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Disposal of 100% of the Ordinary Shares in Regent and Withdrawal of Cautionary
Imperial Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1946/021048/06
Share code: IPL
ISIN: ZAE000067211
(”Imperial” or the “Company’ or the “Group”)
DISPOSAL OF 100% OF THE ORDINARY SHARES IN REGENT INSURANCE COMPANY,
REGENT LIFE ASSURANCE COMPANY (“REGENT GROUP”) AND THE ENTIRE
INTEREST IN REGENT GROUP’S NON-SOUTH AFRICAN ASSETS (“REGENT
BOTSWANA AND REGENT LESOTHO”) (“REGENT’) AND WITHDRAWAL OF
CAUTIONARY
INTRODUCTION
Further to the cautionary announcements published on SENS on 27th
May, 8th July and 19th August 2015, regarding the disposal of the
Regent Group, shareholders are advised that Imperial has accepted an
offer made by the Hollard Insurance Group (“Hollard”) and the
Yellowwoods Group (the umbrella holding company of Hollard) (“the
Consortium”), to acquire the Regent Group, Regent Botswana and
Regent Lesotho (“the Proposed Transaction”). Subsequent to the
implementation of the Proposed Transaction, certain of the Regent
Group’s motor related businesses will be sold by Hollard to the
FirstRand/Hollard insurance joint venture.
RATIONALE FOR THE PROPOSED TRANSACTION
The Regent business consists of long and short term insurance
licences in South Africa, Botswana and Lesotho. It covers both
motor-related insurance as well as a number of non-motor areas.
While the business of Regent has grown strongly since its
establishment, a large fast growing portion of Regent’s revenue and
profits are unrelated to the Group’s core vehicle and logistics
businesses and enjoy no strategic, competitive or financial
advantage from Imperial’s ownership.
The growth prospects and value of these unrelated businesses will be
better advanced by owners with established capability and scale in
financial services and insurance.
Therefore, and consistent with its espoused strategy to invest in
its core capabilities, Imperial has decided to dispose of the
business and insurance licences of Regent, in a transaction
structured to allow the Group continued access to the commercial
value generated by the distribution of vehicle related insurance and
value added products, through Imperial’s extensive dealership
network.
The proceeds from the Proposed Transaction will be invested in due
course in the expansion of the Group’s core businesses while
initially reducing short term debt.
SALIENT TERMS OF THE PROPOSED TRANSACTION
The Consortium will acquire:
1) 100% of the ordinary shares and the tier 2 capital in Regent
Group and;
2) The entire interest in Regent Botswana and Regent Lesotho;
for a total net purchase consideration of c.R2.3 billion (“the
Purchase Consideration”). Interest will accrue on the Purchase
Consideration at First National Bank’s quoted prime interest rate
compounded monthly from 1 January 2016 to the date of final payment.
The Purchase Consideration will be settled in cash upon fulfilment
of the conditions precedent.
The net asset value of the ordinary shares and tier 2 capital, which
is being disposed of as part of the Proposed Transaction is
R1,6 billion and the profits attributable to the ordinary
shareholders are R 319 million.
The Proposed Transaction excludes:
1) The preference shares through which Imperial derives commercial
benefit from insurance related activities in its automotive
value chain. The arrangements on these preference shares will be
adjusted to be market related;
2) 360 plus (Pty) Ltd, a joint venture with Liquid Capital, a
subsidiary of Imperial, through which maintenance and service
plans are sold to independent dealers. This entity will be 100%
owned by Associated Motor Holdings (“AMH”), a subsidiary of
Imperial, post the implementation of the Proposed Transaction;
and
3) The Regent offices in Edenvale, which will be leased to the
Regent Group for a period of 2 years on market related terms
after which the property will be used by Imperial.
CONDITIONS PRECEDENT
The Proposed Transaction is subject to the fulfilment or waiver of,
inter alia, the following conditions precedent:
1) The successful conclusion and signature by the Consortium and
Imperial of the sale agreements in respect of the Proposed
Transaction, which will include appropriate warranties and
indemnities as are normal in such transactions and all other
relevant transaction agreements;
2) the conclusion of a long term agreement, which will include
distribution and commercial arrangements between Imperial and
the Consortium in relation to the distribution of insurance and
other regulated value added products through the Imperial dealer
network and Liquid Capital ;
3) The obtaining of all necessary third party approvals to a change
of control of the Regent Group; and
4) Unconditional regulatory approvals of the Proposed Transaction
in all the relevant jurisdictions.
The effective date of the Proposed Transaction will be on the
fulfilment of the above conditions precedent.
CATEGORISATION OF THE PROPOSED TRANSACTION
The proposed transaction is classified as a Category 2 transaction
in terms of the listings requirements of the JSE Limited.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the cautionary announcement has now
been withdrawn following the release of this detailed announcement
and therefore caution is no longer required to be exercised by
shareholders when dealing in Imperial’s shares.
Bedfordview
29 September 2015
Sponsor:
Merrill Lynch South Africa (Pty) Limited
Date: 29/09/2015 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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