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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 Monday, 19 June 2017 (“Transaction Announcement”),
regarding the amended terms of the proposed participation by Blue Label in the recapitalisation of Cell C
Proprietary Limited (“Cell C”), including the associated R2.75 billion Blue Label vendor consideration placement
(“Proposed Transaction”).
The Transaction Announcement detailed, inter alia, that Blue Label:
- through its wholly owned subsidiary, The Prepaid Company Proprietary Limited ("TPC"), has signed the
final equity transaction agreements applicable to the Cell C recapitalisation;
- anticipates issuing an updated circular, and convening a general meeting before the end of July 2017 in
order to seek the approval of Shareholders for the amendments to the Cell C recapitalisation; and
- has obtained irrevocable undertakings from approximately 53% of Shareholders to vote in favour of the
Proposed Transaction.
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;
- details of the resolutions to approve the Proposed Transaction, and place authorised but unissued Blue
Label shares under the control of the directors for the purposes of the vendor consideration placement
pursuant to Blue Label’s participation in the Cell C recapitalisation, as well as the acquisition in respect
of 3G Mobile Proprietary Limited (as set out in the SENS announcement on 27 June 2017); and
- a notice convening the general meeting of Shareholders.
Shareholders are advised to review the Circular for detailed terms regarding the abovementioned transactions.
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, 26 July 2017 at 10:00 to consider and, if deemed fit, pass,
with or without modification, the resolutions necessary to implement the abovementioned transactions.
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:
2017
Record date to determine which Shareholders are eligible to receive the notice Thursday, 15 June
of General Meeting
Circular and notice of General Meeting posted to Shareholders and announced Tuesday, 27 June
on SENS on
Last day to trade in Blue Label shares in order to be recorded in its securities Tuesday, 11 July
register to vote at the General Meeting
Record date to be entitled to attend, participate in and vote at the General Friday, 14 July
Meeting by close of trading on
Form of proxy for the General Meeting requested to be received by the transfer Monday, 24 July
secretaries by no later than 10:00 on
General Meeting held at 10:00 on Wednesday, 26 July
Results of the General Meeting announced on SENS on Wednesday, 26 July
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, 11 July 2017 will not be eligible to attend,
participate in and to vote at the General Meeting.
3. All times are local times in South Africa.
4. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION
The table below sets out the pro forma financial effects of the Proposed Transaction on the published unaudited
results of the Blue Label group for the half year ended 30 November 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 pro forma financial effects have been prepared using accounting policies that comply with International
Financial Reporting Standards (“IFRS”) and that are consistent with those applied in the published unaudited
results of the Blue Label group for the half year ended 30 November 2016. The pro forma financial effects are
presented in accordance with the listings requirements of the JSE Limited (“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).
The directors of the Company are responsible for the compilation, contents and preparation of the pro forma
financial effects. Their responsibility includes determining that the pro forma financial effects have been properly
compiled on the basis stated, which is consistent with the accounting policies of the Blue Label group and that
the pro forma adjustments are appropriate for purposes of the pro forma financial information disclosed pursuant
to the Listings Requirements.
Pro forma after
the Proposed
Before 1 Transaction2 Change
(cents) (cents) (%)
Basic earnings per share 81.78 17.96 (78.0%)
Diluted basic earnings per share** 81.12 17.84 (78.0%)
Headline earnings per share 81.78 17.34 (78.8%)
Diluted headline earnings per share** 81.12 17.23 (78.8%)
Core headline earnings per share* 82.86 18.69 (77.4%)
Net asset value per share 695.78 864.83 24.3%
Net tangible asset value per share3 521.30 727.64 39.6%
Weighted average number of shares ('000) 666,665 849,998
Diluted weighted average number of shares ('000) 672,077 855,410
Number of shares in issue ('000) 674,509 857,842
* 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 unaudited results of the Blue Label group for the half year
ended 30 November 2016.
2. The “Pro forma after the Proposed Transaction” column has been calculated on the basis that all of the
steps to implement the Cell C recapitalisation and the Proposed Transaction have been completed and is
stated after considering the Cell C recapitalisation and Blue Label group pro forma adjustments.
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 and the Proposed Transaction
were effective on 1 June 2016, while the effects on net asset value and net tangible asset value per share
are calculated on the basis that the Cell C recapitalisation and the Proposed Transaction were effective on
30 November 2016 for purposes of presenting the pro forma effects thereof on the Blue Label group.
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 Cell C vendor consideration placement.
3. Net tangible asset value is calculated as net asset value attributable to the owner of the parent, less the
value of goodwill, other intangible assets and deferred tax assets attributable to the owner of the parent.
4. The detailed notes and assumptions to the pro forma 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 assurance report on the pro forma financial effects and pro
forma financial information is contained in the Circular.
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
2015 to 31 December 2016. 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 2017 and expect this momentum to continue thereafter.
3. The investment in Cell C will have no effect on the dividend policy for the 2017 financial year.
4. 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 pro forma financial effects of the Proposed Transaction are
detailed above, caution is no longer required to be exercised when dealing in the shares of the Company.
By order of the board
Sandton
27 June 2017
Financial Adviser and Sponsor
Investec Bank Limited
Legal Adviser to Blue Label
Werksmans Inc.
Reporting accountants to Blue Label
PricewaterhouseCoopers Inc.
Date: 27/06/2017 02:53:00 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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