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AVU/MVG - Avusa Limited/Mvelaphanda Group Limited - Joint announcement of the
financial effects relating to a firm intention by Mvela Group to make an offer
Avusa Limited
Incorporated in the Republic of South Africa
Registration number: 2008/002461/06
Ordinary share code: AVU
ISIN code: ZAE000115895
("Avusa")
Mvelaphanda Group Limited
Incorporated in the Republic of South Africa
Registration number: 1995/004153/06
Ordinary share code: MVG
ISIN code: ZAE000060737
("Mvela Group")
Richtrau No. 229 (Proprietary) Limited
Incorporated in the Republic of South Africa
Registration number: 2008/009392/07
("Richtrau")
JOINT ANNOUNCEMENT OF THE FINANCIAL EFFECTS RELATING TO A FIRM INTENTION BY
MVELA GROUP TO MAKE AN OFFER, THROUGH ITS WHOLLY OWNED SUBSIDIARY RICHTRAU, TO
ACQUIRE THE ENTIRE ISSUED AND TO BE ISSUED ORDINARY SHARE CAPITAL OF AVUSA
THAT IT DOES NOT ALREADY BENEFICIALLY OWN AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
This announcement follows the joint announcement on Tuesday, 12 June 2012
relating to a firm intention by Mvela Group to make an offer, through its
wholly owned subsidiary Richtrau, to acquire the entire issued and to be
issued ordinary share capital of Avusa that it does not already beneficially
own ("firm intention announcement").
All expressions defined in the firm intention announcement and used in this
announcement shall bear the meaning assigned to them in the firm intention
announcement, unless such words or expressions are otherwise defined in this
announcement.
1. Pro-forma financial effects
The pro-forma financial effects of the Proposed Transaction for Avusa
shareholders and Mvela Group shareholders are illustrated below:
1.1 Unaudited pro-forma financial effects on the earnings and net asset value
pertaining to the Avusa Shares which will be exchanged for ordinary
shares in Richtrau ("Richtrau Shares"):
The unaudited pro-forma financial effects on the earnings and net asset
value pertaining to the Avusa Shares which will be exchanged for the
Richtrau Shares, for which the independent board of Avusa is responsible,
are provided for illustrative purposes only to provide information about
how the Proposed Transaction could affect the financial position of the
Avusa Shareholders who elect to receive the Share Consideration and the
effect thereof on the earnings per share ("EPS"), diluted earnings per
share ("DEPS"), headline earnings per share ("HEPS") and diluted headline
earnings per share ("DHEPS") of Avusa compared to Richtrau as if the
Proposed Transaction had become operative on 1 April 2011, and as regards
the net asset value per share ("NAVPS") and net tangible asset value per
share ("NTAVPS") of Avusa compared to Richtrau as if the Proposed
Transaction had become operative on 31 March 2012. Because of their
nature, the unaudited pro-forma financial effects may not give a fair
presentation of Richtrau`s results of operations and financial position.
The unaudited pro-forma financial effects have been compiled from the
audited consolidated financial statements of Avusa for the 12 months
ended 31 March 2012, and are presented in a manner consistent with
Avusa`s accounting policies and have been adjusted as described in the
notes set out below.
As there is still some uncertainty of the impact on Richtrau due to the
ability for Avusa shareholders to elect the Cash Consideration and/or
Share Consideration for their Avusa shares, the tables below present two
distinct scenarios. The first scenario and table assumes that Avusa
Shareholders elect the maximum Cash Consideration under the Scheme of
R1,130,000,000. The second scenario and table assumes that Avusa
Shareholders elect the maximum Share Consideration under the Proposed
Transaction of 67.7% of the Offer Shares.
Assuming maximum Cash Consideration election by Avusa Shareholders
Avusa Adjustments Richtrau %
Shares Shares Change
Before the After the
Proposed Proposed
Transaction Transaction
(Note 1) (Notes 2 -
8)
EPS (cents) 126.3 (78.7) 47.6 (62.3)
DEPS (cents) 126.2 (78.7) 47.6 (62.3)
HEPS (cents) 110.9 (78.2) 32.7 (70.5)
DHEPS (cents) 110.8 (78.1) 32.7 (70.5)
NAVPS (cents) 1,714.1 (812.9) 901.2 (47.4)
NTAVPS (cents) 931.0 (796.2) 134.8 (85.5)
Weighted 123,562 127,077
average number
of shares in
issue (`000)
Diluted 123,602 127,077
weighted
average number
of shares in
issue (`000)
Actual number 124,377 127,077
of shares in
issue (`000)
Assuming maximum Share Consideration election by Avusa Shareholders
Avusa Adjustments Richtrau % Change
Shares Shares
Before the After the
Proposed Proposed
Transaction Transaction
(Note 1) (Notes 2 -
8)
EPS (cents) 126.3 (69.0) 57.3 (54.6)
DEPS (cents) 126.2 (68.9) 57.3 (54.6)
HEPS (cents) 110.9 (66.3) 44.6 (59.8)
DHEPS (cents) 110.8 (66.2) 44.6 (59.8)
NAVPS (cents) 1,714.1 (702.6) 1,011.5 (41.0)
NTAVPS (cents) 931.0 (569.2) 361.8 (61.1)
Weighted 123,562 149,914
average number
of shares in
issue (`000)
Diluted 123,602 149,914
weighted
average number
of shares in
issue (`000)
Actual number 124,377 149,914
of shares in
issue (`000)
Notes and assumptions:
1. The financial information in the "Before the Proposed Transaction" column
has been based on the audited consolidated financial statements of Avusa
for the 12 months ended 31 March 2012.
2. The weighted average number and actual number of Richtrau Shares in issue
"After the Proposed Transaction" is based on an exchange ratio of 1.47707
Richtrau ordinary shares per Avusa ordinary share as detailed in the firm
intention announcement. As a result, Avusa Shareholders who elect to
receive the Share Consideration will receive 1.47707 Richtrau ordinary
shares per Avusa ordinary share, which has a dilutive effect on the EPS,
DEPS, HEPS, DHEPS, NAVPS and NTAVPS. For comparative purposes, in order
to understand the effect of the Proposed Transaction on the financial
position of Avusa Shareholders who elect to receive the Share
Consideration, one should multiply the EPS, DEPS, HEPS, DHEPS, NAVPS and
NTAVPS as set out in the "After the Proposed Transaction" column by the
exchange ratio of 1.47707.
3. The EPS, DEPS, HEPS and DHEPS included in the "After the Proposed
Transaction" column have been prepared by including the earnings effects
of the Proposed Transaction on the audited consolidated financial
statements of Avusa for the 12 months ended 31 March 2012, as if the
Proposed Transaction had become operative on 1 April 2011.
4. The EPS, DEPS, HEPS and DHEPS included in the "After the Proposed
Transaction" column have been prepared on the basis that the Proposed
Transaction is accounted for as a reverse acquisition of Richtrau by
Avusa in accordance with IFRS 3: Business Combinations and have been
adjusted for the following:
a. the inclusion of once-off transaction costs amounting to an estimated R36
million;
b. the inclusion of finance costs net of taxation and debt raising fees, for
12 months on debt raised in terms of the Proposed Transaction. A tax rate of
28% has been assumed;
c. the reversal of charges net of taxation in terms of IFRS 2: Share-based
Payments, for the 12 months ended 31 March 2012, which would not have arisen
if the Proposed Transaction had become operative on 1 April 2011;
d. as a result of the Proposed Transaction being accounted for as a reverse
acquisition, any impact of the Proposed Transaction on existing Avusa share
incentives in issue are accounted for in equity as opposed to earnings.
Similarly no dilutive effect has been accounted for; and
e. no additional charge in terms of IFRS 2: Share-based Payments incurred as a
result of a new management incentive scheme as a new management incentive
scheme has not yet been determined and the effects cannot be quantified;
5. The NAVPS and NTAVPS included in the "After the Proposed Transaction"
column have been prepared by incorporating the effects of the Proposed
Transaction on the audited consolidated financial statements of Avusa as
at 31 March 2012, as if the Proposed Transaction had become operative on
31 March 2012.
6. The NAVPS and NTAVPS included in the "After the Proposed Transaction"
column have been prepared on the basis that the Proposed Transaction is
accounted for as a reverse acquisition of Richtrau by Avusa in accordance
with IFRS 3: Business Combinations and have been adjusted to include the
once-off transaction costs amounting to an estimated R36 million and debt
raised in terms of the Proposed Transaction.
7. All of the adjustments to the EPS, DEPS, HEPS and DHEPS, except for the
once-off transaction costs, are expected to have a continuing effect.
8. There are no post balance sheet events, which require adjustment to the
pro-forma financial effects.
1.2 Unaudited pro-forma financial effects on the earnings and net asset value
pertaining to the Mvela Group Shares:
The unaudited pro-forma financial effects on the earnings and net asset
value pertaining to the Mvela Group Shares, for which the directors of
Mvela Group are responsible, are provided for illustrative purposes only
to provide information about how the Proposed Transaction could affect
the financial position of the Mvela Group Shareholders and the effect
thereof on the earnings per share ("EPS"), diluted earnings per share
("DEPS"), headline earnings per share ("HEPS") and diluted headline
earnings per share ("DHEPS") of Mvela Group as if the Proposed
Transaction had become operative on 1 July 2011, and as regards the net
asset value per share ("NAVPS") and net tangible asset value per share
("NTAVPS") of Mvela Group as if the Proposed Transaction had become
operative on 31 December 2011. Because of their nature, the unaudited pro-
forma financial effects may not give a fair presentation of Mvela Group`s
results of operations and financial position. The unaudited pro-forma
financial effects have been compiled from the published unaudited
consolidated financial statements of Mvela Group for the 6 months ended
31 December 2011 and are presented in a manner consistent with Mvela
Group`s accounting policies and have been adjusted as described in the
notes set out below.
Before the Adjustments After the % Change
Proposed Proposed
Transaction Transaction
(Note 1) (Notes 2 -
7)
EPS (cents) 16.7 (20.5) (3.8) (122.9)
DEPS (cents) 16.7 (20.5) (3.8) (122.9)
HEPS (cents) 16.7 (20.5) (3.8) (122.9)
DHEPS (cents) 16.7 (20.5) (3.8) (122.9)
NAVPS (cents) 424.0 (152.1) 271.9 (35.9)
NTAVPS (cents) 424.0 (152.1) 271.9 (35.9)
Weighted 529,426 529,426
average number
of shares in
issue (`000)
Diluted 529,426 529,426
weighted
average number
of shares in
issue (`000)
Actual number 529,708 529,708
of shares in
issue (`000)
Notes and assumptions:
1. The financial information in the "Before the Proposed Transaction"
column has been based on the published unaudited consolidated
financial statements of Mvela Group for the 6 months ended 31
December 2011.
2. The EPS, DEPS, HEPS and DHEPS included in the "After the Proposed
Transaction" column have been prepared by including the earnings
effects of the Proposed Transaction on the unaudited consolidated
financial statements of Mvela Group for the 6 months ended 31
December 2011, as if the Proposed Transaction had become operative
on 1 July 2011.
3. The EPS, DEPS, HEPS and DHEPS included in the "After the Proposed
Transaction" column have been adjusted for the following:
a. the revaluation of Mvela Group`s interest in Avusa to R20.07, being the 30
day VWAP as set out in the firm intention announcement;
b. the reversal of interest received, net of taxation, on cash utilised by
Mvela Group as part of the Proposed Transaction for the 6 months ended 31
December 2011. The interest rate used is the actual rate earned by Mvela Group
on cash held on its call account. A tax rate of 28% has been assumed;
c. the reversal of preference share dividends for the 6 months ended 31
December 2011;
d. the reversal of income earned from investment in associate (Richtrau) for
the 6 months ended 31 December 2011; and
e. the payment of Secondary Tax on Companies and the reversal of deferred
taxation on the redemption of preference shares in Richtrau as well as
adjustments to the normal taxation paid by Mvela Group.
4. The NAVPS and NTAVPS included in the "After the Proposed Transaction"
column have been prepared by incorporating the effects of the Proposed
Transaction on the unaudited consolidated financial statements of Mvela Group
as at 31 December 2011, as if the Proposed Transaction had become operative on
31 December 2011.
5. The NAVPS and NTAVPS included in the "After the Proposed Transaction"
column have been adjusted for the following:
a. the cash utilised by Mvela Group as part of the Proposed Transaction and
the redemption of preference shares in Richtrau;
b. the revaluation of Mvela Group`s interest in Avusa to R20.07, being the 30
day VWAP as set out in the firm intention announcement;
c. the unbundling of all of Mvela Group`s shares in Richtrau to its
shareholders; and
d. the payment of Secondary Tax on Companies and the reversal of deferred
taxation on the redemption of preference shares in Richtrau.
6. All of the adjustments to the EPS, DEPS, HEPS and DHEPS are expected
to have a continuing effect.
7. There are no post balance sheet events, which require adjustment to
the pro-forma financial effects.
2. Withdrawal of cautionary announcement
Shareholders of Avusa and Mvela Group are advised that as the pro-forma
financial effects of the Proposed Transaction have now been released, the
cautionary announcement published on Tuesday, 12 June 2012 has been
withdrawn and that they are no longer required to exercise caution in
their share dealings.
Rosebank
22 June 2012
Financial advisor and lead Merchant bank and sponsor
debt arranger to Mvela to Avusa
Group and Richtrau Rand Merchant Bank, a
Rand Merchant Bank, a division of First Rand Bank
division of First Rand Bank Limited
Limited
Promoter and Arranger Independent adviser to the
Blackstar Avusa Board
Ernst & Young
Legal adviser to Mvela
Group and Richtrau Legal adviser to Avusa
Webber Wentzel Werksmans Attorneys
Sponsor to Mvela Group
PSG Capital
Communication advisor to Legal adviser to lead debt
Richtrau arranger
Brunswick Bowman Gilfillan
Date: 22/06/2012 17:09:32 Supplied by www.sharenet.co.za
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