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SBV SVN
SBV
Sabvest - Underwriting of rights issue of Metrofile Holdings Limited
SABVEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1987/003753/06)
Ordinary shares: Share code: SBV & ISIN: ZAE000006417
N Ordinary shares: Share code: SVN & ISIN: ZAE000012043
("Sabvest")
Underwriting of rights issue of Metrofile holdings limited
1. Introduction
Sabvest and its subsidiaries conduct investment, finance and related fee
earning activities in South Africa and the United Kingdom.
Metrofile Holdings Limited ("Metrofile Holdings") has announced that it
intends to undertake a rights issue of R141,7m to its shareholders to
settle debt and raise cash for contingent liabilities ("the Rights Issue").
Shareholders are advised that Sabvest intends to underwrite the full rights
issue ("the Underwriting").
2. Profile of Metrofile Holdings
Metrofile Holdings is quoted in the "Support Services - Business Support
Services" sector of the JSE Limited ("JSE"). The sole business of
Metrofile Holdings is its 65% investment in Metrofile (Pty) Limited. This
company is the South African market leader in the management of business
records through its 16 storage centres and locations throughout South
Africa. It provides full life cycle paper and electronic records
management on or offsite, including collation, scanning, digital
conversions, physical or electronic preservation and destruction services
that satisfy legislation and corporate governance requirements.
3 Sabvest"s relationship with Metrofile Holdings
Sabvest owns 5% of the equity of Metrofile (Pty) Limited, previously held
loan notes issued by Metrofile (Pty) Limited which were repaid early during
August 2006 and owns certain of the loan notes of Metrofile Holdings. The
CEO of Sabvest has been the Chairman of Metrofile Holdings for the past
three years.
4 Rationale for the Underwriting
Sabvest wishes to underwrite the rights issue as part of its corporate
finance activities. It is also prepared to increase its effective interest
in Metrofile (Pty) Ltd by making an investment in Metrofile Holdings, if
existing shareholders of Metrofile Holdings do not take up all of their
rights. Sabvest has concluded agreements with sub-underwriters as a result
of which the maximum investment Sabvest may make in Metrofile Holdings is
R41,25m.
5 Funding of the Rights Issue
Sabvest recently realised its interests in debt portfolios and received
early repayment of the Metrofile (Pty) Limited loan notes held by it. As a
result Sabvest has in excess of R50m in cash and these funds will be
utilised for the Underwriting.
The Underwriting is subject to various conditions and in particular the
approval of the Rights Issue by the shareholders of Metrofile Holdings.
Accordingly there is still a possibility that the Rights Issue may not
proceed.
In addition until the Rights Issue closes, Sabvest will not know the amount
of its investment as the extent of the take up of the rights offer by
Metrofile Holdings shareholders will not be known until then.
Sabvest will make an announcement on the completion of the Rights Issue
advising the extent of its investment in Metrofile Holdings.
6 Financial Effects
The Underwriting is not expected to have any effect on Sabvest"s headline
earnings per share or NAV per share. Subject to attaining a satisfactory
percentage in Metrofile Holdings, Sabvest will account for Metrofile
Holdings as an associate. Diluted equity accounted earnings are expected
to be approximately the same in the first year as the after tax interest
return currently earned by Sabvest on the funds.
7 Exchange of interest in Metrofile (Pty) Limited
Subject to approval of the shareholders of Metrofile Holdings, Sabvest
intends to exchange its 5% interest in Metrofile (Pty) Limited for shares
in Metrofile Holdings such that it will have the same effective interest in
Metrofile (Pty) Limited, but indirectly, after the exchange.
It will also be proposed that Mineworkers Investment Co. (Pty) Limited and
management of Metrofile, who own 25% and 5% of Metrofile (Pty) Limited
respectively, also exchange their shareholdings for shares in Metrofile
Holdings. If the three swap up transactions are concluded, Metrofile (Pty)
Limited will be constituted a wholly owned subsidiary of Metrofile
Holdings.
This will have no effect on Sabvest"s headline earnings per share or NAV
per share although its intrinsic value per share (calculated with
investments at directors" valuation) may vary depending on the share price
of Metrofile Holdings after the rights issue and the swap up transactions.
Sandhurst
15 September 2006
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 15/09/2006 05:17:05 PM Produced by the JSE SENS Department
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