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Proposed Specific Repurchase and Placement of Santam Shares as part of the B-BBEE Scheme Unwind
SANTAM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1918/001680/06)
JSE share code: SNT, NSX share code: SNM
ISIN: ZAE000093779
(“Santam”)
PROPOSED SPECIFIC REPURCHASE AND PLACEMENT OF SANTAM SHARES AS PART OF THE
B-BBEE SCHEME UNWIND
1. INTRODUCTION
In May 2007, Santam concluded a broad-based black economic empowerment (“B-BBEE”) transaction in
terms of which Central Plaza Investments 112 Proprietary Limited (“Central Plaza”) acquired 10% of
Santam’s issued ordinary shares (“Santam Shares”) in terms of a scheme of arrangement. Central Plaza
was incorporated to hold Santam Shares for the benefit of its shareholders, being the following entities:
- the Emthunzini Black Economic Empowerment Staff Trust;
- the Emthunzini Black Economic Empowerment Business Partners Trust; and
- the Emthunzini Broad-based Black Economic Empowerment Community Trust,
(the “Central Plaza Shareholders”), (collectively the “B-BBEE Scheme”).
In terms of the B-BBEE Scheme, the Santam Shares held by Central Plaza were ‘locked-in’ until
28 February 2015, after which date the requisite number of Santam Shares are to be sold by Central Plaza
to settle all outstanding debt and liabilities. Central Plaza is then obliged to distribute the remaining
Santam Shares and cash held by it to the Central Plaza Shareholders once all of its liabilities have been
settled or provided for (collectively the “B-BBEE Scheme Unwind”).
To facilitate the B-BBEE Scheme Unwind:
- Santam has entered into an agreement with Central Plaza (“Repurchase Agreement”) in terms of
which Santam will repurchase 4 215 000 Santam Shares held by Central Plaza (“Repurchase Shares”)
at a price of R190.00 per Repurchase Share (“Repurchase Price”) for an aggregate consideration of
R800 850 000 (“Repurchase Consideration”) on the terms, and subject to the fulfilment of the
conditions precedent, set out in this announcement (“Specific Repurchase”); and
- Central Plaza will dispose of a certain number of Santam Shares through a secondary placement on the
market via a book build process (“Book Build”).
The Specific Repurchase will not constitute an acquisition by Santam of Santam Shares by way of a
general repurchase of Santam Shares as contemplated in subparagraph (b) of paragraph 5.67B of section
5 of the JSE Limited (“JSE”) Listings Requirements.
2. SPECIFIC REPURCHASE
2.1. TERMS OF THE SPECIFIC REPURCHASE
Refer to paragraph 1 above for the salient terms of the Specific Repurchase.
The Repurchase Shares represent 3.5% of Santam’s issued ordinary shares (including treasury
shares) at the close of business on the date prior to this announcement.
The repurchase of the Repurchase Shares and the payment of the Repurchase Consideration,
which is to be discharged from Santam’s existing cash reserves, will take place two business days
after the date of fulfilment of the last of the conditions precedent referred to in paragraph 2.3 below.
The listing of the Repurchase Shares on the JSE will be terminated on, or as soon as possible after,
the implementation of the Specific Repurchase, and the Repurchase Shares will be restored as
authorised but unissued shares in Santam’s share capital. The Specific Repurchase will be applied
against Santam’s reserves (and not contributed tax capital).
The payment of the Repurchase Consideration by Santam to Central Plaza will constitute a dividend
for tax purposes. The Repurchase Price (being R190.00 per Repurchase Share) equates to the
same net cash return for Central Plaza had the Repurchase Shares been disposed of by Central
Plaza to any party other than Santam, at a price of R214.34 per Repurchase Share.
2.2. RATIONALE
The Santam board of directors, having taken cognisance of the optimal solvency levels and future
capital and liquidity requirements of Santam, is of the opinion that Santam’s current capital level is
surplus to its requirements and therefore deems it appropriate to reduce such capital to an
appropriate level. Santam’s capital levels are managed within a target solvency margin range of
35% to 45% of net written premiums. Santam’s capital requirement in terms of Solvency
Assessment and Management (SAM) interim measures is 28.5% of net written premiums. The
Santam board of directors wishes to effect the desired capital reduction by way of the Specific
Repurchase.
2.3. CONDITIONS PRECEDENT
The Specific Repurchase is subject to the fulfilment of the following conditions precedent, as
contained in the Repurchase Agreement:
- the Specific Repurchase being approved by special resolution of the shareholders of Santam (“the
Santam Shareholders”) (excluding Central Plaza and its associates) by way of a specific
authority; and
- the Specific Repurchase being approved by the Registrar of Short-term Insurance (“the
Registrar”) in terms of section 23 of the Short-term Insurance Act, 1998 (Act No. 53 of 1998), as
amended, without any conditions, or in the event that the Registrar attaches any conditions to such
approval, Santam decides to proceed with the Specific Repurchase in accordance with such
conditions.
2.4. IMPACT ON THE FINANCIAL INFORMATION OF SANTAM
The Specific Repurchase is anticipated to be funded from Santam’s existing cash reserves and will
result in a decrease in Santam’s net asset value by the amount of the Repurchase Consideration.
2.5. IRREVOCABLE UNDERTAKINGS
Santam has received irrevocable undertakings from certain Santam Shareholders who, at the date
of this announcement hold 72 217 676 Santam Shares in aggregate, to vote in favour of the
resolutions to be proposed at the general meeting (“General Meeting”), including the resolution for
the approval of the Specific Repurchase (“the Specific Repurchase Resolution”), which represent,
in aggregate, approximately 69.8% of the voting rights which may be exercised by the Santam
Shareholders on such resolutions at the General Meeting.
2.6. NOTICE OF GENERAL MEETING OF SANTAM SHAREHOLDERS AND THE DISTRIBUTION OF
THE CIRCULAR
The General Meeting of Santam Shareholders will be held in the auditorium on the ground floor of
the Santam head office at 1 Sportica Crescent, Tyger Valley, Bellville, Cape Town on Wednesday,
24 June 2015 at 09:30 a.m. to consider and, if deemed fit, to pass, with or without modification
and/or amendment, the Specific Repurchase Resolution and other related resolutions contained in
the notice of General Meeting.
The votes of Central Plaza and its associates will be taken into account in determining whether a
quorum of Santam Shareholders is present at the General Meeting, but such votes will not be taken
into account in determining whether or not the Specific Repurchase Resolution and the related
resolutions have been adopted.
A circular, including a notice of the General Meeting, detailing the terms of the Specific Repurchase
and actions required by the Santam Shareholders will be posted to the Santam Shareholders on or
about Monday, 25 May 2015.
3. BOOK BUILD
In addition to the Specific Repurchase, Central Plaza will offer up to 2,800,000 Santam Shares (“Book
Build Shares”) for sale to institutional investors through a Book Build process pursuant to the B-BBEE
Scheme Unwind. The Book Build does not constitute, and is not intended to constitute, an offer to the
public to purchase any Santam Shares.
The Book Build opens with immediate effect and may close at any time hereafter. Pricing and allocations
of the offering will be determined as soon as practicable following the closing of the book.
The Book Build process will be subject to normal share trading practices, the relevant rules, regulations
and procedures of the JSE and the settlement authority of Strate Proprietary Limited.
Investec Bank Limited will be acting as sole bookrunner (“Bookrunner”) to Central Plaza for the Book
Build.
Cape Town
13 May 2015
Investment bank and sponsor to Santam
Investec Bank Limited
Bookrunner to Central Plaza
Investec Bank Limited
Legal adviser to Central Plaza
Edward Nathan Sonnenbergs Incorporated
This announcement is restricted and is not for release, publication or distribution, in whole or in part, directly
or indirectly, in or into the United States, Australia, Canada, Japan or any other jurisdiction in which such
release, publication or distribution would be unlawful. This announcement is for information purposes only,
does not purport to be full or complete, is subject to change and shall not constitute or form part of an offer or
solicitation of an offer to purchase or subscribe for securities in the United States or any other jurisdiction. No
reliance may be placed for any purpose on the information contained in this announcement or its accuracy or
completeness.
In member states of the European Economic Area (other than the United Kingdom) this announcement is
directed only at persons who are qualified investors (as defined in article 2(1)(e) of EU directive 2003/71/EC
and the relevant implementing rules and regulations adopted by each Member State). In the United Kingdom,
this announcement is directed only at the following persons: investment professionals falling within article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); and
high net worth entities, and other person to whom it may lawfully be communicated, falling within article
49(2)(a) to (d) of the Order.
The shares offered in terms of the Book Build have not been and will not be registered under the United
States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold, directly or
indirectly, in the United States, absent registration or an exemption from, or transaction not subject to, the
registration requirements of the Securities Act. There will be no public offer of shares in the United States.
Neither this announcement nor the Book Build constitutes, or is intended to constitute, an offer to the public
in South Africa in terms of the Companies Act.
This announcement has been issued by and is the sole responsibility of Santam. No representation or
warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or
will be accepted by the Bookrunner or by any of its respective affiliates or agents as to, or in relation to, the
accuracy or completeness of this announcement or any other written or oral information made available to or
publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
This announcement does not purport to identify or suggest the risks (direct or indirect) which may be
associated with an investment in the securities. Any investment decision to buy securities in the Book Build
must be made solely on the basis of publicly available information which has not been independently verified
by the Bookrunner.
The Bookrunner is acting for Central Plaza only in connection with the Book Build and no one else, and will
not be responsible to anyone other than Central Plaza for providing the protections offered to clients of the
Bookrunner nor for providing advice in relation to the Book Build.
In connection with the Book Build, the Bookrunner and any of its respective affiliates, acting as investors for
their own accounts, may acquire shares and in that capacity may retain, purchase, sell, offer to sell or
otherwise deal for their own accounts in such shares and other securities of Santam or related investments in
connection with the Book Build or otherwise. Accordingly, references to Santam Shares being offered,
acquired, placed or otherwise dealt in should be read as including any issue or offer to, or acquisition, placing
or dealing by, the Bookrunner and any of their affiliates acting as investors for their own accounts. The
Bookrunner does not intend to disclose the extent of any such investment or transactions otherwise than in
accordance with any legal or regulatory obligations to do so.
Date: 13/05/2015 05:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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