| Fri 24 Nov 2006, 17:05 | | Shoprite - Internal Re-Organisation |
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SHP
SHP
Shoprite - Internal Re-Organisation, In Specie Distribution, Delisting,
Liquidation and Further Cautionary Announcement
Shoprite Holdings Limited
(Registration number 1936/007721/06)
Share code: SHP & ISIN: ZAE000012084
("Shoprite" or "the company")
Internal re-organisation of Shoprite, in specie distribution, delisting,
liquidation and further cautionary announcement
1. Introduction
Further to the cautionary announcement published on 23 October 2006, Shoprite
has received a proposal from Maxshell 107 Investments (Proprietary) Limited
("Maxshell"), wholly-owned by Brait IV SA Partnership ("Brait"), a fund
affiliated with Brait S.A. Shoprite has entered into agreements in terms of
which Shoprite will implement an amalgamation transaction ("amalgamation")
between Shoprite and Parmtro Investments No. 89 (Proprietary) Limited ("New
Retail"), a wholly-owned subsidiary of Shoprite Checkers (Proprietary) Limited
("Shoprite Checkers"), in terms of Section 44 of the Income Tax Act (No. 58 of
1962) as amended ("Income Tax Act") ("Section 44") and in the process effect the
following:
1.1 the internal re-organisation
Subject to the conditions precedent in 2.4, dispose of all of the company"s
assets and liabilities to New Retail for approximately R13 191 million in
exchange for ordinary class B shares with a par value of 0.1 cent in the issued
share capital of New Retail ("New Retail class B shares"") issued at R26.00 per
share ("the internal re-organisation");
1.2 the distribution
Subject to the conditions precedent in 3.1, as a capital reduction and payment
of a dividend in specie on the Shoprite ordinary shares ("ordinary share(s)"),
distribute to Shoprite ordinary shareholders ("ordinary shareholders") one New
Retail class B share for every ordinary share held on the record date ("record
date") of the distribution ("the distribution");
1.3 the delisting
Delist the Shoprite shares from the Main Board of JSE Limited ("the JSE") ("the
delisting"); and
1.4 the liquidation
Liquidate Shoprite ("the liquidation") (steps 1.1 to 1.4, collectively
constituting "the amalgamation" for purposes of Section 44).
Subsequent to the distribution, New Retail will implement the following:
1.5 the New Retail capital reduction payment
New Retail is obliged under its Articles of Association, forthwith after
completion of the distribution, to make a capital reduction payment in the
amount of R25.99 per New Retail class B share to all New Retail class B
shareholders ("the New Retail capital reduction"); and
1.6 the New Retail capitalisation right
Eligible New Retail class B shareholders (as described in 3.5) will have the
right to elect the New Retail capitalisation right. (Steps 1.1 to 1.6,
collectively referred to for the purposes of this announcement as "the
Transaction").
1.7 Shareholder approval and timing
It is currently envisaged that Shoprite will convene two general meetings for
shareholders to vote on the following:
Meeting 1 ordinary resolutions to approve the internal re-organisation,
the distribution and the delisting. The first general meeting will be held on 15
January 2007 ("Meeting 1"); and
Meeting 2 a special resolution to approve the liquidation to be held no
later than 20 days before the distribution ("Meeting 2").
2. The internal re-organisation
The internal re-organisation will involve the transfer of the businesses of
Shoprite Checkers to Darwo Trading No. 107 (Proprietary) Limited ("New Opco"), a
wholly-owned subsidiary of Shoprite Checkers, and the transfer of Shoprite"s
entire business undertaking, including all assets and liabilities, to New
Retail.
2.1 Transfer to New Opco
Shoprite Checkers will transfer its primary trading assets, including it"s
supermarket businesses and franchise businesses, to New Opco in exchange for
approximately R11 300 million in New Opco debentures and approximately R700
million in New Opco equity. This consideration is to be distributed to Shoprite,
being the only shareholder of Shoprite Checkers.
2.2 Transfer to New Retail
In terms of the internal re-organisation agreements, subsequent to the transfer
by Shoprite Checkers to New Opco, Shoprite will dispose of the entire
undertaking of Shoprite to New Retail for approximately R13 191 million ("the
internal
re-organisation consideration") including:
its entire business as a going concern; and
all assets and liabilities.
In consideration, New Retail will issue to Shoprite one New Retail class B share
for every ordinary share in issue on the record date.
The internal re-organisation consideration payable equivalent to R26.00 per
ordinary share is at a premium of 30.7% to the 90-day historical VWAP (R19.90)
of the ordinary shares calculated from the date of the first cautionary
announcement on 11 April 2006 and 18.2% to the closing price of the ordinary
shares on the date of the first cautionary announcement (11 April 2006).
The effective date of the internal re-organisation will be the delivery date in
terms of the internal re-organisation agreements, anticipated to be during March
2007 ("delivery date").
2.3 Rationale for the internal re-organisation
The internal re-organisation will enable Shoprite to:
realise a more efficient capital structure;
facilitate the injection of gearing in an efficient manner;
facilitate the introduction of a Black Economic Empowerment ("BEE")
partner into the business; and
implement a new capital structure that will realise value for shareholders
and allow them to consider their investment alternatives, including, but not
limited to, the New Retail capitalisation right.
The internal re-organisation will be followed, subject to the fulfillment of the
conditions precedent (in 3.1), by steps 1.2 to 1.6 of the Transaction.
2.4 Conditions precedent to the internal re-organisation
The internal re-organisation is subject to, inter alia, the fulfillment of the
following conditions precedent:
the securing of any third party consents which may be required by New
Retail in relation to the confirmation of existing arrangements or the transfer
of any rights and/or obligations of Shoprite, Shoprite Checkers and/or such
third parties to New Retail, provided that New Retail and Brait may waive this
condition (in whole or in part) in writing;
the internal re-organisation being approved by Shoprite shareholders;
and
the receipt of all other regulatory approvals in relation to the internal
re-organisation including the JSE and the Securities Regulation Panel ("SRP").
2.5 Related party issues
New Retail has reserved equity participation for certain members of Shoprite"s
executive directors and members of management. These individuals will, as a
result, be related parties to the internal re-organisation.
The related parties will not be able to vote at Meeting 1. These related party
shareholders and their shares will, however, be taken into account in
determining the quorum required for the general meeting.
Executive directors expected to participate in the reserved equity in New Retail
include:
JW Basson, CG Goosen, B Harisunker, AE Karp, EL Nel, AN Van Zyl, BR Weyers, JAL
Basson, M Bosman, PC Engelbrecht.
3. The distribution
Shoprite will, subject to, inter alia, the fulfilment of the conditions
precedent described in 3.1, distribute the internal re-organisation
consideration to ordinary shareholders such that ordinary shareholders receive
one New Retail class B share for every ordinary share held on the record date.
3.1. The conditions precedent to the distribution
The agreements governing the distribution, the New Retail capital reduction
payment and the New Retail capitalisation right are subject to the receipt,
inter alia, of all funding required by New Opco to fund the acquisition of the
operational assets of Shoprite Checkers (described in 2.1) and the fulfilment
of, inter alia, the following conditions precedent ("the distribution
conditions"):
the internal re-organisation being implemented;
no material adverse change in the position of Shoprite or generally in the
financial and/or retail markets before the implementation date;
all required regulatory approvals being obtained, including, inter alia,
approvals by the SRP, the JSE and the South African Reserve Bank;
the conclusion of agreements providing for executive directors and certain
members of management to participate in the equity of New Retail;
the agreements with the underwriters (refer to 3.5.5 ) remaining in full
force and effect;
the RMB offer (referred to in 4) remaining in full force and effect;
the conclusion by New Retail and New Opco of debt capital raising
agreements for the purposes of funding the acquisition of operational assets on
terms acceptable to New Retail and Brait;
the granting of approval by the Competition Authorities for the Transaction
in terms of the Competition Act, (89 of 1998);
Brait and the board of Shoprite being satisfied that the Transaction will
comply with the requirements of Section 44, or, if they should agree to waive
such condition, that the Transaction will qualify for Section 45 of the Income
Tax Act;
the approval by the requisite majority of Shoprite shareholders of the
distribution, the delisting and the liquidation;
the repurchase of the ordinary shares held as treasury shares by Shoprite
Checkers; and
Brait and the board of Shoprite being satisfied that no aspect of the
Transaction will give rise to any material adverse tax consequences and/or any
contravention of any applicable law.
Nature of the distribution
The New Retail class B shares will be distributed to ordinary shareholders as a
capital reduction and/or payment of a dividend in specie in terms of Section 90
of the Companies Act, 1973.
3.2 Tax consequences
In order for the internal re-organisation to benefit from the relief provided by
Section 44, the internal re-organisation will need to meet a number of
requirements including, inter alia, taking the required steps for the
liquidation and/or deregistration of Shoprite within six months of the internal
re-organisation (or such extended period as SARS may allow) ("allowed period").
If Shoprite does not, or is unable, to take the required steps for the
liquidation and/or deregistration of the company within the allowed period, and
Brait and the board of Shoprite agree to waive the condition precedent relating
to Section 44, the internal re-organisation and the distribution will proceed
outside of Section 44 and the tax relief provided therein.
If ordinary shareholders do not pass the special resolution in respect
of the liquidation and/or deregistration of the company, and Brait and the board
of Shoprite agree to waive the condition precedent relating to Section 44,
Secondary Tax on Companies ("STC") on the dividend in specie portion of the
distribution will be applicable and the value distributed to ordinary
shareholders by means of the New Retail class B shares will be reduced by the
STC payable of approximately R2.69 per share from R26.00 to R23.31 per New
Retail class B share. The consequence of receiving a New Retail class B share of
R23.31 per share is that the New Retail capital reduction will also be reduced
from R25.99 to R23.30 and the cash portion of the New Retail capitalisation
right paid to New Retail class B shareholders accepting the New Retail
capitalisation right ("the capitalising shareholders") will be reduced from
R205.85 to R178.95 for every ten eligible New Retail class B shares.
3.3 New Retail
New Retail is a newly established wholly-owned subsidiary company of Shoprite
Checkers with no trading history, assets or liabilities, which is to be
converted into a public company.
The acquisition of Shoprite Checkers assets and liabilities will be funded by
New Opco through:
third party debt totalling R9 464 million, comprising mezzanine debt,
senior debt and a corporate bond to be raised from financial institutions on
market-related terms; and
shareholder equity and debenture funding from those shareholders accepting
the New Retail capitalisation right, the underwriters to the New Retail
capitalisation right (see 3.5.5), executive directors and management of Shoprite
and Brait (see 5).
3.4 The New Retail class B shares
Each New Retail class B share, subsequent to the Transaction, will have an
economic interest and a voting right in New Retail equal to the par value in
proportion to the total par value of all of all classes of the issued shares of
New Retail. As such, subsequent to the Transaction, the New Retail class B
shareholders will have nominal economic and voting participation. For clarity,
one New Retail class B share will entitle the holder to one vote while one New
Retail class A share will entitle the holder to 2 556 votes, and dividends will
accrue in the same proportions.
3.5 The New Retail capitalisation right
Eligible New Retail class B shareholders will have the opportunity to elect to
receive, in lieu of the New Retail capital reduction payment, a combination of
cash, New Opco debentures and New Retail class A shares.
3.5.1 Eligibility
The New Retail capitalisation right is restricted by New Retail and ONLY
eligible New Retail class B shareholders may elect the New Retail capitalisation
right.
New Retail class B shareholders will be eligible to elect the New
Retail capitalisation right if:
The New Retail class B shareholder, having bought their ordinary shares and
therefore being a registered holder of (or entitled to be a registered holder
of) an ordinary share (in respect of which he/she will receive, through the
distribution, a New Retail class B share) at the close of trade (17:00) on the
date of this announcement, being 24 November 2006 ("the announcement date"); and
on the record date (expected to be 2 March 2007) the New Retail class B
shareholder remains a registered holder of at least the same number of ordinary
shares as he/she so held at the announcement date.
Ordinary shares acquired after the announcement date will not be eligible for
the New Retail capitalisation right.
If on the record date an ordinary shareholder holds fewer ordinary shares than
the number so held on the announcement date, such an ordinary shareholder will
not be entitled to elect the New Retail capitalisation right at all.
Accordingly, ordinary shareholders who wish to elect the New Retail
capitalisation right are advised not to trade in their ordinary shares after the
announcement date.
The New Retail capitalisation right is not offered to any ordinary shareholders
in the United States, Australia, Canada or Japan or any persons located in such
jurisdictions. Any acceptances received which appear to have been sent from the
United States, Australia, Canada or Japan or any person located in such
jurisdictions will be deemed to be invalid and given no effect.
Nominee companies holding ordinary shares will be required to provide a schedule
of their beneficial ordinary shareholders as at close of business on 1 December
2006, being the record date to be eligible for the New Retail capitalisation
right.
3.5.2 Terms of the New Retail capitalisation right
The New Retail capitalisation right is offered to all eligible New Retail class
B shareholders and entitles the New Retail class B shareholder to receive for
every ten eligible New Retail class B shares held, in lieu of the New Retail
capital reduction payment:
a cash payment of R205.85 (or R178.95 should the Transaction proceed but
not in terms of Section 44);
one New Opco debenture issued at R28.49; and
one New Retail class A capitalisation share (with a par value of R2.56 per
share) issued at R25.56.
Any fractional remainder will be settled in cash by New Retail.
A New Retail class B shareholder who wishes to elect the New Retail
capitalisation right must do so in respect of all (and not part of) his/her
eligible New Retail class B shares held.
Should the third party debt total vary by more than 15% from the total specified
in 3.3, the New Retail shareholders that elect the New Retail capitalisation
right, will be given the opportunity to revoke their election.
3.5.3 The New Retail class A shares
Each New Retail class A share will have an economic interest and voting right in
New Retail equal to the par value of each New Retail class A share pro rata to
the total par value of all of the issued shares of all classes of New Retail.
3.5.4 The New Opco debentures
The new Opco debentures will earn interest on the amount outstanding calculated
at a rate of prime plus 2% from the date of issue. The interest will accrue
daily and will be capitalised monthly on the last day of each calendar month.
Interest payments will be subject to the approval by third party debt funders
and are not anticipated to be paid in the short term.
3.5.5 The underwriters
Thibault Square Financial Services (Proprietary) Limited ("Thibault"), a company
controlled by Dr CH Wiese, and Old Mutual Life Assurance Company (South Africa)
Limited (together, "the underwriters") will act as underwriters for the New
Retail capitalisation right.
If and to the extent that New Retail Class B shareholders do not take up the New
Retail capitalisation right, the underwriters will subscribe for additional New
Retail class A shares and New Opco debentures.
The underwriters will receive an underwriting commission of 1.5% of the full
amount underwritten, to be discharged primarily through the issue of further New
Retail class A shares and New Opco debentures.
4. THE RMB OFFER
RMB, a division of FirstRand Bank Limited or its Nominee, ("RMB") has undertaken
to make an offer to all ordinary shareholders to acquire their ordinary shares
for a purchase consideration of R25.50 per share ("the RMB offer"). The RMB
offer will be inter conditional with the Transaction. As such, acceptances by
ordinary shareholders of the RMB offer ("accepting shareholders") within the
offer period will be subject to all the conditions relating to the Transaction.
The RMB offer will not be made to any ordinary shareholders in the United
States, Australia, Canada or Japan or any persons located in such jurisdictions.
Any acceptances received which appear to have been sent from the United States,
Australia, Canada or Japan or a person located in such jurisdictions will be
deemed to be invalid and given no effect.
The RMB offer will be open for 21 days from the first business day after Meeting
1, being 16 January 2007. In terms of the RMB offer, RMB will acquire ordinary
shares from accepting shareholders on a date to be stipulated following the
closing date of the RMB offer. The purchase consideration for the RMB offer will
be settled in cash by RMB on the date of the New Retail capital reduction
payment. Should the New Retail capital reduction payment not occur for whatever
reason, the purchase by RMB in terms of the RMB offer will be cancelled and
accepting shareholders will receive their ordinary shares back.
Ordinary shareholders will therefore be able to elect:
- the RMB offer in terms of which RMB acquire their ordinary shares for
R25.50 per share; or
- the New Retail election in terms of which the ordinary shareholder will
receive:
- a cash payment of R26.00 (or R23.30 should the Transaction not proceed
in terms of Section 44);
- alternatively eligible New Retail class B shareholders may elect the New
Retail capitalisation right (detailed in 3.5 above).
4.1 Rationale for the RMB offer
The RMB offer provides ordinary shareholders with an alternative to dispose of
their ordinary shares prior to the distribution at a price of R25.50 per share.
This will give ordinary shareholders certainty over the consideration that they
will receive.
4.2 Financial effects of the RMB offer
For purposes of calculating the earnings per share and headline earnings per
share it is assumed that the Transaction was effected on 1 July 2005. For
purposes of calculating the net asset value per share and the tangible net asset
value per share it is assumed that the Transaction took place on 30 June 2006.
Audited Unaudited
Before the After the
Transaction Transaction Change
(cents) (cents) (%)
Basic earnings per ordinary share 175.4 165.8 (5.5)
Headline earnings per ordinary share 146.7 165.8 13.0
Net asset value per ordinary share 598.4 2 550.0 326.1
Net tangible asset value per ordinary share 551.9 2 550.0 362.0
Notes:
1. RMB will acquire the Shoprite ordinary shares for R25.50 per share.
2. Assuming an after-tax cash yield of 6.5% applied to the RMB offer price
of R25.50 per share to calculate basic earnings per share and headline earnings
per share.
3. Assuming a tax rate of 29.0%.
5. Subscription by Brait and Management
Brait has undertaken, subject to the Transaction becoming unconditional, to
subscribe for approximately 16 million class A shares (approximately R402
million) and New Opco debentures having an approximate value of R448 million.
Executive directors and certain members of management, subject to the fulfilment
of the conditions precedent, may subscribe for approximately 9 million New
Retail class A shares (approximately R235 million) and New Opco debentures (or
similar instrument) of approximately R132 million.
The subscription for equity in New Retail and debentures in New Opco is required
for the capitalisation of New Retail and New Opco.
After the New Retail capital reduction payment and the New Retail capitalisation
right, but before the introduction of the BEE consortium (described in 6), the
shareholding in New Retail is anticipated to approximate:
67% held, collectively, by capitalising shareholders and the underwriters;
12% held by executive directors and certain members of management; and
21% held by Brait.
6. BEE
The internal re-organisation will facilitate the introduction of a new BEE
partner into the business. A suitable BEE consortium has been identified and
includes a broad-based element and a workers" trust.
It is envisaged that up to approximately 12% of the equity in New Retail ("BEE
equity") and up to approximately 6% of the New Opco debentures ("BEE
debentures") will be sold to the BEE consortium. New Retail shareholders, with
the exception of executive directors and management, will be required to sell,
at cost plus interest, New Retail equity and New Opco debentures on a pro rata
basis to the BEE consortium. The requisite share certificates will be held in
escrow pending the aforementioned sale. It is envisaged that these share
certificates will be transferred within a period of nine months after
implementation of the Transaction. Should, for whatever reason, the BEE
transaction not occur, the BEE equity and BEE debentures will be returned to New
Retail shareholders.
7. The delisting and liquidation
Subsequent to the internal re-organisation and the distribution, Shoprite will
be delisted from the JSE and will eventually be liquidated or deregistered.
8. Opinions
The board of directors of Shoprite (the "Shoprite board"), in accordance with
the JSE Listings Requirements and the SRP Code on Takeovers and Mergers has
appointed Absa Capital, a division of Absa Bank Limited ("Absa Capital"), as the
independent expert to Shoprite and the Shoprite board to furnish an opinion in
relation to the New Retail capital reduction and the RMB offer.
At the request of the Shoprite board, Absa Capital has provided a preliminary
opinion to the Shoprite board on the New Retail capital reduction and the RMB
offer (the "Preliminary Opinion"), which will be updated and formalised, as at
the last practicable date, in an opinion letter delivered to the Shoprite board
and for publication in the circular to ordinary shareholders.
In terms of its Preliminary Opinion, Absa Capital considers an amount of R25.50
and above per New Retail class B share or ordinary share (the "indicative value
range") to be favourable, after assuming, inter alia, the payment of an interim
ordinary dividend in respect of the interim period to 31 December 2006 and the
payment of the New Retail capital reduction and RMB offer in March 2007.
The Preliminary Opinion sets out the following:
8.1 In the event that the tax relief envisaged in terms of Section 44 is
obtained (the "tax relief") (refer to paragraph 3.2), the cash consideration of
R25.99 per New Retail class B share that ordinary shareholders would receive
resulting from the New Retail capital reduction, is within the indicative value
range.
8.2 In the event that the tax relief is not obtained, the effective cash
consideration of R23.30 per New Retail class B share, that ordinary shareholders
would receive resulting from the New Retail capital reduction is below the
indicative value range.
8.3 The RMB offer of R25.50 per ordinary share to all ordinary shareholders is
within the indicative value range.
Therefore, the Preliminary Opinion in respect of the New Retail Capital
reduction when taken with the RMB offer is considered to be favourable.
Ordinary shareholders are recommended to consult their tax advisers with regards
to the Transaction and the RMB offer. Absa Capital does not in any manner offer
advice or opinion as to the tax consequences of the Transaction or the RMB
offer.
The Preliminary Opinion, which is subject to change, is based on information
available to Absa Capital up to 23 November 2006 and is subject to a review of,
inter alia, market conditions at the time, the final transaction agreements, the
Shoprite circular and other relevant documentation as well as the limitations
and conditions to be set out in its formal opinion.
9. Unaudited Pro forma financial effects of the Transaction Set out below are
the unaudited pro forma financial effects of the Transaction, based on the
published audited results of Shoprite for the 12 months ended 30 June 2006.
The pro forma financial effects illustrate the financial effects under two
scenarios:
where the New Retail class B shareholder receives the New Retail capital
reduction payment; and
where the New Retail class B shareholder accepts the New Retail
capitalisation right.
Under each scenario the financial effect will be influenced by whether the
internal re-organisation proceeds in terms of Section 44 or in terms of Section
45.
The unaudited pro forma financial effects are provided for illustrative purposes
only and because of their nature may not be a fair reflection of ordinary
shareholders financial position, after the Transaction, nor of their future
earnings.
For purposes of calculating the earnings per share and headline earnings per
share it is assumed that the Transaction was effected on 1 July 2005. For
purposes of calculating the net asset value per share and the tangible net asset
value per share it is assumed that the Transaction took place on 30 June 2006.
9.1 Financial effects of the New Retail capital reduction payment
The table below shows the effect of the capital reduction payment on ordinary
shareholders under both scenarios.
Effects of the internal Effects of the internal
reorganisation reorganisation but not
in terms of Section 44 in terms of Section 44
Audited Unaudited Unaudited
Before the After the After the
Transaction Transaction Change Transaction Change
(cents) (cents) (%) (cents) (%)
Basic earnings
per 10 ordinary shares
held 1 754.5 1 689.4 (3.7) 1 514.5 (13.7)
Headline earnings
per 10 ordinary shares
held 1 467.2 1 689.4 15.1 1 514.5 3.2
Net asset value
per 10 ordinary shares
held 5 983.8 26 000.0 334.5 23 310.3 289.6
Net tangible asset
value per 10 ordinary
shares held 5 518.9 26 000.0 371.1 23 310.3 322.4
Notes (reorganisation in terms of Section 44):
1. Pro forma financial effects are calculated per 10 ordinary shares held.
2. Assuming a New Retail capital reduction payment of 25 990.0 cents per New
Retail class B share.
3. Assuming an after-tax cash yield of 6.5% earned on the New Retail capital
reduction payment.
4. Assuming a tax rate of 29.0%.
Notes (reorganisation but not in terms of Section 44):
1. Pro forma financial effects are calculated per 10 ordinary shares held.
2. Assuming an STC charge of 2 689.7 cents applicable to each New Retail class
B share.
3. Assuming a New Retail capital reduction payment of 23 300.3 cents per New
Retail class B share.
4. Assuming an after-tax cash yield of 6.5% applied to New Retail capital
reduction payment.
5. Assuming a tax rate of 29.0%.
9.2 Financial effects of the New Retail capitalisation right
The table below shows the effect of electing the New Retail capitalisation right
on ordinary shareholders under both scenarios. The financial effects are
calculated on the basis that the ordinary shareholder holds ten eligible New
Retail class B shares.
Effects of the internal Effects of the internal
reorganisation reorganisation but not
in terms of Section 44 in terms of Section 44
Audited Unaudited Unaudited
Before the Total Total
Transaction After the Change After the Change
(cents) Transaction (%) Transaction (%)
Basic earnings per
10 ordinary shares held 1 754.5 864.1 (50.8) 689.2 (60.7)
Headline earnings per
10 ordinary shares held 1 467.2 864.4 (41.1) 689.5 (53.0)
Net asset value per
10 ordinary shares held 5 983.8 11 686.0 95.3 8 996.3 50.3
Net tangible asset
value per 10 ordinary
shares held 5 518.9 11 376.6 106.1 8 687.0 57.4
Notes (Reorganisation in terms of Section 44):
1. Pro forma financial effects are calculated per 10 eligible ordinary shares
held.
2. Assuming a cash payout in terms of the New Retail capitalisation right of
20 584.7 cents for every ten New Retail class B shares.
3. Assuming a New Opco debenture and New Retail class A share issued in terms
of the New Retail capitalisation right described in 3.5.2.
4. Assuming an after-tax yield on cash of 6.5%.
5. Assuming a tax rate of 29.0%.
6. Assuming an after-tax interest on debentures calculated at prime plus 2%.
7. Total debt of R9 464 million raised for the Transaction by New Retail at a
weighted average cost of debt of 15.4%.
8. The excess of the purchase price of the Shoprite assets above its net asset
value has been off-set against reserves.
9. Transaction costs of R146 million have been expensed during the year.
10. The number of New Retail class A shares in issue post the transaction will
be equal to 76.3 million.
Notes (re-organisation but not in terms of Section 44):
1. Pro forma financial effects are calculated per 10 eligible ordinary shares
held.
2. Assuming a cash payout in terms of the New Retail capitalisation right of
17 895.1 cents for every ten New Retail class B shares.
3. Assuming a New Opco debenture and New Retail class A share issued in terms
of the New Retail capitalisation right described in 3.5.2.
4. Assuming a tax charge of 2 689.7 cents for every ten eligible class B
shares has been applied to the cash portion of the distribution.
5. Assuming an after-tax yield on cash of 6.5%.
6. Assuming a tax rate of 29.0%.
7. Assuming an after-tax interest on debentures calculated at prime plus 2%.
8. Assuming total debt of R9 464 million raised for the transaction by New
Retail at a weighted average cost of debt of 15.4%.
9. The excess of the purchase price of the Shoprite assets above its net asset
value has been off-set against reserves.
10. Transaction costs of R146 million have been expensed during the year.
11. The number of New Retail class A shares in issue post the transaction will
be equal to 76.3 million.
10. Irrevocable undertakings
At the announcement date, irrevocable undertakings to vote in favour of the
internal re-organisation, distribution and liquidation have been received from:
Shareholder Percentage of ordinary shares held*
Companies controlled by Dr CH Wiese ("Wiese") 15.4%
Old Mutual Life Assurance Company (South Africa) Limited 2.8%
Public Investment Corporation 2.7%
* Net of treasury shares
In addition, Wiese hold 276 821 666 non-convertible, non-participating, no par
value deferred shares in Shoprite ("deferred shares"). The deferred shares carry
one vote per deferred share and will be voted in terms of the irrevocable
undertaking. The deferred shares will however not receive the New Retail class B
shares on the distribution and as such will not be entitled to receive the New
Retail capital reduction payment or the New Retail capitalisation right.
Shoprite intends to cancel these shares upon liquidation or winding-up.
Therefore, irrevocable undertakings to vote in favour of the internal re-
organisation, the distribution and the liquidation have been received from
ordinary shareholders entitled to 48.8% of the voting shares entitled to vote at
the general meeting.
11. Important dates and times
Set out below are the expected dates and times of the proposed internal re-
organisation, distribution, delisting and liquidation.
Announcement date (last date to be registered,
or entitled to be registered, as a shareholder and be
eligible for the New Retail capitalisation right) Friday 24 November 2006
Forms of proxy to be received by 10:00 on Thursday 11 January 2007
Meeting 1 to be held at 10:00 on Monday 15 January 2007
Results of the Meeting 1 released on SENS Monday 15 January 2007
Results of the Meeting 1 published in the press Tuesday 16 January 2007
RMB offer opens Tuesday 16 January 2007
Last day to trade for the RMB offer Tuesday,30 January 2007
RMB offer closes Tuesday 6 February 2007
Record date for RMB offer Tuesday 6 February 2007
Forms of election in respect of the New Retail
capitalisation right and the RMB offer to be received
by the Transfer Secretaries by 10:00 on Tuesday 6 February 2007
Meeting 2 to be held at 10:00 on Friday 16 February 2007
Last day to trade for the distribution Friday,23 February 2007
Record date for distribution Friday 2 March 2007
Distribution date Friday 9 March 2007
RMB offer payment date on Friday 9 March 2007
The dates that follow Meeting 1 will be subject to change depending on, inter
alia, the fulfilment of the conditions precedent and the timing of rulings from
the Competition Tribunal. A further cautionary announcement will be published
notifying shareholders of changes to the salient dates disclosed above.
Notes:
1. Any changes to the above dates and times will be released on SENS and
published in the South African press.
2. All times given are local times in South Africa.
3. The date for Meeting 2 is assuming Competition Tribunal approval is
received on 2 February 2007
12. Documentation
A circular, incorporating a notice of a general meeting of the shareholders of
Shoprite, and containing details of the internal re-organisation, the
distribution, the delisting, the liquidation and the RMB offer and a document
containing the details of the New Retail capital reduction payment and the New
Retail capitalisation right, will be posted to shareholders on or about 11
December 2006.
13. Further cautionary announcement
The New Retail capitalisation right will be available to eligible shareholders
ONLY and, accordingly, Shoprite shareholders wishing to participate in the New
Retail capitalisation right are advised to exercise caution when dealing in
their ordinary shares until consummation of the Transaction.
Cape Town
24 November 2006
Adviser to Shoprite
Javelin Capital Limited
(Registration number 2000/010500/06)
Legal adviser to Shoprite
Jan S. de Villiers Attorneys
Tax adviser to Shoprite
PricewaterhouseCoopers
PricewaterhouseCoopers Tax Services (Pty) Ltd
(Registration number 1983/008289/07)
Independent adviser to Shoprite
ABSA Capital
A division of ABSA Bank Limited
Reg no 1986/004794/06
Corporate advisers to Brait
Rand Merchant Bank
A division of FirstRand Bank Limited
Bravura
Tax adviser to Brait
KPMG
Sponsor to Shoprite in Namibia
Old Mutual
Old Mutual Investment Services (Namibia) (Pty) Ltd
Sponsor, Member of the Namibian Stock Exchange
Sponsor to Shoprite in Zambia
Lewis Nathan Attorneys
Legal Practitioners, Consultants & Commissioners of Oaths
Merchant bank
Rand Merchant Bank
A division of FirstRand Bank Limited
Attorneys to Brait
Read Hope Phillips Attorneys
Independent Sponsor to Shoprite in South Africa
Nedbank Capital
Independent reporting accountants
PricewaterhouseCoopers
PricewaterhouseCoopers Advisory Services (Pty) Ltd
(Registration number 1999/024417/07)
Attorney to RMB
Hofmeyr
Hofmeyr Herbstein & Gihwala Inc.
Registration number 1997/001523/21
Transaction Co-underwriter
Old Mutual Asset Managers
Private equity sponsor
Brait
Date: 24/11/2006 05:05:27 PM Produced by the JSE SENS Department
