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Apportionment: Tax cost for South African tax purposes in respect of the unbundling of Seardel's interest in Deneb
SEARDEL INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1968/011249/06)
Share code: SER ISIN Code: ZAE000029815
Share code: SRN ISIN Code: ZAE000030144
(“Seardel” or “the Company” or “the Group”)
APPORTIONMENT OF TAX COST FOR SOUTH AFRICAN INCOME TAX
PURPOSES IN RESPECT OF THE UNBUNDLING OF SEARDEL’S INTERESTS
IN DENEB INVESTMENTS LIMITED (“Deneb”)
1. Introduction
Shareholders are referred to the SENS announcement of
Friday, 14 November 2014 (“the SENS Announcement”),
relating to the unbundling by Seardel of 100% of the
issued share capital of Deneb (“Unbundling”), to its
ordinary and N-class shareholders in the ratio of 12.91952
(twelve comma nine one nine five two) Deneb shares for
every 100 shares held in Seardel on Friday, 5
December 2014 (“Unbundling Record Date”), rounded to the
nearest whole number.
Shareholders are hereby advised that the Unbundling was
implemented in terms of section 46 of the Companies Act,
No 71 of 2008 and section 46 of the Income Tax Act, No 58
of 1962 (“Income Tax Act”).
The purpose of this announcement is to notify shareholders
of the apportionment ratio to be applied by shareholders
in determining the portion of their past costs (and market
value, if relevant) to be allocated to the unbundled Deneb
shares and the retained Seardel shares.
2. Apportionment tax principles
Shareholders are referred to the SENS Announcement where
the tax implications for shareholders of the Unbundling
were explained in more detail.
As indicated in the SENS Announcement, Seardel
shareholders will have a combined expenditure in respect
of the Seardel shares and the Deneb shares received
pursuant to the Unbundling.
Seardel shares held as trading stock:
Any Seardel shareholder holding Seardel shares as trading
stock will be deemed to acquire the unbundled Deneb Shares
as trading stock. The combined expenditure of such Seardel
and Deneb shares will be the amount taken into account by
the shareholder in respect of those Seardel shares for the
purposes of section 11(a), section 22(1), or section 22(2)
of the Income Tax Act. The portion of the above combined
expenditure to be allocated to the unbundled Deneb Shares,
will be determined by applying the ratio that the market
value of the Deneb Shares, as at the end of the day of the
Unbundling, being Monday, 1 December 2014, bears to the
sum of the market value of Seardel and Deneb shares as at
the end of that day. The expenditure allocated to the
unbundled Deneb Shares will reduce the expenditure of the
Seardel shares held.
Seardel shares held as capital assets:
Any Seardel shareholder holding Seardel shares as capital
assets will be deemed to acquire the unbundled Deneb
Shares as capital assets. The combined expenditure of such
Seardel and Deneb shares will be the expenditure incurred
in respect of the Seardel shares prior to the Unbundling
that is allowable in terms of paragraph 20 of the Eighth
Schedule to the Income Tax Act. Market value in relation
to Seardel shares acquired before 1 October 2001 means the
market value adopted or determined by the shareholder in
respect of those shares within the period contemplated in
paragraph 29(4) of the Eighth Schedule to the Income Tax
Act. The portion of the above combined expenditure and
market value to be allocated to the unbundled Deneb Shares
will be determined by applying the ratio that the market
value of Deneb Shares, as at the end of the day of the
Unbundling, being Monday, 1 December 2014, bears to the
sum of the market value of Seardel and Deneb shares at the
end of that day. The expenditure and market value
allocated to the unbundled Deneb Shares will reduce the
expenditure and market value of the Seardel shares held.
Seardel shareholders are advised to consult their own
professional tax advisors should they have any queries
regarding the taxation consequences of the Unbundling and
the calculation of their costs for taxation purposes.
3. Apportionment ratio
Shareholders are hereby advised that the expenditure and
market value of their Seardel ordinary shares as referred
to above must be apportioned in the ratio of 79.05039% to
the Seardel ordinary shares held after the Unbundling and
20.94961% to the unbundled Deneb shares (“Apportionment
Ratio 1”). Shareholders are hereby further advised that
the expenditure and market value of their Seardel N-class
ordinary shares as referred to above must be apportioned
in the ratio of 76.14983% to the Seardel N-class ordinary
shares held after the Unbundling and 23.85017% to the
unbundled Deneb shares (“Apportionment Ratio 2”)
Apportionment Ratio 1 and Apportionment Ratio 2 are based
on the closing price of R1.95 per Seardel ordinary share,
R1.65 per Seardel N-class ordinary share and R4.00 per
Deneb share on Monday, 1 December 2014, the date of the
Unbundling.
Cape Town
2 December 2014
Transaction Adviser and Sponsor to Deneb
PSG Capital
Sponsor to Seardel
Investec Bank Limited
Date: 02/12/2014 03:04:00 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.
