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BCX/BCA - Business Connexion Group Limited - Announcement relating to

Release Date: 21/07/2011 15:38
Code(s): BCX BCA
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BCX/BCA - Business Connexion Group Limited - Announcement relating to the Repurchase and Delisting of BCX "A" shares BUSINESS CONNEXION GROUP LIMITED (Incorporated in the Republic of South Africa) (Registration number 1988/005282/06) Ordinary share code: BCX ISIN: ZAE000054631 "A" share code: BCA ISIN ZAE000156154 ("BCX") ANNOUNCEMENT RELATING TO THE REPURCHASE AND DELISTING OF BCX "A" SHARES ("THE TRANSACTION") 1) Introduction and details of the Transaction BCX "A" shareholders and BCX ordinary shareholders ("Shareholders") are referred to the pre-listing statement relating to the listing of BCX "A" shares (""A" Shares") on the exchange operated by the JSE Limited ("JSE") dated 6 May 2011, wherein Shareholders were advised that the JSE had granted BCX the authority to list the entire class of "A" Shares pursuant to the acquisition of certain of UCS Group Limited`s subsidiaries ("UCS Target Assets") ("UCS Acquisition") with effect from the commencement of business on 29 April 2011, subject to the following conditions: - the maximum votes that the listed "A" Shares will be entitled to exercise in the entire ordinary share capital (comprising of BCX ordinary shares and "A" Shares) would be 20%; - the "A" Shares could be listed for a maximum period of three months from the date of listing; - no further "A" Shares were to be issued (other than in relation to the acquisition of the UCS Target Assets); and - after the said period of three months, BCX would make a fair offer to BCX "A" shareholders ("Offeree Shareholders") (excluding the BCX "A" shareholders holding the 75,100,000 "A" shares issued as part of the BCX Black Economic Empowerment ("BEE") Transaction ("Excluded Shareholders")) to repurchase their 25,033,334 "A" Shares ("Offeree Shares"), following which all the "A" Shares would be delisted. Consequently, BCX is now proposing to repurchase and delist the Offeree Shares for 75 cents per Offeree Share by way of a scheme of arrangement in terms of section 114(1)(c) of the Companies Act, Act 71 of 2008 ("the Act") ("Scheme") or an alternative offer ("Alternative Offer") should the Scheme fail for whatever reason. 2) The Excluded Shareholders The Excluded Shareholders will not participate in the Scheme and their "A" Shares will not be repurchased by BCX pursuant to the Scheme as the intention is that the BCX BEE Transaction, involving the "A" Shares, will continue to be in force and effect after the delisting. 3) The Scheme and Alternative Offer As set out above, the Offeree Shares are required to be repurchased by BCX and delisted. A fair offer to repurchase the Offeree Shares is therefore being made to the holders of such shares by BCX. Taking cognisance of the fact that the requisite 75% shareholder approval for the Scheme is not guaranteed which would result in the inability to delist the "A" Shares by means of a Scheme, an Alternative Offer will be made by BCX in the event that the Scheme fails, for whatever reason. 4) Fairness opinion The BCX board has appointed Deloitte & Touche Corporate Finance as the independent expert to provide a fairness opinion on the consideration price. The fairness opinion will be included in the circular to be posted to Shareholders on or about 01 August 2011. 5) Unaudited pro forma financial information The unaudited pro forma financial information has been prepared for purposes of complying with the requirements of the JSE to provide information about how the Transaction might have affected the reported financial information had the Transaction been undertaken on 1 September 2009 for purposes of the statement of comprehensive income and on 31 August 2010 for purposes of the statement of financial position and is for illustrative purposes only. The unaudited pro forma financial effects are the responsibility of the BCX directors and have been prepared for illustrative purposes only to provide information about how the Scheme or Alternative Offer may have affected BCX`s financial position on the relevant reporting date. Due to their nature, the unaudited pro forma financial effects may not fairly present BCX`s financial position, changes in equity, results of operations or cash flow after the implementation of the proposed Transaction. After the UCS Unaudited Pro- % Acquisition , forma after the change Destiny Transaction Disposal and
Canoa Acquisition, before the Transaction
Headline earnings 46.1 45.8 (0.7) per share ("HEPS") (cents) Basic earnings per 54.7 54.4 (0.5) shares ("EPS") (cents) Diluted HEPS per 40.8 40.6 (0.5) share (cents) Diluted EPS per 48.4 48.2 (0.4) share (cents) Net asset value per 512.1 511.8 (0.1) share(cents) Tangible net asset 370.8 365.8 (1.3) value per share (cents) Number of Shares in 404,972 404,972 0 issue (000`s) Weighted average 362,097 362,097 0 number of Shares in issue (000`s) Diluted weighted 408,879 408,879 0 average number of Shares (000`s) Assumptions 1) The financial information before the UCS Acquisition, the disposal of BCX`s 70% shareholding in and all of its loan claims against Destiny E-Commerce (Proprietary) Limited ("Destiny Disposal") and the acquisition of 50% plus one share in the issued share capital of Dusty Moon Investments 333 (Proprietary) Limited, a company which holds 100% of the entire issued share capital of Cedar Point Trading 373 Proprietary Limited and Newmillen Investments 117 Proprietary Limited (collectively the "Canoa Group") ("Canoa Acquisition") has been based on BCX`s published and audited statement of financial position as at 31 August 2010 and the statement of comprehensive income for the year ended 31 August 2010 2) The pro forma financial effects have not been based on the recently published BCX interim results for the six months ended 28 February 2011 as they did not account for the UCS Acquisition, the Destiny Disposal and the Canoa Acquisition. It is therefore more meaningful to base the financial effects on the results for the year ended 31 August 2010 as there would be continuity of the acquisition of the UCS Target Assets, the Destiny disposal and the Canoa acquisition. The unaudited pro forma financial effects of the Transaction on BCX shareholders are set out below and are based on the BCX audited results for the year ended 31 August 2010, adjusted for: 1) The audited management accounts for the year ended 30 September 2010 of the UCS Acquisition that became effective on 11 May 2011 and was published in a Circular to BCX shareholders posted on 9 March 2011. 2) The Destiny Disposal, which was one of the UCS Target assets, as announced on SENS on 24 May 2011, 2 June 2011 and 3 June 2011 (based on the management accounts). 3) Unaudited management accounts for the year ended 28 February 2011 for all Canoa Group companies except Cedar Point Trading 373 Proprietary Limited and Smart Office Eastern Cape Proprietary Limited whose unaudited management accounts are for the year ended 30 June 2010. BCX is satisfied with the quality of these management accounts based on the due diligence reviews performed. 4) The circular to BCX Shareholders posted on 9 March 2011 did not account for the issue of the "A" Shares at acquisition of the UCS Target Assets. For accounting purposes, as a result of the terms of the "A" Shares, the "A" Shares issued are treated as a liability based on an issue price of 78 cents per "A" Share. 5) The Offeree Shares are repurchased at a price of 75 cents per Offeree Share, assumed to be the fair market value on the date of Repurchase. It has been assumed that the Scheme will be implemented or the Alternative Offer will be accepted in relation to all Offeree Shares. Transaction costs of approximately R1,7 million have been expensed. Should the Alternative Offer be implemented, it is assumed that the costs will be the same as for the Scheme. 6) Conditions precedent The Scheme is subject to the fulfilment, or waiver (in whole or in part) by BCX, of the following suspensive conditions by no later than 12:00 Friday, 16 September 2011: 6.1. the approval of the repurchase by way of a Scheme or the Alternative Offer as the case may be, by the requisite majority of applicable Shareholders at each of the General Meeting, Scheme Meeting and Class Meeting as contemplated in section 115(2)(a) of the Act, and (a) to the extent required, the approval of the implementation of such resolution by a Court in terms of section 115(2)(c) of the Act and (b) if applicable, BCX not treating the aforesaid resolution as a nullity, as contemplated in section 115(5)(b) of the Act; 6.2. in relation to any objection to the Scheme by Shareholders, either: 6.2.1. Shareholders give notice objecting to the Scheme as contemplated in section 164(3) of the Act and vote against the special resolution proposed at the General Meeting in respect of no more than 1% of all the ordinary shares; or 6.2.2. if Shareholders do give notice objecting to the Scheme and vote against the special resolution proposed at the General Meeting as set out above in respect of more than 1% of all the BCX shares (comprising of BCX ordinary shares and "A" Shares), within 30 business days following the General Meeting, the applicable Shareholders have not exercised appraisal rights, by giving valid demands in terms of sections 164(5) to 164(8) of the Act, in respect of more than 1% of all BCX shares; and 6.3. the receipt of unconditional approvals, consents or waivers from all regulatory bodies, the Takeover Panel (in terms of a compliance certificate to be issued in terms of the Act in relation to the Scheme), or, to the extent that any such approvals, consents or waivers are subject to conditions, such conditions being satisfactory to BCX. 6.4. Should all the conditions precedent not have been fulfilled or waived, as the case may be, on or before 12:00 Friday, 16 September 2011 or by such later date as may be determined by BCX, subject to the approval by the Takeover Panel and the JSE (if necessary), the Scheme shall not become operative and shall be of no force or effect. Should this occur, BCX will proceed with the Alternative Offer. 6.5. An announcement will be published on SENS and in the South African press as soon as practicable after all the conditions precedent have been fulfilled or waived, as the case may be, or if the Scheme lapses pursuant to the provisions of paragraph 5.4 above. 7. Meetings A General Meeting of BCX applicable Shareholders, a Class Meeting of Excluded Shareholders and a Scheme Meeting of the holders of the Offeree Shares will be held on or about 30 August 2011, where authority to implement the transaction will be sought in line with the resolutions set out in the notices to be sent with the circular to Shareholders. An announcement will be made on SENS, when the circular is posted on or about 01 August 2011, providing Shareholders with information on the salient dates and times relating to Scheme and Alternative Offer. Midrand 21 July 2011 Merchant bank and sponsor to BCX RAND MERCHANT BANK (A division of FirstRand Bank Limited) Independent sponsor PricewaterhouseCoopers Corporate Finance Proprietary Limited Legal advisors Cliff Dekker Hofmeyer Independent expert Deloitte & Touche Corporate Finance Date: 21/07/2011 15:38:01 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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