| Tue 14 Nov 2006, 15:37 | | Naspers - Exchange of Johncom interest in Electron |
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NPN
NPN
Naspers - Exchange of Johncom interest in Electronic Media Network Limited
Naspers Limited
(Incorporated in the Republic of South Africa)
(Registration number 1925/001431/06)
Share code: NPN & ISIN: ZAE000015889
("Naspers" or "the company")
EXCHANGE OF JOHNCOM INTEREST IN ELECTRONIC MEDIA NETWORK LIMITED
(M-NET)/SUPERSPORT INTERNATIONAL HOLDINGS LIMITED (SUPERSPORT) FOR NASPERS
SHARES AND CASH
1. INTRODUCTION
Naspers currently owns an effective 60,12% interest in M-Net/SuperSport
(29,98% via MultiChoice Africa (Proprietary) Limited (MCSA), 26,33% via MNH
Holdings (1998) (Proprietary) Limited (MNH) and 3,81% directly) (collectively,
the "Naspers interests").
Johnnic Communications Limited (Johncom) currently owns an effective 38,56%
interest in M-Net/SuperSport (an effective 25,01% through its 47,5% via MNH
and 13,55% directly) (collectively, the "Johncom interests").
The Johncom interests will be exchanged for a consideration of Naspers shares
and cash ("the transaction").
2. RATIONALE
In light of the migration from analogue to digital broadcasting, the
introduction of new technologies such as high definition (HD) television and
pending competition for content, all of which will increase costs and capital
expenditure, the parties have considered it prudent to consolidate the
interests of M-Net/SuperSport with those of Naspers.
Naspers is currently concluding an empowerment drive within its South African
operations. After the above transaction has been concluded, the intention of
Naspers is to consolidate the whole of the M-Net/SuperSport shareholding into
MCSA. This will ensure that M-Net and SuperSport are appropriately empowered
and will secure the best possible position for the new BEE shareholders of
MCSA.
3. CONSIDERATION
Naspers will issue 20 886 667 Naspers N ordinary shares and pay R250 million
in cash to Johncom as consideration for the Johncom interests.
4. INFORMATION RELATING TO M-NET/SUPERSPORT
At present, M-Net"s television channels are delivered to subscribers via
analogue terrestrial and digital satellite distribution. The existing analogue
system, which broadcasts the main M-Net entertainment channel and Community
Services Network (CSN) channel, has been in operation for 20 years and is
rapidly becoming obsolete. M-Net also compiles some 11 channels for
distribution via satellite in South Africa and across the rest of sub-Saharan
Africa by MultiChoice, as part of the DStv bouquet. The main markets are
Nigeria and Angola.
Similarly, SuperSport compiles seven sports channels for distribution in South
Africa and across sub-Saharan Africa. These comprise three 24-hour channels,
including a dedicated pan-African football channel, a sports update channel, a
24-hour highlights channel, a dedicated interactive sports channel, a
Portuguese-language sports channel for Angola and Mozambique, and three ad hoc
sports channels.
Looking forward, the introduction of several competitors, coupled with the
recent weakening of the rand relative to the US dollar, is expected to drive
up M-Net/SuperSport"s programming costs. This will cause turbulence and affect
profitability over the next few years.
5. FINANCIAL EFFECTS
Pro forma financial effects
After the transaction, Naspers"s effective stake in M-Net/SuperSport will be
98,7% and M-Net, SuperSport and MNH will be subsidiaries of Naspers.
Consequently, the articles of association of each of M-Net, SuperSport and MNH
will be amended (to the extent required) to conform to the requirements set
out in Schedule 10 of the JSE Limited Listings Requirements.
The table below sets out the unaudited pro forma financial effects of the
transaction and is based on the published pro forma numbers 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 transaction.
Per Naspers share
Before the After the %
transaction(1) transaction(2) Change
EPS
EPS (cents) 1 093 1 154 6
HEPS (cents) 729 790 8
Fully diluted EPS
EPS (cents) 1 034 1 091 6
HEPS (cents) 689 747 8
NAV (cents)(3) 3 436 4 227 23
NTAV (cents)(3) 2 922 2 697 (8)
Number of shares in issue ("000)(4) 290 555 311 441
Weighted average number of shares
in issue ("000)(4) 283 719 304 606
Fully diluted weighted average number
of shares in issue ("000)(4) 300 243 321 129
Notes:
1. The information "Before the transaction" is based on published pro forma
numbers for the year ended 31 March 2006 and takes into consideration the
proforma effects of the BEE transactions announced in September 2006.
2. The information "After the transaction" is based on the following
assumptions:
(i) the transaction was implemented on 1 April 2005
(ii) the R250 million cash used in financing the transaction was earning
interest at 7% before tax.
3. The NAV and NTAV per ordinary share "After the transaction" is based on
the assumption that the transaction was implemented on 31 March 2006. The
purchase price allocation accounting exercise had not been completed and
the total excess over the NAV acquired was allocated to goodwill.
4. Naspers issued 20 886 667 shares and used R250 million of its existing
cash resources to finance the acquisition.
5. The effect on core HEPS is as follows:
* Before the transaction (1): 671 cents
* After the transaction (2): 716 cents
* % change: 7
6. EFFECTIVE DATE
The effective date of the transaction will be on fulfilment of the conditions
precedent indicated below.
7. CONDITIONS PRECEDENT
The transaction is subject to a number of conditions precedent, inter alia,
the approval of the transaction by Johncom"s shareholders and by the
appropriate regulatory authorities.
Cape Town
14 November 2006
Sponsor to Naspers
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Attorneys to Naspers
Jan S. De Villiers Attorneys
Date: 14/11/2006 03:37:14 PM Produced by the JSE SENS Department
