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Sasol - Proposed Acquisition Of Aeci Limited

Release Date: 15/07/1998 09:56:27      Code(s): SOL SOLD
SASOL LIMITED
(REGISTRATION NUMBER 79/03231/06)
("SASOL")
PROPOSED ACQUISITION OF AECI LIMITED ("AECI")
1. INTRODUCTION
FURTHER TO THE ANNOUNCEMENTS DATED 16 APRIL 1998, 23 APRIL 1998 AND 27 MAY
1998, INVESTEC BANK LIMITED IS AUTHORISED TO ANNOUNCE THAT SASOL HAS PROPOSED
SCHEMES OF ARRANGEMENT IN TERMS OF SECTION 311 OF THE COMPANIES ACT, 1973 (ACT
61 OF 1973), AS AMENDED ("THE ACT"), BETWEEN:
- AECI AND ITS ORDINARY SHAREHOLDERS ("THE AECI ORDINARY SHAREHOLDERS"), IN
TERMS OF WHICH SASOL, SUBJECT TO THE CONDITIONS PRECEDENT SET OUT IN PARAGRAPH
7 BELOW, WILL ACQUIRE THE ENTIRE ISSUED ORDINARY SHARE CAPITAL OF AECI ("THE
ORDINARY SCHEME"): AND
- AECI AND ITS PREFERENCE SHAREHOLDERS ("THE AECI PREFERENCE SHAREHOLDERS"), IN
TERMS OF WHICH SASOL, SUBJECT TO THE CONDITIONS PRECEDENT SET OUT IN PARAGRAPH
7 BELOW, WILL ACQUIRE THE ENTIRE ISSUED PREFERENCE SHARE CAPITAL OF AECI ("THE
PREFERENCE SCHEME") (COLLECTIVELY "THE SCHEME").
SHAREHOLDERS OF SASOL ARE REFERRED TO THE AECI ANNOUNCEMENT THAT APPEARS
ELSEWHERE IN THIS PUBLICATION.
2. SALIENT TERMS OF THE SCHEMES
IN TERMS OF THE ORDINARY SCHEME, AECI ORDINARY SHAREHOLDERS WILL CEASE TO BE
AECI ORDINARY SHAREHOLDERS AND AECI WILL BECOME A WHOLLY-OWNED SUBSIDIARY OF
SASOL. IT IS ANTICIPATED THAT THE LISTING OF THE AECI ORDINARY SHARES ON THE
JOHANNESBURG STOCK EXCHANGE ("THE JSE") WILL BE TERMINATED WITH EFFECT FROM THE
CLOSE OF BUSINESS ON THE FIRST FRIDAY IMMEDIATELY FOLLOWING THE DATE ON WHICH
ALL THE CONDITIONS PRECEDENT REFERRED TO IN PARAGRAPH 7 BELOW HAVE BEEN
FULFILLED ("THE RECORD DATE"). THE TOTAL CASH CONSIDERATION PAYABLE IN TERMS OF
THE ORDINARY SCHEME AMOUNTS TO R30 PER AECI ORDINARY SHARE (APPROXIMATELY R4
640,0 MILLION IN TOTAL) PLUS AN ADDITIONAL AMOUNT EQUAL TO THE INTEREST THAT
WOULD HAVE BEEN EARNED, CALCULATED FROM 1 JULY 1998 TO THE DATE OF PAYMENT
THEREOF. ON THE ASSUMPTION THAT THE CASH CONSIDERATION IN TERMS OF THE ORDINARY
SCHEME IS PAYABLE ON 30 SEPTEMBER 1998, THE INTEREST PAYABLE THEREON,
CALCULATED AT A RATE OF 20% PER ANNUM, WILL AMOUNT TO APPROXIMATELY R239,8
MILLION. ORDINARY SHAREHOLDERS REGISTERED ON THE RECORD DATE WILL PARTICIPATE
IN AECI'S INTERIM DIVIDEND FOR THE SIX MONTHS ENDED 30 JUNE 1998.
IN TERMS OF THE PREFERENCE SCHEME, AECI PREFERENCE SHAREHOLDERS WILL CEASE TO
BE AECI PREFERENCE SHAREHOLDERS. IT IS ANTICIPATED THAT THE LISTING OF THE AECI
PREFERENCE SHARES ON THE JSE AND THE LONDON STOCK EXCHANGE WILL BE TERMINATED
WITH EFFECT FROM THE RECORD DATE. THE TOTAL CASH CONSIDERATION PAYABLE IN TERMS
OF THE PREFERENCE SCHEME AMOUNTS TO GBP1,05 PER AECI PREFERENCE SHARE
(APPROXIMATELY GBP3,150 MILLION IN TOTAL) PLUS A PRO RATA PORTION OF THE
PREFERENCE SHARE DIVIDEND CALCULATED FROM THE DATE OF THE LAST PREFERENCE SHARE
DIVIDEND PAYMENT TO THE DATE OF PAYMENT. ON THE ASSUMPTION THAT THE CASH
CONSIDERATION IN TERMS OF THE PREFERENCE SCHEME IS PAYABLE ON 30 SEPTEMBER
1998, THE PRO RATA PORTION OF THE PREFERENCE SHARE DIVIDEND PAYABLE TO AECI
PREFERENCE SHAREHOLDERS BY SASOL WILL AMOUNT TO APPROXIMATELY GBP0,048 MILLION.
3. RATIONALE FOR THE SCHEMES AND OPINION OF DIRECTORS
THE IMPLEMENTATION OF THE SCHEME WILL RESULT IN SASOL ACQUIRING THE ENTIRE
ISSUED ORDINARY AND PREFERENCE SHARE CAPITAL OF AECI ("THE ACQUISITION"), WHICH
INCLUDES A 40% INTEREST IN POLIFIN LIMITED ("POLIFIN"), A MAJOR SOUTH AFRICAN
PLASTICS AND CHEMICALS COMPANY IN WHICH SASOL HAS AN EXISTING INTEREST OF 42%.
THE ACQUISITION WILL FURTHER ENHANCE SASOL'S EXISTING POSITIONS IN THE
FERTILIZER, EXPLOSIVES, CHEMICALS AND PLASTICS MARKETS AND WILL GIVE SASOL THE
REQUIRED CRITICAL MASS. IN ADDITION, IT IS ENVISAGED THAT SASOL WILL REALISE
SIGNIFICANT SYNERGISTIC BENEFITS FROM THE RATIONALISATION AND OPTIMISATION OF
THE BUSINESSES OF AECI. PRECISE DETAILS IN THIS RESPECT WILL ONLY BE DETERMINED
LATER.
THE DIRECTORS OF SASOL ARE OF THE OPINION THAT THE TERMS AND CONDITIONS OF THE
SCHEMES ARE FAIR AND REASONABLE TO THE SHAREHOLDERS OF SASOL AND THAT THE
ACQUISITION WILL SIGNIFICANTLY ENHANCE SASOL'S POSITION IN CERTAIN OF ITS CORE
BUSINESSES.
4. NATURE OF BUSINESS OF AECI
AECI IS A MAJOR SOUTH AFRICAN-BASED INDUSTRIAL GROUP AND LEADING SUPPLIER OF
CHEMICALS AND RELATED PRODUCTS TO KEY SECTORS OF THE DOMESTIC AND REGIONAL
ECONOMY, AECI IS A LEADING PLAYER IN THE COMMERCIAL EXPLOSIVES AND ACCESSORIES
MARKET AND THE LARGEST SUPPLIER OF PLASTICS RAW MATERIALS, SYNTHETIC FIBRES,
INDUSTRIAL AND SPECIALITY CHEMICALS AND FERTILIZERS. AECI HAS ALSO GAINED
PROMINENCE IN PLASTICS, CONVERSION INDUSTRIES, PAINTS AND BIOPRODUCTS.
A MAJOR RESTRUCTURING PROGRAMME WAS UNDERTAKEN IN 1993 WHICH RESULTED IN THE
MERGING OF AECI'S CHLOR-ALKALI, PLASTICS, PLASTICS CONVERSION AND MINING
REAGENTS BUSINESSES WITH SASOL'S MONOMER AND PLASTICS ACTIVITIES. AECI GAINED A
40% INTEREST IN THE RESULTING COMPANY, POLIFIN.
AT THE BEGINNING OF 1998. AECI REGAINED THE 51% STAKE OF ITS EXPLOSIVES AND
ACCESSORIES BUSINESS SOLD TO ICI (SOUTH AFRICA) LIMITED IN 1994, WITH THE
RESULT THAT AECI EXPLOSIVES LIMITED ("AECI EXPLOSIVES") AGAIN BECAME A
WHOLLY-OWNED SUBSIDIARY OF AECI.
APART FROM AECI EXPLOSIVES, AECI'S FOUR OTHER MAIN OPERATING COMPANIES ARE
CHEMICAL SERVICES LIMITED, DULUX (PTY) LTD, KYNOCH LIMITED AND SANS FIBRES
(PTY) LTD.
5. FINANCIAL INFORMATION OF AECI
SET OUT BELOW ARE THE SALIENT DETAILS OF THE AECI AUDITED RESULTS FOR THE YEARS
ENDED 31 DECEMBER 1997 AND 31 DECEMBER 1996:
                                     1997                           1996
                                     R MILLIONS                     R MILLIONS
TURNOVER                             8 275                          7 536
NET PROFIT ATTRIBUTABLE
TO AECI ORDINARY SHAREHOLDERS        381                            427
HEADLINE EARNINGS ATTRIBUTABLE
TO AECI ORDINARY SHAREHOLDERS        366                            427
NET TANGIBLE ASSET VALUE             3107                           2870
6. FINANCIAL EFFECTS OF THE ACQUISITION
THE ACQUISITION IS EXPECTED TO HAVE A MARGINALLY POSITIVE EFFECT ON SASOL'S
HEADLINE EARNINGS PER SHARE FOR THE YEAR ENDING 30 JUNE 1999. HOWEVER, IN
SUBSEQUENT YEARS THE REALISATION OF SYNERGIES AND OTHER GROWTH OPPORTUNITIES IS
EXPECTED TO CONTRIBUTE MATERIALLY TO EARNINGS PER SHARE GROWTH.
7. CONDITIONS PRECEDENT
THE SCHEMES ARE CONDITIONAL UPON THE FULFILMENT OF, INTER ALIA, THE FOLLOWING
CONDITIONS PRECEDENT:
7.1 THE ORDINARY SCHEME BEING AGREED TO BY A MAJORITY REPRESENTING
THREE-FOURTHS (75%) OF THE VOTES EXERCISABLE BY AECI ORDINARY SHAREHOLDERS
PRESENT AND VOTING EITHER IN PERSON OR BY PROXY AT THE MEETING OF AECI ORDINARY
SHAREHOLDERS CONVENED FOR THAT PURPOSE;
7.2 THE PREFERENCE SCHEME BEING AGREED TO BY A MAJORITY REPRESENTING
THREE-FOURTHS (75%) OF THE VOTES EXERCISABLE BY AECI PREFERENCE SHAREHOLDERS
PRESENT AND VOTING EITHER IN PERSON OR BY PROXY AT THE MEETING OF AECI
PREFERENCE SHAREHOLDERS;
7.3 THE HIGH COURT OF SOUTH AFRICA (TRANSVAAL PROVINCIAL DIVISION) SANCTIONING
THE SCHEMES;
7.4 THE APPROVAL OF THE COMPETITION BOARD BEING OBTAINED, AND IF SUCH APPROVAL
IS GIVEN SUBJECT TO CONDITIONS, SASOL GIVING WRITTEN NOTICE TO THE COMPETITION
BOARD AND AECI THAT IT AGREES TO AND WILL COMPLY WITH SUCH CONDITIONS;
7.5 THE REGISTRATION BY THE REGISTRAR OF COMPANIES OF THE ORDERS OF COURT
SANCTIONING THE SCHEMES; AND
7.6 THE OPERATIVE DATE OF THE ORDINARY SCHEME OCCURRING PRIOR TO 30 SEPTEMBER
1998 OR SUCH LATER DATE AS MAY BE AGREED BETWEEN AECI, ANGLO AMERICAN
INDUSTRIAL CORPORATION LIMITED AND SASOL.
THE IMPLEMENTATION OF THE ORDINARY SCHEME IS NOT CONDITIONAL UPON THE
IMPLEMENTATION OF THE PREFERENCE SCHEME.
8. COMPETITION BOARD
AS SET OUT IN PARAGRAPH 7.4 ABOVE, THE SCHEMES ARE SUBJECT TO APPROVAL OF THE
COMPETITION BOARD. THE COMPETITION BOARD HAS INITIATED A FORMAL INVESTIGATION
IN TERMS OF SECTION 10(1) OF THE MAINTENANCE AND PROMOTION OF COMPETITION ACT,
1979 (ACT NO, 96 OF 1979), AS ANNOUNCED IN GOVERNMENT NOTICE 1175 OF 1998,
DATED 26 JUNE 1998. THIS INVESTIGATION IS EXPECTED TO TAKE APPROXIMATELY THREE
MONTHS TO COMPLETE.
JOHANNESBURG
15 DULY 1998
MERCHANT BANK TO SASOL                 ATTORNEYS
INVESTEC                               EDWARD NATHAN
MERCHANT BANKING                       & FRIEDLAND INC
INVESTEC BANK LIMITED
(REGISTRATION NUMBER 69/04763/06)      (REGISTRATION NUMBER 77/00525/21)



                                        
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