| Mon 4 Dec 2006, 16:50 | | Consol - Firm intention to make an offer to acquir |
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CSL
CSL
Consol - Firm intention to make an offer to acquire and withdrawal of
cautionary
Consol Limited
(Incorporated in the Republic of South Africa)
Registration number 1946/021828/06
Share code: CSL
ISIN: ZAE000063251
("Consol")
FIRM INTENTION TO MAKE AN OFFER TO ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL
OF CONSOL AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcements published by Consol on 20 July 2006,
7 September 2006 and 19 October 2006, shareholders are advised that a
consortium of investors ("consortium"), led by Ethos Private Equity Fund V
("Ethos"), acting through Main Street 504 (Proprietary) Limited ("Newco"),
has submitted to the board of directors of Consol ("the board") a firm
intention to make an offer to acquire the entire issued share capital of
Consol ("the offer shares") ("the offer" or "the proposed acquisition") for
a cash consideration of 1 923.75 cents per Consol share ("the purchase
consideration"). The offer is to be implemented, subject to the conditions
set out in paragraph 5 below, by way of a scheme of arrangement in terms of
section 311 of the Companies Act 61 of 1973, as amended ("the Act"), to be
proposed by Newco between Consol and all of its shareholders ("the scheme").
2. TERMS OF THE OFFER
If the scheme becomes operative, Consol shareholders participating in the
scheme ("scheme participants") will be entitled to receive the purchase
consideration of 1 923.75 cents, which represents a 47.9% premium to the 30
day volume weighted average price ("VWAP") per Consol share on the JSE
Limited ("the JSE") up to and including 19 July 2006, being the day before
the first cautionary announcement in respect of the proposed acquisition.
In addition, scheme participants will receive interest on the purchase
consideration at a rate of 7.0% per annum (nominal annual compounded
annually in arrear) from 16 March 2007 until the payment of the purchase
consideration, subject to a maximum interest payment of 17.15 cents per
offer share.
The purchase consideration will be reduced by any dividend declared in
respect of the six months ending 31 December 2006.
Following the implementation of the scheme, Consol will be a wholly-owned
subsidiary of Newco and the listing of the entire issued share capital of
Consol on the JSE will be terminated.
3. FUNDING
The purchase consideration will be funded by a combination of equity and
debt funding.
The equity funding will be provided by a consortium comprising Ethos,
Ontario Teachers" Pension Plan Board, Sphere Private Equity Fund I, Sphere
Investments (Proprietary) Limited and Sanlam Life Insurance Limited.
Rand Merchant Bank, a division of FirstRand Bank Limited, has fully
underwritten the debt funding.
In terms of Rule 2.3.2(b) and Rule 21.7 of the Securities Regulation Code on
Takeovers and Mergers, the consortium has provided the Securities Regulation
Panel ("SRP") with the necessary cash confirmation letters.
4. RATIONALE
The rationale for the proposed acquisition is to provide shareholders with
the opportunity to realise significant value for their investment.
5. CONDITIONS PRECEDENT
The offer and the implementation of the scheme is subject, inter alia, to
the fulfilment of the following conditions precedent:
5.1 all necessary regulatory and third party approvals and consents in
respect of the proposed acquisition being obtained, including but not
limited to approvals from the competition authorities, the JSE and SRP;
5.2 the Court convening a meeting of Consol shareholders to consider the
scheme ("the scheme meeting");
5.3 the approval of the scheme by 75% of the votes exercisable by the
scheme participants present and voting, in person or by proxy, at the
scheme meeting;
5.4 the sanctioning of the scheme by the Court and a certified copy of the
order of Court sanctioning the scheme having been registered by the
Registrar of Companies in terms of the Act;
5.5 the absence of any material adverse change between 2 December 2006,
being the date of the receipt of the firm intention letter, and the day
before the scheme is sanctioned; and
5.6 other than the interim dividend in respect of the six months ending 31
December 2006, as referred to in paragraph 2 above, no further
dividends being declared until the scheme is sanctioned.
6. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
The board appointed Nedbank Capital, a division of Nedbank Limited ("Nedbank
Capital"), to prepare a fair and reasonable opinion on the offer. Nedbank
Capital has confirmed to the board that it has considered the offer and is
of the opinion that it is fair and reasonable to Consol shareholders.
Nedbank Capital"s written opinion will be contained in the circular referred
to in paragraph 8 below.
Accordingly, the board recommends that Consol shareholders vote in favour of
the scheme and the directors of Consol undertake to vote their own shares in
favour of the scheme at the scheme meeting.
7. MARKET AND FINANCIAL INFORMATION
Information regarding the price at which Consol shares traded immediately
prior to the publication of Consol"s first cautionary announcement and this
announcement of Newco"s firm intention to make an offer, in relation to the
purchase consideration, as well as a comparison of the purchase
consideration to the net asset value and tangible net asset value per Consol
share at 30 June 2006, Consol"s financial year end, is set out in the table
below.
Before the The purchase Premium
scheme (cents) consideration (%)
(cents)
Market price on 19 July 2006 1 200(1) 1923.75 60.3
30-day VWAP to 19 July 2006 1 301(2) 1923.75 47.9
Market price on 1 December 2006 1 741(3) 1923.75 10.5
30-day VWAP to 1 December 2006 1 630(4) 1923.75 18.0
Net asset value per share 488(5) 1923.75 294.2
Tangible net asset value per share 472(5) 1923.75 307.6
Notes:
1. Closing price of Consol shares on the JSE on 19 July 2006, being the
last trading day prior to publication of the first cautionary announcement
in respect of the offer.
2. VWAP at which Consol shares traded on the JSE for the 30 trading days
up to and including 19 July 2006, being the last trading day prior to
publication of the first cautionary announcement in respect of the offer.
3. Closing price of Consol shares on the JSE on 1 December 2006, being the
last trading day prior to the publication of this announcement of Newco"s
firm intention to make an offer.
4. VWAP at which Consol shares traded on the JSE for the 30 trading days
up to and including 1 December 2006, being the last trading day prior to the
publication of this announcement of Newco"s firm intention to make an offer.
5. Audited net asset value and tangible net asset value per share
attributable to Consol shareholders at 30 June 2006.
6. The information reflected in the table above does not take into account
any possible dividend and interest entitlements referred to in paragraph 2
above.
8. DOCUMENTATION
The circular providing further information on the offer and containing,
inter alia, a notice of scheme meeting, an order of Court, forms of proxy
and a form of surrender will be posted to Consol shareholders within 48
hours of the Court order convening the scheme meeting.
9. IMPORTANT DATES AND TIMES
Consol shareholders will be advised of important dates and times of the
proposed acquisition in due course.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Consol shareholders are advised that the cautionary announcements referred
to in paragraph 1 above are hereby withdrawn.
Investment bank and sponsor to Consol
Standard Bank
Corporate law advisers to Consol
Taback & Associates (Proprietary) Limited
Independent adviser to Consol
Nedbank Capital
Lead private equity sponsor
Ethos Private Equity Limited
Corporate law and tax advisers to Newco
Webber Wentzel Bowens
Lead debt funding arranger and underwriter
Rand Merchant Bank (a division of FirstRand Bank Limited)
Legal adviser to the funders
Deneys Reitz
Financial adviser to Newco
Rand Merchant Bank (a division of FirstRand Bank Limited)
Wadeville
4 December 2006
Enquiries
Consol:
Royden Vice, Chairman
Tel: +27 11 685 1264
Cell: +27 83 389 9959
Mike Arnold, Group Managing Director
Tel: +27 11 874 2228
Cell: +27 83 270 9483
Karuna Nayager, Group Financial Director
Tel: +27 11 874 2272
Cell: +27 83 500 9808
Investor Relations:
College Hill
Johannes van Niekerk
Tel: +27 11 447 3030
Cell: +27 82 921 9110
Date: 04/12/2006 04:50:13 PM Produced by the JSE SENS Department
