| Thu 19 Oct 2006, 9:12 | | Alexander Forbes Limited - Further Cautionary Anno |
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AFB
AFB
Alexander Forbes Limited - Further Cautionary Announcement
Alexander Forbes Limited
(Incorporated in the Republic of South Africa)
(Registration number 1958/001974/06)
Sharecode: AFB
ISIN code: ZAE000018230
Further Cautionary Announcement
1. Introduction
Further to the previous cautionary announcements, the last of which was released
on 16 October 2006, Alexander Forbes shareholders ("shareholders") are advised
that a consortium of private equity investors led by Actis Africa Fund 2 LP
("the Actis Consortium"), acting through Cleansheet Investments (Proprietary)
Limited ("Bidco"), has submitted a proposal (the "proposal") to the board of
directors of Alexander Forbes ("the Board") to acquire the entire issued share
capital of Alexander Forbes (the "Proposed Offer").
The Actis Consortium comprises two other private equity firms, Ethos Private
Equity and Harbourvest Partners LLC and two Canadian fund managers, Ontario
Teachers" Pension Plan Board and Caisse de depot et placement du Quebec.
If the Proposed Offer is implemented, the listing of Alexander Forbes on the JSE
Limited ("JSE") as well as the Namibia and Botswana Stock Exchanges will be
terminated. It is envisaged that existing employee share option holders will be
cash settled.
It is intended that Alexander Forbes management and staff and two black economic
empowerment ("BEE") entities, namely Shanduka Group (Proprietary) Limited, and
the Alexander Forbes Community Trust will collectively own at least 30% of the
ordinary equity in Bidco.
This announcement is not an announcement of a firm intention to make an offer by
the Actis Consortium or any other party. The Actis Consortium has advised the
Company that upon fulfillment of the conditions precedent to making a firm offer
referred to in paragraph 2.6 below, it will deliver a notice of a firm intention
to make an offer to the Board.
2. Terms of the Proposed Offer
2.1 Disposal of the Alexander Forbes International Risk Services business
("IRS")
The disposal of IRS was announced on 21 August 2006. The IRS disposal is subject
to two remaining conditions precedent, namely the approval by the Financial
Services Authority in the United Kingdom as well as clearance being received
from the Pensions Regulator in the United Kingdom on the defined benefit scheme
pension arrangements of IRS. Should the Proposed Offer have no remaining
conditions precedent, the Alexander Forbes board will be requested to distribute
part of the proceeds arising from the IRS disposal amounting to 103 cents per
Alexander Forbes share by way of a reduction of share premium ("the IRS
distribution").
2.2 Consideration
The proposed purchase consideration per Alexander Forbes share is 1 600 cents
per share (based on 460.546 million Alexander Forbes shares in issue and
assuming that all share options are cash settled by the Actis Consortium) and is
made up as follows:
*cash of 1 497 cents per share; and
*the IRS distribution in cash of 103 cents per share mentioned in paragraph 2.1
above.
In addition, shareholders received a distribution of 59 cents per share made by
Alexander Forbes on 4 September 2006. Based on a total consideration of 1 659
cents per share (including this distribution), this represents a premium of
18.3% to the closing price on 6 June 2006, being the date prior to the release
of the first cautionary announcement relating to discussions with private equity
parties.
2.3 Funding
The total funding required for the transaction (including funding required for
the settlement relating to the practice of `bulking" and other liabilities) is
approximately R8.3 billion. The funding required will be raised through a
combination of equity provided by the Actis consortium and various financing
instruments provided by:
*Rand Merchant Bank, a division of FirstRand Bank Limited;
*Investec Bank Limited;
*Nedbank Capital, a division of Nedbank Limited;
*JP Morgan Chase Bank;
*Ontario Teachers" Pension Plan Board; and
*Actis Africa Empowerment Fund.
2.4 Mechanism
It is envisaged that the Proposed Offer will be implemented by way of a scheme
of arrangement in terms of section 311 of the Companies Act (No 61 of 1973, as
amended).
2.5 Independent advice
The Board has appointed KPMG Services (Proprietary) Limited ("KPMG") to provide
it with an independent opinion regarding the terms of the Proposed Offer. The
details of this advice, as well as the Board"s opinion on the terms of the
Proposed Offer will be disclosed to shareholders in due course.
2.6 Conditions precedent
The following are conditions precedent to making a firm offer, which conditions
can be waived at the discretion of the Actis Consortium:
*the Board recommending the Proposed Offer to shareholders;
*the Board obtaining a positive fair and reasonable opinion from KPMG regarding
the Proposed Offer;
*the Actis Consortium obtaining an undertaking from VenFin Risk Services
(Proprietary) Limited to vote in favour of the Proposed Offer; and
*the finalisation of the documentation relating to the funding of the
transaction.
The implementation of the Proposed Offer will be subject, inter alia, to the
fulfilment of the following conditions precedent:
*regulatory approvals of the proposed offer and related funding by:
*the relevant competition authorities;
*the Registrar of LongTerm Insurance and the Registrar of ShortTerm Insurance;
*the South African Reserve Bank; and
*the JSE Limited, the Securities Regulation Panel and any other relevant
regulatory body;
*the High Court of South Africa ("the Court") authorising the convening of a
scheme meeting and sanctioning the scheme;
*the required majority of votes being cast in favour of the Proposed Offer at a
scheme meeting;
*the registration of the Order of Court by the Registrar of Companies; and
*implementation of the disposal of IRS to Lockton International Holdings Limited
on the terms announced on 21 August 2006.
3. Detailed terms announcement
Alexander Forbes shareholders are advised that a detailed terms announcement,
including salient dates and times, will be published if the Company receives
notification from the Actis Consortium of a firm intention to make an offer.
Shareholders are therefore advised to continue to exercise caution when dealing
in their Alexander Forbes shares until a further announcement is made.
Sandton
19 October 2006
Financial adviser and sponsor to Alexander Forbes
JP Morgan
Merchant bank to the Actis Consortium
Rand Merchant Bank, a division of FirstRand Bank Limited
Legal adviser to Alexander Forbes
Edward Nathan Sonnenbergs
Independent adviser to the Alexander Forbes Board
KPMG
Legal advisers to the Actis Consortium
Deneys Reitz
Date: 19/10/2006 09:12:15 AM Produced by the JSE SENS Department
