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PMA PMAP PMN
PMA
PMA - Primedia Limited - Proposed taxation amendments and the effect on the non-
redeemable, cumulative, non-participating preference shares issued by Primedia
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")
PROPOSED TAXATION AMENDMENTS AND THE EFFECT ON THE NON-REDEEMABLE, CUMULATIVE,
NON-PARTICIPATING PREFERENCE SHARES ISSUED BY PRIMEDIA
Currently dividends attract Secondary Tax on Companies ("STC") payable by the
company distributing the dividend.
In his budget speech on 21 February 2007, the Minister of Finance announced STC
will be renamed on 01 October 2007 as a "dividend tax". The rate will be
reduced from 12,5% to a rate of 10%. In phase 1, this tax will be levied upon
the company distributing monies out of the company. However, in 2008 the
dividend tax on companies will be converted to a dividend tax on the
shareholders (phase 2), with administrative enforcement through a withholding
tax at company level. This conversion is dependent upon the renegotiation of
several international tax treaties. The dividend tax will apply to all
distributions regardless of profits. The legal liability for this tax will also
be moved from the company paying the dividend to the shareholder receiving it.
As the proposed legislation has not been promulgated regarding the above, it is
not possible to determine the exact impact of this proposed change to STC.
The preference shareholders are however advised that to the extent that any
benefit is received by Primedia as a result of the proposed amendments in
respect of phase 1, this benefit will be passed onto Primedia ordinary and N
ordinary shareholders up to a maximum of the additional tax liability imposed in
respect of their dividends. Phase 2 in 2008, may result in an additional cost
for the preference shareholders. Should Phase 2 result in a benefit for
Primedia as a result of the abolition of STC, Primedia will endeavour to
transfer such benefit to the preference shareholders up to the maximum benefit
of the additional tax imposed. This transfer will however be subject to
ordinary, N ordinary and preference shareholder approval whether at a class
meeting and/or at a general meeting as the articles of Primedia would have to be
amended to accommodate this change.
The preference shareholders are hereby advised that until such time as the
amending act is promulgated and shareholder approval obtained, it will not be
possible to determine exactly what the impact will be on the non-redeemable,
cumulative, non-participating preference shares issued by Primedia.
A further announcement in this regard will be made once the detailed legislation
is published.
Sandton
2 March 2007
Sponsor
Investec Bank Limited
Date: 02/03/2007 16:11:00 Produced by the JSE SENS Department.
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