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MTN - The acquisition of a 6.98% interest in MTN Nigeria
MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
Share code: MTN
ISIN: ZAE000042164
("MTN")
THE ACQUISITION BY MTN OF A 6.98% INTEREST IN MTN NIGERIA COMMUNICATIONS
LIMITED ("MTN NIGERIA") FROM CERTAIN MINORITY SHAREHOLDERS
1. INTRODUCTION
MTN, acting through its wholly-owned subsidiary, MTN International
(Mauritius) Limited ("MTN International"), intends to acquire a 6.98%
interest in its major subsidiary, MTN Nigeria Communications Limited
("MTN Nigeria") ("the Acquisition") from certain minority shareholders
which include Celtelecom Investments Limited, Celtel Funded Shares
Limited, Universal Communications Limited, SASPV Limited, N-Cell
Limited, Hermitage Overseas Corporation, Mobile Communications Holding
Limited and Mobile Communications Invest Limited ("the SPVs"). The
SPVs are controlled by or associates of individuals (the "Minority
Shareholders") who are non-executive directors of MTN Nigeria and as
such are deemed to be related parties in terms of the Listings
Requirements of the JSE Limited ("Listings Requirements"). Various
agreements have been signed between MTN Nigeria, MTN International,
MTN, the SPVs and the Minority Shareholders on 15 August 2006 ("the
Transaction Agreements") which are still subject to certain technical
conditions precedent.
2. DESCRIPTION OF BUSINESS
MTN Nigeria launched operations in 2001 and is the leading GSM
operator in Nigeria, with a subscriber base of 9.6 million as at 30
June 2006. MTN Nigeria"s GSM network comprises over 2,336 base
stations and an extensive transmission infrastructure, providing
access to approximately 73% of Nigeria"s population. The Acquisition
will increase MTN"s shareholding in MTN Nigeria to 81.87%.
3. RATIONALE
The Acquisition will enable the Minority Shareholders to realise a
portion of their investment in MTN Nigeria. MTN is committed to
enabling a broader spectrum of Nigerians to participate in the
performance of MTN Nigeria. The Acquisition is expected ultimately to
be part of a process to facilitate such broader participation.
4. TERMS OF THE ACQUISITION
In terms of the Transaction Agreements, each of the SPVs will sell its
part of the sale equity (made up of ordinary shares in the share
capital of MTN Nigeria with a nominal value of Naira 1.00 each and
linked shareholder loans of US$0.9925579 each ("Linked Units")) to MTN
International which will purchase such sale equity as one indivisible
transaction on and with effect from the effective date.
The aggregate sale equity comprises 28,085,156 Linked Units ("the Sale
Equity"). The purchase consideration payable by MTN is US$ 12.424 per
Linked Unit representing a total purchase consideration of US$
348,929,978.14 ("the Purchase Consideration").
The effective date will be the fifth business day after the date on
which the last of the conditions precedent is fulfilled or waived,
which is currently anticipated to be 16 October 2006. On the effective
date all risk n and benefit to the Sale Equity and ownership thereof
will pass to MTN.
The Purchase Consideration shall be paid on the effective date as
follows:
* by a payment of US$ 287,760,749.59 in cash; and
* by the issue of 6,093,463 ordinary shares in MTN ("MTN
Consideration Shares") in respect of the remaining Purchase
Consideration.
The cash portion of the Purchase Consideration will be financed
through cash resources available within MTN as well as utilising
available banking facilities. US$ 15,082,114.80 of the cash settlement
amount will be utilised to off-set a portion of the outstanding loan
accounts the Minority Shareholders had with MTN International reducing
the cash obligation to US$ 272,678,634.79.
The share portion of the Purchase Consideration will be settled
through a new issue of MTN shares under the general authority granted
to the directors of MTN at the Annual General Meeting held on 13 June
2006.
The number of MTN Consideration Shares has been determined using the
US$ value of the portion of the Purchase Consideration to be settled
by the transfer of the MTN Consideration Shares divided by US$10.0385.
Fractions of MTN Consideration Shares which could have arisen will not
be delivered to the relevant SPV entitled to receive the MTN
Consideration Shares and instead the consideration in respect of such
fractions of MTN Consideration Shares shall be paid in cash.
5. CONDITIONS PRECEDENT
The acquisition is subject, inter alia, to the fulfilment or waiver of
certain technical conditions precedent by the agreed fulfilment date
or such later date as determined by the parties (provided such date is
no more than 60 days from 18 September 2006). It is anticipated that
these conditions will be fulfilled by no later than 16 October 2006.
6. SMALL RELATED PARTY TRANSACTION
As stated in paragraph 1 above, the Minority Shareholders are related
parties in terms of the Listing Requirements. As the Purchase
Consideration is less than 5% but greater than 0.25% of the market
capitalisation of MTN as at the date of this announcement, the
Acquisition is deemed a small related party transaction.
As a consequence, an independent expert is required to be appointed to
advise the board of MTN whether the terms of the Acquisition are fair
and reasonable to MTN shareholders.
7. OPINIONS
Deutsche Bank AG, London Branch ("Deutsche Bank") has been appointed
as the independent expert to provide a fair and reasonable opinion.
After due consideration of the Acquisition, Deutsche Bank is of the
opinion that the terms of the Acquisition are fair and reasonable to
the shareholders of MTN. Such opinion will be available for inspection
during normal office hours at MTN"s registered office for a period of
28 days from the date of this announcement.
The Directors of MTN, having given due consideration to the terms of
the Acquisition as well as the opinion of Deutsche Bank, are also of
the opinion that the terms of the Acquisition are fair and reasonable
to the shareholders of MTN.
8. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Acquisition have been reviewed
by and are the responsibility of the Directors of MTN. The impact on
Earnings per share, Headline Earnings per share, Adjusted Headline
Earnings per share, Net Asset Value per share and Net Tangible Asset
Value per share are detailed in the table below.
Before After
Reviewed Actual Pro Forma
as at as at %
30/06/2006 30/06/2006 change
cents cents
Earnings per share 288.3 293.8 1.9
Headline earnings per share 289.1 294.6 1.9
Adjusted Headline earnings
per share 278.5 282.5 1.4
Net Asset Value per share 1,664.9 1,597.6 (4.0)
Net Tangible Asset Value per share 1,323.4 1,257.3 (5.0)
For purposes of calculating the pro forma financial effects on Earnings per
share, Headline Earnings per share and Adjusted Headline Earnings per share
as set out in the "After" column of the table, it was assumed that the
transaction was effective throughout the six-month period ended 30 June
2006 and financed through outside borrowings as well as the new issue of
MTN shares.
For purposes of calculating the pro forma financial effects on Net Asset
Value per share and Net Tangible Asset Value per share as set out in the
"After" column of the table, it was assumed that the transaction was
effective 30 June 2006 and that the Acquisition was financed through
outside borrowings as well as the new issue of MTN shares.
The pro forma financial effects have not been reviewed by MTN"s auditors.
Johannesburg
3 October 2006
MTN Sponsor
Merrill Lynch
MTN Independent expert
Deutsche Bank
MTN Attorneys
Webber Wentzel Bowens
Minority Shareholders Financial Advisor
HSBC Bank plc
International Legal Advisors to Minority Shareholders
Denton Wilde Sapte
Nigerian Legal Advisors to Minority Shareholders
Aluko & Oyebode
Date: 03/10/2006 09:39:05 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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