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SAP - Sappi - Proposed Renounceable Rights Offer And Cautionary Announcement
Not for distribution in the United States, Japan, Australia or Canada
Sappi Limited
Incorporated in the Republic of South Africa
Registration Number: 1936/008963/06
ISIN Number: ZAE000006284
JSE Share Code: SAP
("Sappi" or "the Company")
This announcement is not for distribution in the United States, Australia,
Canada or Japan. This announcement does not constitute or form part of any
offer or solicitation to purchase or subscribe for securities in the United
States. The proposed rights offer described herein has not been and will
not be registered under the U.S. Securities Act of 1933, as amended ("U.S.
Securities Act"), or under any relevant securities laws of any state or
other jurisdiction of the United States. The securities described herein
(the "Securities") may not be offered, sold, taken up, resold, renounced,
exercised, pledged, transferred or delivered, directly or indirectly, in or
into the United States at any time except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the U.S.
Securities Act and applicable state and other securities laws of the United
States. The Securities may be offered, sold, taken up, resold, renounced,
exercised, pledged, transferred or delivered, by non-U.S. persons outside
the United States in accordance with Regulation S under the U.S. Securities
Act.
PROPOSED RENOUNCEABLE RIGHTS OFFER AND CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders of Sappi Limited ("Sappi" or "the Company") are referred
to the announcements released by Sappi on SENS dated 29 September 2008,
2 October 2008 and 10 October 2008, and the press advertisements dated
1 October 2008, 2 October 2008 and 10 October 2008 regarding the
proposed acquisition by Sappi of the coated graphic paper business of M-
real Corporation (the "Acquisition"). Sappi intends to raise, provided
the conditions set out in paragraph 5 below are fulfilled, the Rand
equivalent of Euro450 million through a fully underwritten renounceable
proposed rights offer ("the proposed rights offer"). The proposed
rights offer is intended to be fully underwritten, subject to certain
conditions, by Citigroup Global Markets Limited and J.P. Morgan
Securities Ltd (the "Joint Bookrunners"). The final terms of the
proposed rights offer, including details of which categories of members
of Sappi not resident within South Africa will be excluded, will be
announced in due course in accordance with the Corporate Action
timetable as set out in the JSE Limited ("JSE") Listings Requirements.
2. Purpose of the proposed rights offer and use of proceeds
The purpose of the proposed rights offer is to finance the cash portion
(being Euro400 million) of the consideration payable under the
Acquisition and related costs. The Acquisition is subject to certain
conditions precedent, including the closing and settlement of the
proposed rights offer in accordance with its terms. In addition, Sappi
may terminate the Acquisition prior to the anticipated completion
should up to three changes, events or circumstances occur which would
together have a certain significant adverse effect on production
volumes of graphic paper at mills being acquired pursuant to the
Acquisition or lead to a liability in respect of the businesses being
acquired, which would have to be settled in cash, having a net present
value in excess of Euro110 million.
In the event that the Acquisition does not proceed, or proceeds on
amended terms, any portion of the proceeds of the proposed rights offer
not applied for the purpose referred to above will be used to settle
debt of Sappi`s subsidiaries and/or be returned to Sappi shareholders
in an appropriate manner.
3. Rationale for the Acquisition
The Acquisition meets Sappi`s strategic and financial criteria for
acquisitions as it enhances Sappi`s global presence, provides an
opportunity to increase Sappi`s customer base, improves Sappi`s
strategic flexibility in regards to capacity utilisation, increases the
range of products offered and provides anticipated growth and cost
synergies. Sappi also expects benefits from increased profitability and
returns and improved cash flows for the Sappi group. The Acquisition
allows Sappi to strengthen its competitive position in the coated
graphic paper industry in Europe and globally.
The Acquisition has been identified as a good fit with the Sappi coated
graphic paper business. Sappi`s European production capacity is
expected to increase from 2.6 million tons per annum to 4.5 million
tons per annum. The assets acquired as part of the Acquisition will
enhance Sappi`s position in the market by expanding its geographical
footprint in Europe to include Finland and Switzerland. Through the
Acquisition, Sappi will significantly increase its exposure to coated
magazine paper and, as a result, the combined group, is anticipated to
be the largest coated fine paper company in Europe with strong
positions in both coated woodfree and coated magazine grades.
In addition, the Acquisition adds to Sappi`s product range a number of
well known brands which will complement Sappi`s existing products and
provide access to an enlarged customer base.
Furthermore, the integration of the business and operations acquired under
the Acquisition with the existing Sappi operations is expected to strengthen
the profitability of Sappi`s European operations through increased coated
graphic paper production, benefiting from the economies of scale and the
ability to optimise production and maximise capacity utilisation. Other
synergies identified in distribution, the integration of sales and
administration, and the rationalisation of manufacturing across the Sappi
group are expected to further enhance the performance of Sappi`s European
business. Sappi estimates total annual synergies of approximately Euro 120
million from the Acquisition which should be realisable in full within three
years and without material capital investments. This synergy estimate is not
a profit forecast or a profit estimate and should not be treated as such nor
relied on by shareholders or prospective investors to calculate the likely
level of profits or losses for Sappi for the financial year ended 30
September 2008 or beyond. The reporting of the synergy estimate complies
with the accounting policies of Sappi.
4. General meeting
A general meeting has been convened to be held at the registered office
of Sappi, 48 Ameshoff Street Braamfontein, Johannesburg at 15:00 (South
African time) on Monday, 3 November 2008 at which general meeting,
shareholders will be asked to approve, inter alia, the Acquisition, an
increase in authorised share capital and the placing of all the
authorised but unissued ordinary shares in the capital of the Company
under the control of the directors to implement the proposed rights
offer. This authority will enable the directors to issue the shares
required to implement the proposed rights offer.
5. Conditions to announcement of final terms of the proposed rights offer
The final terms of the proposed rights offer are expected to be
announced if, inter alia:
- all of the following resolutions contained in the Notice of the
Extraordinary General Meeting, as set out in the circular sent to
shareholders relating to the Acquisition dated 10 October 2008,
are approved: (a) the resolution approving the Acquisition; (b)
the special resolution increasing the authorised share capital of
the Company; and (c) the resolution placing the authorised but
unissued ordinary shares in the capital of the Company under the
control of the directors to implement the proposed rights offer;
- the special resolution increasing the share capital of Sappi is
registered with the Registrar of Companies;
- regulatory approvals for the Acquisition are obtained, including
competition approvals; and
- all the relevant approvals required from the JSE for the proposed
Rights Offer are obtained.
6. Additional information on the proposed rights offer
The final terms of the proposed rights offer are expected to be
announced on or about Friday, 7 November 2008. Full details of the
proposed rights offer, including the financial effects, will be
provided to shareholders in the circular to be posted to shareholders
relating to the proposed rights offer in due course.
Certain expected key dates and times in respect of the proposed rights
offer are set out below:
2008
General meeting Monday, 3 November
Last day to trade in Sappi shares in Friday, 14 November
order to qualify to participate in the
proposed rights offer (cum proposed
rights offer entitlement)
Sappi shares trade ex the proposed Monday, 17 November
rights offer entitlement from
commencement of trade on
Listing of and trading in letters of Monday, 17 November
allocation on the JSE from
commencement of trade on
Record date for shareholders to Friday, 21 November
participate in the proposed rights
offer
Circular posted and form of Monday, 24 November
instruction issued to certificated
shareholders on
Dematerialised shareholders will have Monday, 24 November
their accounts at their CSDP or broker
credited with their proposed rights
offer entitlement on
Certificated shareholders will have Monday, 24 November
their proposed rights offer
entitlement created in electronic form
and held at Computershare on
Proposed rights offer opens at 09:00 Monday, 24 November
on
Last day for trading in letters of Friday, 5 December
allocation on the JSE
Listing and trading of proposed rights Monday, 8 December
offer shares on the JSE at 09:00 on
Proposed rights offer closes at 12:00 Friday, 12 December
on (see note 4)
Forms of instruction including cheques Friday, 12 December
in respect of certificated
shareholders to be lodged by 12:00 on
(see notes (3) and (4))
Record date for letters of allocation Friday, 12 December
Entitlement in respect of the rights Monday, 15 December
offer available from
Proposed rights offer shares issued Monday, 15 December
and posted to certificated
shareholders on or about
Accounts of dematerialised Monday, 15 December
shareholders updated and credited/
debited at their CSDP or broker
Results of the proposed rights offer Monday, 15 December
and basis of allocation of excess
applications published on SENS on or
about
Results of the proposed rights offer Wednesday, 17 December
and basis of allocation of excess
applications published in the South
African press on or about
Accounts of dematerialised Wednesday, 17 December
shareholders updated in respect of
excess shares allocated at their CSDP
or broker on
Share certificates in respect of Friday, 19 December
excess shares allocated posted to
certificated shareholders on or about
Notes
1. All times indicated are South African times and are subject to
change. All changes will be released on SENS and published in the
South African press.
2. Share certificates in respect of Sappi shares may not be
dematerialised or rematerialised between Monday, 17 November 2008
and Friday, 21 November 2008, both days inclusive.
3. CSDPs effect delivery on a "delivery against payment method", in
respect of dematerialised shareholders.
4. If you are a dematerialised shareholder, you are required to
notify your duly appointed CSDP or broker of your acceptance of
the proposed rights offer in the manner and time stipulated in the
custody agreement. Dematerialised shareholders are advised to
contact their CSDP or broker as early as possible to establish
what the cut off times are for the acceptances of the proposed
rights offer, as set out in the custody agreement, as this may be
earlier than the proposed rights offer closing date.
7. Cautionary announcement
The proposed rights offer may have a material effect on the price of
Sappi securities and shareholders are accordingly advised to exercise
caution when dealing in Sappi securities until a further announcement
is made.
8. Forward looking statements
Certain statements in this release that are neither reported financial
results nor other historical information, are forward-looking
statements, including but not limited to statements that are
predictions of or indicate future earnings, savings, synergies, events,
trends, plans or objectives. Undue reliance should not be placed on
such statements because, by their nature, they are subject to known and
unknown risks and uncertainties and can be affected by other factors,
that could cause actual results and company plans and objectives to
differ materially from those expressed or implied in the forward-
looking statements (or from past results). Such risks, uncertainties
and factors include, but are not limited to, the risk that the assets
acquired as part of the Acquisition will not be integrated successfully
or such integration may be more difficult, time-consuming or costly
than expected, expected revenue synergies and cost savings from the
Acquisition may not be fully realised or realised within the expected
time frame, revenues following the Acquisition may be lower than
expected, any anticipated benefits from the consolidation of the
European paper business may not be achieved, the ability to obtain
governmental or regulatory approvals of the Acquisition on the proposed
terms and schedule, the failure of shareholders of Sappi to approve the
Acquisition or the related financings, the highly cyclical nature of
the pulp and paper industry (and the factors that contribute to such
cyclicality, such as levels of demand, production capacity, production
and pricing), adverse changes in the markets for the group`s products,
consequences of substantial leverage, changing regulatory requirements,
unanticipated production disruptions, economic and political conditions
in international markets, the impact of investments, acquisitions and
dispositions (including related financing), any delays, unexpected
costs or other problems experienced with integrating acquisitions and
achieving expected savings and synergies and currency fluctuations.
The Company undertakes no obligation to publicly update or revise any
of these forward looking statements, whether to reflect new information
or future events or circumstances or otherwise.
Morgan Stanley & Co. Ltd in conjunction with one or more of its
affiliates ("Morgan Stanley") is acting for Sappi in connection with
this Acquisition and no one else and will not be responsible to anyone
other than Sappi for providing the protections offered to clients of
Morgan Stanley nor for providing advice in relation to this
Acquisition.
Johannesburg
31 October 2008
Joint Bookrunners and Underwriters:
Citigroup Global Markets Limited and J.P. Morgan Securities Limited
Financial adviser to Sappi:
Morgan Stanley & Co. Ltd
Transaction Sponsor
Morgan Stanley South Africa (Propriety) Limited
South African legal advisers to Sappi:
Bowman Gilfillan Inc.
United States of America legal advisers to Sappi:
Cravath, Swaine & Moore LLP
United Kingdom legal advisers to Sappi:
Linklaters LLP
Underwriters` South African legal advisers:
Werksmans Inc
Underwriters` United States of America legal advisers:
Latham and Watkins LLP
Reporting accountants and auditors:
Deloitte - Registered Auditors
Transaction sponsor:
Morgan Stanley South Africa (Proprietary) Limited
JSE sponsor:
UBS South Africa (Proprietary) Limited
Notice
This notice sets out the restrictions applicable to shareholders and
renouncees who have registered addresses outside South Africa, who are
nationals, citizens or residents of countries, other than South Africa, or
who are persons (including, without limitation, custodians, nominees and
trustees) who have a contractual or legal obligation to forward this
announcement, the circular referred herein, any subscription form or any
other document concerning the proposed rights offer (each an "Offering
Document") to a jurisdiction outside South Africa or who hold ordinary
shares for the account or benefit of any such person.
No action has been taken that would permit a public offering of the letters
of allocation and proposed rights offer shares or the possession,
distribution or transmission of any Offering Document in any jurisdiction
where action for that purpose is required, other than South Africa.
The distribution of any Offering Document or the offer of letters of
allocation and proposed rights offer shares to, or the exercise or transfer
of letters of allocation by, persons resident in, or who are nationals or
citizens of, countries other than South Africa may be restricted by the laws
of the relevant jurisdiction. Those persons should consult their
professional advisers as to whether they require any governmental or other
consent or need to observe any other formalities to enable them to
distribute any such documents or take up their rights. Any failure to
comply with applicable restrictions may constitute a violation of the
securities laws of such jurisdictions.
It is the responsibility of any person outside South Africa (including,
without limitation, nominees, agents and trustees for such persons)
receiving any Offering Document and wishing to take up rights under the
proposed rights offer to satisfy himself as to full observance of the
applicable laws of any relevant territory, including obtaining any requisite
governmental or other consents, observing any other requisite formalities
and paying any issue, transfer or other taxes due in such territories.
Receipt of any Offering Document will not constitute an offer in those
jurisdictions in which it would be illegal to make an offer and, in those
circumstances, any Offering Document, if sent, will be sent for information
only and should not be copied or redistributed. No person receiving a copy
of any Offering Document in any territory, other than South Africa, may
treat the same as constituting an invitation or offer to such person unless,
in the relevant territory, such an invitation or offer could lawfully be
made to him without contravention of any registration or other legal
requirements.
Accordingly, persons (including, without limitation, nominees, agents and
trustees) receiving a copy of any Offering Document should not, in
connection with the proposed rights offer, distribute or send the same to
any person in, or citizen or resident of, or otherwise into any jurisdiction
where to do so would or might contravene local securities laws or
regulations. Any person who does forward any Offering Document into any such
territory (whether under a contractual or legal obligation or otherwise)
should draw the recipient`s attention to the contents of this notice.
Sappi reserves the right, but shall not be obliged, to treat as invalid any
acceptance or purported acceptance of the offer of letters of allocation and
proposed rights offer shares which appears to Sappi or its agents to have
been executed, effected or despatched in a manner which may involve a breach
of the securities laws or regulations of any jurisdiction or if Sappi
believes or its agents believe that the same may violate applicable legal or
regulatory requirements.
Despite any other provision of any Offering Document, Sappi reserves the
right to permit any shareholder or renouncee to take up his rights if Sappi
in its sole and absolute discretion is satisfied that the transaction in
question is exempt from, or not subject to, the legislation or regulations
giving rise to the restrictions in question.
To ensure compliance with applicable provisions of the laws of the United
States and other countries, the procedures described in this notice must be
followed anywhere in the world.
United States
The Offering Documents are intended only for use in connection with the
proposed rights offer to persons outside the United States and are not to be
given or sent, in whole or in part, to any person within the United States
or to any U.S. persons as defined in Regulation S under the U.S. Securities
Act. No Offering Document constitutes or forms part of any offer or
solicitation to purchase or subscribe for securities in the United States.
The proposed rights offer has not been and will not be registered under the
U.S. Securities Act, or under any relevant securities laws of any state or
other jurisdiction of the United States. The letters of allocation and
proposed rights offer shares may not be offered, sold, taken up, resold,
renounced, exercised, pledged, transferred or delivered, directly or
indirectly, in or into the United States at any time except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the U.S. Securities Act and applicable state and other
securities laws of the United States. The letters of allocation and the
proposed rights offer shares may be offered, sold, taken up, resold,
renounced, exercised, pledged, transferred or delivered, by non-U.S. persons
outside the United States in accordance with Regulation S under the U.S.
Securities Act.
No communication regarding the proposed rights offer nor any public
announcement regarding the offer, sale, renunciation, exercise, transfer or
delivery of letters of allocation or the acquisition or subscription for the
proposed rights offer shares may be made into the United States or be
directed to persons residing or present in the United States. In
particular, no Offering Document may be distributed by any intermediary or
any other person within the United States.
When offering, selling, renouncing, exercising, transferring or delivering
the letters of allocation, each person must confirm that (a) it has not
received, in the United States, any prospectus or other Offering Document,
(b) at the time it transacts with its letters of allocation it is located
outside of the United States, (c) it is not acting on behalf of any person
in the United States and (d) its acquisition or subscription for the
proposed rights offer shares or transaction with the letters of allocation
is by non-U.S. persons outside the United States in accordance with
Regulation S under the U.S. Securities Act.
United Kingdom and European Economic Area
The Offering Documents and the proposed rights offer are only addressed to
and directed at persons in member states of the European Economic Area who
are "qualified investors" within the meaning of Article 2(1)(e) of the
Prospectus Directive (Directive 2003/71/EC) ("Qualified Investors"). In
addition, in the United Kingdom, the Offering Documents are being
distributed only to, and are directed only at, Qualified Investors who have
professional experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order") or who are high net worth
entities falling within Article 49 of the Order, and to other persons to
whom it may otherwise lawfully be communicated (all such persons together
being referred to as "Relevant Persons"). The Offering Documents must not
be acted on or relied upon (i) in the United Kingdom, by persons who are not
Relevant Persons, and (ii) in any member state of the European Economic Area
other than the United Kingdom, by persons who are not Qualified Investors.
Any investment or investment activity to which the Offering Documents relate
are available only (i) in the United Kingdom to Relevant Persons, and (ii)
in any member state of the European Economic Area other than to Qualified
Investors, and will be engaged in only with such persons.
No other person should seek to participate in the proposed rights offer or
rely on any Offering Document concerning the proposed rights offer. Persons
distributing the Offering Documents must satisfy themselves that it is
lawful to do so.
Persons located in the United Kingdom and in any member state of the
European Economic Area other than the United Kingdom that satisfy such
requirements will be able to exercise their letters of allocation under the
proposed rights offer provided that any such person, by subscribing for all
or some of their letters of allocation and entitlements to new proposed
rights offer shares, will be deemed to represent, warrant, agree and confirm
that such person is a Relevant Person or a Qualified Investor, as the case
may be.
Australia, Canada and Japan
No Offering Document will be sent to or should be forwarded to holders of
shares with registered addresses in, and no proposed rights offer
entitlement and proposed rights offer shares should be transferred, sold or
delivered in or into any of Australia, Canada or Japan. In addition, due to
restrictions under the securities laws of Australia and Japan no offer of
the letters of allocation and the proposed rights offer shares being offered
in the proposed rights offer is being made under any Offering Document to
holders of shares with registered addresses in, or to residents of,
Australia or Japan.
Authorised Intermediaries
Authorised intermediaries will not accept notifications for the sale,
exercise, transfer or renunciation of letters of allocation or the
subscription for or acquisition of proposed rights offer shares if they
reasonably believe that such transaction is not made in accordance with the
terms described herein.
Any subscription that is incomplete or does not comply with the required
procedures will be void.
We recommend that financial intermediaries include the following legend
regarding United States restrictions in their subscription forms sent to
persons under the proposed rights offer:
I confirm that I have not received, within the United States, any circular,
prospectus, other offering document or any other document regarding the
proposed rights offer, nor any subscription form or information document,
and that at the time I exercise, transfer, sell, resell, take up, pledge,
renounce, transfer or deliver my letters of allocation I am located outside
of the United States, I am not an agent or intermediary acting for a
principal other than a principal who has given instructions outside of the
United States, and that I acquire the proposed rights offer shares, or
renounce, sell, resell, transfer or deliver the letters of allocation, in a
transaction by non-U.S. persons outside the United States in accordance with
Regulation S under the United States Securities Act of 1933, as amended.
We recommend that financial intermediaries include the following legend
regarding United States restrictions in information forms sent to persons
about exercising their letters of allocation:
The proposed rights offer described herein has not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the "U.S.
Securities Act"), or under any relevant securities laws of any state or
other jurisdiction of the United States. The letters of allocation and
proposed rights offer shares (the "Securities") may not be offered, sold,
taken up, resold, renounced, exercised, pledged, transferred or delivered,
directly or indirectly, in or into the United States at any time except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and applicable state
and other securities laws of the United States. Accordingly, intermediaries
may not send any information to persons located in the United States, and no
envelope containing forms concerning the Securities may, except if
authorized by Sappi Limited, be posted or sent in any manner from the United
States. No action has been taken that would permit an offer of the
Securities or the possession, distribution or transmission of this or any
other document concerning the proposed rights offer in any jurisdiction
where action for that purpose is required, other than South Africa. This
notice may not be distributed into, and does not constitute an offer of, or
the solicitation of an offer to subscribe for or buy, any of the Securities
to any person in any jurisdiction to whom or in which such offer or
solicitation is unlawful.
Date: 31/10/2008 16:30:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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