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THE EDUCATION INVESTMENT CORPORATION LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 95/12378/06)
("EDUCOR")
NASPERS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1904/001431/06)
("NASPERS")
UNBUNDLING AND LISTING OF A NEW EDUCATION COMPANY ("NEW EDUCOR") HOLDING
EDUCOR'S EDUCATION BUSINESSES AND INTRODUCTION OF NASPERS AS A STRATEGIC
SHAREHOLDER IN NEW EDUCOR
1. INTRODUCTION
FURTHER TO THE CAUTIONARY ANNOUNCEMENTS PUBLISHED BY EDUCOR DATED 17 NOVEMBER
1999, 15 DECEMBER 1999 AND 13 JANUARY 2000, SHAREHOLDERS OF EDUCOR AND NASPERS
ARE ADVISED THAT EDUCOR HAS ENTERED INTO A BINDING HEADS OF AGREEMENT WITH
NASPERS IN TERMS OF WHICH NASPERS WILL BECOME A 40% SHAREHOLDER IN A NEW
COMPANY HOLDING EDUCOR'S EDUCATION BUSINESSES, NEW EDUCOR, WHICH WILL BE
UNBUNDLED BY EDUCOR AND SEPARATELY LISTED ON THE JOHANNESBURG STOCK EXCHANGE
("JSE") (THE "TRANSACTION").
2. THE TRANSACTION
2.1 SUMMARY OF THE TRANSACTION
SUBJECT TO THE FULFILMENT OF THE CONDITIONS PRECEDENT SET OUT IN PARAGRAPH 2.4
BELOW:
* EDUCOR WILL CONSOLIDATE ALL OF ITS EDUCATION BUSINESSES UNDER NEW EDUCOR;
* NEW EDUCOR WILL ACQUIRE THE BUSINESS OF NATIONAL PRIVATE COLLEGES ("NPC")
FROM NASPERS FOR A PURCHASE PRICE OF R100 MILLION, TO BE DISCHARGED BY THE
ISSUE TO NASPERS OF NEW EDUCOR SHARES, SUCH THAT NASPERS WILL HOLD 10,3% OF THE
ENLARGED NEW EDUCOR;
* NASPERS WILL ACQUIRE A FURTHER 29,7% OF THE SHARES IN NEW EDUCOR FROM EDUCOR
FOR A CONSIDERATION OF R288 MILLION, PAYABLE IN CASH. NASPERS WILL THEN OWN
40% OF NEW EDUCOR;
* EDUCOR WILL UNBUNDLE ITS 60% SHAREHOLDING IN NEW EDUCOR TO EDUCOR
SHAREHOLDERS, AND NEW EDUCOR WILL OBTAIN A SEPARATE LISTING ON THE JSE.
2.2 RATIONALE FOR THE TRANSACTION
WITHIN THE EDUCATION INDUSTRY THERE IS A STRONG MOVEMENT TOWARDS DISTANCE AND
DISTRIBUTED LEARNING. DISTANCE LEARNING IS BECOMING INTERNET BASED, AND
DISTRIBUTED LEARNING IS MOVING TOWARDS USING ELECTRONIC DELIVERY TECHNOLOGY AND
DISTRIBUTION MECHANISMS WHICH ALLOWS EDUCATION TO BE RECEIVED EITHER AT
DISTRIBUTED POINTS OR IN THE COMFORT OF THE HOME.
EDUCATION IS LIKELY TO DEVELOP INTO A COMBINATION OF PRINTED MATTER AND
INTERACTIVE, INTERNET BASED EDUCATION. THIS SHOULD CREATE SUBSTANTIAL
OPPORTUNITIES WITHIN EDUCATION.
DISTRIBUTED FACILITIES WILL, PARTICULARLY IN THE SOUTH AFRICAN CONTEXT, PROVIDE
EDUCATION TO RESOURCE CENTRES ENSURING THAT ALL PEOPLE WISHING TO STUDY HAVE
ACCESS TO THE TECHNOLOGY REQUIRED. THE ABILITY OF EDUCOR'S TRADITIONAL "BRICKS
AND MORTAR" BUSINESS TO ACCESS THE ENABLING TECHNOLOGY PROVIDED BY NASPERS WILL
ALLOW NEW EDUCOR TO DEVELOP EDUCATIONAL PRODUCTS SPECIFICALLY SUITED TO
INTERACTIVE ELECTRONIC MEDIA, ALLOWING NEW EDUCOR TO FULFIL THIS GOAL.
NASPERS IS CURRENTLY INVOLVED IN PRIVATE EDUCATION THROUGH ITS INVESTMENT IN
NPC. NPC IS A DISTANCE LEARNING BUSINESS OPERATING UNDER THE LYCEUM, SUCCESS
AND MENTOR BRANDS THROUGHOUT SOUTHERN AFRICA. THE TRANSACTION WILL PROVIDE
NASPERS WITH A SIGNIFICANT INTEREST IN THE PRIVATE EDUCATION BUSINESS IN SOUTH
AFRICA.
THE MERGER OF EDUCOR'S AND NPC'S DISTANCE LEARNING OPERATIONS WILL CREATE
SYNERGIES AND THE LARGER STUDENT BASE WILL ALLOW EXTENSIVE CURRICULUM
DEVELOPMENT.
2.3 DESCRIPTION OF THE TRANSACTION
REORGANISATION OF EDUCOR'S EDUCATION BUSINESSES
IN TERMS OF SECTION 39 OF THE TAXATION LAWS AMENDMENT ACT (ACT 20 OF 1994) AS
AMENDED, EDUCOR'S EDUCATION BUSINESSES WILL BE RATIONALISED INTO A NEW HOLDING
COMPANY, NEW EDUCOR, WHICH WILL INITIALLY BE WHOLLY OWNED BY EDUCOR. WARRANTIES
USUAL IN A TRANSACTION OF THIS NATURE SHALL BE PROVIDED TO NEW EDUCOR BY EDUCOR
ACQUISITION OF NPC
WITH EFFECT FROM 31 DECEMBER 1999, NEW EDUCOR WILL ACQUIRE NPC FROM NASPERS IN
CONSIDERATION FOR THE ISSUE OF NEW EDUCOR SHARES SUCH THAT NASPERS WILL HOLD
10,3% OF THE ENLARGED NEW EDUCOR. WARRANTIES USUAL IN A TRANSACTION OF THIS
NATURE SHALL BE PROVIDED TO NEW EDUCOR BY NASPERS.
NASPERS' ACQUISITION OF A STRATEGIC STAKE IN NEW EDUCOR
WITH EFFECT FROM 31 DECEMBER 1999, NASPERS WILL ACQUIRE A FURTHER 29,7% OF THE
SHARES IN NEW EDUCOR FOR A CASH CONSIDERATION OF R288 MILLION, WHICH WILL
INCREASE NASPERS' STAKE IN NEW EDUCOR TO 40%.
A NON-REMUNERATORY MANAGEMENT CONTRACT BETWEEN NEW EDUCOR AND NASPERS WILL
ENABLE NASPERS TO DRIVE THE EXPANSION OF NEW EDUCOR'S EDUCATIONAL PRODUCTS
ACROSS THE VARIOUS ELECTRONIC MEDIA PLATFORMS WITHIN THE NASPERS GROUP.
UNBUNDLING OF NEW EDUCOR
IN TERMS OF SECTION 60 OF THE INCOME TAX ACT (ACT 113 OF 1993) AS AMENDED,
EDUCOR WILL UNBUNDLE ITS 60% SHAREHOLDING IN NEW EDUCOR TO EDUCOR SHAREHOLDERS,
AND NEW EDUCOR WILL BE LISTED SEPARATELY ON THE JSE. THE DISTRIBUTION WILL BE
ACHIEVED BY WAY OF A DIVIDEND IN SPECIE OUT OF NON-DISTRIBUTABLE RESERVES AND A
REPAYMENT OF CAPITAL IN TERMS OF SECTION 90 OF THE COMPANIES ACT (ACT 61 OF
1973), AS AMENDED.
EDUCOR SHAREHOLDERS WILL BE ADVISED OF THE RATIO IN WHICH NEW EDUCOR SHARES
WILL BE UNBUNDLED IN DUE COURSE. SUBJECT TO THE APPROVAL OF THE JSE AND THE
FULFILMENT OF THE CONDITIONS PRECEDENT, NEW EDUCOR SHARES WILL BE LISTED IN THE
EDUCATION AND STAFFING SECTOR OF THE JSE LIST.
2.4 CONDITIONS PRECEDENT
THE TRANSACTION IS CONDITIONAL UPON THE FULFILMENT OF THE FOLLOWING CONDITIONS
PRECEDENT:
* THE PASSING OF THE SPECIAL AND ORDINARY RESOLUTIONS NECESSARY TO IMPLEMENT
THE TRANSACTION BY THE EDUCOR SHAREHOLDERS IN GENERAL MEETING, INCLUDING THE
PASSING OF A RESOLUTION BY A MAJORITY OF THE INDEPENDENT SHAREHOLDERS OF EDUCOR
IN TERMS OF WHICH THEY WAIVE THEIR RIGHT TO RECEIVE A MANDATORY OFFER FROM
NASPERS IN RESPECT OF THE NEW EDUCOR SHARES TO BE RECEIVED BY THEM PURSUANT TO
THE UNBUNDLING;
* THE REGISTRATION BY THE REGISTRAR OF COMPANIES OF THE SPECIAL RESOLUTIONS
PASSED AT THE GENERAL MEETING;
* THAT THE RULINGS RECEIVED FROM THE SRP TO THE EFFECT THAT THERE IS NO
OBLIGATION ON NASPERS TO EXTEND A MANDATORY OFFER, AS CONTEMPLATED ABOVE,
REMAIN IN FULL FORCE AND EFFECT FOR A PERIOD OF 30 DAYS AFTER THE DATE ON WHICH
THE SAID SHAREHOLDERS' APPROVAL IS OBTAINED;
* THE APPROVAL OF THE TRANSACTION BY THE JSE, THE SECURITIES REGULATION PANEL,
THE SOUTH AFRICAN RESERVE BANK, THE SOUTH AFRICAN REVENUE SERVICES AND ANY
OTHER APPLICABLE REGULATORY AUTHORITY; AND
* THE SATISFACTORY CONCLUSION OF DUE DILIGENCE INVESTIGATIONS INTO NEW EDUCOR
AND NPC BY NASPERS AND EDUCOR RESPECTIVELY.
THE CONDITIONS PRECEDENT ARE SUBJECT TO FULFILMENT BY CERTAIN DATES, THE LATEST
OF WHICH IS 8 JUNE 2000.
3. RECOMMENDATIONS AND OPINIONS
THE DIRECTORS OF EDUCOR ARE OF THE OPINION THAT THE TRANSACTION WILL BE
BENEFICIAL TO EDUCOR SHAREHOLDERS. ACCORDINGLY, THE DIRECTORS INTEND TO VOTE
IN FAVOUR OF THE SPECIAL AND ORDINARY RESOLUTIONS NECESSARY TO IMPLEMENT THE
TRANSACTION IN RESPECT OF THOSE EDUCOR SHARES OWNED BY THEM, AND THEY RECOMMEND
THAT EDUCOR SHAREHOLDERS VOTE IN FAVOUR OF SUCH SPECIAL AND ORDINARY
RESOLUTIONS.
4. FINANCIAL EFFECTS OF THE TRANSACTION
FINANCIAL EFFECTS OF THE TRANSACTION ON EDUCOR SHAREHOLDERS
CONSEQUENT UPON THE TRANSACTION, EDUCOR SHAREHOLDERS WILL HOLD SHARES IN EDUCOR
POST THE UNBUNDLING ("OLD EDUCOR") AND WILL IN ADDITION HOLD SHARES IN NEW
EDUCOR WHICH COMPRISES THEIR EFFECTIVE ENTITLEMENT TO EDUCOR'S 60% INTEREST IN
NEW EDUCOR.
THE TRANSACTION WILL HAVE THE FOLLOWING IMPACT ON THE NET ASSET VALUE ("NAV"),
NET TANGIBLE NET ASSET VALUE ("NTAV"), EARNINGS PER SHARE ("EPS") AND HEADLINE
EARNINGS PER SHARE ("HEADLINE EPS") ATTRIBUTABLE TO EDUCOR SHAREHOLDERS:
C PER SHARE BEFORE UNBUNDLING AFTER UNBUNDLING INCREASE / DECREASE %
NAV 229.0 365.9 59.8%
OLD EDUCOR 229.0 237.1 3.5%
NEW EDUCOR N/A 128.8 N/A
NTAV 118.0 278.5 136.0%
OLD EDUCOR 118.0 149.7 26.9%
NEW EDUCOR N/A 128.8 N/A
EPS 13.5 16.2 20.0%
OLD EDUCOR 13.5 13.1 -3.0%
NEW EDUCOR N/A 3.1 N/A
HEADLINE EPS 15.8 18.2 15.2%
OLD EDUCOR 15.8 14.7 -7.0%
NEW EDUCOR N/A 3.5 N/A
THE FIGURES IN THE "BEFORE" COLUMN ARE BASED ON THE UNAUDITED INTERIM RESULTS
FOR EDUCOR FOR THE SIX MONTH PERIOD TO 30 JUNE 1999.
THE FIGURES IN THE "AFTER" COLUMN REFER TO THE NAV, NTAV, EPS AND HEADLINE EPS
ATTRIBUTABLE OLD EDUCOR PLUS 60% OF THE NAV, NTAV, EPS AND HEADLINE EPS
ATTRIBUTABLE TO NEW EDUCOR.
THE TRANSACTION IS NOT EXPECTED TO HAVE A MATERIAL FINANCIAL EFFECT ON NASPERS.
5. SALIENT DATES
IT IS ANTICIPATED THAT THE EDUCOR GENERAL MEETING TO CONSIDER AND APPROVE,
INTER ALIA, THE TRANSACTION AND THE WAIVER OF PRE-EMPTIVE RIGHTS IN RESPECT OF
THE ISSUE OF SHARES IN NEW EDUCOR TO NASPERS IN TERMS OF THE LISTING
REQUIREMENTS OF THE JSE, WILL BE ON OR ABOUT FRIDAY, 31 MARCH 2000. THE DATE
OF THE UNBUNDLING OF NEW EDUCOR SHARES AND THE DATE OF THE LISTING OF THE
SHARES IN NEW EDUCOR ON THE JSE ARE DEPENDENT ON THE FULFILMENT OF ALL
CONDITIONS PRECEDENT TO THE TRANSACTION.
6. DOCUMENTATION AND FURTHER ANNOUNCEMENTS
A CIRCULAR CONTAINING FULL DETAILS OF THE TRANSACTION AND INCORPORATING LISTING
PARTICULARS FOR NEW EDUCOR AND AMENDED LISTING PARTICULARS FOR EDUCOR, AND
CONVENING A GENERAL MEETING OF EDUCOR SHAREHOLDERS TO APPROVE THE TRANSACTION
AND THE WAIVER OF PRE-EMPTIVE RIGHTS IN RESPECT OF THE ISSUE OF SHARES IN NEW
EDUCOR TO NASPERS, WILL BE POSTED TO EDUCOR SHAREHOLDERS ON OR ABOUT 9 MARCH
2000.
THE DOCUMENTATION WILL CONTAIN THE AUDITED RESULTS OF EDUCOR FOR THE FINANCIAL
YEAR TO 31 DECEMBER 1999.
SANDTON
10 FEBRUARY 2000
FINANCIAL ADVISER TO EDUCOR
ROBERT FLEMING SOUTH AFRICA LIMITED
(REGISTRATION NUMBER 95/11812/06)
MERCHANT BANK TO NASPERS
AFRICAN MERCHANT BANK LIMITED
(REGISTRATION NUMBER 96/16470/06)
LEGAL ADVISER TO EDUCOR
RABIN, VAN DEN BERG & PELKOWITZ
LEGAL ADVISER TO NASPERS
JAN S DE VILLIERS & SON
JOINT SPONSORING BROKERS TO EDUCOR
HSBC SECURITIES (SOUTH AFRICA) (PTY) LIMITED
(REGISTRATION NUMBER 99/10899/07)
MERRILL LYNCH SOUTH AFRICA (PTY) LIMITED
(REGISTRATION NUMBER 95/01805/07)
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