| Wed 7 Feb 2007, 13:48 | | PMA - Primedia Limited - Further cautionary announ |
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PMA PMAP PMN
PMA
PMA - Primedia Limited - Further cautionary announcement
Primedia Limited
(Incorporated in the Republic of South Africa)
Registration number 1993/003355/06)
Share code: PMA & ISIN: ZAE000035119
Share code: PMN & ISIN: ZAE000035127
Share code: PMAP & ISIN: ZAE000080529
("Primedia" or the "Company")
Further Cautionary Announcement
1. Introduction
Further to the cautionary announcements published by Primedia on 15
December 2006 and 10 January 2007, shareholders are advised that a
consortium of investors, led by the Mineworkers Investment Company
(Proprietary) Limited ("MIC"), Issie Kirsh and William Kirsh (collectively
"the Consortium"), acting through Red Pen 2 Investments (Proprietary)
Limited ("NewCo"), has submitted a proposal in principle to the board of
directors of Primedia ("the Board") for the acquisition of the entire
issued share capital of Primedia ("the Proposal"). This announcement
summarises the relevant information provided in the proposal letter
addressed by NewCo and the Consortium to the Board and dated Monday, 5
February 2007. Neither the Proposal itself nor this announcement,
constitutes a firm intention to make an offer to shareholders of Primedia
for the purposes of the Securities Regulation Code on Take-overs and
Mergers.
2. Terms of the Proposal
2.1 Mechanics and structure
The Proposal envisages Newco implementing the transaction by proposing
two interconditional schemes of arrangement ("the Schemes") in terms
of Section 311 of the Companies Act, No 61 of 1973, as amended, one
between the Company and its ordinary shareholders and the other
between the Company and its N shareholders, and thereby acquiring all
the issued ordinary shares and N shares respectively.
2.2 Consideration
The Proposal sets out that, subject to the conditions set out in
paragraph 4.1 below, Newco may offer shareholders R25.50 in respect of
each ordinary share ("Ordinary Scheme Consideration") and R24.50 in
respect of each N share ("N Scheme Consideration"), payable in cash on
the operative date of the Schemes ("the settlement date"). Relevant
extracts from the Proposal and its related documentation are set out
hereunder:
- any dividend or similar payment declared between the date of the
Proposal and the settlement date will reduce the aggregate scheme
consideration to the extent of such dividend;
- interest will accrue on the Ordinary Scheme Consideration and N
Scheme Consideration from a date to be agreed; and
- the Company shall be entitled to declare and pay any dividends
which may become due and payable under the existing preference
shares of the Company and no adjustment to the scheme
consideration shall be made as a result of such amounts being
declared and/or paid. The Consortium, together with the Company,
intends to engage with the holders of the issued non-redeemable,
cumulative, non-participating preference shares in regard to the
Proposal.
Detailed in the table below is the:
- 90-day volume weighted average share price ("VWAP"), 60-day VWAP
and 30-day VWAP calculated to 14 December 2006 (being the day
prior to the first cautionary announcement);
- closing share price on 14 December 2006;
- 90-day VWAP, 60-day VWAP and 30-day VWAP calculated to 5 February
2007 (being the date of the Proposal letter); and
- closing share price on 5 February 2007, for the Ordinary shares
and N shares as well as the premium that the Ordinary Scheme
Consideration and N Scheme Consideration represents to these
prices:
Price Premium
Ordinary Ordinary Price N Premium
shares shares shares N shares
(cents) % (cents) %
90-day VWAP 16.91 50.8 16.59 47.7
60-day VWAP 17.15 48.7 17.66 38.7
30-day VWAP 18.47 38.1 18.71 30.9
Close - 14 December 34.2 35.3
2006 19.00 18.11
90-day VWAP 17.98 41.8 18.61 31.6
60-day VWAP 19.97 27.7 19.75 24.1
30-day VWAP 22.26 14.6 21.53 13.8
Close - 5 February 2007 10.9 7.5
23.00 22.80
3. Shareholder support
Primedia`s two largest institutional shareholders, Old Mutual Investment
Group (South Africa) (Proprietary) Limited ("OMGISA") (with 17 888 117
ordinary shares and 7 182 844 N ordinary shares) and Coronation Asset
Management (Proprietary) Limited ("Coronation") (with 225 003 ordinary
shares and 46 382 647 N shares) have undertaken to the Consortium to vote
in favour of any offer or to advise their clients to vote in favour of any
offer at the scheme meetings, which may be called pursuant to the Proposal
("OMGISA undertaking" and "Coronation undertaking" respectively). These
undertakings are subject, inter alia, to the independent sub-committee
("Committee") of the Board recommending to the scheme members to vote in
favour of the Schemes.
The OMGISA undertaking and Coronation undertaking shall cease to be of any
force and effect should a bona fide offer be made to OMIGSA or Coronation
respectively by a third party prior to the scheme meeting which is:
- in the case of the OMGISA undertaking, more than 80 cents per share
higher than the Ordinary Scheme Consideration and N Scheme
Consideration; or
- in the case of the Coronation undertaking, higher than the Ordinary
Scheme Consideration and/or the N Scheme Consideration,
("the Competing Offer")
and Newco does not match or better such Competing Offer within a 10
business day period or the period from the date of receipt of the Competing
Offer by the Company to the day immediately preceding the day of the scheme
meeting.
The total undertakings to vote in favour of the schemes are as follows:
- 18 113 120 ordinary shares representing 66.3% of the total ordinary
shares excluding those held by the Consortium; and
- 53 565 491 N shares representing 35.8% of the total N shares excluding
those held by the Consortium.
4. Conditions
4.1 Conditions to submitting a firm intention to make an offer
The submission of a firm intention to make an offer that may arise from the
Proposal (which firm intention, if made, is expected to be forthcoming
towards the end of April 2007), is subject, inter alia, to:
- a detailed due diligence investigation being completed to the
satisfaction of the Consortium and its funders;
- approval by the MIC board of directors and the relevant committees of
all potential equity and debt providers; and
- the provision of the necessary cash confirmation letter to the
Securities Regulation Panel.
4.2 Conditions of a firm offer if made
The Consortium envisages that the firm offer itself, if made, will be
subject, inter alia to, the following suspensive conditions:
- approval by the Board;
- statutory approval by the requisite majorities of both the ordinary
and N shareholders of Primedia at separate class meetings. Members of
the Consortium have indicated that they do not intend to vote at the
relevant scheme meetings;
- all applicable regulatory and statutory approvals being obtained,
including the approval by the South African Reserve Bank of the
Consortium`s funding arrangements; and
- such other conditions as are normal for a transaction of this nature.
5. Independent sub-committee
The Board has established a sub-committee of independent directors to
manage the process relating to the Proposal. The Company has agreed to
allow a due diligence investigation by the Consortium, its funders, as well
as their professional advisors to commence.
6. Renewal of cautionary announcement
Shareholders of Primedia are advised to continue exercising caution when
dealing in the company`s securities until a further announcement is made.
Sandton
8 February 2007
Investment Bank and Sponsor to Primedia
Investec Bank Limited
Legal advisor to Primedia
Edward Nathan Sonnenbergs Inc.
Transaction arranger and debt advisor to the Consortium
Brait South Africa Limited (Specialised Debt Finance)
Merchant Bank to the Consortium
Rand Merchant Bank (a division of FirstRand Bank Limited)
Legal advisors to the Consortium
MJ King Inc.
Corporate Law Advisory Practice of KPMG Services (Proprietary) Limited
Date: 07/02/2007 13:48:01 Produced by the JSE SENS Department.
