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ASR - Assore Limited - Proposed specific share repurchases
Assore Limited
(Incorporated in the Republic of South Africa)
(Registration number 1950/037394/06)
Share code: ASR ISIN: ZAE000017117
("Assore")
PROPOSED SPECIFIC SHARE REPURCHASES
1. INTRODUCTION
Assore shareholders are advised that Assore has entered into an
arrangement with The Standard Bank of South Africa Limited
("Standard Bank") in terms of which Standard Bank will:
- purchase 10.47% of Assore`s issued ordinary share capital
("Assore`s shares") from Old Mutual Life Assurance Company (South
Africa) Limited ("Old Mutual") at R760 per share amounting to
approximately R2.23 billion ("the consideration");
- warehouse such Assore shares acquired from Old Mutual on
Assore`s behalf; and
- subsequently sell such Assore shares to Assore at an amount
equal to the consideration ("the Standard Bank repurchase").
In terms of the Standard Bank repurchase, 1.00% of Assore`s shares
is to be repurchased by Assore and cancelled as issued shares,
with the balance of 9.47% of Assore`s shares to be purchased by
Main Street 460 (Proprietary) Limited, a wholly-owned subsidiary
of Assore ("Assore SubCo") and held as treasury shares.
In addition to the 1.00% of Assore`s shares to be repurchased and
cancelled by Assore under the Standard Bank repurchase, Assore
intends to repurchase and cancel an additional 0.53% of Assore`s
shares from Assore SubCo, which Assore shares are currently held
by Assore SubCo as treasury shares ("the Assore SubCo
repurchase").
2. RATIONALE
On 10 November 2005, Assore concluded an empowerment transaction
pursuant to which 15.02% of Assore`s shares were acquired by
Assore`s Black Economic Empowerment partners, being Shanduka
Resources (Proprietary) Limited and The Bokamoso Trust.
In light of the equity ownership targets specified for the mining
industry under the Broad-Based Socio-Economic Empowerment Charter
for the South African Mining Industry ("the Mining Charter") to be
achieved by 1 May 2014, the Standard Bank repurchase and the
Assore SubCo repurchase will enable Assore, at some future date,
to increase its current level of equity ownership by historically
disadvantaged South Africans (as defined in the Mining Charter)
from 15.02% to 26.00%.
3. DETAILS OF THE WAREHOUSING
Standard Bank has entered into an agreement with Old Mutual to
purchase 2,931,653 Assore shares ("the warehoused shares") from
Old Mutual for the consideration. Standard Bank has further
entered into an agreement with Assore in terms of which Standard
Bank will warehouse the warehoused shares on Assore`s behalf until
such time as Assore is able to obtain the requisite shareholder
approval to repurchase the warehoused shares from Standard Bank at
R760 per Assore share for an aggregate consideration of R2.23
billion, being equal to the amount paid by Standard Bank to Old
Mutual for the warehoused shares.
4. THE SPECIFIC REPURCHASES
The specific repurchases will be implemented by Assore in the
following manner.
4.1 Standard Bank repurchase
The Standard Bank repurchase will be effected:
- in terms of section 85 of the Companies Act 1973 (Act 61 of
1973), as amended ("the Companies Act"), whereby Assore
intends to repurchase and cancel 280,000 Assore shares,
comprising 1.00% of Assore`s shares from Standard Bank ("the
Assore repurchase") at a price of R760 per Assore share for
an aggregate consideration of R212,800,000; and
- in terms of section 89 of the Companies Act, whereby Assore
SubCo intends to purchase 2,651,653 Assore shares, comprising
approximately 9.47% of Assore`s shares from Standard Bank at
a price of R760 per Assore share for an aggregate
consideration of R2,015,256,280.
4.2 The Assore SubCo repurchase
The Assore SubCo repurchase will be effected in terms of
section 85 of the Companies Act, whereby Assore intends to
repurchase and cancel 148,347 Assore treasury shares,
comprising approximately 0.53% of Assore`s shares from Assore
SubCo at a price of R236.90 per Assore share, being the
average price at which these Assore treasury shares were
acquired by Assore SubCo, and thus for an aggregate
consideration of R35,143,275.
5. FUNDING OF THE STANDARD BANK REPURCHASE
The consideration payable by Assore for the Standard Bank
repurchase will be partially funded through the allotment and
issue of preference shares by Assore to Standard Bank for an
aggregate subscription price of R2.2 billion, with the balance
being funded from Assore`s existing cash resources.
6. SUSPENSIVE CONDITIONS
The Standard Bank repurchase is conditional upon, inter alia:
- the approval by the JSE Limited ("JSE") of all documentation to
be sent to Assore shareholders;
- the approval of the ordinary and special resolutions by the
requisite majority of Assore shareholders at a general meeting,
details of which are set out in paragraph 9 below; and
- the registration of all special resolutions by the Registrar of
Companies.
7. VOTING AND IRREVOCABLE UNDERTAKINGS
In terms of the Listings Requirements of the JSE, Standard Bank is
not entitled to exercise its voting rights in respect of the
warehoused shares on resolutions proposed at the general meeting
which relate to the Standard Bank repurchase.
Assore has obtained irrevocable undertakings from Assore
shareholders, representing 78.7% of those shareholders eligible to
vote at the general meeting, to vote in favour of all resolutions
to be proposed at the general meeting relating to the Standard
Bank repurchase.
8. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects set out below are the
responsibility of the Board of Directors of Assore and have been
prepared to assist Assore shareholders in retrospectively
assessing the impact of the Standard Bank repurchase, the
cancellation of 1.00% of Assore shares and the Assore SubCo
repurchase on the earnings per share ("EPS"), headline EPS
("HEPS"), net asset value ("NAV") and tangible NAV ("TNAV") per
share of Assore, for the six months ended 31 December 2007. Due to
the nature of these pro forma financial effects, they are
presented for illustrative purposes only and may not fairly
present Assore`s financial position, or the results of its
operations after the abovementioned transactions.
Consolidated Pro forma Unaudited Percentage
total for adjustments pro forma change
the six after the
months ended repurchase
31 December
2007
EPS (cents) 2,485 446 2,039 -17.9%
HEPS (cents) 2,413 454 1,959 -18.8%
NAV per share 145.7 84.5 61.2 -58.0%
(cents)
TNAV per 143.9 82.8 61.1 -57.5%
share (cents)
Notes and assumptions:
The calculation of the financial effects is based on the following
assumptions:
1. The warehousing agreement with Standard Bank was entered into
on 1 July 2007 and closed on 15 September 2007.
2. The Standard Bank and Assore SubCo repurchases and subsequent
share cancellations were effected on 15 September 2007.
3. A Secondary Tax on Companies ("STC") charge was levied at
12.5% on the share cancellations which was offset by
unutilised STC credits of R20.1 million resulting in a net
charge of R10.8 million.
4. The number of ordinary shares and weighted average number of
ordinary shares in issue before the specific repurchases was
28.0 million and 27.0 million, respectively.
5. The number of ordinary shares and weighted average number of
ordinary shares in issue after the specific repurchases was
27.6 million and 24.0 million, respectively.
6. The preference shares were issued to Standard Bank on 15
September 2007.
7. An STC charge was levied at 10% on the accrued preference
dividend.
8. The prime rate used to calculate the preference share
dividend accrual and the effects on the reduction in the cash
holding and JIBAR used to calculate the warehousing interest
cost were based on the actual rates over the period 1 July
2007 to 31 December 2007.
9. Costs associated with the issue of the preference shares
amounted to R8.2 million and an accrual for the preference
share dividend for the period 15 September 2007 to 31
December 2007 amounted to R72.0 million.
10. Warehousing costs and transaction costs of R80.9 million
were incurred in implementing the transaction.
9. GENERAL MEETING AND CIRCULAR
A general meeting of Assore shareholders to approve the
resolutions relating to the Standard Bank repurchase and the
Assore SubCo repurchase will be held at 10:00 on or about Tuesday,
2 September 2008 at Assore House, 15 Fricker Road, Illovo
Boulevard, Johannesburg, where the necessary resolutions
authorising the Standard Bank and Assore SubCo repurchases will be
proposed to Assore shareholders for consideration ("the general
meeting").
A circular providing additional information on the Standard Bank
repurchase and the Assore SubCo repurchase, and containing, inter
alia, a notice of general meeting and a form of proxy, will be
posted to Assore shareholders on or about Friday, 1 August 2008.
10. IMPORTANT DATES AND TIMES
The expected dates and times in relation to the Standard Bank
repurchase and the Assore SubCo repurchase are set out below:
2008
Posting of the circular to Assore Friday, 1 August
shareholders on or about
Last day to lodge forms of proxy for the Thursday, 28 August
general meeting by 17:00 on or about
Assore`s final results for the year to 30 Monday, 1 September
June 2008, to be released on or about
General meeting of Assore shareholders to be Tuesday, 2 September
held at 10:00 at Assore House, 15 Fricker
Road, Illovo Boulevard, Johannesburg on or
about
Announcement of the results of the general Tuesday, 2 September
meeting released on SENS on or about
Announcement of the results of the general Wednesday, 3 September
meeting published in the press on or about
Special resolutions lodged with the Wednesday, 3 September
Registrar of Companies on or about
Anticipated implementation of the Standard Monday, 15 September
Bank and Assore SubCo repurchases on or
about
Anticipated date of cancellation of shares Monday, 15 September
on or about
Notes:
1. The abovementioned dates and times are South African dates
and times and are subject to change. Any such change will be
released on SENS and published in the press.
2. If the general meeting is adjourned or postponed, forms of
proxy must be received by no later than 48 hours prior to the
time of the adjourned or postponed general meeting, provided
that, for the purpose of calculating the latest time by which
forms of proxy must be received, Saturdays, Sundays and South
African public holidays will be excluded.
11. SUMITOMO TRANSACTION
Assore shareholders are further advised that Sumitomo Corporation
("Sumitomo") has concluded an agreement with Old Mutual in terms
of which Sumitomo has purchased an additional 20% of the issued
ordinary share capital of Oresteel Investments (Proprietary)
Limited ("Oresteel") ("the Sumitomo transaction"). Oresteel is the
controlling shareholder of Assore and currently holds a 52.28%
interest in Assore.
As a result of the Sumitomo transaction, Sumitomo`s shareholding
in Oresteel will increase to 49%. The 51% controlling interest of
the members of the Sacco family, being the founders of Assore in
1950 ("the Sacco Family"), will not in any way be affected or
reduced by either the Sumitomo transaction, the Standard Bank
repurchase or the Assore SubCo repurchase, and subsequent to the
completion of these transactions the Sacco Family will continue to
control Assore through its interest in Oresteel.
Illovo
Johannesburg
25 June 2008
Investment bank and sponsor to Assore
Standard Bank
Attorneys to Assore
Webber Wentzel
Lead funder to Assore
Standard Bank
Reporting accountants and auditors to Assore
Ernst & Young
Attorneys to Sumitomo
Bowman Gilfillan
Attorneys to Standard Bank
Prinsloo, Tindle & Andropoulos
Date: 25/06/2008 08:30:12 Supplied by www.sharenet.co.za
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