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Joint announcement regarding the subscription of shares by Sanlam in a wholly owned subsidiary of Afrocentric
SANLAM LIMITED AFROCENTRIC INVESTMENT
(Incorporated in the Republic of South Africa) CORPORATION LIMITED
(Registration number: 1959/001562/06) (Incorporated in the Republic of South Africa)
JSE share code: SLM (Registration number: 1988/000570/06)
NSX share code: SLA JSE Code: ACT
ISIN: ZAE000070660 ISIN: ZAE000078416
(“Sanlam”) (“AfroCentric” or “ACT”)
JOINT ANNOUNCEMENT REGARDING THE SUBSCRIPTION OF SHARES BY SANLAM IN A
WHOLLY OWNED SUBSIDIARY OF AFROCENTRIC
1. Introduction
Shareholders are advised that AfroCentric has accepted an offer by Sanlam on
30 September 2014 (“Offer”) in terms of which Sanlam, or its nominee, will subscribe for a
28.7% interest in the issued share capital of ACT Healthcare Assets Proprietary Limited
(“AHA”), currently a wholly owned subsidiary of AfroCentric, which owns 94.1% of
AfroCentric Health Limited (“AHL”), for a cash subscription price of R593.7 million (“Sanlam
Subscription”). In addition, in terms of the Offer, pursuant to the conclusion of the
acquisition of the WAD Holdings Proprietary Limited (“WAD”) assets (“WAD Transaction”)
by AfroCentric, and the subsequent transfer of the WAD assets to AHA, Sanlam, or its
nominee, will be entitled to, and will, subscribe for such number of shares in AHA as will
ensure that its shareholding in AHA is restored to 28.7% of all shares in issue. Sanlam will
subscribe for such additional shares (“Further Shares”) at an aggregate cash subscription
price of R109.3 million ("Further Sanlam Subscription") (the Sanlam Subscription and
Further Sanlam Subscription are collectively the “Sanlam Investment”).
Further details of the WAD Transaction are set out in the announcement published on the
Stock Exchange News Service (“SENS”) today, 30 September 2014. The Sanlam
Subscription and the WAD Transaction are not inter-conditional and each will be
implemented independently of the other. The Sanlam Investment is subject to the fulfilment
or waiver of the suspensive conditions set out in paragraph 3 of this announcement and
entails, inter alia, entering into the customary agreements.
The post-tax profits attributable to AHA for the year ended 30 June 2014 was R119.4 million
(which reflects dividends received from its subsidiary investment in AHL) while the net asset
value of AHA as at 30 June 2014 was negligible due to intra-group loan claims. The
proceeds raised through the Sanlam Investment shall be applied against third party and
intra-group loan claims owing by AHA. As a result of the Sanlam Investment, and after the
transfer of WAD assets to AHA and the repayment of third party debt of approximately R160
million, AfroCentric shall have almost no debt and have additional cash resources of
approximately R542 million.
2. Rationale for the Sanlam Subscription
AfroCentric is a black-controlled, diversified investment holding company. AfroCentric holds
a substantial 94.1% majority stake in AHL, indirectly, through AHA. Subsequent to the
Sanlam Investment, AfroCentric’s indirect interest in AHL will be 67.1% and Sanlam’s
indirect interest will be 27%. AHL owns 100% of the issued share capital in Medscheme
Holdings Proprietary Limited (“Medscheme”), a multi-medical scheme administrator and
managed care provider. As the largest health risk management services provider and third
largest medical scheme administrator in South Africa, Medscheme’s focus is to achieve
sustainability through innovation, effective health risk management, complemented by a
drive for operational and service excellence. Medscheme has over 3.2 million lives under
management. Medscheme’s healthcare management expertise has been gained over 41
years, which includes several years of experience with the Government Employees Medical
Scheme, Bonitas and Fedhealth. Although Medscheme is essentially a South African
enterprise, the group has a meaningful presence in Botswana, Namibia, Mauritius,
Swaziland, Kenya and Zimbabwe. Medscheme’s operations in Mauritius provide a platform
for further international expansion. Health management and technical support services are
provided to clients in the Republic of Ireland out of the Medscheme Mauritius office.
Sanlam is one of the largest financial services groups in South Africa, with business interests
elsewhere in Africa, Europe, India and South East Asia. With Sanlam’s extensive local and
global distribution network and suite of financial products, together with the medical
administration capabilities and membership base under management of AHL, the investment
by Sanlam will establish a platform for the joint pursuit and expansion of the parties’
traditional activities as part of an expanded administration and managed healthcare business
model.
3. Suspensive conditions
The Offer will become effective upon the fulfilment or waiver of the following suspensive
conditions:
- the completion to the satisfaction of Sanlam of a financial, tax, legal, operational and IT
due diligence investigation by Sanlam and its advisors in respect of AHA and its
subsidiaries, including the WAD assets;
- the conclusion of definitive transaction agreements;
- the parties obtaining the necessary shareholder and board approvals;
- the parties obtaining the necessary regulatory approvals (including, to the extent
required, Competition Commission approval); and
- the parties agreeing the necessary amendments to the corporate documents relating to,
among others, AHA and AHL to give effect to the principles agreed between them.
4. Categorisation of the Sanlam Investment
For AfroCentric, the Sanlam Investment is categorised in terms of section 9 – “Transactions”
of the JSE Limited Listings Requirements at the time the Offer was accepted by AfroCentric
and is a Category 1 transaction requiring AfroCentric shareholder approval. A circular
incorporating a notice convening a general meeting and setting out information regarding the
Sanlam Investment will be despatched to AfroCentric shareholders in due course.
For Sanlam, the Sanlam Investment is below the Category 2 threshold and this
announcement is made on a voluntary basis.
Johannesburg
30 September 2014
Sponsor to AfroCentric
Sasfin Capital (a division of Sasfin Bank Limited)
Corporate Advisor to AfroCentric
Sinergi Corporate Advisors (Proprietary) Limited
Joint Legal Advisor to AfroCentric
HR Levin Attorneys, Notaries and Conveyancers
Joint Legal Advisor to AfroCentric
Rothbart Ingham Incorporated
Sponsor to Sanlam
Deutsche Securities (SA) Proprietary Limited
Legal Advisor to Sanlam
Glyn Marais
Date: 30/09/2014 04:00:00 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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