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AFRICAN BANK INVESTMENTS LIMITED - Finalisation announcement in respect of rights offer and withdrawal of cautionary announcement

Release Date: 01/11/2013 09:17
Code(s): ABL ABLP     PDF:  
Wrap Text
Finalisation announcement in respect of rights offer and withdrawal of cautionary announcement

AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/021193/06)
(Ordinary share code: ABL) (ISIN: ZAE000030060)
(Preference share code: ABLP) (ISIN: ZAE000065215)
(“ABIL” or “the Company”)


FINALISATION ANNOUNCEMENT IN RESPECT OF RIGHTS OFFER AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT

Not for publication, distribution or release, directly or indirectly, in or into the United States of
America, Canada, Japan, Australia or Hong Kong.

Introduction

Shareholders are referred to the announcements on the Stock Exchange News Service (“SENS”) on 5
August 2013 and on 25 October 2013 wherein the Company announced its intention to raise new equity
capital of R5.5 billion through a fully underwritten, renounceable Rights Offer. Shareholders are also
referred to the Rights Offer declaration date announcement on the SENS on 25 October 2013.

We refer shareholders to the SENS announcement released today relating to the Reviewed Financial
Results for the 11 months ended 31 August 2013. The two announcements should be read in conjunction
with each other.

Rights Offer Terms

The Rights Offer will consist of an offer of 685 281 693 new ABIL ordinary shares (“Rights Offer Shares”)
at a subscription price of 800 cents per Rights Offer Share. The subscription price is at a discount of
38.72% to the theoretical ex-rights price of an ABIL share of 1305 cents on 30 October 2013. The
subscription price represents 92% of the tangible net asset value per ABIL share before the rights offer
and 98% of the equivalent number after the rights offer. Rights Offer Shares will be issued to qualifying
shareholders in the ratio of 84 (eighty four) Rights Offer Shares for every 100 (one hundred) ABIL Shares
held on the record date for the Rights Offer, being close of business on Friday, 15 November 2013
("Record Date"). Fractions of Rights Offer entitlements will not be allotted and each qualifying
shareholder’s Rights Offer entitlement will be rounded to the nearest whole number in this regard (unless
a qualified shareholder is entitled to less than 0.5 of a Rights Offer share, in which case the entitlement
will be rounded down to zero).

International Finance Corporation 

The International Finance Corporation ("IFC"), part of the World Bank Group, began its relationship with
the ABIL in 2008, signing a ZAR350,000,000 subordinated loan agreement with ABIL which remains
outstanding.

As part of this long-term relationship and to support the rights issue of ABIL, IFC has made a sub-
underwriting commitment for 75,000,000 new ordinary shares in the underwriting by Goldman Sachs
International.


                                                                                                             
 
Conditions Precedent

Subject to the terms and conditions described in the Offering Circular, all conditions to Goldman Sachs
International’s underwriting obligations in respect of the Rights Offer have been fulfilled as of this date.

Unaudited Pro Forma Financial Effects of the Rights Offer

The pro forma financial effects set out below have been prepared to assist ABIL shareholders in
assessing the impact of the rights offer on headline earnings per ABIL share, the basic loss per ABIL
share, net asset value per ABIL share and tangible net asset value per ABIL share.

The pro forma financial information has been prepared for illustrative purposes only and because of its
nature may not fairly present ABIL’s financial position, changes in equity, results of operations or cash
flows after the rights offer or the dilution in shareholding as a result of not exercising allocation rights, in
any period, including future periods.

The pro forma financial information is the responsibility of the directors of ABIL. The pro forma financial
information is based on available information and certain assumptions and estimates that the directors of
ABIL believe are reasonable and may therefore differ from actual adjusted amounts.

The pro forma financial information has been adjusted to reflect the impact of the rights offer on the
consolidated income statement for the 11 months ended 31 August 2013 and consolidated statement of
financial position at 31 August 2013, as if the rights offer had occurred: (i) on 1 October 2012 for purposes
of the pro forma adjustments made to the income statement and (ii) on 31 August 2013 for purposes of
the pro forma adjustments made to the statement of financial position.

The consolidated pro forma financial information also reflects the assumption that the net proceeds of the
rights offer, after the deduction of once-off estimated costs of R262 million, will be invested in cash and
cash equivalents.

\The pro forma financial information has been compiled in accordance with the JSE Limited Listings
Requirements, IFRS, the Revised Guide on Pro Forma Financial Information issued by The South African
Institute of Chartered Accountants and the accounting policies of ABIL as at 31 August 2013.

The assumptions on which the pro forma financial effects are based are set out in the notes following the
table. The pro forma financial effects (for ABIL) of the rights offer are set out below.




                                                  Before the    Change due to       After the rights        %
                                                 rights offer   the rights offer                offer   Change




                                                                      Pro forma




Basic loss per ABIL share (cents)                    (534.3)              255.0              (279.3)      (47.7)


                                                                                                                    
 
                                                      Before the      Change due to        After the rights           %
                                                     rights offer     the rights offer                 offer      Change




                                                                            Pro forma




Headline earnings per ABIL share (cents)                     39.6                 (8.1)                 31.5        (20.4)

Net asset value per ABIL share (cents)                      1 067                (140)                  928         (13.1)

Tangible net asset value per ABIL share                       867                  (48)                 819           (5.5)
(cents)

Number of ABIL shares in issue (millions)                   815.8                685.3              1 501.1           84.0

Weighted average number of ABIL shares                      810.1                685.3              1 495.4           84.6
in issue (millions)




Notes and assumptions:

The financial information ‘Before the rights offer’ has been based on the reviewed consolidated interim financial
statements for the 11 months ended 31 August 2013.

The effects on headline earnings per share and basic loss per share are based on the following assumptions:

- The rights offer is assumed to have occurred on 1 October 2012.
- 685.3 million rights offer shares are assumed to have been issued at a subscription price of 800 cents per rights
   offer share in the ratio of 84 rights offer shares for every 100 ABIL shares held pursuant to the rights offer thereby
   raising capital of R5.482 billion.
- The net proceeds of the rights offer of R5.22 billion, after deducting estimated once-off transaction costs of R262
  million have been assumed to have been invested in cash and cash equivalents.
- The interest earned on the net proceeds of the rights offer is based on African Bank’s actual interest earned on cash
  and cash equivalents of 4.4% pre-tax for the 11 months ended 31 August 2013.
- The tax expense adjustment is a result of the interest earned. A tax rate of 28% was applied.
- The once-off transaction costs of R262 million are not expensed through the income statement, but debited against
  share premium.
- The interest and tax adjustments are expected to have a continuing effect.

The effects on net asset value per share and tangible net asset value per share are based on the following
assumptions:

- The rights offer is assumed to have occurred on 31 August 2013.
- 685.3 million rights offer shares are assumed to have been issued at a subscription price of 800 cents per rights
  offer share in the ratio of 84 rights offer shares for every 100 ABIL shares held pursuant to the rights offer thereby
  raising capital of R5.482 billion.
- The net proceeds of the rights offer of R5.22 billion, after deducting estimated once-off transaction costs of R262
  million have been assumed to have been invested in cash and cash equivalents.
- The estimated once-off transaction costs of R262 million relating to the rights offer are written off against the share
  premium account.

There are no material post balance sheet events which need adjustment to the pro forma financial information (apart
from what has already been adjusted for in the financial statements for the period ended 31 August 2013) including
the issue of R1 billion of senior unsecured bonds as announced on SENS on 20 September 2013 and the issue of
CHF 105 million senior unsecured bonds as announced on SENS on 1 October 2013 which were issued in the normal
course of business.




                                                                                                                              
 
Further Notices

The Rights Offer circular, incorporating revised listing particulars and a form of instruction in respect of
letters of allocation, where applicable, will be posted to all qualifying shareholders on or about 18
November 2013.

Withdrawal of Cautionary Announcement

Following this announcement of the final terms and the unaudited pro forma financial effects of the
Rights Offer, ABIL shareholders are no longer required to exercise caution when dealing in their ABIL
shares.



Midrand

1 November 2013

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Sole Global Co-ordinator, Sole Bookrunner and Sole Underwriter
GOLDMAN SACHS INTERNATIONAL

Independent reporting accountants and auditors
DELOITTE & TOUCHE

Legal advisers to the Company as to U.S. and English law
REED SMITH LLP

South African legal advisers to the Company
PRINSLOO, TINDLE & ANDROPOULOS INC.

Legal advisers to the Sole Global Co-ordinator, Sole Bookrunner and Sole Underwriter as to U.S. and
English law
NORTON ROSE FULBRIGHT LLP

South African legal advisers to the Sole Global Co-ordinator, Sole Bookrunner and Sole Underwriter
NORTON ROSE FULBRIGHT SOUTH AFRICA (incorporated as Deneys Reitz Inc.)



Important Information:
This has been prepared and issued by, and is the sole responsibility of, ABIL. This announcement does not constitute,
or form part of an offer to sell, or the solicitation of an offer to subscribe for or buy, any Rights Offer Shares or letters
of allocation.
This announcement is not a prospectus, disclosure document or offering document under the laws of South Africa or
any other law and does not purport to be complete. Investors should not subscribe for or purchase any securities
referred to in this announcement except solely on the basis of the information in the Rights Offer circular to be
published by ABIL in due course in connection with the Rights Offer.
Any decision to participate in the Rights Offer or to purchase, otherwise acquire, subscribe for, or sell or otherwise
dispose of any securities should only be made on the basis of the information contained in the Rights Offer circular
when it is published in due course, which will contain further information relating to ABIL as well as a summary of the
risk factors to which any investment is subject. The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any
purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The
information in this announcement is subject to change.
                                                                                                                             
 
This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any
offer to acquire, the Rights Offer Shares or letters of allocation offered by any person in the United States, Australia,
Canada, Japan and Hong Kong, subject to certain exceptions, and any other jurisdiction in which such offer or
solicitation is unlawful. No public offer of Rights Offer Shares or letters of allocation will be made in the United States,
Australia, Canada, Japan and Hong Kong, and any other jurisdiction where the extension or making of the Rights
Offer would be unlawful or in contravention of certain regulations. The Rights Offer Shares and letters of allocation
have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except
pursuant to an exemption from and in compliance with any applicable securities laws.
This announcement is not for distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan
and Hong Kong, subject to certain exceptions, and any other jurisdiction where the extension or making of the Rights
Offer would be unlawful or in contravention of certain regulations. The distribution of this announcement and/or the
Rights Offer circular and/or the letters of allocation and/or the Rights Offer Shares into jurisdictions other than the
Republic of South Africa may be restricted by law. Persons into whose possession such announcement comes should
inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such jurisdiction.
The information contained in this announcement has been prepared solely for information purposes and it does not
constitute, or form part of, any offer or invitation to purchase, underwrite or otherwise acquire rights, shares or
depository receipts in ABIL or its affiliates, or the solicitation of any such offer. The securities referred to herein have
not been, and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the
laws of any state or jurisdiction of the United States, and may not be offered or sold in the United States except
pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act
and applicable state laws. The information contained in this announcement does not constitute an offer of securities
for sale in the United States nor the solicitation of an offer to buy any such securities. ABIL does not intend to conduct
a public offering of securities in the United States.
In addition, in the United Kingdom, this announcement is solely directed at: (i) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the
“Order”); or who are “qualified investors”, within the meaning of Article 2(1)(e) of the Directive 2003/71/EC and
amendments thereto, including Directive 2010/73/EU, to the extent implemented in the relevant Member State of the
European Economic Area (“Qualified Investors”), who fall within Article 49(2)(a) to (d) of the Order, and (ii) persons
to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant
persons”). The information in this announcement must not be acted on or relied on (i) in the United Kingdom, by
persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the
United Kingdom, by persons who are not Qualified Investors or persons to whom it may otherwise lawfully be
communicated. Any investment or investment activity to which the information in this announcement relates is
available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic
Area other than the United Kingdom, Qualified Investors or persons to whom it may otherwise lawfully be
communicated, and will be engaged in only with such persons.
Certain statements in this announcement constitute “forward-looking statements”. All statements other than
statements of historical facts included in this announcement, including, without limitation, those regarding the financial
position, revenue and profitability (including, without limitation, any financial or operating projections or predictions),
business strategy, prospects, plans and objectives of management for future operations of ABIL, and macro-economic
conditions in South Africa and elsewhere, are forward-looking statements. Some of these statements can be identified
by forward-looking terms, such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”,
“plan”, “will” and “would” (or in each case, their negative) and similar words, as well as statements in the future tense.
However, these words are not the exclusive means of identifying forward-looking statements. These forward-looking
statements and any other predictions contained in this announcement involve known as well as unknown risks,
uncertainties and other factors which may cause actual results or performance of ABIL, industry results, or macro-
economic conditions, to differ materially from those expressed or implied by such forward-looking statements. Such
forward-looking statements are based on current beliefs, assumptions, expectations, estimates and projections of the
directors and management of the Company, public statements by ABIL, present and future business strategies and
the environment in which ABIL will operate in the future. These forward-looking statements are not guarantees of
ABIL’s future performance and are subject to assumptions, risks and uncertainties that could cause actual future
results to differ materially from those expressed in or implied by such forward-looking statements. Many of these
assumptions, risks and uncertainties relate to factors that are beyond ABIL's ability to control or estimate precisely,
and could cause ABIL’s actual performance, results or achievements to be materially different from any future
performance, results or achievements that may be expressed or implied by such forward-looking statements. These
factors include changes in general economic and business conditions in the sector in South Africa; changes and
volatility in currency exchange rates, interest rates, share price and credit spreads; changes in the price of ABIL
shares; changes in the availability and conditionality of funding; the adequacy of ABIL’s provision for impairment as
well as future net impairment charges; changes in governmental policy and regulation; changes in ABIL’s competitive
environment; and factors that are not known to the company at this time.
These forward-looking statements speak only as at the date of this announcement. Except as required by the JSE and
applicable law, ABIL does not have any obligation to update or revise publicly any forward-looking statement, whether
as a result of new information, further events or otherwise. Except as required by the JSE and applicable law, ABIL
expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking
statement contained herein to reflect any change in ABIL's expectations with regard thereto or any change in events,

                                                                                                                                
 
conditions or circumstances on which any such statement is based. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed herein might not occur. Goldman Sachs International expressly
disclaim any obligation or undertaking to update, review or revise any forward-looking statement contained in this
announcement whether as a result of new information, future developments or otherwise.




                                                                                                                      
 

Date: 01/11/2013 09:17:00 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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