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BIDVEST GROUP LIMITED - ANNOUNCEMENT
BIDVEST GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT ISIN: ZAE 000008132("Bidvest")
Proposal by Bidvest to acquire the entire issued stated capital and all the
issued preference shares in the share capital of McCarthy Limited ("McCarthy")
and further cautionary announcement
1. INTRODUCTION
Investec Bank Limited is authorised to announce that, further to the cautionary
announcement published on the Securities Exchange News Service ("SENS") of the
JSE Securities Exchange South Africa ("the JSE") on October 23 2003, Bidvest
has advised the board of directors of McCarthy ("the McCarthy board") that in
terms of an agreement concluded with ABN AMRO Bank N.V., ABSA Corporate and
Merchant Bank a division of ABSA Bank Limited, Nedbank Limited, FirstRand Bank
Limited, Investec Bank Limited, Societe Generale and Standard Corporate and
Merchant Bank a division of The Standard Bank of South Africa Limited ("the
consortium") ("the agreement") it intends to acquire the entire issued stated
capital of McCarthy ("the ordinary share offer") and all the issued preference
shares in the share capital of McCarthy ("the preference share acquisition"),
(collectively, "the transaction").
The transaction is subject, inter alia, to the conditions precedent set out in
paragraph 4 below ("conditions precedent"). The salient details of the
transaction are set out in this announcement.
2. RATIONALE FOR THE TRANSACTION
McCarthy provides Bidvest with an opportunity to enter into a major industry in
which Bidvest is currently not represented. Furthermore, McCarthy offers
Bidvest another distribution channel in which to get products to the market
efficiently, which will enable McCarthy to leverage off the Bidvest customer
base. McCarthy is a strong and credible brand with good management and a well
developed culture. Bidvest"s ability to bring financial and management focus
will enable McCarthy to grow in a decentralised and entrepreneurial environment.
3. THE TRANSACTION
3.1 The ordinary share offer
3.1.1 Terms of the ordinary share offer
In terms of the ordinary share offer, Bidvest will, subject to the fulfilment of
the conditions precedent, acquire the entire issued stated capital of McCarthy
("the McCarthy ordinary shares") from McCarthy shareholders at a price of 33
cents per McCarthy ordinary share, subject to 7.2.2 ("the ordinary share offer
price") which shall be payable in cash on the later of February 28 2004 and
the implementation of the transaction on the basis that no interim dividend is
declared in respect of the ordinary shares during the period from July 1 2003
to the implementation of the transaction. Interest will be levied on any amounts
not paid on February 28 2004.
The ordinary share offer will be implemented, either by way of a scheme of
arrangement in terms of Section 311 of the Companies Act (Act 61 of 1973), as
amended ("the Companies Act") between McCarthy and its shareholders ("the
scheme") or alternatively, by way of an offer, in terms of Section 440 of the
Companies Act ("the Section 440 offer").
3.1.2 Intention to invoke the provisions of section 440K of the Companies
Act
In the event that the ordinary share offer is implemented by means of the
Section 440 offer and should acceptances of the ordinary share offer by the
McCarthy shareholders representing not less than nine-tenths of the McCarthy
ordinary shares held by the McCarthy shareholders be obtained, Bidvest may, at
its election, invoke the provisions of Section 440K of the Companies Act and
compulsorily acquire the remaining McCarthy ordinary shares held by the McCarthy
minority ordinary shareholders.
3.1.3 Shareholders undertaking
The consortium collectively holding 1 794 425 497 McCarthy ordinary shares,
representing 88,27% of the McCarthy ordinary shares have, in writing,
irrevocably undertaken to vote in favour of the scheme or to accept the Section
440 offer, whichever is applicable.
3.2 The preference share acquisition
In terms of the agreement, Bidvest shall purchase 830 757 065 McCarthy
preference shares constituting 99,69% of all McCarthy preference shares in issue
from the consortium at a price of 33 cents per share (less the amount of the
December 2003 preference dividend) subject to 7.2.2 ("the preference share
acquisition price") which shall be payable in cash on the later of February 28
2004 and the implementation of the transaction, subject to the fulfilment of the
conditions precedent. Interest will be levied on any amounts not paid on
February 28 2004. In respect of the balance of the preference shares, Bidvest
shall make an offer in terms of the Securities Regulation Code on Takeovers and
Mergers and the Rules of the Securities Regulation Panel ("the SRP") to the
McCarthy minority preference shareholders.
4. CONDITIONS PRECEDENT
The transaction is conditional upon the fulfilment of certain conditions
precedent, including the following:
4.1 the obtaining of the written approval of each of the vehicle manufacturers
and licensors of McCarthy to the implementation of the transaction;
4.2 the obtaining of the approval, in so far as may be necessary, of the SRP,
the JSE, the South African Reserve Bank, the Financial Services Board and such
other relevant regulatory authorities; and
4.3 the obtaining of the approval of the Competition authorities.
5. DUE DILIGENCE
McCarthy has granted Bidvest the right to undertake a "black hole" due diligence
investigation in terms of which if it is discovered that the audited
consolidated financial statements of McCarthy for the year ended June 30 2003
are incorrect by a net amount in excess of R34,2m, then Bidvest may resile from
the agreement.
6. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The tables below set out the pro forma financial effects of the transaction on a
Bidvest shareholder.
Per Bidvest share Note Before the transaction After the transaction %
(cents) (cents) change
Earnings 1 448,6 490,0 9,3
Headline earnings 1 479,0 510,3 6,5
Net tangible asset
value 2 1 560,5 1 466,7 (6,0)
The pro forma financial effects have been prepared for illustrative purposes
only, in order to provide information on how the transaction might affect the
financial position of Bidvest shareholders and, because of its nature, may not
give a true reflection of the actual financial effects of the transaction. The
pro forma financial effects have been calculated on the basis set out below.
Notes:
1. The "Before" column reflects the earnings and headline earnings per Bidvest
share for the year ended June 30 2003 calculated on the basis of the weighted
average number of 308,1 million Bidvest shares in issue throughout the period.
The "After" column assumes that the transaction was implemented with effect from
July 1 2002 and incorporates the diluted earnings and the fully diluted
headline earnings of McCarthy for the year ended June 30 2003. Interest paid at
a rate of 7% per annum (after tax) has been provided for on the purchase
consideration.
2. The "Before" column reflects the net asset value per Bidvest share as at
June 30 2003, and is based on 302,7 million Bidvest shares in issue at June 30
2003. The "After" column assumes that the transaction was implemented on June
30 2003 and incorporates the net asset value of McCarthy as at June 30 2003.
No account has been taken of any personal taxes, which might be applicable to
Bidvest shareholders in the calculation of the above pro forma financial
effects.
7. SPECIAL ARRANGEMENTS
7.1 The consortium has undertaken to indemnify Bidvest against any loss,
liability, damage or expense which McCarthy may suffer or sustain as a result of
or which may be attributable to:
7.1.1 any claims which the creditors of the Retail Apparel Group Limited,
RAG Capital (Proprietary) Limited, the RAG Security Trust and Retail Apparel
(Proprietary) Limited (collectively, "the RAG Group") or the liquidators of
Retail Apparel (Proprietary) Limited ("RAP") may have against McCarthy and its
subsidiaries; and
7.1.2 the advance interim liquidation dividend received by McCarthy from RAP
on or about December 31 2002 and any interest thereon being recalled.
7.2 If, after the implementation of the transaction, McCarthy receives any
amounts in addition to the advance interim liquidation dividend referred to in
7.1.2 above from RAP or the RAG group, an amount equal to the net receipt
(including tax) by McCarthy shall be paid by Bidvest as follows:
7.2.1 up to the first R10 000 000 (including VAT), or such lesser sum which
the SRP may rule, thereof shall be paid to the consortium as an indemnity fee;
and
7.2.2 the balance, if any, shall be paid to the McCarthy ordinary
shareholders and the McCarthy preference shareholders pro rata to their
shareholdings in McCarthy, as at the appropriate date, by means of an increase
in the ordinary share offer price and an increase in the preference share
acquisition price.
8. FURTHER CAUTIONARY ANNOUNCEMENT
Bidvest shareholders are advised to continue to exercise caution when dealing in
their Bidvest shares until a further announcement regarding the transaction is
made.
Sandton
November 5 2003
Corporate adviser and lead sponsor to Bidvest
Investec Corporate Finance
Co Sponsor
Deutsche
Legal adviser to Bidvest
Edward, Nathan & Friedland
Adviser to the lead bank
FNB Corporate
Date: 05/11/2003 05:54:10 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department