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African Oxygen Limited - Pro Rata Share Repurchase By Way Of A Scheme Of

Release Date: 29/04/2005 15:12:01      Code(s): AFX
African Oxygen Limited - Pro rata share repurchase by way of a scheme of        
arrangement                                                                     
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa)                                  
(Registration number 1927/000089/06)                                            
JSE share code: AFX  NSX share code: AOX                                        
ISIN: ZAE000030920                                                              
("Afrox" or "the company")                                                      
Pro rata share repurchase by way of a scheme of arrangement                     
1   INTRODUCTION                                                                
     Standard  Bank  is authorised to announce that the board  of  directors  of
Afrox  ("the board") has approved the distribution of a portion of the  net
     proceeds,  after  the deduction of all related expenses, arising  from  the
     disposal  of  the company"s 68.8% shareholding in Afrox Healthcare  Limited
     ("Ahealth") ("the net proceeds"), to be effected through the acquisition of
approximately  34  285  308  Afrox  shares  by  Afrox  African  Investments
     (Proprietary)  Limited ("Subco") (a wholly-owned subsidiary  of  Afrox)  in
     terms of section 89 of the Companies Act, 1973 (Act 61 of 1973), as amended
     ("the  Act"). The acquisition is to be effected on a pro rata basis by  way
of  a scheme of arrangement in terms of section 311 of the Act proposed  by
     Subco between Afrox and its shareholders ("the scheme"). The balance of the
     net  proceeds  from the disposal of its shareholding in Ahealth  is  to  be
     distributed to shareholders by way of a special dividend.                  
2   TERMS OF THE SCHEME                                                         
    In  terms of the scheme, Subco will acquire from each Afrox shareholder  one
    Afrox share per ten Afrox shares held ("the scheme shares") at the close  of
    business on                                                                 
Friday,  1 July 2005 ("the record date") for a consideration of 1 927  cents
    per  scheme share ("the scheme consideration"), which equates to the  30-day
    volume-weighted  average  price  of  Afrox  shares  on  the  JSE  Securities
    Exchange  South Africa ("the JSE") at the close of business on Thursday,  28
April  2005 less the amount of the special dividend of 415 cents per  share,
    plus a 5% premium.                                                          
    In  terms  of the scheme, a total of approximately 34 285 308 scheme  shares
    will  be acquired by Subco, representing 10% of the issued shares of  Afrox,
for an expected total consideration of R660.8 million                       
    To  the  extent  that the number of shares that Subco would acquire  exceeds
    10%  of  Afrox"s issued shares as a result of any rounding up of  fractional
    entitlements  to  shares, such additional shares will be acquired  by  Afrox
and cancelled.                                                              
3   THE SPECIAL DIVIDEND                                                        
    Shareholders are referred to the Afrox Interim Results announcement         
    released on SENS on 29 April 2005 for full details of the special dividend. 
4   RATIONALE FOR THE SCHEME AND THE SPECIAL DIVIDEND                           
    The proceeds from the disposal of Afrox"s 68.8% shareholding in Ahealth     
    were received by Afrox on 22 March 2005. Taking into account the cash-      
    generating performance of Afrox"s operations, its current cash balances and 
its low level of gearing, the board is of the view that Afrox"s current     
    cash resources are sufficient to fund its current operations and organic    
    growth into the foreseeable future, and that the net proceeds received      
    should therefore be distributed to shareholders.                            
The  board has resolved to distribute a portion of the net proceeds by  way
     of  an  acquisition, as treasury shares, of 10% of Afrox"s shares in issue.
     It  is the board"s intention to utilise these treasury shares in pursuit of
     the company"s strategic objectives.                                        
The  balance of the net proceeds will be distributed to shareholders by way
     of  a  special  dividend. The treasury shares will not participate  in  the
     special dividend.                                                          
5   CONDITIONS PRECEDENT TO THE SCHEME                                          
The scheme is subject, inter alia, to the fulfilment of the following      
         conditions precedent:                                                  
    5.1 all necessary regulatory approvals being obtained;                      
    5.2 the  High  Court of South Africa ("the Court") ordering that  a  meeting
of  the  shareholders of the company be convened to consider the scheme
         ("the scheme meeting");                                                
    5.3 a  special  resolution  amending  Afrox"s  articles  of  association  to
         authorise  Afrox  to  approve the acquisition of shares  issued  by  it
being  duly passed at a general meeting of Afrox shareholders  and  the
         registration  of such special resolution by the Registrar of  Companies
         ("the Registrar");                                                     
    5.4 special  resolutions approving the acquisition of the scheme  shares  in
terms  of  the scheme being duly passed at a general meeting  of  Afrox
         shareholders  in accordance with the Act and the Listings  Requirements
         of  the  JSE  and the registration of such special resolutions  by  the
         Registrar;                                                             
5.5 the  scheme  being  agreed  to  at  the scheme  meeting  by  a  majority
         representing  not less than three-fourths of the votes  exercisable  by
         shareholders present and voting in person or by proxy;                 
    5.6 the Court having sanctioned the scheme; and                             
5.7 a  certified  copy  of the Order of Court sanctioning the  scheme  being
         registered by the Registrar in terms of the Act.                       
6   FINANCIAL EFFECTS OF THE SCHEME                                             
    The  unaudited  pro  forma  financial effects of the  scheme  on  the  basic
earnings  per  share ("EPS"), headline earnings per share ("HEPS")  and  net
    asset  value per share ("NAV") for the six-month period ended 31 March  2005
    are  set  out in the table below. The unaudited pro forma financial  effects
    have been disclosed in terms of the Listings Requirements.                  
The  unaudited  pro  forma financial effects are the responsibility  of  the
    directors  and  have  been  prepared for  illustrative  purposes  only  and,
    because  of  their  nature,  may not give a true reflection  of  the  actual
    financial effects of the scheme.                                            
The  unaudited pro forma financial effects presented below are based on  the
    consolidated results of Afrox and its subsidiaries and include  the  results
    of Ahealth up to the effective date of disposal.                            
                              Before the     After the      Change              
scheme        scheme                          
     HEPS            (cen       100.8(1)      112.0(2)       11.1%              
                      ts)                                                       
     EPS             (cen       350.0(1)      388.9(2)       11.1%              
ts)                                                       
     NAV             (cen     1 108.0(3)   1 017.0 (4)      (8.5%)              
                      ts)                                                       
    Notes:                                                                      
1.   The HEPS and EPS as set out in the "Before the scheme" column of the t
      are based upon the unaudited income statement for Afrox for the six-month 
      ended 31 March 2005 and a weighted average of 342.853 million Afrox shares
      issue.                                                                    
2.   The HEPS and EPS as set out in the "After the scheme" column of the ta
      are based upon a weighted average of 308.568 million Afrox shares in issue
      the assumptions that:                                                     
       - the scheme was effective on 1 October 2004;                            
-  sufficient proceeds from the Ahealth transaction to settle the  scheme
       consideration were received on                                           
         1 October 2004; and                                                    
       - the aggregate scheme consideration was paid on 1 October 2004.         
3.   The NAV as set out in the "Before the scheme" column of the table is b
      upon  the  unaudited  balance sheet of Afrox  as  at  31  March  2005  and
      342.853 million Afrox shares in issue.                                    
4.   The NAV  as set out in the "After the scheme" column of the table is based 
upon 308.568 million Afrox shares in issue and the assumptions that:            
       - the scheme became effective on 31 March 2005;  and                     
       - the aggregate scheme consideration was paid on 31 March 2005.          
     5.   For the purposes of calculating these financial effects it was assumed
Afrox itself will not, in terms of the scheme and as a result of the appli
      of the rounding principle, acquire any shares.                            
7.  INDICATIONS OF SUPPORT                                                      
    Shareholders  holding, in aggregate, 78.5% of the Afrox shares currently  in
issue have confirmed, in writing, their support for the scheme.             
8.  NOTICE OF MEETINGS                                                          
    If the Court orders that the scheme meeting be convened:                    
    *    a  general  meeting will be held at 10:00 on Monday,  6  June  2005  at
Afrox House, 23 Webber Street, Selby, Johannesburg to consider and, if
          deemed  fit, approve the resolutions required to implement the  scheme
          ("the general meeting"); and                                          
    *    the  scheme  meeting  will be held at 10:30 or ten  minutes  after  the
conclusion  or  adjournment of the general meeting, whichever  is  the
          later, on Monday, 6 June 2005 at Afrox House, 23 Webber Street, Selby,
          Johannesburg to consider and, if deemed fit, agree to the scheme.     
9.  SALIENT DATES AND TIMES                                                     
2005              
     Last  day  to trade Afrox shares  in         Thursday, 26 May              
     order to be recorded in the register                                       
     to  vote at the scheme meeting (note                                       
2)                                                                         
     Record  date to vote at  the  scheme         Thursday, 2 June              
     meeting at 17:00 on                                                        
     Last day to lodge forms of proxy for         Thursday, 2 June              
the  general  meeting  by  10:00  on                                       
     (note 3)                                                                   
     Last day to lodge forms of proxy for           Friday, 3 June              
     the  scheme  meeting  by  10:30   on                                       
(notes 4 and 5)                                                            
     General meeting to be held at  10:00           Monday, 6 June              
     on                                                                         
     Scheme  meeting to be held at 10:30,           Monday, 6 June              
or  ten minutes after the conclusion                                       
     or   adjournment  of   the   general                                       
     meeting, whichever is the later, on                                        
     Announcement of results  of  general           Monday, 6 June              
meeting and scheme meeting on SENS                                         
     Announcement of results  of  general          Tuesday, 7 June              
     meeting  and scheme meeting  in  the                                       
     press                                                                      
Court hearing to sanction the scheme         Tuesday, 21 June              
     Announcement  on SENS regarding  the         Tuesday, 21 June              
     sanctioning of the scheme                                                  
     Announcement in the press  regarding       Wednesday, 22 June              
the sanctioning of the scheme                                              
     If  the  scheme  is  sanctioned  and                                       
     becomes effective:                                                         
     Last day to trade to participate  in          Friday, 24 June              
the scheme                                                                 
     First  day to trade in Afrox  shares          Monday, 27 June              
     ex   entitlement   to   the   scheme                                       
     consideration                                                              
Record  date  on which  shareholders           Friday, 1 July              
     must be recorded in the register  to                                       
     be scheme participants and so become                                       
     entitled   to  receive  the   scheme                                       
consideration,  at  the   close   of                                       
     trading on                                                                 
     Operative date of the scheme                   Monday, 4 July              
     The  scheme  consideration  and  new           Monday, 4 July              
share  certificates expected  to  be                                       
     posted    to   scheme   participants                                       
     holding  certificated  Afrox  shares                                       
     (if  documents of title are received                                       
on  or  prior to the record date  of                                       
     the scheme) or, failing that, within                                       
     five business days of the receipt of                                       
     the  relevant documents of title  by                                       
the transfer secretaries                                                   
     Safe  custody accounts to be updated           Monday, 4 July              
     at the CSDP or broker in the case of                                       
     shareholders who have dematerialised                                       
their Afrox shares                                                         
    Notes                                                                       
     1.   The abovementioned times and dates are subject to change.  Any such ch
      will be published on SENS and in the press.                               
2.   Shareholders are advised that as trades executed on the JSE are settled    
within the STRATE environment five business days following the trade,           
shareholders acquiring shares after Thursday, 26 May 2005 will not be eligible  
to vote at the scheme meeting.                                                  
3.   If the general meeting is adjourned or postponed, forms of proxy must be   
received by no later than 48 hours prior to the time of the adjourned or        
postponed general meeting (excluding Saturdays, Sundays and public holidays).   
4.   If a form of proxy for the scheme meeting is not received by the time and  
date shown above, it may be handed to the chairman of the scheme meeting by no  
later than ten minutes before the commencement thereof.                         
5.   If the scheme meeting is adjourned or postponed, forms of proxy must be    
received by no later than 24 hours prior to the time of the adjourned or        
postponed scheme meeting (excluding Saturdays, Sundays and public holidays).    
6.   Shareholders may not dematerialise or rematerialise their existing Afrox   
shares from Friday, 24 June 2005.  Dematerialisation and rematerialisation of   
Afrox shares will recommence after Friday, 1 July 2005.                         
10. FURTHER DOCUMENTATION                                                       
     If the Court orders that the scheme meeting be convened, a circular        
     providing further information relating to the scheme and containing, inter 
     alia, the scheme, an explanatory statement in terms of section 312 of the  
Act, a notice of scheme meeting, a notice of general meeting, a form of    
     proxy in respect of the general meeting, a form of proxy in respect of the 
     scheme meeting and a form of surrender will be posted to Afrox shareholders
     on or about Friday, 13 May 2005.                                           
Johannesburg                                                                
    29 April 2005                                                               
    Investment bank and transaction sponsor                                     
    Standard Bank                                                               
Attorneys                                                                   
    Bowman Gilfillan Inc.                                                       
    Reporting accountants and auditors                                          
    Pricewaterhouse Coopers Inc.                                                
Sponsor                                                                     
    Barnard Jacobs Mellet Corporate Finance                                     
Date: 29/04/2005 03:12:06 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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