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AFRICAN OXYGEN LIMITED
(REGISTRATION NUMBER 05/00089/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
("AFROX")
PRESIDENT MEDICAL INVESTMENTS LIMITED
(REGISTRATION NUMBER 85/01313/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
("PRESMED")
FURTHER ANNOUNCEMENT REGARDING THE PROPOSED MERGER OF PRESMED AND CERTAIN OF
THE HEALTHCARE INTERESTS OF AFROX ("AFROX HEALTHCARE")
FURTHER TO THE JOINT ANNOUNCEMENT PUBLISHED BY AFROX AND PRESMED ON 17 JUNE
1999, BOE MERCHANT BANK (A DIVISION OF BOE BANK LIMITED) ("BOE") AND THE
BUSINESS BANK ("TBB") ARE AUTHORISED TO ANNOUNCE THE FOLLOWING ADDITIONAL
INFORMATION REGARDING THE PROPOSED MERGER OF PRESMED AND AFROX HEALTHCARE ("THE
MERGER"):
1. STATUS OF THE MERGER
THE MERGER BETWEEN AFROX HEALTHCARE AND PRESMED HAS BEEN CONCLUDED AND THE
RESPECTIVE BOARD APPROVALS HAVE BEEN OBTAINED. PRESMED ACCORDINGLY ACQUIRES,
SUBJECT TO THE CONDITIONS PRECEDENT SET OUT IN PARAGRAPH 2 BELOW, AFROX
HEALTHCARE FOR A CONSIDERATION, AS AT 1 APRIL 1999 ("THE EFFECTIVE DATE"), OF
R626 067 618. THE PURCHASE CONSIDERATION WILL BE SATISFIED BY THE ALLOTMENT AND
ISSUE OF 155 399 557 NEW PRESMED ORDINARY SHARES ("THE CONSIDERATION SHARES")
AT 312 CENTS PER SHARE AND THE BALANCE BEING PAYABLE ON AN INTEREST-BEARING
LOAN ACCOUNT OWING TO AFROX ("THE CONSIDERATION LOAN"). THIS LOAN BEARS
INTEREST FROM THE EFFECTIVE DATE AT 1,5% ABOVE THE 90 DAY BA RATE OF STANDARD
BANK OF SOUTHERN AFRICA LIMITED AND IS REPAYABLE BY 31 MARCH 2002. THE
CONSIDERATION SHARES WILL RANK PARI PASSU WITH THE EXISTING PRESMED ORDINARY
SHARES, BUT WILL HOWEVER NOT RANK FOR THE SPECIAL DIVIDEND REFERRED TO IN
PARAGRAPH 7.1 BELOW ("THE SPECIAL DIVIDEND").
2. CONDITIONS PRECEDENT TO THE MERGER
THE MERGER IS STILL SUBJECT TO, INTER ALIA, THE FOLLOWING CONDITIONS PRECEDENT
BEING FULFILLED BY 15 NOVEMBER 1999:
- THE APPROVAL THEREOF BY PRESMED SHAREHOLDERS AND DEBENTURE HOLDERS
(COLLECTIVELY "THE PRESMED EQUITY HOLDERS") AT SEPARATE MEETINGS; AND
- THE APPROVAL THEREOF BY THE AFROX SHAREHOLDERS IN GENERAL MEETING. THE BOC
GROUP PLC, AFROX'S ULTIMATE HOLDING COMPANY, A COMPANY REGISTERED IN THE UNITED
KINGDOM, WHICH HOLDS 56% OF THE ISSUED SHARES OF AFROX, HAS UNDERTAKEN TO VOTE
IN FAVOUR OF THE RESOLUTION IN TERMS OF WHICH THE MERGER IS TO BE APPROVED.
3. OFFERS TO PRESMED SHAREHOLDERS AND DEBENTURE HOLDERS
ON THE MERGER BECOMING UNCONDITIONAL AND THE ISSUE OF THE CONSIDERATION SHARES,
AFROX WILL HOLD 76,5% (DIRECTLY AND INDIRECTLY) OF PRESMED AND WILL BE
EXTENDING A MANDATORY EX DIVIDEND OFFER TO THE SHAREHOLDERS OF PRESMED AT 312
CENTS PER SHARE. A COMPARABLE OFFER WILL BE MADE TO THOSE PRESMED DEBENTURE
HOLDERS WHO HAVE ELECTED NOT TO ACCEPT THE DEBENTURE CONVERSION OPTION ("THE
REMAINING DEBENTURE HOLDERS") REFERRED TO IN PARAGRAPH 6 BELOW, AT 549 CENTS
PER DEBENTURE PLUS ACCRUED INTEREST AT A RATE OF 12% PER ANNUM APPLIED TO THE
ISSUE PRICE OF THE DEBENTURES OF 250 CENTS EACH FROM 1 MARCH 1999 TO THE DATE
OF PAYMENT IN TERMS OF THE OFFER.
A CIRCULAR CONTAINING FULL DETAIL OF THE OFFERS ("THE AFROX OFFERS") WILL BE
POSTED TO PRESMED SHAREHOLDERS AND THE REMAINING DEBENTURE HOLDERS AS SOON AS
POSSIBLE AFTER THE MERGER BECOMING UNCONDITIONAL.
BOE HAS CONFIRMED TO THE SECURITIES REGULATION PANEL THAT AFROX WILL HAVE
SUFFICIENT CASH RESOURCES TO IMPLEMENT THE AFROX OFFERS IN FULL. CERTAIN
PRESMED EQUITY HOLDERS, HOLDING 41 627 462 AND 1 259 848 PRESMED SHARES AND
DEBENTURES RESPECTIVELY, HAVE UNDERTAKEN NOT TO ACCEPT THE AFROX OFFERS IN
RESPECT OF THE PRESMED SHARES AND DEBENTURES SO HELD.
4. BOARD RECONSTITUTION AND CHANGE OF NAME
UPON THE IMPLEMENTATION OF THE MERGER THE BOARD OF DIRECTORS OF PRESMED WILL BE
RECONSTITUTED TO COMPRISE MESSRS RT VICE (CHAIRMAN), RL HOGBEN (MANAGING
DIRECTOR), JM MARRIOTT, DMJ NCUBE AND CJPG VAN ZYL.
IT IS PROPOSED THAT THE NAME OF PRESMED BE CHANGED TO AFROX HEALTHCARE LIMITED
("THE CHANGE OF NAME"). IT IS CURRENTLY ANTICIPATED THAT THE CHANGE OF NAME
WILL BECOME EFFECTIVE ON MONDAY, 4 OCTOBER 1999.
5. OPINIONS ON THE MERGER
BOE AND TBB HAVE CONCLUDED THEIR SEPARATE ASSESSMENTS OF THE TERMS AND
CONDITIONS OF THE MERGER AND THEIR RESPECTIVE OPINIONS ARE INCLUDED IN THE
CIRCULARS MAILED TO AFROX SHAREHOLDERS AND PRESMED EQUITY HOLDERS REFERRED TO
IN PARAGRAPH 11 BELOW.
6. DEBENTURE CONVERSION OPTION
IN TERMS OF A PROPOSED AMENDMENT TO THE DEBENTURE TRUST DEED, PRESMED'S
DEBENTURE HOLDERS WILL BE AFFORDED THE OPTION TO CONVERT ALL OR ANY OF THEIR
DEBENTURES INTO PRESMED ORDINARY SHARES IN THE RATIO OF 176 NEW PRESMED
ORDINARY SHARES FOR EVERY 100 DEBENTURES HELD ("THE DEBENTURE CONVERSION
OPTION"). THE PROPOSED AMENDMENT OF THE DEBENTURE TRUST DEED RELATING TO THE
DEBENTURE CONVERSION OPTION WILL, IF APPROVED, BE IMPLEMENTED PRIOR TO THE
RECORD DATE FOR THE SPECIAL DIVIDEND REFERRED TO IN PARAGRAPH 7 BELOW AND WILL
ACCORDINGLY RESULT IN THOSE DEBENTURE HOLDERS, WHO ELECT THE DEBENTURE
CONVERSION OPTION, BECOMING ENTITLED TO PARTICIPATE IN THE SPECIAL DIVIDEND.
7. SPECIAL DIVIDEND AND PAYMENT OF DEBENTURE INTEREST
7.1 SPECIAL DIVIDEND
FOLLOWING THE MERGER BECOMING UNCONDITIONAL, A SPECIAL DIVIDEND, COMPRISING A
CASH DIVIDEND OF R7 MILLION, WILL BE DECLARED TO PRESMED SHAREHOLDERS
REGISTERED AS SUCH ON THE FIRST FRIDAY FOLLOWING THE MERGER BECOMING
UNCONDITIONAL OR, IF THAT FRIDAY IS A PUBLIC HOLIDAY THE FRIDAY THEREAFTER
("THE RECORD DATE"), WHICH, BASED ON CURRENT TIMING, IS ENVISAGED TO BE FRIDAY,
10 SEPTEMBER 1999. DEPENDING ON THE NUMBER OF DEBENTURES BEING CONVERTED IN
TERMS OF THE DEBENTURE CONVERSION OPTION, THE DIVIDEND WILL AMOUNT TO BETWEEN
10,51 AND 11,38 CENTS PER PRESMED ORDINARY SHARE.
7.2 PAYMENT OF DEBENTURE INTEREST
THE IMPLEMENTATION OF THE MERGER WILL RESULT IN THE FINANCIAL YEAR-END OF
PRESMED BEING CHANGED TO 30 SEPTEMBER. PURSUANT THERETO, THE AUDITORS OF
PRESMED HAVE DETERMINED, IN TERMS OF THE DEBENTURE TRUST DEED, THE FOLLOWING
AMENDMENTS:
- INTEREST IN RESPECT OF THE SIX MONTHS TO 31 AUGUST 1999 WILL BE PAYABLE FOR
THE SEVEN MONTHS FROM 1 MARCH 1999 TO 30 SEPTEMBER 1999;
- IN FUTURE, INTEREST WILL BE PAYABLE FOR THE SIX MONTHS ENDING 31 MARCH AND
30 SEPTEMBER FROM THE YEAR 2000; AND
- ALL DEBENTURES NOT OPTIONALLY CONVERTED WILL BE AUTOMATICALLY CONVERTED INTO
ORDINARY SHARES WITH EFFECT FROM 1 OCTOBER OF THE YEAR FOLLOWING THE FINANCIAL
YEAR IN RESPECT OF WHICH THE ORDINARY DIVIDEND PER SHARE IS EQUAL TO OR EXCEEDS
17,045 CENTS PER SHARE.
8. FINANCIAL EFFECTS ON PRESMED
8.1 EARNINGS PER SHARE
BASED ON:
- PRESMED'S AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 1999 AND AFROX
HEALTHCARE'S UNAUDITED RESULTS FOR THE 12 MONTHS ENDED 31 MARCH 1999;
- THE PROFIT FORECAST OF PRESMED AS RECONSTITUTED AFTER THE MERGER FOR THE
PERIOD 1 OCTOBER 1999 TO 30 SEPTEMBER 2000 (BEING THE FIRST FULL FINANCIAL YEAR
FOLLOWING THE IMPLEMENTATION OF THE MERGER);
- THE ISSUE OF 155,4 MILLION PRESMED CONSIDERATION SHARES PURSUANT TO THE
MERGER BECOMING UNCONDITIONAL RESULTING IN AN ISSUED ORDINARY SHARE CAPITAL OF
216,9 MILLION SHARES AND THE FULLY DILUTED ISSUED SHARE CAPITAL (IE AFTER
CONVERSION OF THE PRESMED DEBENTURES) OF 222,0 MILLION SHARES; AND
- AN AFTER-TAX INTEREST ADJUSTMENT TO THE PRO FORMA HISTORIC RESULTS FOR THE
TWELVE MONTHS TO 31 MARCH 1999 TO REFLECT A NORMALISED LEVEL OF FINANCIAL
GEARING BASED ON THE CAPITAL STRUCTURE OF AFROX HEALTHCARE AS AT 1 APRIL 1999
AS ADJUSTED FOR THE CONSIDERATION LOAN PAYABLE BY PRESMED TO AFROX,
THE EFFECTS OF THE MERGER ON PRESMED'S EARNINGS PER SHARE WILL BE AS FOLLOWS:
HISTORIC FORECAST
12 MONTHS TO YEAR ENDING
31 MARCH 1999 30 SEPTEMBER 2000
PRO FORMA
(CENTS PER SHARE) BEFORE AFTER % CHANGE BEFORE AFTER % CHANGE
HEADLINE
EARNINGS PER
ORDINARY SHARE 50,0 47,0 (6,0) 62,6 65,2 4,2
FULLY DILUTED
HEADLINE
EARNINGS PER
SHARE 47,1 46,1 (2,1) 58,7 63,9 8,9
THE DIRECTORS OF AFROX HEALTHCARE AND PRESMED ENVISAGE THAT FUTURE BENEFITS
RELATING TO SYNERGIES AND RATIONALISATION WILL BE SUBSTANTIAL. A REPORTING
ACCOUNTANTS' REPORT ON THE ABOVE FORECAST IS INCLUDED AND FORMS PART OF THE
CIRCULAR TO PRESMED EQUITY HOLDERS ("THE PRESMED CIRCULAR") REFERRED TO IN
PARAGRAPH 11 BELOW. THE PRESMED CIRCULAR WAS INCLUDED FOR INFORMATION PURPOSES
IN THE DISPOSAL CIRCULAR WHICH WAS POSTED TO AFROX SHAREHOLDERS ON 12 AUGUST
1999.
8.2 TANGIBLE NET ASSET VALUE PER SHARE
BASED ON THE AUDITED CONSOLIDATED BALANCE SHEET OF PRESMED AS AT 28 FEBRUARY
1999 AND THE UNAUDITED CONSOLIDATED BALANCE SHEET OF AFROX HEALTHCARE AS AT 31
MARCH 1999 AND ON THE FULLY DILUTED ISSUED SHARE CAPITAL OF 222 MILLION PRESMED
SHARES, THE EFFECTS OF THE MERGER ON PRESMED'S TANGIBLE NET ASSET VALUE PER
SHARE ARE AS FOLLOWS:
(CENTS PER SHARE) BEFORE AFTER % CHANGE
TANGIBLE NET ASSET
VALUE PER ORDINARY SHARE 437,8 332,4 (24,1)
TANGIBLE FULLY DILUTED
NET ASSET VALUE PER
ORDINARY SHARE 415,2 328,1 (21,0)
8.3 FINANCIAL GEARING
BASED ON THE BALANCE SHEETS OF PRESMED AND AFROX HEALTHCARE REFERRED TO IN
PARAGRAPH 8.2 ABOVE AND THE CONSIDERATION LOAN, THE MERGED ENTITY'S PRO FORMA
DEBT:EQUITY RATIO WOULD HAVE INCREASED FROM 7,5% TO 35,7% IF CAPITALISED
PROPERTY FINANCE LEASES OF AFROX HEALTHCARE WERE TO BE TREATED AS BORROWINGS.
EXCLUDING CAPITALISED PROPERTY FINANCE LEASES, THE PRO FORMA DEBT:EQUITY RATIO
WOULD HAVE BEEN 23,8%.
9. FINANCIAL EFFECTS ON AFROX
WITH EFFECT FROM 1 APRIL 1999, AFROX ACQUIRED A 55% INTEREST IN LIFECARE GROUP
HOLDINGS LIMITED ("LIFECARE") FROM LIFECON INVESTMENTS LIMITED ("THE LIFECARE
TRANSACTION"). REAL AFRICA HOLDINGS LIMITED, AN EMPOWERMENT HOLDING COMPANY,
HOLDS THE REMAINING 45% OF LIFECARE. LIFECARE'S MAIN BUSINESS IS THE PROVISION
OF SPECIALISED HEALTHCARE SERVICES FOR CHRONIC PATIENTS. IN ADDITION, LIFECARE,
PRIOR TO THE IMPLEMENTATION OF THE MERGER, HAS AN INTEREST OF APPROXIMATELY 40%
IN THE ISSUED ORDINARY SHARE CAPITAL OF PRESMED.
THE TABLE BELOW SETS OUT THE PRO FORMA EFFECTS OF THE LIFECARE TRANSACTION AND
THE MERGER ON THE EARNINGS AND HEADLINE EARNINGS PER AFROX SHARE FOR THE TWELVE
MONTHS ENDED 31 MARCH 1999 AND THE NET ASSET VALUE PER AFROX SHARE AS AT 31
MARCH 1999.
PRO FORMA
AFTER THE PRO FORMA
ACTUAL LIFECARE AFTER %
BEFORE TRANSACTION THE MERGER CHANGE
(CENTS PER SHARE) (A) (B) (C) (C-A)/(A)
TOTAL EARNINGS 71 72 73 2,8
HEADLINE EARNINGS 77 80 81 5,2
NET ASSET VALUE 452 452 460 1,8
NOTES
(I) THE PRO FORMA COLUMN IS BASED ON THE FOLLOWING ASSUMPTIONS:
EARNINGS
THE PERIODS USED TO CALCULATE EARNINGS FOR THE PRO FORMA EFFECT OF THE MERGER
FOR THE RESPECTIVE COMPANIES ARE AS FOLLOWS:
AFROX YEAR ENDED 31 MARCH 1999 (UNAUDITED)
LIFECARE YEAR ENDED 31 MARCH 1999 (AUDITED)
PRESMED YEAR ENDED 28 FEBRUARY 1999 (AUDITED)
(II) IT IS ASSUMED THAT THE AFROX SHAREHOLDING IN PRESMED WILL NOT BE
INCREASED BY THE AFROX OFFERS.
(III) THE AVERAGE NUMBER OF AFROX SHARES IN ISSUE IS 310,3 MILLION.
10. SALIENT DATES
THE IMPLEMENTATION DATE OF THE MERGER IS DEPENDENT ON THE DATE UPON WHICH ALL
OF THE CONDITIONS PRECEDENT TO WHICH THE MERGER IS SUBJECT, ARE FULFILLED.
THESE CONDITIONS INCLUDE AFROX SHAREHOLDERS' AND PRESMED EQUITY HOLDERS'
APPROVALS AT SEPARATE MEETINGS TO BE HELD ON FRIDAY, 3 SEPTEMBER 1999. THE
SALIENT DATES PERTAINING TO THE MERGER ARE AS FOLLOWS:
1999
ANNUAL GENERAL MEETING OF PRESMED HELD
AT 12:30 ON MONDAY, 16 AUGUST
PROXY FORMS FOR THE GENERAL MEETING OF
SHAREHOLDERS TO BE RECEIVED BY 11:30 ON WEDNESDAY, 1 SEPTEMBER
PROXY FORMS FOR THE SEPARATE MEETING
OF DEBENTURE HOLDERS TO BE RECEIVED
BY 12:00 ON WEDNESDAY, 1 SEPTEMBER
GENERAL MEETING OF SHAREHOLDERS OF
PRESMED HELD AT 11:30 ON FRIDAY, 3 SEPTEMBER
SEPARATE MEETING OF DEBENTURE HOLDERS
HELD AT 12:00 (OR IMMEDIATELY AFTER
THE CONCLUSION OF THE GENERAL MEETING,
WHICHEVER IS THE LATER TIME) ON FRIDAY, 3 SEPTEMBER
LAST DAY FOR DEBENTURE HOLDERS TO
ELECT THE DEBENTURE CONVERSION OPTION
BY 14:30 ON FRIDAY, 3 SEPTEMBER
THE DATES AND EVENTS THAT FOLLOW ARE
BASED ON THE ASSUMPTION THAT ALL OF THE
CONDITIONS PRECEDENT WILL HAVE BEEN
FULFILLED BY FRIDAY, 3 SEPTEMBER 1999
LISTING OF CONVERTED DEBENTURES TERMINATES
(16:30) ON MONDAY, 6 SEPTEMBER
PRESMED SHARES ALLOTTED AND ISSUED TO
DEBENTURE HOLDERS WHO HAVE ELECTED THE
DEBENTURE CONVERSION OPTION, AND
LISTED ON TUESDAY, 7 SEPTEMBER
AFROX'S OFFERS OPEN (09:30) ON FRIDAY, 10 SEPTEMBER
LAST DAY FOR EXISTING PRESMED SHAREHOLDERS
TO BE REGISTERED AS SUCH IN ORDER
TO PARTICIPATE IN THE SPECIAL DIVIDEND
(16:30) ON FRIDAY, 10 SEPTEMBER
LAST DAY FOR EXISTING PRESMED EQUITY
HOLDERS TO BE REGISTERED AS SUCH IN
ORDER TO BE ENTITLED TO PARTICIPATE IN
THE AFROX OFFERS (16:30) ON FRIDAY, 10 SEPTEMBER
SPECIAL DIVIDEND PAID ON TUESDAY, 14 SEPTEMBER
PRESMED CONSIDERATION SHARES ISSUED
AND LISTED ON TUESDAY, 14 SEPTEMBER
AFROX OFFERS CLOSE (14:30) ON FRIDAY, 1 OCTOBER
LAST DAY FOR PRESMED EQUITY HOLDERS TO
SURRENDER THEIR DOCUMENTS OF TITLE IN
RESPECT OF THE CHANGE OF NAME ON FRIDAY, 1 OCTOBER
LAST DAY ON WHICH EXISTING DOCUMENTS OF
TITLE UNDER THE NAME "PRESIDENT MEDICAL
INVESTMENTS LIMITED" ARE GOOD FOR DELIVERY
ON THE JSE ON FRIDAY, 1 OCTOBER
THE CHANGE OF NAME BECOMES EFFECTIVE AND
THE COMPANY'S LISTING AMENDED TO REFLECT
ITS NEW NAME "AFROX HEALTHCARE
LIMITED" ON MONDAY, 4 OCTOBER
ALL OUTSTANDING CHEQUES (WHERE APPLICABLE
IN RESPECT OF THE AFROX OFFERS) AND
REPLACEMENT AND BALANCE SHARE AND DEBENTURE
CERTIFICATES (WHERE APPLICABLE) POSTED
TO SHAREHOLDERS AND DEBENTURE HOLDERS
ENTITLED THERETO BY TUESDAY, 5 OCTOBER
NOTE
ANY AMENDMENTS TO THE ABOVE DATES WILL BE NOTIFIED TO AFROX SHAREHOLDERS AND
PRESMED EQUITY HOLDERS IN THE PRESS.
11. CIRCULARS TO SHAREHOLDERS AND DEBENTURE HOLDERS
CIRCULARS TO THE PRESMED EQUITY HOLDERS AND THE SHAREHOLDERS OF AFROX,
CONTAINING FULL DETAIL OF THE MERGER, THE DEBENTURE CONVERSION OPTION, THE
SPECIAL DIVIDEND AND THE CHANGE OF NAME, ACCOMPANIED BY NOTICES OF GENERAL
MEETINGS OF PRESMED AND AFROX SHAREHOLDERS, AND A SEPARATE MEETING OF PRESMED
DEBENTURE HOLDERS, WERE POSTED ON 12 AUGUST 1999.
JOHANNESBURG
13 AUGUST 1999
MERCHANT BANK TO AFROX
BOE MERCHANT BANK
A DIVISION OF BOE BANK LIMITED
CO REG 51/00847/06
MERCHANT BANK TO PRESMED
THE BUSINESS BANK
LEGAL ADVISOR TO AFROX
BOWMAN GILFILLAN INC
REG NO 98/21409/21
REPORTING ACCOUNTANTS AND AUDITORS TO AFROX AND PRESMED
PRICEWATERHOUSECOOPERS INC
CHARTERED ACCOUNTANTS (SA)
(REGISTERED ACCOUNTANTS AND AUDITORS)
REG NO 98/12055/21
LEGAL ADVISOR TO PRESMED
DYASON
SPONSORING BROKERS TO AFROX
HSBC SIMPSON MCKIE (PTY) LIMITED
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
REG NO 84/01736/07
WIKUS HANEKOM
MEMBER NAMIBIA STOCK EXCHANGE
TRADING AS
HSBC SIMPSON MCKIE
SPONSORING BROKERS TO PRESMED
PLJ FINANCIAL SERVICES LIMITED
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
REG NO 69/13227/06
BOE SECURITIES (PTY) LIMITED
(REG NO 96/15589/07)
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
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