| Fri 17 Nov 2006, 17:19 | | Alexander Forbes - Further Cautionary Announcement |
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AFB
AFB
Alexander Forbes - Further Cautionary Announcement
Alexander Forbes Limited
(Incorporated in the Republic of South Africa)
(Registration number 1958/001974/06)
Sharecode: AFB
ISIN code: ZAE000018230
("Alexander Forbes" or the "Company")
Further Cautionary Announcement
1. Introduction
Shareholders of Alexander Forbes ("shareholders") are referred to previous
cautionary announcements, the last of which was released on 19 October
2006, in which shareholders were 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"), had
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") by way of a scheme of
arrangement in terms of section 311 of the Companies Act (No 61 of 1973, as
amended).
Shareholders were advised further that the following were conditions
precedent to the making of a firm offer by the Actis Consortium("the pre-
conditions"), which pre-conditions could 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
Services (Proprietary) Limited ("KPMG") regarding the Proposed Offer;
*the Actis Consortium obtaining an undertaking from VenFin Risk Services
(Proprietary) Limited ("VenFin") to vote in favour of the Proposed Offer;
and
*the finalisation of the documentation relating to the funding of the
transaction.
2. The revised proposal
Shareholders are now advised that the Actis Consortium has submitted a
revised proposal to the Board in terms of which, if an offer is made by the
Actis Consortium, the proposed consideration receivable per Alexander
Forbes share in terms of the Proposed Offer has been increased from R16.00
to R16.25 (the "proposed revised offer price").
3. Status of the pre conditions
KPMG has completed a preliminary valuation of Alexander Forbes as at 30
October 2006 and has advised the Board that based on financial, regulatory,
securities market and other conditions at that date, an offer on
substantially similar terms to the terms of the Proposed Offer would be
fair and reasonable. Based on KPMG"s advice, a sub-committee of the Board
has advised Actis that if they were to receive a firm offer at the proposed
revised offer price, they would recommend such firm offer to shareholders
should it be made, subject to a favourable fair and reasonable opinion
being received from KPMG at that time. The substance of the advice from
KPMG in this regard and the views of the Board will be provided in the
relevant circular to Alexander Forbes shareholders once a firm offer has
been made. Furthermore, any such advice and recommendation in respect of a
firm offer will be based on financial, regulatory, securities market and
other conditions prevailing at that time.
Shareholders are also advised that VenFin has conditionally undertaken to
the Actis Consortium to vote in favour of the Proposed Offer at the
proposed revised offer price if a firm offer is made. This undertaking will
lapse if a bona fide offer is made by a third party which is more than 75
cents per Alexander Forbes share higher than the proposed revised offer
price (and is not matched or bettered by the Actis Consortium). In
addition, the undertaking is subject to certain conditions precedent and
may lapse in certain other circumstances.
Consequently, the only remaining pre-condition to the Actis Consortium
making a firm offer is the finalisation of the documentation relating to
the funding of the transaction.
4. Conditions precedent
The implementation of a firm offer by the Actis Consortium, if made, will
be subject, inter alia, to the fulfilment of the following conditions
precedent:
*regulatory approvals in respect of the offer and (to the extent required)
the related funding, by:
*the relevant competition authorities;
*the Registrar of Long-Term Insurance and the Registrar of Short-Term
Insurance;
*the South African Reserve Bank;
*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 such offer at a
scheme meeting of shareholders and at a scheme meeting of option holders to
the extent required;
*the registration of the Order of Court by the Registrar of Companies; and
*the proceeds from the disposal of Alexander Forbes" International Risk
Services business, which was completed on 9 November 2006, being used only
for purposes of payments to clients in respect of bulking and related
settlements and the repayment of certain existing interest bearing debt.
5. Break fee
If the Actis Consortium makes a firm offer, the Company has agreed to pay
to the Consortium a break fee up to a maximum of R30 million in respect of
any bona fide costs actually incurred by Actis in connection with the
making of a firm offer. This break fee will only become payable if the
Company receives an offer from a third party prior to the scheme meeting in
respect of such offer at R17.00 or more per Alexander Forbes share and such
third party"s offer is recommended by the board to the Company"s
shareholders and is successfully implemented, with the result that the
Consortium does not directly or indirectly acquire any Alexander Forbes
shares.
6. No formal offer
This announcement is not an announcement of a firm intention to make an
offer by the Actis Consortium or any other party.
7. 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
17 November 2006
Financial adviser and sponsor to Alexander Forbes
JPMorgan
Financial adviser to the Actis Consortium
Rand Merchant Bank
Legal adviser to Alexander Forbes
Edward Nathan Sonnenbergs
Legal advisers to the Actis Consortium
Deneys Reitz
Independent adviser to the Alexander Forbes Board
KPMG
Date: 17/11/2006 05:19:41 PM Produced by the JSE SENS Department
