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AFE/AFEP - AECI Limited - Update on the proposed B-BBEE transaction and
withdrawal of cautionary announcement
AECI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1924/002590/06)
JSE ordinary share code: AFE
JSE preference share code: AFEP
JSE ordinary share ISIN: ZAE000000220
JSE preference share ISIN: ZAE000000238
("AECI" or "the Company")
UPDATE ON THE PROPOSED B-BBEE TRANSACTION AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
AECI shareholders ("Shareholders") are referred to the detailed terms
announcement released on the Securities Exchange News Service ("SENS")
on Thursday, 13 October 2011 and published in the press on Friday, 14
October 2011 relating to the proposed Broad-based Black Economic
Empowerment ("B-BBEE") transaction ("the proposed B-BBEE Transaction")
and the results of the general meeting and the cautionary announcement
released on SENS on Thursday, 24 November 2011 and published in the
press on Friday, 25 November 2011 ("the 24 November Announcement").
Shareholders are further referred to the circular to Shareholders
containing the full terms of the proposed B-BBEE Transaction ("the
Circular"), posted to Shareholders on Wednesday, 26 October 2011.
2. Mechanics of the proposed B-BBEE Transaction
As set out in the Circular, the proposed B-BBEE Transaction will be
implemented through:
* the creation and the specific issue of 10 117 951 unlisted
redeemable convertible B ordinary shares ("AECI B Ordinary
Shares") to the AECI Employees Share Trust ("the EST"),
constituting 8% of the Net Enlarged Issued Share Capital (as
defined in the Circular); and
* the specific issue of 4 426 604 AECI ordinary shares to the
AECI Community Education and Development Trust ("the CST")
("CST Ordinary Shares"), constituting 3,5% of the Net
Enlarged Issued Share Capital.
3. Changes to the proposed B-BBEE Transaction
In the 24 November 2011 Announcement, Shareholders were advised that
following feedback from key Shareholders on the terms of the proposed B-
BBEE Transaction, the Company was giving further consideration to these
and was engaging with Shareholders in this regard.
Shareholders are hereby advised that, following discussions with key
Shareholders, the transaction term relating to the EST ("the EST Term")
has been amended from seven years to 10 years.
Accordingly, the notional loan provided by AECI to the EST to fund the
subscription by the EST of the 10 117 951 AECI B Ordinary Shares will
now be settled at the end of a period of 10 years, as extended or
anticipated in terms of the EST trust deed .
No other material changes have been made to the terms of the proposed B-
BBEE Transaction.
The amendment to the EST Term will allow AECI to maintain the B-BBEE
benefits derived from the EST for a further three years and, at the
same time, will increase the potential for eligible employees to unlock
greater value from the proposed B-BBEE Transaction.
4. Economic cost
AECI had previously estimated the economic cost of implementing the
proposed B-BBEE Transaction to be approximately R257 million. Based on
the revised EST Term, this figure has been revised upwards to
approximately R260 million, calculated in accordance with International
Financial Reporting Standards ("IFRS"), specifically IFRS 2 - Share-
based Payments.
5. Unaudited pro forma financial effects
Based on the revised EST Term, the unaudited pro forma financial
effects set out below have been prepared to assist Shareholders to
assess the impact of the proposed B-BBEE Transaction on the earnings
per share ("EPS"), headline earnings per share ("HEPS"), net asset
value per share ("NAV") and tangible net asset value per share
("TNAV").
The unaudited pro forma financial effects are presented for
illustrative purposes only and because of their nature may not fairly
present AECI`s financial position, changes in equity, results of
operations or cash flows after the proposed B-BBEE Transaction.
It has been assumed for purposes of the pro forma financial effects
that the proposed B-BBEE Transaction took place with effect from 1
January 2011 for statement of comprehensive income purposes and at 30
June 2011 for statement of financial position purposes.
The Board is responsible for the preparation of the unaudited pro forma
financial effects.
Before Effects of After the Percentage
the B-BBEE B-BBEE change
Transaction Transaction (%)
EPS (cents) 275 (129) 146 (47)
HEPS (cents) 265 (130) 135 (49)
NAV (cents) 4 186 0 4 186 0
TNAV per share 3 184 0 3 184 0
(cents)
Notes:
1. The "Before" column has been extracted without adjustment from the
condensed consolidated unaudited interim financial results for the
half-year ended 30 June 2011.
2. The "After the B-BBEE Transaction" EPS and HEPS have been adjusted
to include the IFRS2 charge of the EST (R14,9 million) and the CST
(R122,1 million), as well as implementation expenses of R2,0
million. The charge relating to the EST is spread over the vesting
period and varies from year to year whilst the charge relating to
the CST is recognised immediately. The weighted average number of
shares in issue has been adjusted to exclude the 10,1 million
shares issued to the EST as these shares are treasury shares and
have not been issued to external parties. The weighted average
number of shares in issue has been adjusted further to exclude the
4,4 million shares relating to the CST as these shares are
contingently returnable and are treated as not outstanding until
the date they are no longer subject to cancellation.
3. The "After the B-BBEE Transaction" NAV and TNAV have been adjusted
to include the IFRS2 charge of the CST, though this has no effect
on the NAV or TNAV. The weighted average number of shares in issue
has been adjusted to exclude the 10,1 million shares issued to the
EST as these shares are treasury shares and have not been issued
to external parties. The weighted average number of shares in
issue has been adjusted further to exclude the 4,4 million shares
relating to the CST as these shares are contingently returnable
and are treated as not outstanding until the date they are no
longer subject to cancellation.
6. Conditions precedent
The proposed B-BBEE Transaction is subject, inter alia, to the
fulfillment of the following conditions precedent:
* the passing of all requisite special and ordinary resolutions by
the requisite majority of votes at a general meeting of AECI
ordinary shareholders;
* the filing of any special resolution with the Companies and
Intellectual Property Commission, to the extent required; and
* the lodging of the amendments to the trust deeds with the Master
of the High Court.
7. Fairness opinion
As set out in the Circular, Ernst & Young Advisory Services Limited
("E&Y"), the independent professional expert appointed by the AECI
board of directors ("the Board") in terms of the Listings Requirements
of the JSE Limited ("JSE"), has considered the terms and conditions of
the AECI B Ordinary Shares and is of the opinion that such terms and
conditions are fair to Shareholders. E&Y has considered the revised
EST Term and has informed the Board that its opinion, as set out in the
Circular, remains unchanged.
8. Supplementary circular and salient dates and times
A supplementary circular setting out the revised terms of the EST ("the
Supplementary Circular") will be posted to Shareholders on or about
Wednesday, 21 December 2011.
A general meeting ("the General Meeting") of AECI ordinary shareholders
will be convened in terms of the notice of General Meeting attached to
and forming part of the Supplementary Circular, on Wednesday, 25
January 2012 at 13h30 at AECI Place, Ground Floor, 24 The Woodlands,
Woodlands Drive, Woodmead, Sandton whereat AECI ordinary shareholders
will be requested to consider and, if deemed fit, pass with or without
modification the resolutions required to implement the proposed B-BBEE
Transaction.
Salient dates and times:
Record date, as determined by the Board, in
accordance with Section 59 of the Companies Act,
for AECI ordinary shareholders to be eligible to
receive the Supplementary Circular and notice of Thursday, 15 December
General Meeting 2011
Last day to trade AECI ordinary shares on the JSE
in order to be recorded in the share register on
the record date to be eligible to vote at the Friday, 13 January 2012
General Meeting
Record date to be eligible to vote at the General Friday, 20 January 2012
Meeting
Last day to lodge forms of proxy for the General
Meeting by 13h30 on Monday, 23 January 2012
General Meeting of AECI ordinary shareholders to
be held at 13h30 on Wednesday, 25 January
2012
Results of General Meeting released on SENS Wednesday, 25 January
2012
Results of General Meeting published in the South
African press Thursday, 26 January
2012
Expected listing of the new AECI ordinary shares
on the JSE on or about Friday, 3 February 2012
Notes:
* All times shown are South African local times.
* These salient dates and times are subject to change. Any material
changes will be released on SENS and published in the South
African press.
9. Withdrawal of cautionary announcement
Shareholders are advised that as the revised EST Term has now been
announced, Shareholders no longer need to exercise caution when dealing
in their AECI Securities in this regard.
Woodmead
19 December 2011
Investment bank and Attorneys and tax Reporting accountants
transaction sponsor advisers and auditors
The Standard Bank of KPMG Inc.
South Africa Limited Webber Wentzel
Accounting advisers Programme and Independent expert
implementation managers
Barnstone Corporate Ernst & Young Advisory
Deloitte Services Proprietary Services Limited
Limited
Corporate sponsor
Rand Merchant Bank (a
division of FirstRand
Bank Limited)
Date: 19/12/2011 13:30:01 Supplied by www.sharenet.co.za
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