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RMI - Rand Merchant Insurance Holdings Limited - Abridged pre-listing

Release Date: 21/02/2011 16:21
Code(s): JSE
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RMI - Rand Merchant Insurance Holdings Limited - Abridged pre-listing statement RAND MERCHANT INSURANCE HOLDINGS LIMITED (formerly Main Street 796 (Proprietary) Limited) (Incorporated in the Republic of South Africa) (Registration number 2010/005770/06) JSE Ordinary share code: RMI ISIN: ZAE000153102 ("RMI Holdings" or the "Company") ABRIDGED PRE-LISTING STATEMENT Abridged pre-listing statement relating to the listing of all of RMI Holding`s issued ordinary shares with a par value of R0.0001 each ("ordinary shares") on the main board of the securities exchange operated by the JSE Limited ("JSE") with effect from the commencement of business on Monday, 7 March 2011 (the "Listing Date"). RMB Holdings Limited ("RMBH") will unbundle its ordinary shareholding in RMI Holdings to RMBH ordinary shareholders who hold RMBH ordinary shares on Friday, 4 March 2011. RMBH issued a circular to shareholders on Thursday, 3 February 2011, regarding the RMBH restructuring (the "RMBH circular"). On the same day, RMI Holdings issued a pre-listing statement relating to the listing of its ordinary shares in the "Investment Instruments" sub-sector of the main board of the JSE (the "RMI Holdings pre-listing statement"). The information in this abridged pre-listing statement has been extracted from the RMI Holdings pre-listing statement and the RMBH circular. This abridged pre-listing statement does not constitute an offer to the public (as defined in the South African Companies Act, no. 61 of 1973 (as amended)) to purchase or subscribe for shares, but is issued in compliance with the Listings Requirements of the JSE for the purpose of providing information to the public with regard to RMI Holdings. 1. Overview of the RMBH restructuring RMBH shareholders are referred to the RMBH circular and the RMI Holdings pre- listing statement which contained, inter alia, information regarding the following: - the issue of shares for cash to Royal Bafokeng Holdings (Proprietary) Limited ("Royal Bafokeng") (the "Royal Bafokeng Placement"); - the acquisitions by RMBH of additional ordinary shares in FirstRand Limited ("FirstRand") from Financial Securities Limited ("FSL"), a wholly- owned subsidiary of Remgro Limited, in exchange for the issue of new RMBH ordinary shares, thereby increasing RMBH`s holding in FirstRand to c.33.9% ("First FirstRand Acquisition" and "Second FirstRand Acquisition"); - the separation of RMBH`s insurance and banking interests, through the transfer of RMBH`s insurance interests to a newly incorporated wholly-owned subsidiary of RMBH, RMI Holdings (the "RMBH Insurance Interests Acquisition"); - the unbundling of RMBH`s shareholding in RMI Holdings to RMBH`s ordinary shareholders and the separate listing of RMI Holdings on the JSE Limited as an insurance-focused investment entity (the "RMI Holdings Unbundling"); - the subsequent acquisition by RMI Holdings of additional ordinary shares in MMI Holdings Limited ("MMI Holdings") from FSL, in exchange for the issue to FSL of new RMI Holdings ordinary shares, increasing RMBH`s holding in MMI Holdings to c.24.4% (the "MMI Holdings Acquisition"); and - the acquisition by RMI Holdings of FirstRand`s 45% interest in FirstRand STI Holdings Limited ("OUTsurance") (the "OUTsurance Acquisition") collectively hereinafter referred to as the "RMBH Restructuring". RMBH shareholders have been advised that the Royal Bafokeng Placement was successfully implemented on 9 February 2011. RMBH shareholders were further advised that all of the resolutions required to implement the RMBH Restructuring were duly approved by the requisite majorities at the general meeting of RMBH shareholders held on 18 February 2011. As such, all the conditions precedent to the First FirstRand Acquisition, Second FirstRand Acquisition, RMBH Insurance Interests Acquisition, RMI Holdings Unbundling and the MMI Holdings Acquisition (other than those conditions requiring any other of the transactions to be implemented first) have now been fulfilled. The Competition authorities of South Africa and the Namibian Registrar of Short-Term Insurance have approved the OUTsurance Acquisition. Consequently, the only outstanding condition precedent to the OUTsurance Transaction (which will be the final step in the RMBH Restructuring) is the approval thereof by the South African Registrars of Short-Term and Long-Term Insurance. 2. Rationale for the RMI Holdings Listing The RMBH restructuring will result in the creation of separate focused insurance and banking entities. The two separately listed entry points will provide investors with greater flexibility in terms of their investment choices: Investors in RMBH will have access to a strategic investment in a premier Southern African banking group, owning pre-eminent banking brands that control significant elements of the profit pools of their segments; while Investors in RMI Holdings will have access to a strategic portfolio of insurance investments with significant shares in the profits of various segments of the insurance market. All the companies which will form part of the RMI Holdings portfolio are quality investments that excel in their own segments of the insurance market. 3. Overview of RMI Holdings RMI Holdings will be a listed insurance investment entity holding a 25% interest in the ordinary shares of Discovery Holdings Limited ("Discovery"), a 90% interest in the ordinary shares of OUTsurance, a 76% interest in the ordinary shares of RMB-SI (Proprietary) Limited (RMB-SI") and a 24% interest in the ordinary shares of MMI Holdings. The details of these investments are: 3.1 Discovery Discovery is an integrated financial services organisation that operates in health insurance, life assurance, investment and health and wellness markets. Discovery operates in South Africa, the United Kingdom, China and the United States in the consumer-engaged health insurance, consumer-engaged life assurance and the investment and long-term savings markets. 3.2 OUTsurance OUTsurance is the holding company of a group which conducts short-term and long-term insurance activities. Direct short-term insurance activities are conducted through direct insurers OUTsurance Insurance Company Limited, Youi (Proprietary) Limited (an Australian subsidiary) and OUTsurance Namibia Insurance Company Limited (a joint venture with FNB Namibia Holdings Limited). Intermediated short-term insurance is provided by Momentum Short- Term Insurance Limited, a joint venture with MMI Holdings. The short-term insurance offering includes personal and commercial (South Africa only) products. OUTsurance Life Insurance Company Limited provides long-term insurance products direct to the South African public. The growth of OUTsurance can be attributed to a scientific approach to risk selection together with superior claims management and innovative product design. 3.3 RMB-SI RMB-SI provides a comprehensive range of tailored solutions to select clients in the short-term and long-term insurance sector. RMB-SI`s business model is based on structured business products, underwriting managers and affinity business. 3.4 MMI Holdings MMI Holdings is a leading insurance-based financial services group conducting business in South Africa and elsewhere in Africa. The business of MMI Holdings consists of life insurance, healthcare administration, asset management, short-term insurance and employee benefits. Following the implementation of the RMBH Restructuring, RMI Holdings will, amongst other things, own approximately 24.4% of the ordinary shares in MMI Holdings. RMI Holdings intends to increase its stake in MMI Holdings to over 25% in order to prevent potential structural value traps. 4. Prospects The directors are positive about RMI Holdings` growth prospects in South Africa, Africa and internationally. RMI Holdings anticipates a modest return to growth in the South African economy in 2011, driven by further investment by South African Government and some improvement in consumption levels. Through creating a focused entity with a suite of significant investments in South Africa`s pre-eminent insurance brands, the RMBH Restructuring should provide benefit to RMI Holdings shareholders. 5. Investment policy The main investment criteria for RMI Holdings for new investments can be described as classical "value investing" principles, namely: RMI Holdings will seek to invest in established businesses with demonstrated, consistent earning power, mainly in the financial services sector. It is unlikely that RMI Holdings will invest in turnaround or greenfield situations; RMI Holdings intends to invest in businesses with first class management teams, who should also hold a significant stake in the business, as RMI Holdings aims to enter into long-term partnerships with the management groups. It is intended that RMI Holdings will fund its investments through a combination of debt and equity. 6. Directors The names, ages, nationalities, business addresses and functions of the directors of RMI Holdings are set out below. On the Listing Date, the board will comprise: Name Business Address Occupation/Function Executive directors Peter Cooper (55) 3rd Floor, Chief Executive South African 2 Merchant Place, Officer and Corner Fredman Drive Financial Director and Rivonia Road, Sandton, 2196
Non-executive directors Gerrit Thomas Ferreira (62) 3rd Floor, Non-executive South African Old College Building, Chairman 35 Church Street,
Stellenbosch, 7600 Lauritz Lanser Dippenaar 4th Floor, Director / Director (62) 4 Merchant Place, of companies South African Corner Fredman Drive and Rivonia Road, Sandton, 2196
Jan Willem Dreyer (60) * Carpe Diem Office Park, Director / Director South African Quantum Road, of companies Techno-Park, Stellenbosch,
7600 Jan Jonathan Durand (44) Carpe Diem Office Park, Director / Director South African Quantum Road, of companies Techno-Park,
Stellenbosch, 7600 Patrick Maguire Goss (62) * 15 Suffert Street, Director / Director South African Pinetown, of companies 3600 Paul Kenneth Harris (61) 3rd Floor, Director / Director South African 2 Merchant Place, of companies Corner Fredman Drive
and Rivonia Road, Sandton, 2196 Sonja Emilia Ncumisa Sebotsa 1st Floor, Director / Director (39) * 22 Oxford Road of companies South African (entrance off Federation Road), Parktown,
2193 Khehla Cleopas Shubane (54) 14 Cole Street, Director / Director * Kensington, of companies South African 2094 Matthys Hendrik Visser (56) Carpe Diem Office Park, Director / Director South African Quantum Road, of companies Techno-Park, Stellenbosch,
7600 Notes: * Independent director 7. Salient dates and times 2011 Release of the abridged RMI Holdings pre- Monday, 21 listing statement on SENS on February Issue and listing of new RMBH ordinary shares Tuesday, 22 in terms of the First FirstRand Acquisition on February Release of the abridged RMI Holdings pre- Tuesday, 22 listing statement in press on February Expected date of fulfilment or waiver (where Tuesday, 22 applicable) of the conditions precedent to the February RMI Holdings Unbundling on Last day to trade in dematerialised RMBH Friday, 4 March ordinary shares on the JSE in order to participate in the RMI Holdings Unbundling on RMBH ordinary shares trade ex the entitlement Monday, 7 March to the unbundled RMI Holdings ordinary shares on Listing of unbundled RMI Holdings ordinary Monday, 7 March shares with effect from the commencement of business under the JSE code: RMI, ISIN: ZAE000153102 and abbreviated name RMIH on Commencement of trade in RMI Holdings ordinary Monday, 7 March shares on Record date for RMBH ordinary shareholders to Friday, 11 March participate in the RMI Holdings Unbundling on Expected date of fulfilment or waiver (where Monday, 14 March applicable) of the conditions precedent to the Second FirstRand Acquisition and the MMI Holdings Acquisition on RMI Holdings share certificates posted by Monday, 14 March registered post to certificated RMBH ordinary shareholders on or about Dematerialised RMBH ordinary shareholders have Monday, 14 March their accounts at their CSDP or brokers updated with their unbundled RMI Holdings ordinary shares on Listing of new RMBH ordinary shares to be Wednesday, 16 issued in terms of the Second FirstRand March Acquisition on Listing of new RMI Holdings ordinary shares to Wednesday, 16 be issued in terms of the MMI Holdings March Acquisition on Operative date for the Second FirstRand Wednesday, 16 Acquisition and MMI Holdings Acquisition on March Announcement of specified ratio in respect of Wednesday, 16 the apportionment of the cost / base cost for March taxation / CGT purposes on or about Expected date of fulfilment or waiver (where Friday, 15 April applicable) of the conditions precedent to the OUTsurance Acquisition on Operative date for the OUTsurance Acquisition Friday, 29 April on Any material change to the above dates will be released on SENS and published in the press. 8. Share capital At the Listing Date, the authorised share capital of RMI Holdings will comprise 2,000,000,000 ordinary shares and 100,000,000 preference shares, both having a par value of R0.0001, and the issued share capital of RMI Holdings will comprise approximately 1 361 576 456 fully paid ordinary shares only. RMI Holdings` total share premium at the Listing Date will be approximately R9,795,864,000. As at the Listing Date no ordinary or preference shares will be held by RMI Holdings or its subsidiaries as treasury shares. All ordinary shares that are in issue at the Listing Date will rank pari passu in all respects. 9. Copies of the pre-listing statement Copies of the pre-listing statement are available in English only, which copies may be obtained during normal business hours from Monday, 21 February 2011 until Monday, 7 March 2011 from RMI Holdings, Rand Merchant Bank and Computershare Investor Services (Proprietary) Limited, at their respective physical addresses which appear below: The registered office of RMI The office of Rand Merchant Holdings: Bank: 3rd Floor, 2 Merchant Place 1 Merchant Place, Corner Fredman Drive and Rivonia Corner Fredman Drive and Road Rivonia Road Sandton, 2196 Sandton, 2196 South Africa South Africa The office of Computershare Investor Services(Proprietary) Limited Ground Floor 70 Marshall Street Johannesburg 2001 South Africa Johannesburg 21 February 2011 Merchant bank and transaction sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Legal advisors Webber Wentzel Competition law advisors Werksmans Inc Independent sponsor PricewaterhouseCoopers Corporate Finance (Proprietary) Limited Independent expert KPMG Services (Proprietary) Limited Independent reporting accountants and auditors PwC Inc Date: 21/02/2011 16:21:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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