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BRN BRT
BRT
Brimstone - Acquisition and Withdrawal of Cautionary Announcement
BRIMSTONE INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/010442/06)
JSE share code: BRT; ISIN: ZAE000015277
JSE share code: BRN; ISIN: ZAE000015285
("Brimstone")
Acquisition of a further 5.61 % effective economic interest in Life
Healthcare Group Holdings (Proprietary) Limited ("Life Healthcare") and
withdrawal of cautionary announcement
1 Introduction
Brimstone currently holds an effective 18.1% economic interest and a
20.3% voting interest in Life Healthcare (formerly Business Venture
Investments No 790 (Proprietary) Limited which acquired the entire
share capital of Afrox Healthcare Limited with effect from 23 March
2005). These interests are held via Business Venture Investments No
813 (Proprietary) Limited ("BEE Consortium 2"), in which Mvelaphanda
Strategic Investments (Proprietary) Limited ("Mvelaphanda"), Life
Healthcare management (via the Ammed Trust) and Life Healthcare
employees (via the Life Healthcare Employees Trust) are the other
shareholders. In terms of a shareholders agreement, BEE Consortium 2
owns the rights in respect of a call option ("the call option") in
terms of which it is entitled to purchase all of African Oxygen
Limited"s ("Afrox") remaining 21.39% shareholders" interests in Life
Healthcare comprising ordinary shares, a shareholders loan, `A"
preference shares and `N" ordinary shares ("the sale interest"), and
Old Mutual Life Assurance Company (South Africa) Limited ("OMLACSA"),
the Ammed Trust and various entities in the FirstRand Group
(collectively "RMB") are in turn entitled to acquire a part of the
sale interest from BEE Consortium 2.
The call option has now been exercised and it has been agreed with
Afrox that the sale interest will be acquired directly by Brimstone,
Mvelaphanda, OMLACSA, the Ammed Trust and RMB in agreed proportions.
In terms of the transaction Brimstone will acquire a further 5.61%
effective economic interest in Life Healthcare ("the acquisition")
with effect from 29 September 2006.
The 5.61% effective economic interest in Life Healthcare acquired in
terms of the acquisition could reduce to 4.43%, as a result of
certain other transactions contemplated by Life Healthcare, which
would correspondingly reduce the acquisition cost. In such an event
an appropriate communication to shareholders will be made.
2 Consideration for the acquisition
The consideration for Brimstone"s 5.61% share of the sale interest is
R222.947 million. The consideration will be settled in cash which
will be funded by way of third party debt.
3 Nature of Life Healthcare"s business
Life Healthcare operates and has a spread of 62 acute care hospitals
and same-day surgical centres in seven South African provinces and
Botswana and enjoys the support of approximately 2,700 doctors and
specialists. Life Healthcare also offers other healthcare related
services such as rehabilitation, occupational health and doctor
solutions. Life Healthcare also has a UK-based joint venture
operation and is associated with Life Esidemeni (the oldest and
largest public/private partnership in South Africa).
4 Rationale for the acquisition
Brimstone regards Life Healthcare as a quality investment with
significant growth potential in an industry which attracts a premium
rating in the investment markets. Furthermore, Brimstone"s existing
shareholding in Life Healthcare represents a substantial portion of
its aggregate net asset value. Brimstone will continue to seek to
increase its shareholding in Life Healthcare as opportunities become
available.
5 Financial effects
The table below sets out the pro forma financial effects of the
acquisition on the earnings ("EPS"), headline earnings ("HEPS"), net
asset value ("NAV") and tangible NAV per Brimstone share. The pro
forma financial information has been prepared for illustrative
purposes only and because of its nature may not give a true picture
of Brimstone"s financial position and results of operations, nor the
effect and impact of the acquisition going forward and is the
responsibility of Brimstone"s directors.
Per Brimstone share Before the After the Percentage
(cents) acquisition acquisition change
(1) (2)
EPS (cents) 54.1 51.6 (3) (4.5)%
HEPS (cents) 54.1 51.6(3) (4.5)%
NAV and tangible NAV 256.6 256.6 (4) 0%
(cents)
Number of shares for EPS 230 992 230 992
and HEPS purposes ("000)
Number of shares for NAV 232 534 232 534
and tangible NAV purposes
("000)
Notes:
1 Based on Brimstone"s unaudited published interim results for the
six months ended 30 June 2006.
2 Based on the assumption that the acquisition was effected on 1
January 2006 for income statement purposes and 30 June 2006 for
balance sheet purposes.
3 After taking into account the equity accounted income relating
to the effective economic 5.61% Life Healthcare interest
acquired. Further to this, adjustments have been made to take
into account finance costs incurred on the third party debt
funding and the tax effects thereof.
4 On the basis that no intangible assets are separately
recognised, in accordance with International Financial Reporting
Standards.
6 Conditions of the acquisition
All conditions relating to the acquisition have been fulfilled.
7 Categorisation
The acquisition is a Category 3 transaction in terms of the JSE
Limited Listings Requirements. Brimstone shareholders will be advised
by way of an announcement issued on the Securities Exchange News
Service should the effective economic interest acquired be below the
maximum 5.61%.
8 Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 22
August 2006 and are advised that further to this announcement,
shareholders need no longer exercise caution when dealing in
Brimstone"s securities.
Cape Town
7 September 2006
Investment bank and sponsor
Nedbank Capital
Corporate law advisers
Hofmeyr Herbstein & Gihwala Inc
Corporate law advisers
Edward Nathan (Proprietary) Limited
Date: 07/09/2006 07:45:07 AM Produced by the JSE SENS Department
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