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Naspers - Exchange of Johncom interest in Electronic Media Network Limited

Release Date: 14/11/2006 15:37
Code(s): NPN
Wrap Text

Naspers - Exchange of Johncom interest in Electronic Media Network Limited Naspers Limited (Incorporated in the Republic of South Africa) (Registration number 1925/001431/06) Share code: NPN & ISIN: ZAE000015889 ("Naspers" or "the company") EXCHANGE OF JOHNCOM INTEREST IN ELECTRONIC MEDIA NETWORK LIMITED (M-NET)/SUPERSPORT INTERNATIONAL HOLDINGS LIMITED (SUPERSPORT) FOR NASPERS SHARES AND CASH 1. INTRODUCTION Naspers currently owns an effective 60,12% interest in M-Net/SuperSport (29,98% via MultiChoice Africa (Proprietary) Limited (MCSA), 26,33% via MNH Holdings (1998) (Proprietary) Limited (MNH) and 3,81% directly) (collectively, the "Naspers interests"). Johnnic Communications Limited (Johncom) currently owns an effective 38,56% interest in M-Net/SuperSport (an effective 25,01% through its 47,5% via MNH and 13,55% directly) (collectively, the "Johncom interests"). The Johncom interests will be exchanged for a consideration of Naspers shares and cash ("the transaction"). 2. RATIONALE In light of the migration from analogue to digital broadcasting, the introduction of new technologies such as high definition (HD) television and pending competition for content, all of which will increase costs and capital expenditure, the parties have considered it prudent to consolidate the interests of M-Net/SuperSport with those of Naspers. Naspers is currently concluding an empowerment drive within its South African operations. After the above transaction has been concluded, the intention of Naspers is to consolidate the whole of the M-Net/SuperSport shareholding into MCSA. This will ensure that M-Net and SuperSport are appropriately empowered and will secure the best possible position for the new BEE shareholders of MCSA. 3. CONSIDERATION Naspers will issue 20 886 667 Naspers N ordinary shares and pay R250 million in cash to Johncom as consideration for the Johncom interests. 4. INFORMATION RELATING TO M-NET/SUPERSPORT At present, M-Net"s television channels are delivered to subscribers via analogue terrestrial and digital satellite distribution. The existing analogue system, which broadcasts the main M-Net entertainment channel and Community Services Network (CSN) channel, has been in operation for 20 years and is rapidly becoming obsolete. M-Net also compiles some 11 channels for distribution via satellite in South Africa and across the rest of sub-Saharan Africa by MultiChoice, as part of the DStv bouquet. The main markets are Nigeria and Angola. Similarly, SuperSport compiles seven sports channels for distribution in South Africa and across sub-Saharan Africa. These comprise three 24-hour channels, including a dedicated pan-African football channel, a sports update channel, a 24-hour highlights channel, a dedicated interactive sports channel, a Portuguese-language sports channel for Angola and Mozambique, and three ad hoc sports channels. Looking forward, the introduction of several competitors, coupled with the recent weakening of the rand relative to the US dollar, is expected to drive up M-Net/SuperSport"s programming costs. This will cause turbulence and affect profitability over the next few years. 5. FINANCIAL EFFECTS Pro forma financial effects After the transaction, Naspers"s effective stake in M-Net/SuperSport will be 98,7% and M-Net, SuperSport and MNH will be subsidiaries of Naspers. Consequently, the articles of association of each of M-Net, SuperSport and MNH will be amended (to the extent required) to conform to the requirements set out in Schedule 10 of the JSE Limited Listings Requirements. The table below sets out the unaudited pro forma financial effects of the transaction and is based on the published pro forma numbers of Naspers for the year ended 31 March 2006. The unaudited pro forma financial effects, for which the Naspers board is responsible, are presented for illustrative purposes only and may not give a fair reflection of the financial position and results of operations post the implementation of the transaction. Per Naspers share Before the After the % transaction(1) transaction(2) Change EPS EPS (cents) 1 093 1 154 6 HEPS (cents) 729 790 8 Fully diluted EPS EPS (cents) 1 034 1 091 6 HEPS (cents) 689 747 8 NAV (cents)(3) 3 436 4 227 23 NTAV (cents)(3) 2 922 2 697 (8) Number of shares in issue ("000)(4) 290 555 311 441 Weighted average number of shares in issue ("000)(4) 283 719 304 606 Fully diluted weighted average number of shares in issue ("000)(4) 300 243 321 129 Notes: 1. The information "Before the transaction" is based on published pro forma numbers for the year ended 31 March 2006 and takes into consideration the proforma effects of the BEE transactions announced in September 2006. 2. The information "After the transaction" is based on the following assumptions: (i) the transaction was implemented on 1 April 2005 (ii) the R250 million cash used in financing the transaction was earning interest at 7% before tax. 3. The NAV and NTAV per ordinary share "After the transaction" is based on the assumption that the transaction was implemented on 31 March 2006. The purchase price allocation accounting exercise had not been completed and the total excess over the NAV acquired was allocated to goodwill. 4. Naspers issued 20 886 667 shares and used R250 million of its existing cash resources to finance the acquisition. 5. The effect on core HEPS is as follows: * Before the transaction (1): 671 cents * After the transaction (2): 716 cents * % change: 7 6. EFFECTIVE DATE The effective date of the transaction will be on fulfilment of the conditions precedent indicated below. 7. CONDITIONS PRECEDENT The transaction is subject to a number of conditions precedent, inter alia, the approval of the transaction by Johncom"s shareholders and by the appropriate regulatory authorities. Cape Town 14 November 2006 Sponsor to Naspers Investec Corporate Finance Investec Bank Limited (Registration number 1969/004763/06) Attorneys to Naspers Jan S. De Villiers Attorneys Date: 14/11/2006 03:37:14 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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