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CEL - Celcom Group - Proposed Disposal Of The V Cellular Business,
Implementation Of A Repurchase Of Shares By Way Of A Scheme Of Arrangement
And De-Listing Of Celcom From The JSE And Withdrawal Of Cautionary
Announcement
CELCOM GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/021219/06)
JSE code: CEL ISIN: ZAE000087490
(the "company" or "Celcom")
PROPOSED DISPOSAL OF THE V CELLULAR BUSINESS, IMPLEMENTATION OF A REPURCHASE
OF SHARES BY WAY OF A SCHEME OF ARRANGEMENT AND DE-LISTING OF CELCOM FROM THE
JSE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement released on SENS on
6 October 2008 and renewed on 17 November 2008.
PROPOSED SALE OF THE V CELLULAR BUSINESS
Celcom and its wholly owned subsidiary V Cellular Stores (Proprietary)
Limited ("V Cellular") have entered into an agreement for the sale of the
business conducted by V Cellular ("the V Cellular disposal") to Magauta
Trading 18 (Proprietary) Limited ("the purchaser").
The purchaser is a company established for the purposes of the V Cellular
disposal by Mr George Aliferis and Mr Blaise Sommerville. G Aliferis is
currently an executive director of Celcom and B Sommerville the managing
director of V Cellular`s business.
The V Cellular business comprises the operation of 18 Vodacom retail
franchise outlets and a Nokia concept store. The V Cellular disposal is being
entered into in the overall context of the share repurchase and delisting of
the company further detailed below.
The V Cellular disposal is subject to the fulfilment of the following
conditions by no later than 30 April 2009:
- the approval thereof by the shareholders of Celcom in accordance with
the provisions of the Companies Act and the JSE`s Listings Requirements (the
V Cellular disposal constitutes a "related party" transaction for the
purposes of the Listings Requirements, in terms of the section 228 of the
Companies Act, the V Cellular disposal requires approval by way of special
resolution of shareholders and the delivery of the company`s own shares to it
by the purchaser in part settlement of the purchase price, further dealt with
below, constitutes a share repurchase requiring shareholder approval by way
of special resolution);
- the scheme of arrangement (as further detailed below) having been
approved by the Celcom shareholders and having been sanctioned by the High
Court of South Africa;
- the proceeds of the Investec facility (referred to below) having become
unconditionally available for drawdown by the purchaser;
- the consent of Vodacom to the transfer of the relevant franchise
agreements (in terms of which the Vodacom retail franchise outlets are
conducted by V Cellular) from Celcom to the purchaser; and
- to the extent necessary, the approval of the Competition Commission.
Assuming fulfilment of the above conditions, the effective date of the
V Cellular disposal will be 1 January 2009.
The consideration payable by the purchaser to Celcom in respect of the
V Cellular business comprises:
- a cash amount of R49 075 000; and
- the delivery to Celcom of 52 457 799 fully paid ordinary shares in
Celcom (the "V Cellular consideration shares").
The purchaser has obtained a facility from Investec Bank Limited in order to
fund the cash portion of the consideration payable to the company. Drawdown
under this facility remains subject to various conditions standard in a
transaction of this nature.
The purchase consideration is to be settled on the implementation date as
against delivery of the V Cellular business to the purchaser.
THE PROPOSED SHARE REPURCHASE BY WAY OF A SCHEME OF ARRANGEMENT
Celcom intends proposing a scheme of arrangement in terms of section 311 of
the Companies Act ("the scheme") between the company and offeree shareholders
in terms of which it will acquire all of the issued ordinary shares in Celcom
held by those offeree shareholders ("the share repurchase").
The offeree shareholders in terms of the scheme ("offeree shareholders" or
"scheme members") are all shareholders in Celcom other than Convergence
Communications (Proprietary) Limited, the S Brachini Family Trust, the
L Brachini Family Trust, Mr Stef Brachini, Mr Luca Brachini and the
Karpathakis Trust (such excluded shareholders hereafter referred to as "the
management and BEE shareholders") and the holders of the V Cellular
consideration shares (as these shares will have been delivered to the company
in part consideration for the V Cellular business and cancelled prior to or
simultaneous with the scheme being implemented).
The consideration to be offered to scheme members in terms of the scheme is a
cash consideration of 50 cents per Celcom share, which represents a premium
of 56.25% to the closing price on 11 December 2008.
The scheme will be subject to the following conditions:
- all conditions to the V Cellular disposal having been fulfilled other
than any condition pertaining to the approval and sanction of the scheme;
- the approval of Celcom shareholders, by way of special resolution, of
the share repurchase in accordance with the provisions of the Companies Act;
- receipt of all necessary regulatory and statutory approvals including
the approval of the JSE Limited and the Securities Regulation Panel;
- the scheme being approved by a majority representing not less than three-
fourths of the votes exercisable by the scheme members present and voting
either in person or by proxy at the scheme meeting;
- the sanctioning of the scheme by the High Court; and
- registration of a certified copy of the Order of Court sanctioning the
scheme by the Registrar of Companies in terms of the Act.
The above conditions must be fulfilled by no later than 30 April 2009 or such
later date as may be agreed to by Celcom.
On fulfilment of the conditions to and implementation of the scheme, the
management and BEE shareholders will hold 100% of the issued shares in Celcom
and application will be made to delist Celcom from the JSE.
Offeree shareholders holding approximately 44% of the votes exercisable by
scheme members have provided irrevocable undertakings to vote in favour of
the scheme.
EXTERNAL ADVICE AND VIEWS OF THE BOARD
Celcom has established a sub-committee of its board, comprising the
independent non-executive directors, who will appoint an independent advisor
to provide the board with external advice in regard to the V Cellular
disposal and the share repurchase as required in terms of the JSE`s Listings
Requirements and the SRP Code. The substance of the external advice and the
views of the board sub-committee will be set out in the circular to be posted
to Celcom shareholders.
FINANCIAL EFFECTS OF THE V CELLULAR DISPOSAL AND THE SHARE REPURCHASE
The pro forma financial effects of the proposed V Cellular disposal and the
scheme set out in the table below are the responsibility of the company`s
directors and have been prepared for illustrative purposes only, to show how
the V Cellular disposal and the scheme terms would have affected the
company`s results for the financial year ended 30 June 2008 (the "audited
results"). Due to their nature, the pro forma financial effects may not
fairly present the company`s financial position, changes in equity, results
of operations or cash flows following implementation of the V Cellular
disposal and the scheme.
(Cents) Before After % Change
EPS 1.83 (5.48) (400%)
HEPS 1.38 (5.42) (491%)
NAV per share 37.67 43.31 15%
NTAV per share (3.87) 23.74 713%
Weighted average shares in issue (`000) 206,399 116,187
Shares in issue (`000) 206,459 116,187
Notes:
The "Before" column reflects the earnings per share ("EPS"), headline
earnings per share ("HEPS"), net asset value ("NAV") and net tangible asset
value ("NTAV") per share as disclosed in the audited results.
2. The "After" column reflects what the EPS and HEPS would have been had
the V Cellular disposal and the scheme taken place on 1 July 2007 and what
the NAV and NTAV per share would have been had the transactions taken place
on 30 June 2008.
3 The consideration received of R75,304,000 in respect of the V Cellular
disposal is settled as follows:
- R49 075 000 in cash; and
- R26 229 000 by the delivery to Celcom of 52 457 799 fully paid ordinary
shares in Celcom.
4 The cash proceeds arising on the V Cellular disposal have been utilised
to effect the share buy-back in terms of the scheme and to reduce interest
expense.
5 37,8 million shares have been repurchased in terms of the scheme.
6 The estimated costs of the transactions have been written off to the
share premium account.
FURTHER DOCUMENTATION
A circular containing full details of the proposed V Cellular disposal and
the scheme and containing notices convening both a general meeting of
shareholders and a scheme meeting will be posted to Celcom shareholders in
due course.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Consequent on the release of this announcement, the cautionary announcements
referred to above are withdrawn and caution is no longer required to be
exercised by Celcom shareholders when dealing in the company`s shares.
15 December 2008
Corporate advisor, legal advisor and Sponsor
Java Capital (Proprietary) Limited
Date: 15/12/2008 13:14:20 Supplied by www.sharenet.co.za
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