEE Treasury Shares And The Scheme Shares To Be Acquired By The
Bee Consortium Will Be Subject To Restrictions On Alienation And
Encumbrance For Five Years After Acquisition, Whereafter Peregrine
Will Have Pre-Emptive Rights Applicable In Favour Of The Company Or
Its Nominee In The Event Of Any Sale Of Such Shares.
3.6 Under Jse Listings Requirements The Proposed Sale Of The Bee Treasury
Shares Is Treated As A Specific Issue Of Shares For Cash And, If
Peregrine Ever Exercises Its Pre-Emptive Rights To Buy-Back The Bee
Consortium"s Shares, The Buy-Back Would Be A Specific Re-Purchase.
Accordingly, Both Require Approval By Ordinary Resolution To Be Passed
By 75% Of Ordinary Shareholders Present Or Represented By Proxy At A
General Meeting. The Necessary Notice And Resolutions Will Be Included
In The Circular Referred To Below.
4. ECONOMIC EFFECT ON PEREGRINE SHAREHOLDERS
4.1 Pursuant To The Implementation Of The Scheme, Shareholders Will
Receive An Amount Of R7,50 Per Each Share Sold By Such Shareholder To
The Bee Consortium.
4.2 Such Amount Of R7,50 Per Share Represents -
4.2.1 A Premium Of 28,42% To The Ruling Price Of Peregrine Shares
On The Day Preceding The Cautionary Announcement;
4.2.2 A Discount Of 6,6% To The Volume Weighted Average Price
(Being R8,03) At Which Peregrine Shares Were Traded On The
Jse During The Twenty Days Preceding 4 August 2006 (The "20
Day Vwap").
5. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects for which the board of Peregrine
is responsible are presented for illustrative purposes only and may not
give a fair reflection of the financial position and results of operations
after the implementation of the proposed BEE transaction.
The table below sets out the unaudited pro forma financial effects of the
proposed BEE transaction based on the published financial results of
Peregrine for the financial year ended 31 March 2006:
Before the After the
proposed BEE proposed BEE
transaction transaction % change
(cents) (cents)
Earnings per share (EPS) 130,4 110,2 -15,5
Headline earnings per 111,7 91,9 -17,7
share(HEPS)
Diluted basic earnings 121,8 103,0 -15,4
per share (DEPS)
Diluted headline earnings 104,3 85,9 -17,6
per share (DHEPS)
Net asset value per share 388,2 379,0 -2,4
(NAV)
Net tangible asset value 260,8 254,2 -2,5
per share (NTAV)
Number of shares in issue 229,971 229,971
(`000)
Weighted average number 193,128 197,128
of shares in issue (`000)
Diluted weighted average 206,801 210,801
number of shares in issue
(`000)
Notes:
(i) The EPS, HEPS, DEPS, DHEPS, NAV and NTAV per share after the proposed
BEE transaction are based on the assumption that the transaction took
place with effect from 1 April 2005 for purposes of calculation of the
income statement effect and on 31 March 2006 for purposes of
calculation of the balance sheet effect.
(ii) On the transaction date:
- 4 million shares were sold out of treasury shares at par for a
total cash consideration of R4000;
- the company paid estimated transaction costs in the amount of
R2,520 million.
(iii) Under IFRS2, Peregrine is required to expense, through the income
statement, the difference between the fair value of the treasury
shares sold in terms of the proposed BEE transaction and the
proceeds received on the sale of those shares ("the cost of the
BEE transaction"). The fair value is deemed to be the current
share price, adjusted for any restrictions applicable to the
specific shares to be issued, determined on the date of issue of
the shares. For the purposes of preparation of the pro forma
financial effects, the fair value is R8,03, being the 20 day
VWAP. On this assumption, the cost of the BEE transaction is
R32,1 million, which amount will be recognised as a once-off
expense through headline earnings. This expense will have no
effect on the group"s cash flows and the ongoing economic effect
of the BEE transaction will be limited to the dilution in
earnings from the increased number of shares in issue.
(iv) The EPS and HEPS after the proposed BEE transaction are based on:
- attributable and headline earnings as at 31 March 2006, adjusted
for transaction costs and the cost of the BEE transaction;
- the weighted average number of ordinary shares of 193,128 million
in issue as at 31 March 2006 plus 4 million shares transferred
out of treasury shares.
(v) Diluted EPS and HEPS after the proposed BEE transaction are based on
the diluted weighted average number of 206,801 million shares in issue
as at 31 March 2006 plus 4 million shares transferred out of treasury
shares.
(vi) The NAV and NTAV per share after the proposed BEE transaction are
based on 196,671 million net shares in issue as at 31 March 2006. Net
shares in issue comprise 229,971 million ordinary shares less treasury
shares plus 4 million shares transferred out of treasury shares.
(vii) The tax rate is 29%.
It should be noted that the financial effects have been based on the 2006
results for illustrative purposes only and include a once-off reduction in
reported headline earnings per share under IFRS of 16,3 cents per share
based on the weighted average number of shares in issue after the proposed
BEE transaction. As the proposed BEE transaction will only take effect in
the 2007 financial year, the 2007 interim and final headline earnings per
share will be approximately 16,3 cents lower than normalised earnings would
have been. There will be no similar effect in subsequent years.
6. CONDITIONS PRECEDENT
The proposed BEE transaction is subject, inter alia, to the following
conditions precedent:
6.1 The Approval By The Requisite Majority Of Peregrine Shareholders Of
The Resolutions Approving The Sale Of The Bee Treasury Shares And The
Specific Re-Purchase Of The Bee Consortium"s Shares In The Event Of An
Exercise Of Pre-Emptive Rights;
6.2 The Requisite Regulatory Approvals;
6.3 Approval Of The Scheme By The Requisite Majority Of Shareholders And
Its Sanction By The High Court;
6.4 Peregrine Approving The Terms And Conditions Governing The
Relationship, Inter Se, Of The Members Of The Bee Consortium; And
6.5 The BEE Consortium Finalising The Arrangements In Respect Of The
Funding It Requires To Effect The Acquisition Of The Bee Treasury
Shares And The Scheme Shares.
7. FUNDING OF BEE CONSORTIUM
The BEE consortium is finalising the funding necessary in order for it to
acquire the BEE treasury shares and the scheme shares. The BEE consortium
has committed to provide at least 10% of the funding required from its
internal resources. The balance of such funding will be provided by a
third party and Peregrine will not be providing financial assistance in
this regard.
8. OPINIONS AND RECOMMENDATIONS
The board has considered the terms and conditions of the proposed BEE
transaction and is of the opinion that it is in the best interests of all
of Peregrine"s stakeholders. Accordingly, the board recommends that
shareholders vote in favour of the resolutions required to approve and
implement the proposed BEE transaction.
The directors of Peregrine who, directly or indirectly, beneficially own
Peregrine shares, intend to vote in favour of the resolutions to implement
the proposed BEE transaction in respect of their shareholdings.
9. FURTHER DOCUMENTATION AND IMPLEMENTATION
A circular containing full details of the proposed transactions will be
posted to Peregrine shareholders during September 2006. It is anticipated
that the scheme meeting will be held during September 2006 and the sale of
and payment for the scheme shares will be implemented by the end of October
2006.
Sandton
7 August 2006
Corporate advisor and sponsor
Java Capital (Proprietary) Limited
Reporting accountants and auditors
PKF (Jhb) Inc.
Date: 07/08/2006 10:00:16 AM Produced by the JSE SENS Department
