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GEN - Capitau Holdings Ltd - Further to the cautionary and general
announcements made by Avusa Limited in relation to a potential offer to
acquire the entire issued capital of Avusa
CAPITAU HOLDINGS LTD - FURTHER TO THE CAUTIONARY AND GENERAL ANNOUNCEMENTS
MADE BY AVUSA LIMITED ("AVUSA") IN RELATION TO A POTENTIAL OFFER TO ACQUIRE
THE ENTIRE ISSUED CAPITAL OF AVUSA
We refer to the cautionary and general announcements made by Avusa on 28 March
2011 ("Avusa Announcements").
1. Introduction
An Expression of Interest letter ("EoI") was delivered to the Avusa
Chairman on Sunday, 13 March 2011, which confirmed that a consortium
("the Consortium") led by Capitau Holdings Limited ("Capitau") and
comprising only Capitau and RMB Ventures, one of the private equity
businesses within the FirstRand Limited group ("RMB"), is considering
making an offer to acquire the entire issued ordinary share capital of
Avusa (the "Proposed Acquisition").
The Consortium has an obligation to certain of Avusa`s shareholders to
make public the key terms of the EoI, and accordingly this announcement
summarises the key terms of the EoI not disclosed in the Avusa
Announcements for the benefit of Avusa shareholders and other
stakeholders. The EoI does not constitute a firm intention to make an
offer and is in no way binding on the parties concerned.
2. Rationale
The Consortium is impressed by the operations and strategy of the Avusa
group and it is the Consortium`s intention to work together with
management to grow the business along similar lines over the medium to
long term for the shared benefit of employees, investors and other
stakeholders. The members of the Consortium have well established track
records of successfully implementing industry mergers and acquisitions
and would look to apply such experience to add value in order to grow the
business.
The Consortium is an investment consortium which is serious about
pursuing the Proposed Acquisition. Both Avusa and the Consortium share a
common view that it is essential to maintain the editorial independence
of the Avusa group`s relevant media assets. While discussions are at a
preliminary stage, the Consortium is continuing to engage with the
independent sub-committee established by the Avusa Board (the
"Committee") with a view to implementing the Proposed Acquisition.
3. Abridged terms of the EoI
The EoI contemplates that the Proposed Acquisition, if and when it
proceeds, will be executed by a new company ("Newco") to be formed by the
Consortium, and will be structured on the basis of professional advice
but is likely to be effected by way of either a scheme of arrangement or
a take-over offer in terms of the Companies Act, 1973 or the new
Companies Act, 2008, as the case may be.
The EoI sets out an indicative price of R26.00 per ordinary share, based
on the Consortium`s current assessment of future prospects for Avusa, to
be settled, at the election of the Avusa shareholders, either:
- in cash of R26.00 per share ("cash consideration"); OR
- by way of a "reinvestment alternative" consisting of a combination
of:
i) cash of R18.00 per share; AND
ii) cumulative redeemable preference shares in the share capital of
Newco with a subscription price of R5.00 for every share held
in Avusa; AND
iii) ordinary shares in the share capital of Newco with a
subscription price of R3.00 for every share held in Avusa
in such proportions as will, upon election by the holder of the
reinvestment alternative in respect of its shares in Avusa, result in the
re-investing Avusa shareholders being entitled to their pro rata
percentage of the ordinary and preference issued share capital of Newco.
Subject to such amendments as may be prudent, or advisable, it is
intended that on successful implementation of the Proposed Acquisition:
- all of the ordinary shares in Avusa shall be held by Newco; and
- Newco shall be held as to no more than 70% of its ordinary issued
share capital by the current Avusa shareholders, and as to the
balance thereof, by the Consortium.
This will constitute Avusa as a wholly owned subsidiary of Newco and
necessitate its delisting from the JSE Limited.
Any ordinary shareholder of Avusa that accepts the "reinvestment
alternative" and wishes to purchase and subscribe for more than its pro
rata proportion of the ordinary and preference shares in the share
capital of Newco, may elect to do so (each, an "Accepting Offeree"). To
the extent that existing Avusa ordinary shareholders do not take up the
re-investment alternative and the Consortium holds surplus shares over
and above the minimum of 30% of Newco`s ordinary issued share capital,
such surplus Newco shares ("Available Shares") will be available for this
purpose, with the ratio of Newco ordinary shares to preference shares
remaining the same. If there is more than one Accepting Offeree, the
Available Shares will be allocated among such Accepting Offerees pro rata
to their acceptances, but on the basis that no Accepting Offeree will be
obliged to purchase more than the maximum number of Available Shares
desired by it. The cash consideration due to it/them pursuant to the re-
investment option will be reduced accordingly.
The above price of R26.00 represents a 30.0% premium to the spot price on
the last trading day prior to the date of the EoI and a 19.7% premium to
the 30 day volume weighted average price calculated from the last trading
day prior to the date of the EoI.
The indicative offer price as detailed above will be increased with
interest at prime + 200bps from the earlier of the date of the scheme /
shareholders` meeting, if applicable, or 15 August 2011, until the
settlement date of the Proposed Acquisition.
4. Irrevocable undertakings
The Consortium has approached and received irrevocable undertakings in
support of the Proposed Acquisition from holders of 59% of the Avusa
shares (copies of which have been provided to the Committee).
Furthermore, of the 59% mentioned above, holders of 38% of the Avusa
shares have undertaken to vote against any scheme proposed by, and not to
agree to the sale of their shares to, any party other than the
Consortium.
Mvelaphanda Group Limited ("Mvela Group") is not a member of the
Consortium as has been speculated in the press, but is one of the Avusa
shareholders who have signed an irrevocable undertaking in support of the
Proposed Acquisition. Furthermore, Mvela Group has committed to elect the
re-investment alternative described above, which will be available to all
Avusa shareholders.
5. Conditions precedent
In addition to the conditions summarised in the Avusa Announcements, the
Proposed Acquisition shall be subject to conditions which are usual for
transactions of this nature including, inter alia:
- no material adverse changes in the position of Avusa (as defined in
the EoI) coming to the attention of Newco before the date the scheme
or general offer becomes unconditional; and
- obtaining all necessary approvals and acceptances from competition
authorities, regulatory bodies and shareholders.
The EoI assumes, and is made on the basis, that, pending the offer (if
made) becoming unconditional in all respects or lapsing or being
withdrawn:
- there will be no significant changes to the business of Avusa and
its subsidiaries, no extraordinary investments and capital
expenditure and there will be no disposal of assets of a material
amount;
- there will be no changes or alterations to Avusa`s issued and
authorised share capital amounts, the articles and memorandum of
association of Avusa or the existing service or employment
agreements or arrangements of any nature whatsoever with any of the
Avusa group`s management or employees; and
- no extraordinary dividend, distribution or bonus will be declared,
paid or made in respect of the profits or capital of Avusa.
6. Engagement with the Committee
Following the submission of the EoI, the Consortium has, at the request
of the Committee, provided additional information and copies of relevant
documentation to the Committee.
The Consortium continues to engage with the Committee and further
announcements regarding the Proposed Acquisition will be made as and when
required to ensure Avusa shareholders and other stakeholders are kept
informed.
7. Consortium responsibility statement
The Consortium accepts responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the
Consortium (who have taken all reasonable care to ensure that such is the
case) the information contained in this announcement is in accordance
with the facts and does not omit anything likely to affect the import of
such information.
29 March 2011
Johannesburg
Financial advisor to Capitau Holdings Ltd and the Consortium
Investec Bank Limited
Legal advisor to Capitau Holdings Limited and the Consortium
Bowman Gilfillan
Date: 29/03/2011 16:59:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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