| Tue 26 Sep 2006, 13:30 | | Bidvest - Refinancing by Dinatla of its shareholdi |
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BDEO BVT
BVT
Bidvest - Refinancing by Dinatla of its shareholding in Bidvest
The Bidvest Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT
ISIN: ZAE000050449
("Bidvest")
Dinatla Investment Holdings (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/023927/07)
("Dinatla")
BidBEE Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/01886/06)
Share code: BDE
ISIN: ZAE
("BidBEE")
Refinancing by Dinatla of its shareholding in Bidvest
1. Introduction
Shareholders are referred to the scheme of arrangement approved by
Bidvest shareholders as proposed by Dinatla between Bidvest and the
holders of ordinary shares in Bidvest (other than BB Investment
Company (Proprietary) Limited), to which BidBEE was a party ("the
scheme"), pursuant to which Dinatla acquired approximately 15% of the
issued share capital of Bidvest.
In terms of the scheme, Dinatla has an obligation to settle its
indebtedness to BidBEE ("the Dinatla indebtedness") on or, if only in
cash, prior to December 8 2006 ("the specified date"). The amount of
the Dinatla indebtedness is based on a rolling 14-day traded volume
weighted average price ("VWAP") of the Bidvest shares immediately
preceding the earlier of the specified date or the settlement date,
but subject to a maximum of R60 per Bidvest share and a minimum of R42
per Bidvest share. Based on the anticipation that the 14-day traded
VWAP per Bidvest share does not fall below R60 per share, the amount
of the Dinatla indebtedness is R2,7 billion, being 45 million Bidvest
shares multiplied by the maximum price of R60 per share. The
settlement by Dinatla of the Dinatla indebtedness is hereinafter
referred to as "the Dinatla refinancing".
2. The Dinatla refinancing
Dinatla has agreed, with the approval of Bidvest and subject to the
fulfilment of certain conditions precedent, to the refinancing of its
indebtedness, which will enable Dinatla, together with the
facilitation of Bidvest, to settle its indebtedness by the specified
date. The salient terms of the Dinatla refinancing and Bidvest"s
facilitation relating thereto are as follows:
2.1 BB Investment Company (Proprietary) Limited, a wholly-owned
subsidiary of Bidvest, will repurchase 18 million shares from
Dinatla at R79,38 per share for a total consideration of
approximately R1,4 billion ("the Bidvest repurchase");
2.2 the remaining amount of the Dinatla indebtedness of approximately
R1,3 billion will be funded by Investec Bank Limited or its
nominee ("Investec") subscribing for cumulative, redeemable, non-
participating preference shares ("the Dinatla preference shares")
to be issued by Dinatla at a dividend rate equal to 71% of the
prevailing prime rate from time to time and which preference
shares will be redeemable on March 30 2012 ("the closing date");
and
2.3 in order to enable Dinatla to secure market-related funding on
the Dinatla preference shares on favourable terms, Bidvest has
granted Dinatla an American put option ("the put option") against
Bidvest. The put option is over 15 million Bidvest shares at R75
per Bidvest share for the period commencing 3-months after the
subscription date in respect of the Dinatla preference shares and
ending on the closing date ("the put option period"). This put
option will only be exercisable in the event that and for so long
as the Bidvest share price falls below R75 based on a rolling 10-
day traded VWAP of the Bidvest shares.
The Bidvest repurchase and the potential repurchase by Bidvest of
shares in terms of the put option (hereinafter collectively referred
to as ("the specific repurchases")) are each classified as a specific
repurchase of shares in terms of the Listings Requirements ("the JSE
Listings Requirements") of the JSE Limited ("the JSE") and the
Companies Act, 1973.
3. Rationale for the Dinatla refinancing and the specific repurchases
Dinatla has an obligation to BidBEE to refinance its indebtedness by
the specified date. In terms of the scheme, Dinatla must first use its
best endeavours to raise as much cash as it is able on market related
terms and only thereafter, with the consent of Bidvest, may Dinatla
sell Bidvest shares to meet its indebtedness. Until the expiry of a 5-
year period following the specified date i.e. until 8 December 2011
if Dinatla wishes to sell any of its remaining Bidvest shares, it must
first offer same to Bidvest which has a pre-emptive right over those
shares.
3.1 Accordingly, Bidvest will implement the Bidvest repurchase as
detailed in 2.1 above, which will enable Dinatla to realise value
in respect of 18 million of its existing holding of 45 million
Bidvest shares.
3.2 In addition, Bidvest will furthermore facilitate the Dinatla
refinancing by granting the put option, which will enable Dinatla
to:
- finance the indebtedness on its remaining 27 million Bidvest
shares after the Bidvest repurchase; and
- protect its downside risk below R75 per share on 15 million
of its remaining 27 million Bidvest shares until the closing
date.
By facilitating the Dinatla refinancing, Bidvest will ensure the
participation by Dinatla as a significant BEE shareholder in Bidvest
for at least a further 5-years whilst enabling Dinatla to procure
refinancing on favourable terms to ensure further growth in value for
Dinatla and not giving up any upside appreciation in the share price
often associated with these types of transactions.
4. The specific repurchases
4.1 Terms of the specific repurchases
Subject to the fulfilment of the conditions precedent in 4.3
below, Bidvest could repurchase up to a maximum of 33 million
Bidvest shares ("the repurchase shares") as follows:
- 18 million Bidvest shares at R79,38 per share on December 8
2006 to be repurchased pursuant to the Bidvest repurchase;
and
- 15 million Bidvest shares to be repurchased pursuant to and
in the event of the exercise of the put option at R75 per
share as set out in 2.3 above.
The Bidvest repurchase will assist in neutralising the effect of the
additional 18 million Bidvest shares ("the Bidvest option shares") to
be settled by Bidvest pursuant to call options granted by Bidvest at a
strike price of R60 per share as an indivisible part of the scheme.
The Bidvest option shares will be settled from Bidvest"s existing
treasury shares.
4.2 Conditions precedent
The specific repurchases are subject to, inter alia, the following
conditions precedent:
- all other aspects of the Dinatla refinancing becoming
unconditional;
- the requisite approvals being received from the JSE;
- the passing of a special resolution by Bidvest"s shareholders
which special resolution will be proposed at Bidvest"s annual
general meeting to be held on 26 October 2006 ("the Bidvest
annual general meeting");
- the registration of the required special resolution by the
Registrar of Companies;
- the approval of the board of directors of Dinatla;
- the approval by the core shareholders of Dinatla; and
- the passing and registration of the special resolutions of
shareholders of Dinatla to create the Dinatla preference shares
and incorporate their terms into its articles.
4.3 Funding for the specific repurchases
The Bidvest repurchase will be effected in the main from the
proceeds anticipated from the Bidvest option shares amounting to
approximately R1,1 billion, with the balance of the specific
repurchases to be funded from existing resources.
4.4 Treatment of Bidvest shares to be repurchased
BB Investment Company (Pty) Limited currently holds approximately
26 million Bidvest shares as treasury shares, being approximately
8% of the Bidvest shares in issue. The 18 million Bidvest option
shares will be settled from the existing treasury shares held by
BB Investment Company (Pty) Limited. The 18 million Bidvest
shares to be acquired pursuant to the Bidvest repurchase will be
acquired by BB Investment Company (Pty) Limited which will hold
the Bidvest shares repurchased as treasury shares.
Any Bidvest shares which may be acquired to the extent that the
put option against Bidvest is exercised will, to the extent
possible, be acquired by BB Investment Company (Pty) Limited and
thereafter will be acquired by Bidvest directly and will be
cancelled and restored to the status of authorised but unissued
shares.
4.5 Related party transactions
The Bidvest repurchase and the purchase by Bidvest of any shares
which may be acquired to the extent the put option is exercised
are each classified as related party transactions in terms of the
JSE Listings Requirements and advisors must provide a fair and
reasonable opinion on the terms of the Bidvest repurchase and the
put option. Advisors will be mandated to advise Bidvest
shareholders in this regard.
5. Financial effects of the issue of the Bidvest option shares and the
specific repurchases
The pro forma financial effects of the issue of the Bidvest option
shares and the specific repurchases, which are based on Bidvest"s
audited results for the year ended June 30 2006, are as follows:
Per Before Pro forma Change Pro forma Cumu- Pro forma Total
Bidvest (1) After (1) (%) After (2) lative After (3) change
share (cents) After the After the change After the (%)
Bidvest issue of the (%) issue of
repurchase Bidvest the option
(cents) option shares shares and
and Bidvest the
repurchase specific
(cents) repurchases
(cents)
Earnings 796.3 816.5 2.5 788.1 (1.0) 779.0 (2.2)
(2)
Headline 804.6 825.3 2.6 796.3 (1.0) 787.7 (2.1)
earnings
(2)
Net 2 984.7 2 665.9 (10.7) 2 866.6 (4.0) 2 593.9 (13.1)
asset
value
(3)
Net 1 814.9 1 420.2 (21.7) 1 695.7 (6.6) 1 361.3 (25.0)
tangible
asset
value
(3)
Notes
1. The "Before" financial information has been extracted from the
published, audited consolidated results of Bidvest for the year ended
June 30 2006.
2. The basic and headline earnings per share calculations have been based
on the following:
2.1 the "Before" calculation is based on the weighted average number
of 299 976 247 Bidvest shares in issue for the year ended June 30
2006;
2.2 the Pro forma "After" (1) column assumes the Bidvest repurchase
was implemented on July 1 2005 and was effective for the full
financial year ended June 30 2006 and is based on a weighted
average number of 281 976 247 Bidvest shares. No Secondary Tax on
Companies ("STC") has been assumed as it is unlikely that this
will arise on the practical implementation of the Bidvest
repurchase;
2.3 the Pro forma "After" (2) column assumes the issue of the Bidvest
option shares and the Bidvest repurchase were implemented on July
1 2005 and that they were effective for the full financial year
ended June 30 2006 and is based on the weighted average number
of 299 976 247 Bidvest shares; and
2.4 the Pro forma "After" (3) column assumes the issue of the Bidvest
option shares and the specific repurchases were implemented on
July 1 2005 and that they were effective for the full financial
year ended June 30 2006 and is based on a weighted average
number of 284 976 247 Bidvest shares.
3. The net asset value and net tangible asset value per share
calculations have been based on the following:
3.1 the "Before" calculation is based on 299 154 382 Bidvest shares
in issue at June 30 2006;
3.2 the Pro forma "After" (1) column assumes the Bidvest repurchase
was implemented on June 30 2006 and is based on 281 154 382
Bidvest shares. No STC has been assumed as it is unlikely that
this will arise on the practical implementation of the Bidvest
share repurchase;
3.3 the Pro forma "After" (2) column assumes that the issue of the
Bidvest option shares and the Bidvest repurchase were implemented
on June 30 2006 and is based on 299 154 382 Bidvest shares; and
3.4 the Pro forma "After" (3) column assumes the issue of the Bidvest
option shares and the specific repurchases were implemented on
June 30 2006 and is based on 284 154 382 Bidvest shares.
4. The above financial effects are the responsibility of the directors of
Bidvest and have been prepared for illustrative purposes only.
6. Salient dates and times, general meeting and documentation
The special resolution required to be passed by Bidvest shareholders
to implement the specific repurchases will be incorporated as part of
the notice of the Bidvest annual general meeting which is expected to
be held on or about October 26 2006. Any amendment to the
aforementioned date will be published on SENS.
Johannesburg
September 26 2006
Transaction adviser to Corporate law
Bidvest advisers to Bidvest
Investec Corporate Edward Nathan
Finance Corporate Law
Advisres
Joint sponsor to Joint sponsor to
Bidvest Bidvest
Investec
Deutsche Bank
Joint transaction Sole underwriter to Legal advisers to
advisers to Dinatla Dinatla Dinatla
Wipcapital_hjs Investec Treasury &
Specialised Finance MJ King Attorneys
Date: 26/09/2006 01:30:08 PM Produced by the JSE SENS Department
