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PSG/ PSG Financial Services/ Arch Equity - Joint Announcement: Proposed Merger
PSG GROUP LIMITED
Incorporated in the Republic of South Africa)
Registration number 1970/008484/06)
JSE share code: PSG & ISIN code: ZAE000013017
("PSG")
PSG FINANCIAL SERVICES LIMITED
Registration number 1919/000478/06
JSE share code: PGFP & ISIN code: ZAE000060166
("PSG Financial Services")
ARCH EQUITY LIMITED
Registration Number: 2004/004019/06
JSE share code: ACH & ISIN code: ZAE000061073
("Arch Equity")
(Collectively referred to as "the companies")
JOINT ANNOUNCEMENT IN RESPECT OF THE PROPOSED MERGER BETWEEN PSG AND ARCH EQUITY
1. INTRODUCTION
Shareholders of the companies are referred to the cautionary announcement
of 14 February 2006 and the renewal thereof on 30 March 2006. Shareholders
are advised that PSG and Arch Equity have entered into an agreement whereby
PSG has made an offer to Arch Equity shareholders in terms of the proposed
merger between the companies ("the merger agreement"). It is envisaged that
the proposed merger will be implemented by way of a scheme of arrangement
in terms of section 311 of the Companies Act (61 of 1973) ("the Act")to be
proposed by PSG between Arch Equity and all of its ordinary shareholders
(other than PSG, any of its subsidiaries and Jasmyn Corporate Holdings
(Proprietary) Limited ("Jasmyn")("the scheme") in terms whereof, subject to
the fulfilment of certain conditions precedent, Arch Equity will become a
wholly owned subsidiary of PSG and will be delisted from the Altx, or
alternatively by way of an irrevocable conditional substitute offer in
terms of section 440K of the Act ("the substitute offer"), should the
aforementioned scheme fail for whatever reason ("the proposed merger").
Should the scheme become operative, and all of the conditions precedent
thereto becomes fulfilled, the scheme participants will be deemed to have
disposed of their Arch Equity shares to PSG and in consideration for such
disposal each scheme participant will receive the scheme consideration
shares comprising of 1 PSG ordinary share for every 2.71 Arch Equity
ordinary shares held.
In order to effect the proposed merger, and as an indivisible part thereof
but prior to the implementation of the scheme (or the substitute offer) (as
the case may be), PSG will implement a share swap between itself and all
the shareholders of Jasmyn, the controlling shareholder in Arch Equity
("the Jasmyn share swap"). The Jasmyn share swap will be effected in the
same ratio as that to be utilised in respect of the scheme, such that PSG
will acquire the Jasmyn shareholders" interest in Arch Equity prior to the
scheme (or substitute offer)(as the case may be) becoming operational. Any
reference to the proposed merger accordingly includes the Jasmyn share
swap, together with the scheme (or the substitute offer) (as the case may
be).
In further effecting the proposed merger, and as an indivisible part
thereof, but prior to the implementation of the scheme (or the substitute
offer)(as the case may be)PSG will repurchase 21 540 000 PSG ordinary
shares from Arch Equity by way of a specific repurchase in terms of section
85 of the Act, and Arch Equity will conversely dispose of such shares to
PSG, so as to eliminate the cross-holding of shares that presently exists
between Arch Equity and PSG (depending on the context, "the specific
repurchase" in respect of PSG shareholders, "the disposal" in respect of
Arch Equity shareholders). PSG holds 22.57% of the issued ordinary share
capital of Arch Equity, and Arch Equity holds 21.1% of the issued ordinary
share capital of PSG. It is the latter shareholding that the specific
repurchase (or disposal) will eliminate prior to the implementation of the
scheme (or the substitute offer) (as the case may be).
Finally, in terms of the merger agreement, and subject to the proposed
merger becoming unconditional, PSG will issue approximately 564 549 PSG
ordinary shares to participants in the Arch Equity Share Incentive Scheme
as consideration for the cancellation of such participants" share options
in terms of the aforementioned scheme ("the specific issue").
The steps required in respect of the proposed merger may therefore be
summarized as follows:
1. - the specific repurchase (or disposal);
2. - the Jasmyn share swap;
3. - the scheme (or the substitute offer)(as the case may be);
((2) and (3) above collectively referred to as the proposed merger);
and
4. - the specific issue.
((1)- (4) above collectively referred to as "the proposed
transactions").
2. GENERAL MEETING FOR PSG SHAREHOLDERS
PSG shareholders will be required in a general meeting to be held at 9:00
in the Boardroom on the 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch
on 12 June 2006 to consider and approve the resolutions required to effect
the proposed merger (either in terms of the scheme or the substitute
offer)(as the case may be), the Jasmyn share swap, the specific repurchase,
the specific issue, and placing sufficient authorised share capital under
the control of the PSG directors in order to effect the aforementioned
transactions.
3. GENERAL MEETING AND SCHEME MEETING FOR ARCH EQUITY SHAREHOLDERS
Arch Equity shareholders will be required in a general meeting and scheme
meeting to be held at 8:30 and 9:00 (or as soon as the general meeting may
be concluded, whichever is the later), respectively, in the Boardroom on
the 1st Floor, Inanda, 6 Dorp Street, Stellenbosch on 21 July 2006 to
consider and approve the proposed merger (either in terms of the scheme or
the substitute offer (as the case may be), the disposal and such other
resolutions as may be required in order to effect the aforementioned
transactions.
4. CONDITIONS PRECEDENT TO THE PROPOSED MERGER
The implementation of the proposed merger is subject to the fulfilment of
the following conditions precedent, namely:
- that the various agreements relating to Arch Equity"s investments, to
the extent necessary, be amended, or the written consent to the
proposed merger, and cession of all relevant contracts in connection
therewith, by such parties be obtained by PSG and PSG confirming in
writing that such contracts will not be terminated by reason of the
proposed merger;
- Registrar of Banks approval being obtained, to the extent necessary;
Securities Regulation Panel"s ("SRP") required approval being
obtained, as - PSG will effectively acquire more than 35% of the total
issued share capital of Arch Equity should the proposed merger be
effected;
- Competition Authorities approval being obtained;
- PSG shareholders, in a general meeting, approving the resolutions
necessary to effect the proposed merger, as set out in 2 above;
- Arch Equity shareholders, in a general and scheme meeting, approving
the resolutions necessary to effect the proposed merger, as set out in
3 above;
- Fair and/or reasonable opinions being obtained from independent
experts acceptable to the JSE as to the fairness and/or reasonableness
of the terms and conditions of the proposed merger to PSG and Arch
Equity shareholders respectively; and
- if applicable, the sanctioning of the scheme by Court, and the
registration of such Court Order with the Registrar of Companies.
5. RATIONALE FOR THE PROPOSED MERGER
5.1 For PSG
The rationale for the proposed merger, from a PSG perspective, can be
summarised as follows:
- the cross-shareholding that presently exists between Arch Equity
and PSG will be eliminated (and this will vice versa also be
beneficial for Arch Equity);
- Arch Equity Investment Holdings ("AEIH"), Arch Equity"s primary
BEE vehicle since its BEE restructuring undertaken in December
2005, together with its investments, will fall under the PSG
umbrella and will facilitate the restructured PSG Group in
pursuing those BEE transactions presently beyond the scope of its
given BEE credentials;
- PSG"s BEE shareholder base will increase to approximately 13%
immediately post the merger;
- the Arch Equity investments will provide the enlarged PSG Group
with a strengthened group balance sheet and access to new and
sustainable annuity income steams, particularly through the 19.4%
(21.4% including the indirect interest that is held through AEIH)
stake presently held by Arch Equity in Capitec Bank;
- via the incorporation of the Arch Equity investments, the
restructured PSG Group will boast a market capitalization in
excess of R3 billion, bringing it within one of the top 100
companies, on a market capitalization basis, in South Africa;
- in amplification of the above, PSG will enjoy an enhancement of
its NAV and TNAV through the acquisition of the Arch Equity
investments; and
- the restructured PSG Group will emerge as a more streamlined
group of companies with more diversified strategic investments.
5.2 For Arch Equity
The rationale for the proposed merger, from an Arch Equity
shareholder"s perspective, can be summarised as follows:
- by way of the scheme consideration shares, Arch Equity
shareholders will continue to participate in the potential upside
to be yielded by the Arch Equity investments;
- further, by way of the scheme consideration shares, Arch Equity
shareholders will effectively switch to a share that offers
higher levels of liquidity and greater critical mass, in a
company that offers a diversified investment strategy, strong
management and future growth potential;
- AEIH will enjoy the benefits of being part of an enlarged group
of companies with a proven track record in the financial services
industry;
- the potential conflict of interest that exists between Arch
Equity and AEIH will be removed in so far as investment
allocation between the two companies is concerned;
- AEIH will have as a supportive shareholder, in the form of PSG, a
company with a superior balance sheet to allow it to aggressively
pursue its investment strategy within the BEE sphere; and
- in amplification of the foregoing, Arch Equity will benefit from
being able to participate directly in and leverage off the strong
business relationships that PSG has nurtured with its various
partners over the course of the last 10 years.
6. THE PROPOSED MERGER
Subject to the conditions precedent referred to in 4 above being fulfilled,
PSG will acquire all of the issued share capital in Arch Equity by way of
the implementation of the scheme, or alternatively, by way the substitute
offer, together with the Jasmyn share swap.
6.1 Terms of the proposed merger
6.1.1 Consideration
In arriving at the appropriate consideration, the directors
of PSG determined that Arch Equity shareholders should be
offered 1 PSG share for every 2.71 Arch Equity shares held.
Subject to the proposed merger becoming unconditional, PSG
will accordingly issue approximately 27 154 796 PSG ordinary
shares to Arch Equity shareholders in terms of the scheme
(or the substitute offer) (as the case may be) and 17
827 762 PSG ordinary shares to the shareholders of Jasmyn in
terms of the Jasmyn share swap ("the consideration shares").
6.1.2 Effective Date
The effective date of the proposed merger is the operative
date of the scheme of arrangement or substitute offer (as
the case may be).
6.1.3 Warranties
Both PSG and Arch Equity have warranted to the other that it
has disclosed to the other all its material liabilities and
obligations (whether actual or contingent) as at the date of
signature of the merger agreement. Arch Equity has further
warranted to PSG that the proposed merger will not trigger
any change in control provisions contained in any agreements
in relation to Arch Equity, or alternatively that all
required consents and/or waivers required for the change in
control of Arch Equity pursuant to the implementation of the
proposed merger.
6.1.4 Listing of consideration shares
Subject to the fulfilment of the conditions precedent set
out in 4 above, the consideration shares will be listed in
due course on the JSE.
6.1.5 Assumed liabilities, costs and transfer of employees
Employees of Arch Equity and its subsidiaries will continue
to be employed on substantially the same terms and
conditions as applicable to them prior to the proposed
merger.
7. THE SPECIFIC REPURCHASE (OR THE DISPOSAL)
Subject to the conditions precedent referred to in 4 being fulfilled, PSG
will repurchase prior to the implementation of the scheme (or the
substitute offer) (as the case may be) 21 540 000 PSG shares from Arch
Equity in terms of section 85 of the Act, and Arch Equity will conversely
dispose of same to PSG.
7.1 Terms of the specific repurchase
7.1.1 Reason for and method of the specific repurchase
The repurchase of the 21 540 000 PSG ordinary shares (or
21.1% of the issued share capital of PSG) is required in
order to eliminate the cross-shareholding that presently
exists between PSG and Arch Equity. The repurchase of the
aforementioned 21.1% shareholding will be effected by way of
a specific repurchase for cash from Arch Equity at a price
of R13.39 per PSG ordinary share which represents the 90 day
volume weighted average price of a PSG share on the day
immediately preceding the SENS announcement on 14 February
2006.
7.1.2 Source of funds
PSG will utilise available cash resources for the proposed
specific repurchase and/or credit Arch Equity"s loan account
in PSG with the specific repurchase consideration.
8. THE SPECIFIC ISSUE
Subject to the conditions precedent referred to in 4 above being fulfilled,
the participants in the Arch Equity Share Incentive Scheme have, in terms
of the merger agreement, agreed to the forfeiture of approximately half of
their Arch Equity share options for no consideration, and to the
cancellation of the other half for a cash consideration, agreed between the
trustees of the Arch Equity Share Incentive Trust, Arch Equity and PSG
("the parties"). The Arch Equity Share Incentive Scheme participants will
then utilise a portion of such cash consideration to acquire PSG shares.
Although such forfeiture and cancellation is as a result of the scheme (or
substitute offer) (as the case may be) and is required in order to
facilitate the implementation thereof, it does not form part of the scheme
(or the substitute offer) (as the case may be).
8.1 Terms of the specific issue
8.1.1 Reason for and method of specific issue
In terms of the merger agreement, the participants in the
Arch Equity Share Incentive Scheme, on the operative date of
the scheme (or the substitute offer) (as the case may be),
will have 6 423 669 Arch Equity share options. Pursuant to
the implementation of the scheme (or the substitute offer)
(as the case may be) it has been agreed between the parties
that 2 978 362 of such share options shall be forfeited for
no consideration, and the remaining 3 445 307 Arch Equity
share options shall be cancelled for a cash consideration of
R20 700 133. The participants in the Arch Equity Share
Incentive Scheme will utilise a portion thereof to subscribe
for PSG ordinary shares at R22 per share.
8.1.2 Issue Price
PSG will accordingly issue 564 549 PSG ordinary shares,
comprising 0.45 % of the issued ordinary share capital of
PSG after the implementation of the proposed merger,
specific repurchase (or disposal) and the specific issue, to
participants of the Arch Equity Share Incentive Scheme at an
issue price of R22.00 per share for a total consideration of
R12 420 078. The issue price of R22.00 per PSG share does
not represent any discount to the market price of PSG shares
on 28 March 2006, the date on which agreement was reached
between the parties.
9. FINANCIAL EFFECTS
9.1 For PSG
Unaudited pro forma financial effects of the proposed transactions
The unaudited pro forma financial effects of the proposed transactions
set out below are the responsibility of the directors of PSG. These
unaudited pro forma financial effects have been presented for
illustrative purposes only and may not give a fair reflection of PSG"s
financial position nor of the effect on future earnings post the
implementation of the proposed transaction.
The independent reporting accountant"s report relating to the
unaudited pro forma financial effects of the proposed transaction as
set below will be attached to the circular to be provided to PSG
shareholders as per 13 below.
The table below sets out the unaudited pro forma cumulative financial
effects of the proposed transactions on PSG.
Financial effects Audited(1) Unaudited pro Change
(cents) forma after the (%)
proposed
transactions(2-9)
(cents)
EPS 401.5 308.3 (23.2)
HEPS 351.8 263.3 (25.2)
Diluted EPS 388.9 300.4 (22.8)
Diluted HEPS 340.7 256.6 (24.7)
NAV per share 704 1 180 67.6
TNAV per share 589 815 38.4
Weighted average number
of shares in issue (`000) 101 888 125 895
Diluted weighted average
number of shares in issue 105 200 129 207
(`000)
Number of shares in issue 102 180 126 187
(`000)
Notes:
1. Extracted from the audited results of PSG for the year ended 28
February 2006.
2. For purposes of calculating the EPS, HEPS, diluted EPS and diluted
HEPS it was assumed that the proposed transactions were implemented on
1 March 2005.
3. For purposes of calculating the NAV and TNAV it was assumed that the
proposed transactions were implemented on 28 February 2006.
4. TNAV was calculated after deducting the intangible assets from
ordinary shareholders fund.
5. In terms of the specific repurchase:
- PSG will repurchase 21 540 000 PSG ordinary shares from Arch
Equity on loan account for a purchase consideration of R 288 420
600. This loan will bear interest at a pre-tax rate of 6.65% per
annum.
- A maximum Secondary Tax on Companies ("STC") of R35 530 000 and
Uncertificated Securities Tax of R1 217 000 will be payable in
terms of the specific repurchase and subsequent cancellation of
the shares.
- Arch Equity"s equity accounted earnings of PSG will be eliminated
as a result of the specific repurchase.
6. In terms of the proposed merger:
- PSG will issue 44 982 588 PSG ordinary shares in terms of the
scheme and the Jasmyn share swap.
- The purchase consideration to acquire the Arch Equity shares in
terms of the scheme is R1 016 607 488 based on a market value of
R22.60 per PSG share as at 28 February 2006. Transaction costs
of R3 508 00 are treated as part of the purchase consideration.
- Goodwill of R323 615 000 is created on the acquisition of Arch
Equity.
- A reserve of R6 6177 000 was created when PSG"s initial 20.53%
investment in Arch Equity was fair valued prior to the proposed
merger.
- PSG"s equity accounted earnings of Arch Equity will be eliminated
as a result of Arch Equity now becoming a wholly owned subsidiary
of PSG.
- After the merger Arch Equity"s audited results and assets and
liabilities for the year ended 28 February 2006 will be
consolidated with those of PSG on a line by line basis.
7. In terms of the specific issue:
- PSG will pay a cash consideration of R 20 700 131 to participants
of the Arch Equity Share Incentive Scheme. This amount will form
part of the purchase price of Arch Equity and will accordingly
increase the goodwill raised on the proposed merger.
- The participants of the Arch Equity Share Incentive Scheme will
utilise R12 420 078 to subscribe for 564 549 ordinary shares at
R22 per share.
8. Interest was calculated taking into account the net cash effect of the
proposed transactions at a pre-tax rate of 6.65%.
9. Taxation has been calculated at 29%, where applicable
9.2 For Arch Equity
Unaudited pro forma financial effects of the scheme on an Arch Equity
shareholder
The table below sets out the unaudited pro forma financial effects of
the scheme on an Arch Equity shareholder as well as certain JSE share
price comparative information.
Financial effects Before(1) After Change
(cents) (cents) (%)
EPS 112.0 113.8(2) 1.6
HEPS 95.8 97.2(2) 1.5
Diluted EPS 110.1 110.8(2) 0.6
Diluted HEPS 94.1 94.7(2) 0.6
NAV per share 302 435(3) 44.0
TNAV per share 302 301(3) (0.3)
Share price(4) 520 646 24.2
Share price(5) 750 771 2.8
Weighted average number 144 045 125 895(6)
of shares in issue (`000)
Diluted weighted average 146 553 129 207(6)
number of shares in issue
(`000)
Number of shares in issue 157 334 126 187(6)
(`000)
Notes:
1. Extracted from the audited results of Arch Equity for the year ended
28 February 2006.
2. EPS, HEPS, diluted EPS and diluted HEPS per share has been determined
assuming that the scheme had been implemented on 1 March 2005 for the
year ended 28 February 2006, as follows:
- share of PSG earnings, being 0, 37 of a PSG share per Arch Equity
share, which includes 100% of Arch Equity"s earnings for the year
ended 28 February 2006.
3. NAV has been determined assuming that the scheme had been implemented
on 28 February 2006, as follows:
- share of the PSG NAV and TNAV per share, being 0,37 of a PSG
share, which includes 100% of Arch Equity"s NAV and TNAV per
share at 28 February 2006.
4. The share price in the "Before" column is the price of an Arch Equity
share on the JSE at the close of business on 8 February 2006 of R5.20,
the date prior to the publication over SENS of the cautionary
announcement pertaining to the scheme. The value in the "After" column
is 0,37 of a PSG share, based on the price on the JSE of a PSG share
at the close of business on 8 February 2006 of R17.50
5. The share price in the "Before" column is the price of an Arch Equity
share on the JSE at the close of business on 18 May 2006 of R7.50,
the date prior to the publication over SENS of the firm intention to
proceed with the scheme. The value in the "After" column is 0, 37 of
a PSG share, based on the price on the JSE of a PSG share at the close
of business on 18 May 2006 of R20.89.
6. For purposes of calculating the number of shares in issue, the
weighted number of shares in issue and the diluted weighted number of
shares in issue , it was assumed that:
- the 21 540 000 shares repurchased by PSG from Arch Equity were
cancelled;
- 44 982 588 PSG shares were issued in terms of the scheme, and;
- 564 549 PSG shares were issued to participants of the Arch Equity
Share Incentive Scheme in terms of the proposed specific issue.
7. No effect has been given to Capital Gains Tax that may be
applicable to Arch Equity shareholders.
10. RELATED PARTIES AND VOTING
10.1 To PSG
Each of the proposed transactions constitutes a "related party
transaction" as defined in terms of the JSE"s Listings Requirements,
and consequently the following parties will be taken into account in
determining whether a quorum is present, but will be excluded from
voting on the resolutions as set out herein below at the general
meeting of PSG shareholders:
10.1.1 In terms of the proposed merger (including the Jasmyn share
swap), Arch Equity, AEIH, the PSG Group Share Incentive
Trust, Mr JF Mouton, JF Mouton Familietrust, Die Dana Mouton
Trust, Dana Beleggings Beperk, Die Piet Mouton Trust, Die
Jan Mouton Trust, Charite Mouton Trust, Mayfair Speculators
(Proprietary) Limited, Mr CA Otto, Die Otto Familietrust and
the Sanbourne Trust are related parties (or associates
thereof) to PSG and will not be entitled to vote on the
ordinary resolutions relating thereto. Such resolutions must
accordingly be approved by a simple majority of those PSG
shareholders, excluding the aforementioned parties, who are
present in person or by proxy and who are entitled to vote
thereon.
10.1.2 In terms of the specific repurchase, Arch Equity and AEIH
are related parties (or associates thereof) to PSG and will
not be entitled to vote on the special resolution relating
to thereto. Such special resolution must accordingly be
approved by at least 75% of those PSG shareholders,
excluding the aforementioned parties, who are present in
person or by proxy and who are entitled to vote thereon.
10.1.3 In terms of the specific issue, Die Piet Mouton Trust, Ms S
Cassiem and Ms S Slabbert (together with those participants
in Arch Equity"s share incentive scheme who may become
shareholders in PSG prior to the record date of the
scheme)(or associates thereof) are related parties to PSG
and will not be entitled to vote on the ordinary resolutions
relating thereto. The ordinary resolution pertaining to the
specific issue must, in terms of the JSE"s Listings
Requirements, be approved by at least 75% of those PSG
shareholders, excluding the aforementioned parties, who are
present in person or by proxy and who are entitled to vote
thereon.
A written confirmation from an independent expert, acceptable to the
JSE, as to whether the terms and conditions of the proposed merger
(including the Jasmyn share swap), the specific repurchase and the
specific issue, are fair and reasonable to PSG shareholders has been
provided by BDO Questco (Proprietary) Limited ("BDO Questco").
10.2 To Arch Equity
The disposal constitutes a "related party transaction" as defined in
terms of the JSE"s Listings Requirements of the JSE, and consequently
the following parties will be taken into account in determining
whether a quorum is present, but will be excluded from voting on the
resolutions as set out below at the general meeting of Arch Equity
shareholders:
10.2.1 PSG Financial Services, Kumani Holdings (Proprietary)
Limited, Mandisa Holdings (Proprietary) Limited, Die Piet
Mouton Trust, Ms S Mouton, Die Otto Familietrust, Mayfair
Speculators (Proprietary) Limited and Dana Beleggings Beperk
are related parties (or associates thereof) to Arch Equity
and will not be entitled to vote on the ordinary resolutions
relating to the disposal. Such resolutions must accordingly
be approved by a simple majority of those Arch Equity
shareholders, excluding the aforementioned parties, who are
present in person or by proxy.
A written confirmation from an independent expert, acceptable to the
JSE, as to whether the terms and conditions of the disposal are fair
and/or reasonable to Arch Equity shareholders will be provided by
Grant Thornton Corporate Finance (Proprietary) Limited ("Grant
Thornton").
11. OPINIONS AND RECOMMENDATIONS
11.1 In respect of PSG shareholders
11.1.1 BDO has been appointed as the independent expert to PSG for
the purpose of considering the terms and conditions of the
proposed merger (including the Jasmyn share swap), specific
repurchase and specific issue, and has advised the PSG board
that it considers the terms and conditions thereof to be
fair and/or and reasonable to the shareholders of PSG.
11.1.2 The PSG board is of the opinion that the terms and
conditions of the proposed transactions as set out above are
fair and reasonable to PSG shareholders. Accordingly, the
directors of PSG recommend that PSG shareholders vote in
favour of the resolutions to be proposed at the general
meeting.
11.1.3 Those PSG directors who hold PSG ordinary shares intend
voting in favour of the scheme and the specific repurchase
in respect of their PSG shares, to the extent they are
entitled to do so.
11.2 In respect of Arch Equity shareholders
11.2.1 Grant Thornton has been appointed as the independent expert
to Arch Equity for the purpose of considering the terms and
conditions of the proposed merger (in terms of the scheme or
the substitute offer) (as the case may be) and the disposal,
and to advise the Arch Equity board as to whether such terms
and conditions are fair and/or reasonable to the Arch Equity
shareholders.
11.2.2 An announcement will be made in due course as to how Grant
Thornton has advised the board of Arch Equity and providing
full details as to the salient dates and times in respect of
the scheme, as well as confirmation of the date of the
scheme and general meetings of Arch Equity shareholders
(should such date change from that set out in 3 above).
11.2.3 The Arch Equity board is of the opinion that the terms and
conditions of the proposed transactions as set out above are
fair and/or reasonable to Arch Equity shareholders.
Accordingly, the directors of Arch Equity recommend that
shareholders vote in favour of the resolutions to be
proposed at the general meeting and scheme meeting
respectively.
11.2.4 Those Arch Equity directors who hold Arch Equity ordinary
shares intend voting in favour of the scheme and the
disposal in respect of their Arch Equity shares to the
extent that they are entitled to do so.
11.2.5 The independent expert"s opinion is required in terms of the
JSE Listings Requirements, and has also been given in order
to meet the requirements of the SRP"s Code on Takeovers and
Mergers.
12. DOCUMENTATION
12.1 In respect of PSG shareholders
A circular containing full details of the proposed merger (including
the Jasmyn share swap), the specific repurchase and the specific issue
will be posted to PSG shareholders on or about 22 May 2006.
12.2 In respect of Arch Equity shareholders
A circular containing full details of the proposed merger (in terms of
the scheme or the substitute offer) (as the case may be) and the
disposal will be posted to Arch Equity shareholders on or about 15
June 2006.
13. AUDITED ANNUAL FINANCIAL STATEMENTS OF PSG
PSG shareholders are advised that the audit of PSG"s financial results for
the year ended 28 February 2006 by PricewaterhouseCoopers Inc. has been
completed. The unqualified audit report from PricewaterhouseCoopers Inc in
respect of the annual financial statements for the year ended 28 February
2006 is available for inspection at the registered offices of PSG. These
audited financial statements agree in all respects to the preliminary
results announcement published on SENS on 18 April 2006, and are now also
available for inspection at PSG"s registered office.
14. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
PSG and Arch Equity shareholders are accordingly advised that the
cautionary announcement referred to in 1 above is hereby withdrawn and that
the companies" shareholders need no longer exercise caution in dealing with
their shares.
Stellenbosch
19 May 2006
Warning: The listing of ordinary shares in Arch Equity is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, who is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
PSG Capital - Joint Sponsor to PSG and Arch Equity and designated advisor to
Arch Equity
BDO Questco (Pty) Ltd - Independent expert to PSG
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited - Lead sponsor
PricewaterhouseCoopers Inc Chartered Accountants (SA) - Auditors
Hofmeyr Herbstein & Gihwala Incorporated - Attorneys advising PSG and Arch
Equity in respect of the proposed transactions
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