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CSB - Cashbuild Limited - Specific repurchase of Cashbuild ordinary shares from
the Cashbuild Empowerment Trust ("the Trust") ("specific repurchase")
Cashbuild Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/001503/06)
Share code: CSB ISIN: ZAE000028320
("Cashbuild" or "the Company")
SPECIFIC REPURCHASE OF CASHBUILD ORDINARY SHARES FROM THE CASHBUILD EMPOWERMENT
TRUST ("the Trust") ("specific repurchase")
1 Introduction and background
In 2005, Cashbuild implemented a Black Economic Empowerment ("BEE")
transaction, through the introduction of all of its employees, of whom more
than 90% qualified as historically disadvantaged individuals
("participants"), as indirect shareholders of Cashbuild ("the
transaction").
The transaction was effected through the establishment of a perpetual blind
trust, with the Trust subscribing for approximately 2.5 million shares
representing 10% of the ordinary shares in Cashbuild at the time. The Trust
was funded by way of a non interest bearing loan from Cashbuild Management
Services (Proprietary) Limited ("CMS"), a wholly owned subsidiary of
Cashbuild. The loan provided by CMS was in the amount of R75 million, and
was used to subscribe for approximately 2,5 million ordinary shares at
R29.09 per ordinary share. The repayment of the aforementioned R75 million
loan, is in terms of the provisions of the trust deed only required to be
made on termination of the Trust.
Given the significant increase in Cashbuild`s ordinary share price to date,
there has been a substantial amount of value created in the Trust. In light
of this and in the spirit of true wealth distribution, the Company and the
Trust would like to release a portion of this value to the participants and
accordingly have entered into a repurchase agreement (`the Repurchase
Agreement") dated 27 October 2010 in terms of which a specific repurchase
of 615 536 ordinary shares is proposed, which shall constitute an aggregate
value of R50 million (fifty million rand), based on the 30 (thirty) day
volume weighted average price, calculated on the date on which the
Repurchase Agreement was entered into is proposed, which specific
repurchase shall be undertaken out of the distributable cash reserves of
the Company (save for the par value of the repurchased ordinary shares,
which will be undertaken out of share capital). The proceeds of the
specific repurchase will be distributed to participants in five quarterly
payments commencing on 15 February 2011.
In order to effect the specific repurchase, to enable the Trust to sell
ordinary shares to the Company and subsequently make distributions to
participants, there are certain amendments which need to be made to the
trust deed governing the Trust; these are discussed in further detail
below.
2 The specific repurchase
Cashbuild will repurchase ordinary shares to the value of approximately R50
million from the Trust out of distributable cash reserves (save for the par
value portion of the repurchased ordinary shares, which will be undertaken
out of share capital). The consideration payable in respect of the specific
repurchase will be R81.23 rand per share based on the 30 (thirty) day
volume weighted average price, calculated on the date on which the
Repurchase Agreement was entered into, being 27 October 2010. The ordinary
shares will be cancelled pursuant to the specific repurchase being
implemented and will be restored to the authorised but unissued ordinary
share capital of the Company.
3 The amendments to the trust deed governing the Trust
The trust deed governing the Trust is required to be amended as set out in
the Notarial Deed of Variation of Trust entered into on 1 November 2010, to
align the vested rights of participants with corporate events to be
undertaken by the Company and the Trust, namely the repurchase by the
Company of certain shares held by the Trust from time to time, and to
distribute the proceeds of the repurchase by the Company as aforesaid, less
certain costs and disbursements, to the participants.
4 Conditions precedent
The specific repurchase and amendments to the Trust are subject to the
following conditions precedent:
- shareholder approval;
- the registration of the special resolution authorising the specific
repurchase by the Registrar of Companies; and
- the registration of the Notarial Deed of Variation of Trust by the
Master of the High Court, Pretoria.
5 Unaudited pro forma financial information
The table below sets out the unaudited pro forma financial effects of the
specific repurchase on Cashbuild`s earnings per share ("EPS"), headline
earnings per share ("HEPS"), net asset value per share ("NAV") and net
tangible asset value per share ("NTAV"). The unaudited pro forma financial
effects and the preparation thereof, which is the responsibility of the
directors of Cashbuild, has been prepared for illustrative purposes only,
and because of its nature, may not give a fair reflection of Cashbuild`s
financial position and results of operations, nor the effect and impact of
the specific repurchase on Cashbuild going forward.
Before (1) After the % Change
specific
repurchase
and
distribution
(2)
Earnings per share 721.2 459.4 (36.3)
(cents)(3)
Headline earnings per 717.2 455.4 (36.5)
share (cents)(3)
Net asset value per 3,071 2,823 (8.1)
share (NAV) (cents)(4)
Net tangible asset 2,947 2,699 (8.4)
value per share (NTAV)
(cents)(4)
Weighted average number 22,709 22,709
of shares (`000)(5)
Consolidated shares in 22,709 22,709
issue (`000)(5)
Notes
1 Based on the published audited annual financial results of Cashbuild
for the year ended 30 June 2010.
2 Represents the unaudited pro forma financial effects after the
specific repurchase and subsequent distribution to participants, which
has been accounted for in terms of IFRS2: Share Based Payment as a
cash-settled share-based payment.
3 Earnings and headline earnings per share effects are based on the
following principal assumptions:
* the specific repurchase was effective on 1 July 2009;
* the specific repurchase of R50 million and subsequent
distribution to participants is expensed as an employee cost,
which is once-off in nature;
* Secondary tax on companies ("STC") of R5 million, calculated at
10 percent of the specific repurchase, which is deemed as a
dividend for tax purposes which is once-off in nature;
* transaction costs of R1.3 million, which are once-off in nature;
and
* Interest foregone on the specific repurchase, STC and transaction
cost at an average rate of 7.69% pa before tax assuming the full
distribution was paid 1 July 2009 which is recurring in nature;
and
4 NAV and TNAV per share effects are based on the following principal
assumptions:
* the specific repurchase was effective on 30 June 2010;
* the specific repurchase and subsequent distribution to
participants of R50 million and the resulting STC effect of R5
million is settled in cash from reserves; and
* transaction costs of R1.3 million, which are once-off in nature.
5 The specific repurchase has no impact on weighted average and number
of shares in issue due to the Trust being consolidated and shares held
by the Trust are eliminated.
6 Further details
A circular giving further details will be included in the notice of annual
general meeting, which forms part of the annual report, to be posted to
shareholders on or about 11 November 2010. The annual general meeting is
proposed to be held on Monday, 6 December 2010, at which the resolutions
proposed to give effect to the specific repurchase and amendments to the
trust deed governing the Trust, will be proposed.
7 Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 21 September
2010, and are advised that caution is no longer required to be exercised by
shareholders when dealing in their securities.
Johannesburg
08 November 2010
Investment bank and sponsor
Nedbank Capital
Corporate law advisers and consultants
Webber Wentzel Attorneys
Independent reporting accountants
PricewaterhouseCoopers Inc.
Date: 08/11/2010 12:00:01 Supplied by www.sharenet.co.za
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