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Posting of circular, notice of general meeting and withdrawal of cautionary announcement
Blue Label Telecoms Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/022679/06)
Share code: BLU ISIN: ZAE000109088
(“Blue Label” or the “Company”)
POSTING OF CIRCULAR, NOTICE OF GENERAL MEETING AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Blue Label shareholders ("Shareholders") are referred to the announcement released by Blue Label on the Stock
Exchange News Service (“SENS”) of the JSE Limited on Wednesday, 5 October 2016 (“Transaction
Announcement”), regarding the finalised terms of the proposed participation by Blue Label in the recapitalisation
of Cell C Proprietary Limited (“Cell C”).
The Transaction Announcement detailed, inter alia, that Blue Label, through its wholly owned subsidiary The
Prepaid Company Proprietary Limited ("TPC"), has agreed with Cell C, 3C Telecommunications Proprietary Limited
(“3C”), Albanta Trading 109 Proprietary Limited and senior management of Cell C, to participate in the
recapitalisation of Cell C, which, if successfully completed, will result in TPC holding 45% of the issued share
capital of Cell C (the “Proposed Transaction”), for a total subscription consideration of R5.5 billion.
2. POSTING OF THE CIRCULAR AND NOTICE OF GENERAL MEETING
Shareholders are hereby advised that a circular (“Circular”) has been posted to Shareholders today, containing,
inter alia:
- details of the Proposed Transaction; and
- a notice convening the general meeting of Shareholders (“General Meeting”).
Shareholders are advised to review the Circular for detailed terms regarding the Proposed Transaction.
Notice is hereby given that the General Meeting of Blue Label shareholders will be held at Blue Label’s corporate
offices, 75 Grayston Drive, Sandton on Wednesday, 16 November 2016 at 10:00 to consider and, if deemed fit,
pass, with or without modification, the resolutions necessary to implement the Proposed Transaction.
The Circular and notice of General Meeting, is also available on the Company’s website
www.bluelabeltelecoms.co.za
3. IMPORTANT DATES AND TIMES
The important dates and times in relation to the General Meeting are set out below:
2016
Record date to determine which Shareholders are eligible to receive the notice Friday, 7 October
of General Meeting
Circular and notice of General Meeting posted to Shareholders and announced Tuesday, 18 October
on SENS on
Last day to trade in Blue Label shares in order to be recorded in its securities Tuesday, 1 November
register to vote at the General Meeting
Record date to be entitled to attend, participate in and vote at the General Friday, 4 November
Meeting by close of trading on
Form of proxy for the General Meeting requested to be received by the transfer Monday, 14 November
secretaries by no later than 10:00 on
General Meeting held at 10:00 on Wednesday, 16 November
Results of the General Meeting announced on SENS on Wednesday, 16 November
Announcement as to the fulfilment of all conditions precedent to the To be advised
Proposed Transaction released on SENS
Notes:
1. The above dates and times are subject to amendment at the discretion of Blue Label. Any such amendment
will be released on SENS.
2. Shareholders should note that as transactions in Blue Label shares are settled in the electronic settlement
system used by Strate, settlement of trades takes place 3 business days after such trade. Therefore
Shareholders who acquire Blue Label Shares after Tuesday, 1 November 2016 will not be eligible to attend,
participate in and to vote at the General Meeting.
3. All times given in this Circular are local times in South Africa.
4. FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION
The table below sets out the pro forma financial effects of the Proposed Transaction on the published audited
results of the Blue Label Group for the year ended 31 May 2016. The pro forma financial effects have been
prepared for illustrative purposes only and because of their pro forma nature, may not fairly present the Company’s
financial position, changes in equity, results of operations or cash flows, nor the effect and impact of the Proposed
Transaction going forward. The financial effects are the responsibility of the Blue Label board.
The pro forma financial effects have been prepared using accounting policies that comply with International
Financial Reporting Standards and that are consistent with those applied in the published audited results of the
Blue Label Group for the year ended 31 May 2016. The pro forma financial effects are presented in accordance
with the Listings Requirements, the Guide on Pro Forma Financial Information issued by the South African Institute
of Chartered Accountants and ISAE 3420 (Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus).
Pro forma
after the
Proposed
Transaction
before non- Pro forma
recurring after the
Pro forma Proposed
Before 1 adjustments2 Change Transaction3 Change
(cents) (cents) (%) (cents) (%)
Basic earnings per share 103.85 (70.93) -168% (97.16) -194%
Diluted basic earnings per share** 102.84 (70.34) -168% (96.35) -194%
Headline earnings per share 100.35 (55.90) -156% (82.13) -182%
Diluted headline earnings per
share** 99.37 (55.43) -156% (81.45) -182%
Core headline earnings per share* 102.85 (52.69) -151% (78.93) -177%
Net asset value per share 662.32 816.15 23% 807.16 22%
Net tangible asset value per share 484.15 664.49 37% 655.51 35%
Weighted average number of
shares ('000) 665,950 783,875 18% 783,875 18%
Diluted weighted average number
of shares ('000) 672,520 790,445 18% 790,445 18%
Number of shares in issue ('000) 674,509 792,434 17% 792,434 17%
* Core headline earnings per share is calculated after adding back to headline earnings, the amortisation of
intangible assets as a consequence of the purchase price allocations completed in terms of IFRS 3(R): Business
Combinations.
** Diluted earnings per share and diluted headline earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding for the number of shares that would be
issued on vesting under the employee forfeitable share plan.
Notes:
1. The “Before” column is based on the published audited results of the Blue Label Group for the year ended 31
May 2016.
2. The “Pro forma after the Proposed Transaction before non-recurring pro forma adjustments” column reflects
the results of the impact of the pro forma adjustments on the Blue Label group as a consequence of the Cell
C recapitalisation and the Proposed Transaction before taking into account once-off and non-recurring pro
forma adjustments.
3. The “Pro forma after the Proposed Transaction” column reflects the results of the impact of the pro forma
adjustments on the Blue Label group as a consequence of the Cell C recapitalisation and the Proposed
Transaction after taking into account recurring, once-off and non-recurring pro forma adjustments.
4. The effects on earnings, diluted earnings, headline earnings, diluted headline earnings and core headline
earnings per share are calculated on the basis that the Cell C recapitalisation was effective on 1 June 2015,
while the effects on net asset value and net tangible asset value per share are calculated on the basis that
the Cell C recapitalisation was effective on 31 May 2016 for purposes of presenting the pro forma effects
thereof on the Blue Label group.
5. The detailed notes and assumptions to the financial effects are presented in the Circular and the pro forma
financial effects should be read in conjunction with the pro forma condensed group statement of financial
position and the pro forma condensed group statement of comprehensive income contained therein. The
Independent Reporting Accountant’s report on the pro forma financial effects and pro forma financial
information is also contained in the Circular.
6. The increase in the weighted average, diluted weighted average and total number of Blue Label shares in
issue is congruent with the new Blue Label shares issued for the vendor consideration placement.
5. PROSPECTS
1. The Board is of the opinion that the Proposed Transaction provides a compelling value proposition to Blue
Label, as well as to Cell C, and its customers, affording both companies the opportunity to realise synergies
in product distribution, and positioning Blue Label to benefit from the improved operational and financial
performance that the investment in Cell C will create.
2. At an EBITDA level, Cell C achieved a significant positive improvement from the year ended 31 December
2014 to 31 December 2015. Based on its performance during its current financial year to date, Cell C
management are confident that it will perpetuate this growth for the remainder of its financial year ending 31
December 2016 and expect this momentum to continue thereafter.
3. Pursuant to its planned refinancing currently in progress, Blue Label will not be required to provide any
additional funding to Cell C in the foreseeable future.
4. The investment in Cell C is expected to contribute positively to Blue Label’s headline earnings per share post
the 2017 financial year.
5. The investment in Cell-C will have no effect on the dividend policy for the 2017 financial year.
6. The information reported above has not been reviewed, audited or reported on by the Company’s auditors
6. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the renewal of the cautionary announcement contained in the Transaction
Announcement, and are hereby advised that as the details of the Proposed Transaction have been announced to
Shareholders, caution is no longer required to be exercised when dealing in the shares of the Company.
By order of the board
Sandton
18 October 2016
Financial Adviser and Sponsor
Investec Bank Limited
Legal Adviser to Blue Label
Werksmans Inc.
Reporting accountants to Blue Label
PricewaterhouseCoopers Inc.
Date: 18/10/2016 11:03:00 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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