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Bidvest - Refinancing by Dinatla of its shareholding in Bidvest

Release Date: 26/09/2006 13:30
Code(s): BDEO BVT
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Bidvest - Refinancing by Dinatla of its shareholding in Bidvest The Bidvest Group Limited (Incorporated in the Republic of South Africa) (Registration number 1946/021180/06) Share code: BVT ISIN: ZAE000050449 ("Bidvest") Dinatla Investment Holdings (Pty) Limited (Incorporated in the Republic of South Africa) (Registration number 2003/023927/07) ("Dinatla") BidBEE Limited (Incorporated in the Republic of South Africa) (Registration number 2003/01886/06) Share code: BDE ISIN: ZAE ("BidBEE") Refinancing by Dinatla of its shareholding in Bidvest 1. Introduction Shareholders are referred to the scheme of arrangement approved by Bidvest shareholders as proposed by Dinatla between Bidvest and the holders of ordinary shares in Bidvest (other than BB Investment Company (Proprietary) Limited), to which BidBEE was a party ("the scheme"), pursuant to which Dinatla acquired approximately 15% of the issued share capital of Bidvest. In terms of the scheme, Dinatla has an obligation to settle its indebtedness to BidBEE ("the Dinatla indebtedness") on or, if only in cash, prior to December 8 2006 ("the specified date"). The amount of the Dinatla indebtedness is based on a rolling 14-day traded volume weighted average price ("VWAP") of the Bidvest shares immediately preceding the earlier of the specified date or the settlement date, but subject to a maximum of R60 per Bidvest share and a minimum of R42 per Bidvest share. Based on the anticipation that the 14-day traded VWAP per Bidvest share does not fall below R60 per share, the amount of the Dinatla indebtedness is R2,7 billion, being 45 million Bidvest shares multiplied by the maximum price of R60 per share. The settlement by Dinatla of the Dinatla indebtedness is hereinafter referred to as "the Dinatla refinancing". 2. The Dinatla refinancing Dinatla has agreed, with the approval of Bidvest and subject to the fulfilment of certain conditions precedent, to the refinancing of its indebtedness, which will enable Dinatla, together with the facilitation of Bidvest, to settle its indebtedness by the specified date. The salient terms of the Dinatla refinancing and Bidvest"s facilitation relating thereto are as follows: 2.1 BB Investment Company (Proprietary) Limited, a wholly-owned subsidiary of Bidvest, will repurchase 18 million shares from Dinatla at R79,38 per share for a total consideration of
approximately R1,4 billion ("the Bidvest repurchase"); 2.2 the remaining amount of the Dinatla indebtedness of approximately R1,3 billion will be funded by Investec Bank Limited or its nominee ("Investec") subscribing for cumulative, redeemable, non-
participating preference shares ("the Dinatla preference shares") to be issued by Dinatla at a dividend rate equal to 71% of the prevailing prime rate from time to time and which preference shares will be redeemable on March 30 2012 ("the closing date");
and 2.3 in order to enable Dinatla to secure market-related funding on the Dinatla preference shares on favourable terms, Bidvest has granted Dinatla an American put option ("the put option") against
Bidvest. The put option is over 15 million Bidvest shares at R75 per Bidvest share for the period commencing 3-months after the subscription date in respect of the Dinatla preference shares and ending on the closing date ("the put option period"). This put
option will only be exercisable in the event that and for so long as the Bidvest share price falls below R75 based on a rolling 10- day traded VWAP of the Bidvest shares. The Bidvest repurchase and the potential repurchase by Bidvest of shares in terms of the put option (hereinafter collectively referred to as ("the specific repurchases")) are each classified as a specific repurchase of shares in terms of the Listings Requirements ("the JSE Listings Requirements") of the JSE Limited ("the JSE") and the Companies Act, 1973. 3. Rationale for the Dinatla refinancing and the specific repurchases Dinatla has an obligation to BidBEE to refinance its indebtedness by the specified date. In terms of the scheme, Dinatla must first use its best endeavours to raise as much cash as it is able on market related terms and only thereafter, with the consent of Bidvest, may Dinatla sell Bidvest shares to meet its indebtedness. Until the expiry of a 5- year period following the specified date i.e. until 8 December 2011 if Dinatla wishes to sell any of its remaining Bidvest shares, it must first offer same to Bidvest which has a pre-emptive right over those shares. 3.1 Accordingly, Bidvest will implement the Bidvest repurchase as detailed in 2.1 above, which will enable Dinatla to realise value in respect of 18 million of its existing holding of 45 million Bidvest shares. 3.2 In addition, Bidvest will furthermore facilitate the Dinatla refinancing by granting the put option, which will enable Dinatla to: - finance the indebtedness on its remaining 27 million Bidvest shares after the Bidvest repurchase; and
- protect its downside risk below R75 per share on 15 million of its remaining 27 million Bidvest shares until the closing date. By facilitating the Dinatla refinancing, Bidvest will ensure the participation by Dinatla as a significant BEE shareholder in Bidvest for at least a further 5-years whilst enabling Dinatla to procure refinancing on favourable terms to ensure further growth in value for Dinatla and not giving up any upside appreciation in the share price often associated with these types of transactions. 4. The specific repurchases 4.1 Terms of the specific repurchases Subject to the fulfilment of the conditions precedent in 4.3
below, Bidvest could repurchase up to a maximum of 33 million Bidvest shares ("the repurchase shares") as follows: - 18 million Bidvest shares at R79,38 per share on December 8 2006 to be repurchased pursuant to the Bidvest repurchase;
and - 15 million Bidvest shares to be repurchased pursuant to and in the event of the exercise of the put option at R75 per share as set out in 2.3 above.
The Bidvest repurchase will assist in neutralising the effect of the additional 18 million Bidvest shares ("the Bidvest option shares") to be settled by Bidvest pursuant to call options granted by Bidvest at a strike price of R60 per share as an indivisible part of the scheme. The Bidvest option shares will be settled from Bidvest"s existing treasury shares. 4.2 Conditions precedent The specific repurchases are subject to, inter alia, the following conditions precedent: - all other aspects of the Dinatla refinancing becoming unconditional; - the requisite approvals being received from the JSE; - the passing of a special resolution by Bidvest"s shareholders which special resolution will be proposed at Bidvest"s annual general meeting to be held on 26 October 2006 ("the Bidvest annual general meeting");
- the registration of the required special resolution by the Registrar of Companies; - the approval of the board of directors of Dinatla; - the approval by the core shareholders of Dinatla; and - the passing and registration of the special resolutions of shareholders of Dinatla to create the Dinatla preference shares and incorporate their terms into its articles. 4.3 Funding for the specific repurchases The Bidvest repurchase will be effected in the main from the proceeds anticipated from the Bidvest option shares amounting to approximately R1,1 billion, with the balance of the specific repurchases to be funded from existing resources.
4.4 Treatment of Bidvest shares to be repurchased BB Investment Company (Pty) Limited currently holds approximately 26 million Bidvest shares as treasury shares, being approximately 8% of the Bidvest shares in issue. The 18 million Bidvest option
shares will be settled from the existing treasury shares held by BB Investment Company (Pty) Limited. The 18 million Bidvest shares to be acquired pursuant to the Bidvest repurchase will be acquired by BB Investment Company (Pty) Limited which will hold
the Bidvest shares repurchased as treasury shares. Any Bidvest shares which may be acquired to the extent that the put option against Bidvest is exercised will, to the extent possible, be acquired by BB Investment Company (Pty) Limited and
thereafter will be acquired by Bidvest directly and will be cancelled and restored to the status of authorised but unissued shares. 4.5 Related party transactions The Bidvest repurchase and the purchase by Bidvest of any shares which may be acquired to the extent the put option is exercised are each classified as related party transactions in terms of the JSE Listings Requirements and advisors must provide a fair and
reasonable opinion on the terms of the Bidvest repurchase and the put option. Advisors will be mandated to advise Bidvest shareholders in this regard. 5. Financial effects of the issue of the Bidvest option shares and the specific repurchases The pro forma financial effects of the issue of the Bidvest option shares and the specific repurchases, which are based on Bidvest"s audited results for the year ended June 30 2006, are as follows: Per Before Pro forma Change Pro forma Cumu- Pro forma Total Bidvest (1) After (1) (%) After (2) lative After (3) change share (cents) After the After the change After the (%) Bidvest issue of the (%) issue of
repurchase Bidvest the option (cents) option shares shares and and Bidvest the repurchase specific
(cents) repurchases (cents) Earnings 796.3 816.5 2.5 788.1 (1.0) 779.0 (2.2) (2) Headline 804.6 825.3 2.6 796.3 (1.0) 787.7 (2.1) earnings (2) Net 2 984.7 2 665.9 (10.7) 2 866.6 (4.0) 2 593.9 (13.1) asset value (3) Net 1 814.9 1 420.2 (21.7) 1 695.7 (6.6) 1 361.3 (25.0) tangible asset value (3) Notes 1. The "Before" financial information has been extracted from the published, audited consolidated results of Bidvest for the year ended June 30 2006. 2. The basic and headline earnings per share calculations have been based on the following: 2.1 the "Before" calculation is based on the weighted average number of 299 976 247 Bidvest shares in issue for the year ended June 30
2006; 2.2 the Pro forma "After" (1) column assumes the Bidvest repurchase was implemented on July 1 2005 and was effective for the full financial year ended June 30 2006 and is based on a weighted
average number of 281 976 247 Bidvest shares. No Secondary Tax on Companies ("STC") has been assumed as it is unlikely that this will arise on the practical implementation of the Bidvest repurchase;
2.3 the Pro forma "After" (2) column assumes the issue of the Bidvest option shares and the Bidvest repurchase were implemented on July 1 2005 and that they were effective for the full financial year ended June 30 2006 and is based on the weighted average number
of 299 976 247 Bidvest shares; and 2.4 the Pro forma "After" (3) column assumes the issue of the Bidvest option shares and the specific repurchases were implemented on July 1 2005 and that they were effective for the full financial
year ended June 30 2006 and is based on a weighted average number of 284 976 247 Bidvest shares. 3. The net asset value and net tangible asset value per share calculations have been based on the following: 3.1 the "Before" calculation is based on 299 154 382 Bidvest shares in issue at June 30 2006; 3.2 the Pro forma "After" (1) column assumes the Bidvest repurchase was implemented on June 30 2006 and is based on 281 154 382
Bidvest shares. No STC has been assumed as it is unlikely that this will arise on the practical implementation of the Bidvest share repurchase; 3.3 the Pro forma "After" (2) column assumes that the issue of the Bidvest option shares and the Bidvest repurchase were implemented on June 30 2006 and is based on 299 154 382 Bidvest shares; and 3.4 the Pro forma "After" (3) column assumes the issue of the Bidvest option shares and the specific repurchases were implemented on
June 30 2006 and is based on 284 154 382 Bidvest shares. 4. The above financial effects are the responsibility of the directors of Bidvest and have been prepared for illustrative purposes only. 6. Salient dates and times, general meeting and documentation The special resolution required to be passed by Bidvest shareholders to implement the specific repurchases will be incorporated as part of the notice of the Bidvest annual general meeting which is expected to be held on or about October 26 2006. Any amendment to the aforementioned date will be published on SENS. Johannesburg September 26 2006 Transaction adviser to Corporate law Bidvest advisers to Bidvest Investec Corporate Edward Nathan Finance Corporate Law Advisres
Joint sponsor to Joint sponsor to Bidvest Bidvest Investec Deutsche Bank
Joint transaction Sole underwriter to Legal advisers to advisers to Dinatla Dinatla Dinatla Wipcapital_hjs Investec Treasury & Specialised Finance MJ King Attorneys
Date: 26/09/2006 01:30:08 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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