| Tue 26 Sep 2006, 9:00 | | Naspers Limited - Announcement |
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NPN
NPN
Naspers Limited - Announcement
Naspers Limited
(Incorporated in the Republic of South Africa)
(Registration number 1925/001431/06)
Share code: NPN ISIN: ZAE000015889
("Naspers" or "the company")
The introduction of black economic empowerment shareholders in relation to
Multichoice Africa (Proprietary) Limited ("MCSA")
1. INTRODUCTION
Naspers, in furtherance of its empowerment objectives, is implementing a
Broad-Based Black Economic Empowerment ("BEE") ownership initiative in
relation to MCSA. The MCSA BEE transaction is intended to result in the
acquisition by qualifying Black Persons and Black Groups ("General Black
Public" or "Black Participants") of ordinary shares in the issued share
capital of Phuthuma Nathi Investments Limited ("Phuthuma Nathi"), which
will hold ordinary shares in the issued share capital of MultiChoice South
Africa Holdings (Proprietary) Limited ("MCSA Holdings"), the holding
company of MCSA ("the MCSA Empowerment Transaction").
Phuthuma Nathi is a company whose sole objective is to acquire ordinary
shares in MCSA Holdings for the benefit of its shareholders, being the
General Black Public. MCSA Holdings, an indirect wholly owned subsidiary of
Naspers, has, as its only asset, 100% of the issued share capital of MCSA.
A key element of the MCSA Empowerment Transaction is the funding of the
purchase by Phuthuma Nathi of up to 45 000 000 ordinary shares in MCSA
Holdings (with the total number of MCSA Holdings ordinary shares in issue
being 300 000 000) for R2,25 billion, based on an equity value of R15
billion (enterprise value of R17,43 billion). This funding for the
transaction will be raised by the issue of up to 45 000 000 Phuthuma Nathi
ordinary shares at a price of R10,00 per share in terms of a public offer
to the General Black Public, and the issue of up to 180 000 000 Phuthuma
Nathi preference shares at a price of R10,00 per share to MIH Holdings
Limited ("MIH Holdings"), a wholly owned subsidiary of Naspers.
2. RATIONALE FOR THE MCSA EMPOWERMENT TRANSACTION
Naspers supports the drive to incorporate previously disadvantaged
communities into the South African economy and believes that BEE may be a
driver of economic growth and transformation in South Africa. For some
years the group has advanced BEE in the media industry.
Naspers"s BEE contributions include:
- Phuthuma - implemented in 1995, which enabled some 8 000 disadvantaged
South Africans to acquire shares in Electronic Media Network Limited ("M-
Net") and to profit from it
- Phuthuma Futhi - implemented in 1998, making a further 10% of
M-Net/SuperSport International Holdings Limited ("SuperSport") linked
shares available for BEE. This scheme closed in the money in April 2004
- Welkom - launched in 1998 and scheduled to mature in September 2006, will
enable some 17 000 previously disadvantaged individuals to acquire shares
in Naspers.
The group is also conscious of employment equity targets in its South
African operations. To this end, a number of initiatives were launched in
the operating businesses, including transformation forums, the acceleration
of employment equity by pursuing employment targets, mentorship for
previously disadvantaged employees and preference in procurement.
Naspers is proud of the fact that 42% of its board already comprises people
from previously disadvantaged communities and 17% are women. We are
committed to transformation and the MCSA Empowerment Transaction is an
integral part of this process.
If required, Naspers may undertake further empowerment transactions to
ensure compliance with the BEE Codes.
In structuring the MCSA Empowerment Transaction, Naspers developed a set of
key objectives ("BEE objectives") as follows:
- the Black Participants will comprise a broad base of Black Persons and
Black Groupings
- the Black Participants are required to fund only 20% of the purchase
consideration that Phuthuma Nathi will pay to acquire shares in MCSA
Holdings
- economic interest and voting rights in Phuthuma Nathi are secured by the
Black Participants immediately
- the Black Participants remain shareholders of Phuthuma Nathi for a
minimum period of five years ("Minimum Investment Period"), whereafter they
may trade their shareholding to other Black Participants
- the minimum level of participation by Black Participants is affordable in
economic terms by most people.
3. THE MCSA EMPOWERMENT TRANSACTION PARTICIPANTS
The ordinary shares in Phuthuma Nathi will be offered to:
- Black Persons, which has the meaning ascribed to it under Code 000 of the
Codes of Good Practice issued in terms of the Broad-Based Black Economic
Empowerment Act of 2003. This includes Black, Coloured or Indian persons
who are natural persons and who are citizens of the Republic of South
Africa
- Black Controlled and Owned Companies or similar Entities incorporated or
formed in South Africa, and verified as such.
This will ensure that the MCSA Empowerment Transaction will be broad based.
4. MECHANICS OF THE MCSA EMPOWERMENT TRANSACTION
MCSA Holdings owns 100% of MCSA. Prior to the proposed MCSA Empowerment
Transaction, MCSA Holdings is 100% held by MIH Holdings.
The MCSA Empowerment Transaction will be implemented as follows:
- for each Phuthuma Nathi ordinary share with a subscription price of
R10,00 subscribed for in terms of the public offer, MIH Holdings will sell
to Phuthuma Nathi one MCSA Holdings ordinary share at a price of R50,00
- the price per MCSA Holdings ordinary share is based on the underlying
value of MCSA, having regard to the fact that MCSA Holdings" only asset is
its shareholding in MCSA
- MIH Holdings will sell up to 45 000 000 MCSA Holdings ordinary shares to
Phuthuma Nathi
- Phuthuma Nathi will finance each MCSA Holdings ordinary share purchased
at R50,00 per share as follows:
- the issue to Black Participants of one Phuthuma Nathi ordinary share
at an issue price of R10,00 (i.e. 20% of the price payable for one MCSA
Holdings
ordinary share)
the issue to MIH Holdings of four Phuthuma Nathi preference shares at an
issue price of R10,00 per share (i.e. 80% of the price payable for one MCSA
Holdings ordinary share). The Phuthuma Nathi preference shares are
redeemable over 10 years or such extended period as MIH Holdings may allow.
Dividends are calculated at the rate of 75% of the prime interest rate.
5. INFORMATION RELATING TO MCSA
MCSA is South Africa"s premium pay-television and internet business. MCSA
also has a 29,98% interest in M-Net/SuperSport and 100% in M-Web Holdings
(Proprietary) Limited ("MWEB").
5.1 MCSA operations
MCSA provides premium television entertainment through its DStv bouquets to
more than 1 million subscribers in South Africa.
Operations include subscriber management services and digital satellite
television platforms broadcasting over 70 video and over 60 audio channels.
Included are seven data channels with interactive television offerings.
5.2 M-Net/SuperSport
M-Net/SuperSport provide premium thematic channels and exclusive content to
the subscriber base of MCSA. M-Net provides premium entertainment channels
and SuperSport provides sports channels carried by MCSA on its pay-
television platforms.
5.3 MWEB
MWEB provides the infrastructure for MCSA"s interactive platform. MWEB has
approximately 324 000 dial-up subscribers and 19 000 broadband ADSL
subscribers.
6. FINANCIAL EFFECTS
6.1 Profit on disposal to Naspers
The book profit arising in respect of the MCSA Empowerment Transaction to
Naspers shareholders amounts to approximately R2,25 billion. The adjustment
has been made directly to equity in accordance with Naspers"s accounting
policies.
6.2 Pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the
MCSA Empowerment Transaction, which are based on the published financial
results of Naspers for the year ended 31 March 2006.
The unaudited pro forma financial effects, for which the Naspers board is
responsible, are presented for illustrative purposes only and may not give
a fair reflection of the financial position and results of operations post
the implementation of the MCSA Empowerment Transaction.
Per Naspers share
Before the After the
MCSA MCSA
Empowerment Empowerment Change
Transaction(1) Transaction(2) (%)
EPS
EPS (cents) 1 124 1 097 (2)
Core HEPS (cents) 696 668 (4)
HEPS (cents) 756 729 (4)
Fully diluted EPS
EPS (cents) 1 063 1 037 (2)
HEPS (cents) 715 689 (4)
NAV (cents)(3) 2 450 3 224 32
NTAV (cents)(3) 1 936 2 732 41
Number of shares in
issue ("000) 290 555 290 555
Weighted average
number of shares in issue ("000) 283 719 283 719
Fully diluted weighted
average number of shares
in issue ("000) 300 243 300 243
Notes:
1. The information "Before the MCSA Empowerment Transaction" is based on
the audited results for the year ended 31 March 2006.
2.The information "After the MCSA Empowerment Transaction" is based on the
following assumptions:
(i) The MCSA Empowerment Transaction was implemented on 1 April 2005;
(ii) The Phuthuma Nathi preference dividend rate is a variable rate based
on 75% of the prime rate of interest. This rate, assuming the current prime
rate of 11,5%, is 8,625%; and
(iii) The cash of R450 million received by Naspers from Phuthuma Nathi was
invested for the period at an interest rate of 6% after tax.
3. The NAV and NTAV per ordinary share "After the MCSA Empowerment
Transaction" is based on the assumption that the MCSA Empowerment
Transaction was implemented on 31 March 2006. The NAV and NTAV were
adjusted to reflect the purchase consideration received, which created an
accounting profit of R2,25 billion and the effect on retained earnings as
set out in note 2 above, and, in addition, excluded the NAV and NTAV
attributable to the 45 000 000 MCSA Holdings ordinary shares sold to
Phuthuma Nathi.
7. CONDITIONS PRECEDENT
The MCSA Empowerment Transaction is subject to Phuthuma Nathi undertaking
the public offer to the General Black Public to subscribe for ordinary
shares in Phuthuma Nathi. The number of MCSA Holdings ordinary shares to be
acquired by Phuthuma Nathi will depend on the amount raised by Phuthuma
Nathi in terms of the public offer.
8. OPINIONS AND RECOMMENDATIONS
The board of Naspers has considered the terms and conditions of the
proposed MCSA Empowerment Transaction and is of the opinion that the
proposed MCSA Empowerment Transaction is in the best interests of Naspers"s
various stakeholders.
9. FURTHER DOCUMENTATION
A further announcement will be made once the public offer has been
completed.
Cape Town
26 September 2006
Investment bank and sponsors to Naspers
Investec Bank Limited
(Registration number 1969/004763/06)
Joint attorneys and tax advisers to Naspers
Webber Wentzel Bowens
Joint attorneys to Naspers
JAN S. DE VILLIERS ATTORNEYS
Date: 26/09/2006 09:00:14 AM Produced by the JSE SENS Department
