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Unbundling, redemption and delisting of preference shares and withdrawal of cautionary announcement
Alexander Forbes Preference Share Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 2006/031561/06
Share code: AFP
ISIN: ZAE000188942
(“AF Pref” or “the Company”)
PROPOSED UNBUNDLING BY AF PREF OF ITS ENTIRE SHAREHOLDING IN ALEXANDER FORBES GROUP HOLDINGS LIMITED (“ALEXANDER FORBES”), REDEMPTION AND
DELISTING OF PREFERENCE SHARES (COLLECTIVELY, “THE TRANSACTION”) AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the renewal of cautionary announcement released on the Stock Exchange News
Service on 7 July 2014 in relation to the proposed unbundling of AF Pref’s entire shareholding in
Alexander Forbes to the holders of preference shares issued by the Company (“preference
shareholders”) (the “unbundling”), preference shareholders are advised that following the
successful listing of Alexander Forbes on the main board of the securities exchange operated by
the JSE Limited (“JSE”) on 24 July 2014, the board of directors of AF Pref has resolved to
proceed with the unbundling and to distribute any residual cash in the form of a redemption
payment (the “redemption”). Subsequent to the unbundling and the redemption, the preference
shares will be delisted (the “delisting”) from the JSE and AF Pref will be deregistered (the
“deregistration”).
2. RATIONALE
2.1. Rationale for the unbundling
The Alexander Forbes pre-listing statement (the “PLS”), issued on 7 July 2014, confirmed
the intention of the directors of AF Pref to give effect to the unbundling as soon as
practicable following the listing of Alexander Forbes (the “listing”). The unbundling will result
in preference shareholders holding Alexander Forbes ordinary shares directly, which shares
shall be freely tradable. Following the listing, there is no reason for the interests of
preference shareholders in Alexander Forbes to be held indirectly through AF Pref.
2.2. Rationale for the redemption
Following the successful implementation of the unbundling, the Company will no longer hold
any Alexander Forbes shares and, in compliance with article 3.1(2)(II) of its Memorandum of
Incorporation (the “MOI”), will be required to redeem all of the preference shares.
AF Pref currently holds approximately R24.3m in surplus cash as at the last practicable
date. Any residual cash, after settling any outstanding liabilities of AF Pref and making
provision for any costs and expenses, will be distributed to preference shareholders by way
of the redemption.
2.3. Rationale for the delisting
As the unbundling and the redemption will result in the distribution of AF Pref’s only material
assets to the preference shareholders, and following the redemption, there will no longer be
any preference shares in issue, AF Pref will no longer meet the JSE Listings Requirements
and the preference shares will be ineligible for listing as tradable instruments on the JSE.
2.4. Rationale for the deregistration
Subsequent to the unbundling and the redemption, AF Pref will no longer hold any assets or
have any liabilities and, as such, will have no value. Accordingly, there will be no reason for
AF Pref to remain registered as a company and to incur associated obligations in terms of,
inter alia, the Companies Act 71 of 2008 (the “Companies Act”).
3. SALIENT TERMS
3.1. Unbundling
AF Pref will, subject to the fulfilment of the conditions precedent set out in paragraph 4.1
below, distribute the Alexander Forbes ordinary shares held by it to preference shareholders
in the entitlement ratio of 1.09485 Alexander Forbes ordinary share for every 1 AF Pref
preference share held on or about Friday, 19 September 2014 (the “record date”).
The unbundling will be implemented as a distribution in specie of the Alexander Forbes
ordinary shares to the preference shareholders in accordance with the provisions of the MOI
and section 46 of the Companies Act. In terms of section 112 of the Companies Act the
unbundling will constitute the disposal by AF Pref of all of its assets or undertaking and, as
such, requires the approval of the AF Pref shareholders.
3.2. Redemption
AF Pref will, upon the unbundling, redeem the preference shares at the redemption price of
R0.07491 per preference share held on the record date.
3.3. Delisting
Subject to the fulfilment of the conditions precedent detailed in paragraph 4.3 below, the
listing of the preference shares will be suspended from trading on the JSE at the
commencement of business on 15 September 2014 and AF Pref will delist from the
“Investments Products” sector on the JSE with effect from the commencement of business
on Tuesday, 23 September 2014.
3.4. Deregistration
Subject to the fulfilment of the conditions precedent set out in paragraph 4.4 below,
application will be made to the Companies and Intellectual Property Commission of South
Africa (“CIPC”) for the deregistration of AF Pref and the removal of the Company from the
companies register in terms of section 82(3)(b)(ii) of the Companies Act. The directors shall
not apply for the deregistration of AF Pref until such time as all of the assets of AF Pref have
been distributed to the preference shareholders pro rata to their shareholding in the
Company pursuant to the unbundling and the redemption and until all of the liabilities of AF
Pref have been settled or provided for.
4. CONDITIONS PRECEDENT
4.1. Unbundling
The unbundling is conditional upon the following conditions precedent being fulfilled:
- the approval by AF Pref shareholders of the resolutions required to implement the
transaction in accordance with the Listings Requirements and the Companies Act; and
- no preference shareholders giving notice objecting to the special resolution for the
section 112 disposal as contemplated in section 164(3) of the Companies Act or, to the
extent that such notice is given, it is given by preference shareholders holding not more
than 1% of all preference shares.
4.2. Redemption
The redemption is conditional upon the fulfilment of the conditions precedent to the
unbundling referred to in paragraph 4.1 above and to the completion of the unbundling.
4.3. Delisting
The delisting is conditional upon the fulfilment of the conditions precedent to the redemption
referred to in paragraph 4.2 above.
4.4. Deregistration
The deregistration is conditional upon the fulfilment of the conditions precedent to the
unbundling, the redemption and the delisting referred to in paragraphs 4.1 to 4.3 above.
5. FINANCIAL INFORMATION
5.1. Financial information relating to the unbundling
AF Pref will be unbundling its material asset, being 355,178,339 Alexander Forbes ordinary
shares, to preference shareholders on a pro rata basis. Furthermore, pursuant to the
unbundling, AF Pref's only asset will be such amount of cash as it requires to discharge its
liabilities prior to the deregistration. Accordingly, there will be no material effect on the
earnings and underlying net asset value attributable to each preference shareholder as a
result of the unbundling.
5.2. Financial information relating to the redemption
Post balance sheet date events
On 24 March 2014 the preference shareholders and linked debenture unit holders resolved
to:
- delink the linked preference share and debenture units;
- amend the MOI;
- amend the Debenture Trust Deed; and
- approve the restructuring and ancillary events as detailed in the circular dated 24
February 2014.
Consequently, the following post balance sheet events have occurred:
- On 7 April 2014, the Company issued 87 691 346 preference shares to the value of
R606 million in partial settlement of the amount payable to debenture holders; and
- On 14 April 2014 the Company paid cash of R2 200 million to settle the remaining
debentures thereby fully settling the debenture holders whose debenture units are no
longer listed on the JSE.
Pro forma financial information: Reconciliation of cash balance at financial year
end date to redemption payment date
The pro forma reconciliation of the cash balance as at the financial year end, 31 March 2014
to the redemption payment date is set out below. The pro forma reconciliation is the
responsibility of the directors of AF Pref and has been prepared for illustrative purposes only
to reconcile the cash balance as at AF Pref’s latest reported financial period to the expected
redemption payment on the redemption date. Due to its nature, the pro forma reconciliation
of cash balance may not provide a fair reflection of the actual cash movement to the
redemption date.
Description Note R millions
Cash balance at 31 March 2014 – Annual Financial Statements 2 239.8
Cash utilised in redemption of debenture units (2 200.4)
Settlement of tax payable and tax provision (12.1)
Tax payable as provided at 31 March 2014 (25.5)
Release of tax provision following listing of Alexander Forbes 13.4
Estimated interest received and accrued to redemption payment 1
date 3.1
Estimated expenses related to unbundling (incl. VAT) (4.3)
Estimated operational expenses to deregistration of AF Pref (1.8)
Redemption payment 24.3
Notes:
1. The estimated interest received and accrued to redemption payment date is based on
an assumed interest rate of 5.0% (before tax), being the average rate currently earned
on the cash balance.
6. SALIENT DATES AND TIMES
The salient dates and times applicable to the unbundling, the redemption and the delisting are set
out below:
2014
Last day to trade to be entitled to attend and vote at the class meeting Friday, 15 August
Last day to trade to be entitled to attend and vote at the general meeting Friday, 15 August
Record date to determine entitlement to attend and vote at the class
meeting Friday, 22 August
Record date to determine entitlement to attend and vote at the general
meeting Friday, 22 August
Last day to lodge forms of proxy for the class meeting by 11:00 on Friday, 29 August
Last day to lodge forms of proxy for the general meeting by 11:15 on Friday, 29 August
Last date and time for AF Pref shareholders to give notice, in terms of
section 164 of the Companies Act, to AF Pref objecting to the special
resolutions for the section 112 disposal by 11:00 on Monday, 1 September
Class meeting to be held at 11:00 on Monday, 1 September
General meeting to be held at 11:15 (or as soon thereafter as the class
meeting is concluded) on Monday, 1 September
Results of the class meeting and general meeting released on SENS on Monday, 1 September
Date AF Pref will send objecting AF Pref shareholders (if any) notice of
the adoption of the special resolutions approving the section 112
disposal, in terms of section 164(4) of the Companies Act on Monday,1 September
Results of the class meeting and general meeting published in the press
on Tuesday, 2 September
If the transaction is approved by AF Pref shareholders at the class
meeting and general meeting and if no AF Pref shareholders
exercise their rights in terms of section 164 of the Companies Act
objecting to the special resolution for the section 112 disposal
Finalisation announcement released on SENS on Friday, 5 September
Finalisation announcement published in the press on Monday, 8 September
Last day to trade in the preference shares in order to participate in the
unbundling and redemption on Friday, 12 September
Preference shares suspended on JSE trading system on Monday, 15 September
Preference shareholders commence trading in the unbundled Alexander
Forbes ordinary shares on the JSE on Monday, 15 September
Record date to participate in the unbundling and the redemption on Friday, 19 September
Certificated preference shareholders’ preference share certificates to be
received by the transfer secretaries together with a duly completed form
of surrender on or before 12:00 (See Note 5) Friday, 19 September
Dematerialised shareholders will have their accounts with their CSDP or
broker updated with the Alexander Forbes ordinary shares received
pursuant to the unbundling and the receipt of cash pursuant to the
redemption on Monday, 22 September
Share certificates in respect of Alexander Forbes ordinary shares will be
posted, at the risk of the certificated preference shareholders concerned,
and cash in respect of the redemption will be sent by electronic fund
transfer or by cheque, to certificated preference shareholders on or about Monday, 22 September
Announcement of specified ratio in respect of the apportionment of the
cost/base cost of Alexander Forbes for taxation/CGT purposes on or Monday, 22 September
about
Termination of AF Pref listing at commencement of trading on Tuesday, 23 September
Notes:
1. All times shown above are South African local times.
2. The above dates and times are subject to amendment. Any material amendments to the dates and
times will be released on SENS and published in the press.
3. Preference share certificates may not be dematerialised or rematerialised as from Monday, 15
September 2014 (if no AF Pref shareholders exercise their rights in terms of section 164 of the
Companies Act).
4. AF Pref will send the notice to objecting preference shareholders in terms of section 164(4) on
Monday, 1 September 2014, but the last day for sending this notice is 10 business days after the
date of the class meeting and general meeting.
5. Certificated preference shareholders whose preference share certificates and duly completed
forms of surrender are received by the transfer secretaries after 12:00 on Friday, 19 September
2014 will have the cash in respect of the redemption and new share certificates for the unbundled
Alexander Forbes ordinary shares in respect of the unbundling posted to them within 5 business
days of such receipt.
7. POSTING OF THE CIRCULAR
AF Pref preference shareholders are advised that a circular containing the full details of the
terms of the transaction and notices of Class Meeting and General Meetings containing the
necessary resolutions to be approved by the AF Pref ordinary shareholder and preference
shareholders in order to implement the transaction, has been posted to AF Pref shareholders
today, 4 August 2014.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Preference shareholders are advised that, as a result of the publication of this announcement,
the cautionary announcement is now withdrawn and caution is no longer required to be exercised
by preference shareholders when dealing in their preference shares.
Johannesburg
4 August 2014
Financial adviser and sponsor to AF Pref
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal advisers to AF Pref
Bowman Gilfillan Inc.
Reporting accountants to AF Pref
PricewaterhouseCoopers Inc.
Date: 04/08/2014 08:26:00 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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