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Howden Africa Holdings Limited - Announcement
Howden Africa Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/002982/06)
Share code: HWN ISIN: ZAE000010583
("HAHL" or "the Company")
THE BUSINESS AND FINANCIAL INTERNAL REORGANISATION OF THE HAHL GROUP OF
COMPANIES ("THE INTERNAL REORGANISATION"),THE PROPOSED CASH PAYMENT ("CASH
PAYMENT")TO ELIGIBLE SHAREHOLDERS AND THE WITHDRAWAL OF THE CAUTIONARY
ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 9 May 2006, shareholders are
advised that the HAHL directors are proposing, subject to certain conditions, to
undertake an internal reorganisation of the HAHL group of companies and to make
a cash payment of 241 cents per share to eligible shareholders. The cash payment
will be made in terms of section 90 of the Companies Act following the
completion of the internal reorganisation. The cash payment will take place in
the currency of South Africa and will comprise:
- a return of share premium in HAHL of 92,88 cents per share; and
- a special dividend out of the distributable reserves of HAHL of
148,12 cents per share.
2. The Internal Reorganisation and rationale
The internal reorganisation will simplify HAHL"s holdings in its subsidiaries
under a single holding company, Howden Africa (Proprietary) Limited ("Howden
Africa"), a newly incorporated company which is a wholly-owned subsidiary of
HAHL.
Following the internal reorganisation, Howden Africa will own the business and
assets of Howden Power (Proprietary) Limited (HAHL"s principal business) and the
entire issued share capitals of the following companies: James Howden Holdings
Limited, Howden Holdings (Proprietary) Limited, Gertrude Holdings Limited and
Howden Process Compressors (Proprietary) Limited. Under the terms of the
reorganisation, Howden Africa will also acquire HAHL"s existing interests in
Bateman Howden SA (Proprietary) Limited and Howden Projects (Proprietary)
Limited. HAHL will retain its 42% shareholding in Pump Brands (Proprietary)
Limited.
The internal reorganisation will be achieved through the intra group transfer of
certain shareholdings, and the sale of assets, liabilities and business as a
going concern, each at fair market value.
HAHL has consistently been distributing to its shareholders less cash than it
has been generating from its operations. It has also generated cash by business
sales. Such cash has been largely retained within the HAHL group and as a
consequence HAHL has developed an inefficient capital structure.
The proposed distribution of funds to shareholders will give the HAHL group a
capital structure that is considered to be appropriate to its mix of businesses
and the increased generation of shareholder value. In addition, the internal
reorganisation and cash payment should assist in the introduction of additional
BEE investors.
Shareholders are advised that the internal reorganisation is not viewed as a
category transaction for purposes of the JSE Listings Requirements and
accordingly the approval of shareholders is not required.
3. The Cash Payment
As indicated above, the board of HAHL proposes, on conclusion of the internal
reorganisation, to effect a cash payment to eligible shareholders in terms of
section 90 of the Companies Act. The cash payment will take place in the
currency of South Africa and will amount to 241 cents per share, comprising:
- a return of share premium in HAHL of 92,88 cents per share
(conditional upon the approval of shareholders in general meeting);
and
- a cash payment out of the distributable reserves of HAHL of 148,12
cents per share.
The total cash payment to shareholders, together with related STC, is expected
to amount to R171 million and will be financed as to R71 million from the
existing cash resources of HAHL and as to R100 million from facilities which
Standard Bank has conditionally agreed to make available to Howden Africa and
its subsidiaries. The facilities, which comprise term loans repayable over 7
years of R 100 million and other facilities of R60 million, are conditional
inter alia, on the completion of the internal reorganisation and certain
formalities.
It is expected that the cash payment will take place to shareholders recorded as
such in the books of the Company on Friday, 7 July 2006. The expected date for
the cash payment is Monday, 10 July 2006.
4. Condition precedent
The cash payment is subject to shareholder approval which approval will be
sought at a general meeting of shareholders to be held at 13:00 on Thursday, 15
June 2006 or immediately after the conclusion of the Annual General Meeting of
shareholders convened at 12:00 on the same day, whichever is the later, at the
registered office of HAHL, 1A Booysens Road, Booysens, Johannesburg.
5. Pro forma Financial effects of the internal reorganisation and cash
payment
The unaudited pro forma consolidated financial effects of the cash payment on
the earnings, headline earnings, net asset value and net tangible asset value
per HAHL share, before and after the internal reorganisation and cash payment
are set out below. The unaudited pro forma financial information provided is the
responsibility of the directors. The unaudited pro forma financial information
has been prepared for illustrative purposes only and because of its nature, may
not fairly reflect the financial position of HAHL or results of its operations
after the transactions.
Actual(1) Pro forma
Before the After the Change
internal internal
reorganisation reorganisation
and cash payment and cash
1 payment 2
(cents) (cents) %
Earnings per share 3 38.88 24.10 (38.01)
Headline earnings per 3 40.46 25.68 (36.53)
share
Net asset value per 4 264.75 3.40 (98.72)
share
Net tangible asset 4 206.07 (55.27) -
value per share
Number of shares in 65,729 65,729
issue (`000)
Weighted number of 65,729 65,729
shares (`000)
Notes:
1. Extracted from the audited annual financial statements of HAHL for the year
ended 31 December 2005.
2. Represents the effect on HAHL after the cash payment to shareholders.
3. The pro forma effects on earnings and headline earnings per share for the
year-ended 31 December 2005, are calculated on the basis that the internal
reorganisation and cash payment were effective 1 January 2005;
4. The pro forma effects on net asset and net tangible asset value per share
for the year-ended 31 December 2005 are calculated on the basis that the
internal reorganisation and cash payment were effective 31 December 2005;
5. The pro forma effects of the internal reorganisation (not taking into
account the effect of the cash payment) on earnings, headline earnings, net
asset value and net tangible asset value are immaterial.
6. PricewaterhouseCoopers Inc, the independent reporting accountants, have
issued a report on the pro forma financial effects.
6. Salient dates of the cash payment
2006
Proxy forms for general meeting to be received by not Tuesday, 13 June
later than 13:00 on
General meeting held at 13:00 (or as soon as possible Thursday, 15 June
after the conclusion of the Company"s Annual General
Meeting, whichever is the later) on
Results of general meeting:
- released over SENS Thursday, 15 June
- published in the press on Monday, 19 June
Last day to trade in and to acquire shares in Howden Friday, 30 June
on the JSE in order to be eligible to receive the
cash payment 1
Shares will trade "ex" entitlement on Monday, 3 July
Record date for the cash payment 1 Friday, 7 July
Settlement of the cash payment effected 1 Monday,10 July
The salient dates of the payment are as follows:
Notes:
1. Shareholders are advised that due to the technical complexities
and inherent timing issues associated with an internal
reorganisation such as is being implemented by HAHL, the dates and
times indicated may necessarily need to be changed to accord with
the facts. Accordingly, the indicated expected dates are subject to
amendment. Any such amendment will be advised by notification over
SENS and by publication in the press.
2. No dematerialisation or rematerialisation of shares will be
processed between Monday, 3 July 2006 and Friday, 7 July 2006,
inclusive.
7. Circular to shareholders
A circular setting out the full details of the internal reorganisation and
proposed cash payment will be posted to shareholders on Wednesday, 31 May 2006.
8. Withdrawal of cautionary
Shareholders are advised that caution is no longer required to be exercised by
shareholders when dealing in their securities.
Booysens
29 May 2006
Corporate adviser and sponsor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Attorneys
Webber Wenzel Bowens
Reporting Accountants
PricewaterhouseCoopers Inc
Banker
The Standard Bank of South Africa Limited
Corporate and Investment Banking Division
Date: 29/05/2006 05:15:09 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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