| Fri 17 Nov 2006, 16:37 | | Purple Capital - Acquisition By Purple Capital Of |
|
PPE
PPE
Purple Capital - Acquisition By Purple Capital Of A 10% Shareholding
In Cape Empowerment Trust Limited ("CET")
Purple Capital Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE & ISIN: ZAE000071411
("Purple Capital" or "the company")
ACQUISITION BY PURPLE CAPITAL OF A 10% SHAREHOLDING IN CAPE EMPOWERMENT TRUST
LIMITED ("CET")
1. Introduction
Further to the cautionary announcement dated 6 October 2006, Purple
Capital is pleased to announce that it has entered into an agreement dated 10
November 2006, in terms of which Purple Capital:
- will acquire 16 104 056 new ordinary shares in CET in exchange for the
issue of 16 104 056 new ordinary shares in Purple Capital; and
- has acquired the right to subscribe for a further 7 781 230 new shares
in CET either by way of an issue of shares for cash by CET or in terms of a
vendor placing by CET of new CET shares as a result of a potential acquisition
by CET. Such subscription by Purple Capital, whether in the form of an issue
of shares for cash or participation in a vendor placing, will be at a price of
84.48 cents per CET share, being within 10% of the volume weighted average price
of CET shares for the period prior to the date of signature of the agreement,
collectively, "the acquisition". The effective date of the acquisition
is 1 September 2006.
On completion of the acquisition, Purple Capital will own 23 885 286
ordinary shares in CET, being an effective interest of 10%, and CET will own
16 104 056 ordinary shares in Purple Capital, likewise being an effective 10%
interest in the total issued share capital of Purple Capital.
2. Rationale for the acquisition
Purple Capital has established a strategic cross-holding investment with CET.
Whilst Purple Capital remains committed to building an independent
financial services group in partnership with black professionals we have
decided to play a more active role in structuring and funding the many BEE
deals presented to us.
As the structure of BEE deal funding in South Africa has evolved, it has
become clear that access to equity capital is an imperative.
We previously announced that Purple Capital has entered into an
arrangement to access US$150 million of equity capital from funds based in the
USA, the purpose of which is to part-fund major corporate BEE transactions,
together with local debt providers.
CET is a black-controlled listed company which we feel is ideally placed
to be a ready made solution to companies, both private and public, which
require BEE partners that are at once:
- broad-based in their beneficiary structure;
- experienced in business; and
- have access to capital.
As a consequence of the acquisition, the total black shareholding in
Purple Capital will increase from approximately 13% to 23%, improving our
direct BEE credentials.
The acquisition brings together complementary skills, networks, deal
flow and capital access. Combining these attributes really does position the
two companies very well as BEE investment partners of choice.
3. Conditions precedent
The acquisition is subject to the approval of the JSE Limited and such
other regulatory or shareholder approvals which may be required.
4. Unaudited pro forma financial effects of the acquisition
Set out in the table below are the unaudited pro forma financial effects
of the acquisition based on Purple Capital"s published audited results for the
year ended 31 August 2006. The unaudited pro forma financial effects are the
responsibility of the company"s directors and have been prepared for
illustrative purposes only, to provide information on how the acquisition may
have impacted on the results and financial position of Purple Capital. Because
of their nature, the unaudited pro forma financial effects may not give a fair
reflection of Purple Capital"s financial position after the acquisition or the
effect on future earnings.
Before the After the Percentage
acquisition(1) acquisition change
Earnings per share (cents) 7.61 6.582 (13.5)
Headline earnings per share (cents) 7.61 6.582 (13.5)
Net asset value per share (cents) 45.38 51.343 13.1
Net tangible asset value per share (cents) 45.38 51.343 13.1
Notes:
1. Extracted from the published audited results of Purple Capital for the
year ended 31 August 2006.
2. Earnings and headline earnings per share in the "After the acquisition"
column have been based on the following assumptions:
a. the acquisition was effective from 1 September 2005;
b. Purple Capital acquires a shareholding of 10% in CET for a consideration
of R23.5 million, settled partly by the issue of 16 104 056 new shares in
Purple Capital and partly in cash amounting to R6.6 million;
c. the weighted average number of Purple Capital shares in issue is 144 936
503 and 161 040 559, before and after the acquisition; and
d. a reduction in interest received in respect of the cash portion of the
acquisition consideration has been calculated at an average after tax interest
rate of 6.62% per annum.
3. Net asset value and net tangible asset value per share in the "After the
acquisition" column have been based on the following assumptions:
a. the acquisition was effective 31 August 2006; and
b. the share swap with CET was based on a Purple Capital share price of 105
cents per share.
5. Umnombo/DIHOLD shareholding
Although the issue of the new CET shares to Purple Capital in terms of
the acquisition will not result in the percentage of black ownership in CET
falling below 50%, Umnombo Investment Holdings (Pty) Limited ("Umnombo") and
DENOSA Investment Holdings (Pty) Limited ("DIHOLD") will have the first right
to acquire shares in CET should CET"s black ownership in the future fall below
50.1%. This is to ensure that CET will always be in a position to participate
in empowerment sensitive transactions.
Umnombo is a black empowered investment company controlled by four black
professionals who collectively bring both commercial experience and
complementary networks. Umnombo has a preferred advisory and co-investment
relationship with the Democratic Nursing Association of South Africa
("DENOSA") which aims to safeguard and promote the dignity, rights and socio-
economic status of members in the nursing profession. DENOSA represents
approximately 65 000 nurses and healthcare workers in South Africa, of which
90% are women.
6. Withdrawal of cautionary announcement
As the details of the acquisition have been published, caution is no
longer required to be exercised by shareholders when dealing in their Purple
Capital shares.
Johannesburg
17 November 2006
Sponsor
Bridge Capital
Date: 17/11/2006 04:37:50 PM Produced by the JSE SENS Department
