| Mon 18 Dec 2006, 10:57 | | AFB - Alexander Forbes - Firm intention and withdr |
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AFB
AFB
AFB - Alexander Forbes - Firm intention and withdrawal of cautionary
Alexander Forbes Limited
(Incorporated in the Republic of South Africa)
(Registration number 1958/001974/06)
Share code: AFB
ISIN code: ZAE000018230
("Alexander Forbes" or the "Company")
Firm intention to make an offer to acquire all the issued shares in the capital
of Alexander Forbes Limited and withdrawal of cautionary announcement
1. INTRODUCTION
Shareholders of Alexander Forbes were last advised on 17 November 2006 by way of
a cautionary announcement 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 ("scheme") in terms of section 311 of
the Companies Act (No 61 of 1973, as amended) ("the Act").
Shareholders were advised further that the finalisation of the documentation
relating to the funding of the transaction was the last remaining condition
precedent to the making of a firm offer by the Actis Consortium, acting through
Bidco ("the pre-condition"). This documentation has now been finalised.
Shareholders are now advised that the Actis Consortium, acting through Bidco,
has submitted to the Board a firm offer to acquire the entire issued share
capital of Alexander Forbes ("the offer" or "the proposed acquisition") for a
cash consideration of 1 625 cents per Alexander Forbes share ("the purchase
consideration"). The offer is to be implemented, subject to the conditions
precedent set out in paragraph 4 below, by way of a scheme, to be proposed by
Bidco between Alexander Forbes and its shareholders, excluding any treasury
shares held by subsidiaries of Alexander Forbes.
2. TERMS OF THE OFFER
If the scheme becomes operative, Alexander Forbes shareholders participating in
the scheme ("scheme participants") will be entitled to receive the purchase
consideration of 1 625 cents, which represents a 16% premium to the closing
price per Alexander Forbes share on the JSE Limited ("the JSE") on 6 June 2006,
being the day before the first cautionary announcement was published in respect
of the proposed offer.
In addition, scheme participants will receive interest on the purchase
consideration at a rate of 6.0% per annum (nominal annual compounded annually in
arrear) from 1 April 2007 until the date of payment of the purchase
consideration.
The purchase consideration will be reduced by any distribution made by Alexander
Forbes to its shareholders between today and the implementation of the scheme.
Following the implementation of the scheme, Alexander Forbes will be a wholly-
owned subsidiary of Bidco and Alexander Forbes` listing on the JSE will be
terminated.3. FUNDING
The purchase consideration will be funded by a combination of equity, preference
shares and debt funding. The equity funding will be provided by the Actis
Consortium, which comprises two other private equity firms, Ethos Private Equity
Fund V and Harbourvest Partners LLC and two Canadian fund managers, Ontario
Teachers` Pension Plan Board and Caisse de depot et placement du Quebec as well
as Black Economic Empowerment ("BEE") partners, namely Shanduka Group
(Proprietary) Limited, a community trust and an employee share trust.
The debt and preference share funding will be provided by the following
institutions:
*Rand Merchant Bank, a division of FirstRand Bank Limited;
*Investec Bank Limited;
*Nedbank Capital, a division of Nedbank Limited;
*JP Morgan Chase Bank, N.A.;
*Goldman Sachs International;
*Ontario Teachers` Pension Plan Board; and
*Actis Africa Empowerment Fund.
In terms of Rule 2.3.2(b) and Rule 21.7 of the Securities Regulation Code on
Takeovers and Mergers, the Actis Consortium has provided the Securities
Regulation Panel ("SRP") with the necessary cash confirmation letters.4.
CONDITIONS PRECEDENT
The implementation of the scheme is subject, inter alia, to the fulfilment of
the following conditions precedent:
4.1 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, the Registrar of
Long Term Insurance, the Registrar of Short Term Insurance and the South African
Reserve Bank;
4.2 the High Court of South Africa ("Court") authorising the convening of a
meeting of Alexander Forbes shareholders to consider the scheme ("the scheme
meeting");
4.3 the approval of the scheme by 75% or more of the votes exercisable by the
scheme participants present and voting, in person or by proxy, at the scheme
meeting;
4.4 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;
4.5 all holders of options over Alexander Forbes shares accepting or being
deemed to have accepted a comparable offer made to them; and
4.6 R473 million of 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
until the operative date of the scheme.
5. BREAK FEE
Alexander Forbes has agreed to pay to the Actis Consortium a break fee up to a
maximum of R30 million in respect of any bona fide costs actually incurred by
the Actis Consortium 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 Actis Consortium does not directly or indirectly acquire any Alexander
Forbes shares.
6. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS
The board has appointed KPMG Services (Proprietary) Limited ("KPMG") to prepare
a fair and reasonable opinion in respect of the offer. KPMG has completed a
preliminary valuation of Alexander Forbes as at 11 December 2006 and has advised
the Board that the offer is fair and reasonable to Alexander Forbes shareholders
as at that date. KPMG`s opinion will however be formalised and finalised at the
last practicable date prior to the publication of the relevant circular to
Alexander Forbes shareholders ("the last practicable date") and will be based on
financial, regulatory, securities market and other conditions prevailing at that
time.
Based on KPMG`s preliminary advice but subject to receipt of a final fair and
reasonable opinion from KPMG by the last practicable date on appropriate terms,
a sub committee of the Board recommends that Alexander Forbes shareholders vote
in favour of the scheme and the directors of Alexander Forbes undertake to vote
their own shares in favour of the scheme at the scheme meeting.
Shareholders are also advised that VenFin Risk Services (Proprietary) Limited,
which owns 25.1% of Alexander Forbes` issued shares, has undertaken to the Actis
Consortium to vote in favour of the offer at the scheme meeting provided that
the scheme meeting occurs on or before 28 February 2007. 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 purchase consideration payable in
terms of this offer (and is not matched or bettered by the Actis Consortium).
7. DOCUMENTATION
A 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 Alexander Forbes shareholders in due course.
8. IMPORTANT DATES AND TIMES
Alexander Forbes shareholders will be advised of important dates and times of
the proposed acquisition in due course.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Alexander Forbes shareholders are advised that the cautionary announcements
concerning the proposed acquisition are hereby withdrawn.
Sandton
18 December 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
Advisor to the BEE consortium
AMB Capital
Date: 18/12/2006 10:57:42 Produced by the JSE SENS Department.
