To view the PDF file, sign up for a MySharenet subscription.

Standard Bank Group - Further Details In Respect Of The Proposed Introduction Of

Release Date: 18/08/2004 09:00
Code(s): SBK
Wrap Text

Standard Bank Group - Further Details In Respect Of The Proposed Introduction Of Direct Black Share Ownership To Standard Bank Group Standard Bank Group Limited (Incorporated in the Republic of South Africa) (Registration number 1969/017128/06) Share code: SBK Namibian share code: SNB ISIN: ZAE000038873 ("Standard Bank Group" or "the Company") FURTHER DETAILS IN RESPECT OF THE PROPOSED INTRODUCTION OF DIRECT BLACK SHARE OWNERSHIP TO STANDARD BANK GROUP 1. INTRODUCTION Standard Bank Group ordinary shareholders are referred to the announcement on 15 July 2004 relating to Standard Bank Group proposing to facilitate the acquisition of an effective 10% interest in its South African banking operations by a broad-based grouping of black entities ("the black ownership initiative"). The black ownership initiative participants comprise the following: * black strategic partners, being Safika Holdings (Proprietary) Limited and Shanduka Group (Proprietary) Limited (formerly Millennium Consolidated Investments (Proprietary) Limited); * trusts to be formed for the benefit of current, as well as future, black managers of Standard Bank Group"s subsidiaries (other than Liberty Group Limited ("Liberty Life") and its subsidiaries) and non-executive directors of Standard Bank Group ("the Managers Trusts"); and * regional business and community groups or a trust to be formed for the benefit of those groups. The above black ownership initiative participants are collectively referred to as "the black partners". Standard Bank Group also proposes that every employee of its subsidiaries worldwide, who is not a beneficiary under the Managers Trusts or is not a participant in Standard Bank Group"s share incentive scheme, will be awarded 100 Standard Bank Group ordinary shares ("General Staff Scheme"), to be held for his benefit by the Standard Bank Group General Staff Share Trust ("General Staff Trust"). To the extent that black employees are beneficiaries under this trust, this too will form part of the black ownership initiative. To enable the black ownership initiative to occur: * Standard Bank Group has established six wholly-owned subsidiaries (collectively referred to as "the SBG subsidiaries") whose sole purpose will be to acquire and own Standard Bank Group ordinary shares; * Standard Bank Group will subscribe for preference shares with a 20-year term in the capital of each of the SBG subsidiaries at an aggregate subscription price of R4.02 billion; * companies who employ the beneficiaries under the General Staff Scheme will provide approximately R127 million, in cash, to the General Staff Trust, as a benefit to the beneficiaries arising from their employment; * the SBG subsidiaries and the trustees of the General Staff Trust have together proposed a scheme of arrangement in terms of section 311 of the Companies Act, 1973 (Act 61 of 1973), as amended ("Companies Act"), between Standard Bank Group and its ordinary shareholders ("the scheme") for the acquisition by the SBG subsidiaries, in terms of section 89 of the Companies Act, and the General Staff Trust, of a total of approximately 102.3 million Standard Bank Group ordinary shares on a pro rata basis from ordinary shareholders of Standard Bank Group for an ex-dividend consideration of R40.50 per ordinary share ("the scheme consideration"). This represents a discount of 4.71% to the Standard Bank Group closing ordinary share price on Friday, 9 July 2004 of R42.50. After taking into account the interim dividend to be paid to Standard Bank Group ordinary shareholders on or about 13 September 2004 of 50.5 cents per ordinary share, the effective discount to the Standard Bank Group closing ordinary share price on Friday, 9 July 2004 is 3.57%. The aggregate consideration will be approximately R4.14 billion; * if the scheme is implemented, the SBG subsidiaries will acquire approximately 99.2 million Standard Bank Group ordinary shares and the General Staff Trust will acquire approximately 3.1 million Standard Bank Group ordinary shares; and * after the implementation of the scheme, the ordinary shares in the SBG subsidiaries will be sold by Standard Bank Group to the black partners. This announcement sets out further details relating to: * the important dates and times relevant to the scheme; * the pro forma financial effects of the scheme based on the interim results for the six-month period ended 30 June 2004; * the meetings required to implement the scheme, the black ownership initiative and the General Staff Scheme; and * the circular to Standard Bank Group ordinary shareholders. 2. IMPORTANT DATES AND TIMES 2004 Last day to trade Standard Bank Group ordinary shares on the JSE Securities Exchange South Africa ("JSE") in order to be recorded in the register of members of Standard Bank Group to vote at the scheme meeting on (note 2) Thursday, 2 September Record date to vote at the scheme meeting at 17:00 on Thursday, 9 September Last day for receipt of forms of proxy for the scheme meeting by 09:00 on (notes 3 and 4) Friday, 10 September Last day for receipt of forms of proxy for the general meeting by 10:00 on (note 5) Friday, 10 September Scheme meeting to be held at 09:00 on Monday, 13 September General meeting to be held at 10:00 or 10 minutes after the conclusion or adjournment of the scheme meeting, whichever is the later, on Monday, 13 September Announcement of results of the general scheme meeting and the scheme general meeting on SENS on or about Monday, 13 September Announcement of results of the general scheme meeting and the scheme general meeting in the press on or about Tuesday, 14 September Court hearing to sanction the scheme on Tuesday, 21 September If the scheme is sanctioned and implemented: Announcement on SENS regarding the sanctioning of the scheme on Tuesday, 21 September Announcement in the press regarding the sanctioning of the scheme on Wednesday, 22 September Expected last day to trade Standard Bank Group ordinary shares on the JSE in order for ordinary shareholders to be eligible to receive the scheme consideration on (note 6) Thursday, 23 September Expected first day to trade Standard Bank Group ordinary shares on the JSE ex entitlement to the scheme consideration on Monday, 27 September Expected record date, being the date on which ordinary shareholders must be recorded on the register of members of Standard Bank Group in order to be scheme participants and so become entitled to receive the scheme consideration, at 17:00 on Friday, 1 October Expected operative date of the scheme, at the commencement of trading on the JSE, on Monday, 4 October The scheme consideration expected to be transferred or posted (as the case may be), and new share certificates expected to be posted, to certificated scheme participants whose documents of title are received by the transfer secretaries of the Company before 12:00 on Friday, 1 October 2004, on or about Monday, 4 October or Failing receipt of documents of title before 12:00 on Friday, 1 October 2004, within five business days of receipt thereof by the transfer secretaries of the Company The scheme consideration expected to be credited to the dematerialised scheme participants" accounts held at their CSDP or broker and share balances updated Monday, 4 October Notes 1. The abovementioned times and dates are South African times and dates, and are subject to change. Any such change will be published on SENS and in the press. 2. Shareholders are advised that as trading in ordinary shares on the JSE is settled within the STRATE environment five business days following the trade, shareholders acquiring dematerialised shares after Thursday, 2 September 2004 will not be eligible to vote at the scheme meeting. 3. 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 chairperson of the scheme meeting by not later than 10 minutes before the scheme meeting is due to commence. 4. If the date of 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, provided that for the purposes of calculating the latest time by which forms of proxy must be received, Saturdays, Sundays and public holidays will be excluded. 5. If the date of the general 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 general meeting, provided that for the purposes of calculating the latest time by which forms of proxy must be received, Saturdays, Sundays and public holidays will be excluded. 6. Shareholders may not dematerialise or rematerialise their Standard Bank Group ordinary shares after Thursday, 23 September 2004. Dematerialisation and rematerialisation of Standard Bank Group ordinary shares will re- commence after Monday, 4 October 2004. 3. PRO FORMA FINANCIAL EFFECTS The illustrative pro forma financial effects set out below have been prepared to indicate to Standard Bank Group ordinary shareholders the impact of the scheme on the interim earnings per share ("EPS"), headline EPS ("HEPS"), net asset value ("NAV") and tangible NAV ("TNAV") per Standard Bank Group ordinary share. The material assumptions are set out in the notes following the tables. These pro forma financial effects do not constitute a representation of the future financial position of Standard Bank Group on implementation of the scheme. These pro forma financial effects are the responsibility of the board of directors of Standard Bank Group, have not been reviewed by the auditors and are purely for illustrative purposes. * It should be noted that as announced on Tuesday, 6 July 2004, Standard Bank Group raised additional preference share capital with an aggregate value of R3 billion ("the capital raising"), the impact of which has been shown in the table below with effect from 1 January 2004. 3.1 Pro forma financial effects of the scheme After the Before the capital Net After the Net
scheme raising change scheme change (3) (%) (%) EPS (cents) 250.3 246.7 (1.4) 245.9 (1.8) HEPS (cents) 252.5 248.9 (1.4) 248.2 (1.7) NAV per ordinary share (cents) (1) 2228 2228 0.0 2071 (7.0) TNAV per ordinary share (cents) (1) 2172 2172 0.0 2011 (7.4) ROE (%) (2) 23.0 22.7 24.4 1 Excludes cash in the hands of the ordinary shareholder. 2 Return on ordinary shareholders equity ("ROE") is based on average ordinary shareholders" equity for the period. 3 Represents the net change after the capital raising and the scheme. Notes: 1. The EPS, HEPS, NAV per ordinary share and TNAV per ordinary share "Before the scheme" are based on the unaudited interim results for the six-month period ended 30 June 2004. 2. The EPS and HEPS "After the scheme" are based on the assumption that the capital raising and the scheme were implemented on 1 January 2004. The average prime interest rate used in calculating the pro forma financial effects was 11.50%. 3. The NAV per ordinary share and TNAV per ordinary share "After the scheme" are based on the assumption that the capital raising and the scheme were implemented on 30 June 2004. 4. The EPS and HEPS "After the scheme" are based on 1 243 215 359 weighted average ordinary shares in issue (1 342 405 556 weighted average ordinary shares in issue as per the 2004 interim results less 99 190 197 shares acquired by the SBG subsidiaries). 5. The NAV per ordinary share and TNAV per ordinary share "After the scheme" are based on 1 247 293 670 ordinary shares in issue (1 346 483 867 ordinary shares in issue as per the 2004 interim results less 99 190 197 shares acquired by the SBG subsidiaries). 6. The adjustments assume the following events: 6.1. The SBG subsidiaries have acquired 99 190 197 ordinary shares at R40.50 per share in terms of the scheme. The acquisition has been facilitated by R3 billion raised in terms of the capital raising
(refer to paragraph 6.2) and surplus cash in the Standard Bank Group including its subsidiaries ("the Group") of R1.02 billion. The full acquisition has been debited to equity; 6.2. 30 000 000 non-redeemable, non-cumulative, non-participating Standard Bank Group preference shares with a par value of R0.01 each at a subscription price of R100 per share have been issued. The preference share coupon is 70% of the prime overdraft rate of Standard Bank Group (prior to the scheme it is assumed the Group
invested the funds from the capital raising at the average JIBAR effective rate of 8.40%, after tax of 5.88%); 6.3. employer companies in the Group have made a gross payment on behalf of employees in terms of the General Staff Scheme of
R211.7 million, after tax of R148.2 million, facilitated out of surplus cash in the Group. The payment has been utilised to acquire a further 3 136 400 ordinary shares in terms of the scheme. These shares immediately vest with employees through the
General Staff Trust; 6.4. the Group has forgone the opportunity to earn interest on the surplus cash and the cash utilised in the General Staff Scheme, and would have earned interest on cash retained, at the average
JIBAR effective rate of 8.40%, after tax of 5.88%, for the period ended 30 June 2004; and 6.5. the above transactions, unless otherwise stated, are subject to South African taxes and the tax effects have been accounted for
in the above adjustments. 7. The scheme of Standard Bank Group"s subsidiary, Liberty Group is not included in the pro forma financial effects. 3.2 Pro forma financial effects on Standard Bank Group including the Liberty Life black ownership initiative (Liberty Life has also announced a proposed black ownership initiative, which it intends to facilitate by means of a scheme of arrangement in terms of section 311 of the Companies Act between Liberty Life and its ordinary shareholders ("Liberty Life scheme"). If the Liberty Life scheme is implemented wholly-owned subsidiaries of Liberty Life will acquire approximately 25.8 million Liberty Life ordinary shares). After the Before the capital Net After the Net
scheme raising change scheme change (3) EPS (cents) 250.3 246.7 (1.4) 245.3 (2.0) HEPS (cents) 252.5 248.9 (1.4) 247.9 (1.8) NAV per ordinary share (cents) (1) 2228 2228 0.0 2070 (7.1) TNAV per ordinary share (cents) (1) 2172 2172 0.0 2010 (7.5) ROE (%) (2) 23.0 22.7 24.4 1 Excludes cash in the hands of the ordinary shareholder. 2 ROE is based on average ordinary shareholders" equity for the period. 3 Represents the net change after the capital raising and the scheme. Notes: The adjustments assume the following events: 1. notes 1 to 6.5 of paragraph 3.1 above apply in addition to the Liberty Life assumptions set out in paragraphs 1.1 to 1.4 below. 1.1 The earnings per Liberty Life ordinary share, headline earnings per Liberty Life ordinary share, NAV per Liberty Life ordinary share, TNAV per Liberty Life ordinary share and the return on equity per Liberty Life ordinary share "Before the scheme" are based on the unaudited results for the six-month interim period ended 30 June 2004. The weighted average number of Liberty Life ordinary shares in issue, as per the 30 June 2004 unaudited results, of 275.3 million was used. In respect of the NAV per Liberty Life ordinary share and TNAV per Liberty Life ordinary share, the number of Liberty Life ordinary shares in issue at 30 June 2004, as per the 2004 unaudited results, of 275.8 million was used. 1.2 The earnings per Liberty Life ordinary share, headline earnings per Liberty Life ordinary share and the return on equity "After the scheme" of 172.6, 157.1 and 10.5%, respectively, are based on the assumption that the Liberty Life black ownership initiative was implemented on 1 January 2004 using 249.5 million Liberty Life ordinary shares in issue (275.3 million weighted average Liberty Life ordinary shares in issue as per the 30 June 2004 unaudited results less 25.8 million Liberty Life ordinary shares owned by Liberty Life"s black partners). 1.3 The Liberty Life NAV per Liberty Life ordinary share and TNAV per Liberty Life ordinary share "After the scheme" of 3049.5 and 2950.0, respectively, are based on the assumption that the Liberty Life black ownership initiative was implemented on 30 June 2004 using 250.0 million Liberty Life ordinary shares in issue (275.8 million Liberty Life ordinary shares in issue as per the 2004 unaudited results less 25.8 million Liberty Life ordinary shares owned by Liberty Life"s black partners). 1.4 The "After the scheme" column reflected above, includes the following assumptions made by Liberty Life: 1.4.1 the wholly-owned subsidiaries of Liberty Life, acquire 25.8 million Liberty Life ordinary shares at R48.50 per share in terms of the Liberty Life black ownership initiative. The pro rata share repurchase is funded by R1.3 billion of
capital in Liberty Life; 1.4.2 the pro rata share repurchase is debited to equity; 1.4.3 dividends on preference shares paid by these wholly-owned subsidiaries to Liberty Life equal the dividends on Liberty
Life ordinary shares paid to these subsidiaries; 1.4.4 the cumulative preference dividends on the preference shares in the wholly-owned subsidiaries subscribed for by Liberty Life are calculated at 65% of the prime interest rate
(nominal annual compounded semi-annually); 1.4.5 the pro rata repurchase of R1.3 billion is financed from Liberty Life"s shareholders" funds through Liberty Life"s existing available cash and near cash, which would have
earned an after-tax return of 4.1% per annum; 1.4.6 a cost to company expense of approximately R33.4 million is paid to Liberty Life employees and agents, which will be used by employees and agents to acquire approximately 460
000 Liberty Life ordinary shares from Liberty Life ordinary shares currently held by Liberty Life; 1.4.7 the return on equity is based on Liberty Life average ordinary shareholders" funds for the period; and
1.4.8 estimated costs associated with the Liberty Life scheme of approximately R22.5 million have been taken into account; 2. the Liberty Life Scheme is approved; and 3. cash obtained by Liberty Holdings Limited from the repurchase earns a return equivalent to a call interest rate being 10.49%, after tax of 7.34%. 4. THE SCHEME MEETING, THE GENERAL MEETING AND THE CIRCULAR TO STANDARD BANK GROUP ORDINARY SHAREHOLDERS 4.1 The scheme meeting The scheme meeting of ordinary shareholders of Standard Bank Group recorded in the register of members of Standard Bank Group at the close of business on Thursday, 9 September 2004 will be held at 09:00 on Monday, 13 September 2004 in the HP de Villiers Auditorium, Standard Bank Centre, 6 Simmonds Street, Johannesburg to consider and, if deemed fit, to approve the scheme. 4.2 The general meeting A general meeting of Standard Bank Group ordinary shareholders will be held at 10:00 or 10 minutes after the conclusion or adjournment of the scheme meeting, whichever is the later, on Monday, 13 September 2004 in the HP de Villiers Auditorium, Standard Bank Centre, 6 Simmonds Street, Johannesburg to consider and, if deemed fit, pass, inter alia, the resolutions required to implement the scheme. 4.3 The circular to Standard Bank Group ordinary shareholders A document setting out details of the scheme, the black ownership initiative and the General Staff Scheme was posted to Standard Bank Group ordinary shareholders today. Johannesburg 18 August 2004 Investment bank and joint sponsor Standard Bank Independent financial adviser JP Morgan Independent lead sponsor Deutsche Securities Attorneys Bowman Gilfillan Attorneys Joint independent reporting accountants KPMG and PricewaterhouseCoopers Date: 18/08/2004 09:00:46 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

Share This Story