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CPI- Capitec - Issue of ordinary shares and withdrawal of cautionary

Release Date: 15/12/2006 07:58:04      Code(s): CPI
CPI- Capitec - Issue of ordinary shares and withdrawal of cautionary            
CAPITEC BANK HOLDINGS LIMITED                                                   
Registration number:  1999/025903/06                                            
Share Code:    CPI                                                              
ISIN Number:   ZAE000035861                                                     
("Capitec")                                                                     
ISSUE OF ORDINARY SHARES TO BEE CONSORTIUM AND WITHDRAWAL OF CAUTIONARY         
ANNOUNCEMENT                                                                    
1.   INTRODUCTION                                                               
    Further to the cautionary notice published on SENS on Friday, 8 December    
    2006 and in the press on Monday, 11 December 2006, shareholders are advised 
that the board of Capitec has agreed, subject to shareholder approval, to   
    issue 10 000 000 shares in the ordinary share capital of Capitec ("shares") 
    at 3 000 cents per share to a consortium of black companies, trusts and     
    black individuals ("the specific issue").                                   
The Capitec group subscribes to the Financial Sector Charter and The Codes  
    of Good Practice, a draft of which has been published by the Department of  
    Trade and Industry ("the Codes") as the focus of both documents is to       
    facilitate broad based black participation in the South African economy.    
In terms of the Financial Sector Charter, Capitec is required to have black 
    shareholding of at least 25% by 2010.  To this end, Capitec issued 1 445    
    582 shares to Arch Equity Limited ("Arch Equity") in 2004, its BEE partner  
    at the time, increasing Arch Equity`s interest to 15.48%.  In addition, 100 
000 shares each were issued to two black directors of Capitec taking black  
    shareholding in Capitec to 15.77%.  Subsequent to the issue, however, the   
    Codes which define a black company differently from the Financial Sector    
    Charter, were published, bringing about a restructure of Arch Equity.  The  
result thereof was the creation of Arch Equity Investment Holdings Limited  
    ("Arch Equity BEE"), a black company as defined in the Codes and complying  
    with the definition of a black company in terms of the Financial Sector     
    Charter.  As a result of the restructure, however, BEE shareholding in      
Capitec was reduced to 4.35% consisting of Arch Equity BEE at 4.02%, black  
    directors at 0.29% and black employees participating in the Capitec Bank    
    Empowerment Share Purchase Scheme at 0.04%.                                 
    In pursuit of fulfilling the requirement to have black shareholding of 25%  
by 2010, the board recommends the BEE consortium, as more fully disclosed   
    under paragraph 3 below, as a suitable BEE shareholder.                     
2.   THE PROPOSED STRUCTURE                                                     
    The shareholding structure as envisaged will be published in the press      
announcement of 18 December 2006.                                           
    The BEE Consortium, consisting of the parties listed below, are the         
    exclusive shareholders of Ash Brook.  Ash Brook will hold 100% interest in  
    Coral.                                                                      
In terms of the subscription agreement between Capitec, Coral and Ash       
    Brook, Coral will subscribe for 10 000 000 ordinary shares thereby          
    obtaining an interest of 12.21% in Capitec.  The Industrial Development     
    Corporation of South Africa Limited (registration number 1940/014201/06)    
("IDC") has agreed to finance R285 million of the subscription price of the 
    specific issue through subscription for preference shares ("the IDC         
    preference share subscription agreement") to be issued by Coral.            
    Capitec Bank will subscribe for preference shares to the value of R15       
million to be issued by Ash Brook ("the Ash Brook preference shares") in    
    return for a 5% stake in Ash Brook being issued to the Capitec Bank Share   
    Empowerment Trust.  The Ash Brook preference shares will rank before any    
    other preference shares which may be issued by Ash Brook.  The Ash Brook    
preference shares will, however, not be redeemed prior to the IDC           
    preference shares issued by Coral.                                          
    Should any or all of the preference shares issued by Coral to the IDC in    
    terms of the IDC preference share subscription agreement be cancelled or    
redeemed then the Ash Brook preference shares will be redeemed in the same  
    proportion.                                                                 
    Capitec does not provide security for redemption of any preference shares.  
3.   THE BEE CONSORTIUM                                                         
The BEE consortium consists of the following parties :                      
                                                                                
                                                                                
    BEE Consortium shareholders                Constituent    Holding in        
shareholder    BEE               
                                                              Consortium        
    Regiments Capital (Pty) Limited            L Nyhonyha     15.00%            
    An authorized financial services provider  N Pillay                         
of pension fund benefits, securities and   E Wood                           
    instruments (shares, money market                                           
    instruments, debentures and securitized                                     
    debt, warrants, certificates and other                                      
instruments, bonds, and derivative                                          
    instruments) and deposits defined in the                                    
    Banks Act, exceeding 12 Months as well as                                   
    less than 12 months                                                         

    Kaebetso Holdings (Pty) Limited            T Mahoele      31.85%            
    A newly formed investment company          Z.  Z Nzama                      
    representing black professionals led by                                     
Tsepho Mahoele, Chief Executive Officer                                     
    of the Pan African Infrastructure                                           
    Development Fund                                                            
                                                                                
Lemoshanang Trust                                         5.00%             
    Trustees: Mr BL Moropa, Mrs ES Moropa, Ms                                   
    MD Mokone and Mr JM Kekana                                                  
                                                                                
Mdumo Trust                                               5.00%             
    Trustees: Abdool Rawoof Ahmed and Feroza                                    
    Mootla                                                                      
                                                                                
Batho-Batho Trust                                         20.00%            
    Trustees: Reverend Tsele (Chairperson),                                     
    Vallie Moosa (Former Minister of                                            
    Environmental Affairs and Tourism), Kenny                                   
Fihla (Previous CEO of Business Against                                     
    Crime) and Sbongiseni Dhlomo                                                
                                                                                
    Koma Trust                                                5.00%             
Trustees: Tlhalefang Sekano (founder of                                     
    Union Alliance Holdings) and Ramateu                                        
    Monyokolo (current CEO of Koma Management                                   
    Services and has recently been appointed                                    
by the Minister of Public Enterprises to                                    
    serve as a Trustee of Diabo Share Trust                                     
    which has been set up to administer                                         
    Telkom employees` shares in Telkom)                                         

    Nozala Investment (Pty) Limited            Nozala         6.15%             
    The board consists of Dr Makaziwe Mandela  Holdings                         
    (chairman), Salukazi Dakile-Hlongwane,     (Pty) Limited                    
Dawn Mokhobo, Lorato Phalatse, Thandi      Nozala Trust                     
    January-McLean, Joan Joffe, Dr Busisiwe                                     
    Nyembezi, Adele Pretorius and David                                         
    Geeringh                                                                    

    Rorisang Basadi Investment Holdings                       3.00%             
    The board consists of Jackie Huntley,                                       
    Puli Moloto-Stofile, Modie Mabalayo and                                     
Nombini Mehlomakulu                                                         
                                                                                
    Capitec Bank Share Empowerment Trust                      5.00%             
    Individuals                                                                 
Pilisiwe Nomsa Tau                                        1.00%             
    Prudence Mtshali                                          1.00%             
    Pilisiwe Nomsa Tdikeledi Muriel Majola                    1.00%             
     Bongani Khumalo                                          1.00%             

    Total                                                     100.00%           
4.   DETAILS OF THE SPECIFIC ISSUE                                              
    4.1  Rationale and terms                                                    
4.1.1     Rationale                                                    
              The directors propose the specific issue to Coral to increase the 
              direct interest of black people in Capitec to 16.04% so as to     
              achieve the ultimate objective of 25% interest in the company by  
BEE parties by 2010.  This will strengthen the black economic     
              empowerment credentials of the group and increase compliance with 
              the Financial Sector Charter and the Codes.                       
         4.1.2     Salient terms                                                
Coral subscribes for 10 000 000 shares in Capitec against    
                   payment of 3000 cents per share;                             
                   The BEE Consortium may nominate a non-executive director to  
                   the board of Capitec, subject to approval of the said board  
and the Registrar of Banks;                                  
                   Capitec Bank undertakes to utilise the proceeds of the       
                   specific issue for infrastructure expansion and/or loan      
                   products with pricing limited to the pricing prescribed by   
the National Credit Act that is to come into effect on 1     
                   June 2007; and                                               
                   The participants in the BEE Consortium will remain black,    
                   i.e. they must continue to comply with the Codes from time   
to time and are accordingly restricted in dealing with the   
                   shares.                                                      
    4.2  Effects of the specific issue                                          
         The unaudited pro forma financial effects set out below have been      
prepared for illustrative purposes only and because of their nature    
         may not give a fair reflection of the financial position of the        
         Capitec group nor the effect on future earnings after the specific     
         issue.  The preparation of the financial effects is the responsibility 
of the directors of Capitec.                                           
         The table below sets out the unaudited pro forma financial effects of  
         the specific issue on the Capitec group:                               
                                                                                

                                          Before(1  After(2)(3) Change          
                                          )         (7)                         
                                          (cents)   (cents)     %               
Net asset value per share        824       1 089       32%             
         Net tangible asset value per     768       1 040       35%             
         share(4)                                                               
         Earnings per share                                                     
- Basic attributable              102.3    98.7        (4%)            
         - Basic headline                  103.6    99.9        (4%)            
         - Diluted attributable            96.9     94.2        (3%)            
         - Diluted headline                98.2     95.3        (3%)            
Number of shares (`000)                                                
         - In issue                        71 928    81 928                     
         - Weighted average                71 928    81 928(5)                  
         - Diluted weighted average(6)     75 897    85 897(5)                  
Notes :                                                                
         1    Extracted from the published unaudited consolidated interim       
              results of Capitec for the six months ended 31 August 2006;       
         2.   Basic attributable earnings per share, basic headline earnings    
per share, diluted attributed earnings per share and diluted      
              headline earnings per share are based on the following            
              assumptions:                                                      
              -    the issue to the BEE consortium and the investment in the    
Ash Brook preference shares was effected on 1 March 2006;    
              -    a dividend of 45 cents per share was paid on the 10 000 000  
                   shares issued;                                               
              -    STC at a rate of 12,5% was taken into account on the         
dividends paid and the dividend received on the Ash Brook    
                   preference shares;                                           
              -    the dividend received on the Ash Brook preference shares was 
                   based on the actual prime rate for the six months to 31      
August 2006;                                                 
              -    interest was earned on the net cash at the group`s marginal  
                   return on excess funding (7.03%); and                        
              -    a tax rate of 29% was applied;                               
3.   Net asset value per share and the net tangible asset value per    
              share are based on the following assumptions:                     
              -    the issue to the BEE Consortium and the investment in the    
                   Ash Brook preference shares was effected on 31 August 2006;  
and                                                          
              -    proceeds of R300 million was received and R15 million was    
                   invested in the Ash Brook preference shares on the same      
                   date;                                                        
4.   For purposes of calculating the net tangible asset value per      
              share, computer software was excluded;                            
         5.   Weighted average number of shares were computed as if the issue   
              was effected on 1 March 2006;                                     
6.   The diluted number of shares are calculated as if all 6 320 148   
              outstanding share options as at 31 August 2006 were exercised at  
              the average market price of R30.26 for the six months then ended; 
         7.   No transaction costs have been taken into account in the          
calculation of the financial effects as it will not have a        
              material impact.                                                  
    4.3  Conditions precedent                                                   
         The implementation of the specific issue is subject to the following   
remaining conditions precedent by not later than 31 March 2007:        
         Satisfactory conclusion by Capitec of a due diligence investigation    
         into the BEE status of Coral and Ash Brook and the delivery by Capitec 
         to Coral and Ash Brook of a written notice confirming that Capitec is  
satisfied, in its sole and absolute discretion, with such status;      
         Satisfactory conclusion by Capitec of a due diligence investigation    
         into the solvency of Coral and Ash Brook according to Generally        
         Accepted Accounting Principles (GAAP) and the delivery by Capitec to   
Coral and Ash Brook of a written notice confirming that Capitec is     
         satisfied, in its sole and absolute discretion, with the outcome of    
         the investigation; and                                                 
         Approval by at least 75% of shareholders present in person or by proxy 
at the meeting to be convened on 15 February 2007 (excluding persons   
         participating in the specific issue and their associates).             
5.   SHARE CAPITAL                                                              
    5.1  Authorised and issued share capital of Capitec                         
The authorised and issued share capital of the Capitec group before    
         and after the specific issue is:                                       
                                                                                
                                                                                
R`000                      
         Before the specific issue                                              
                                                                                
         Authorised  share capital                                              

         100 000 000 ordinary shares of R0,01 each   1 000                      
         100 000 000 non-cumulative, non-            1 000                      
         redeemable, non-participating preference                               
shares of R0,01 each                                                   
                                                                                
         Total authorised share capital              2 000                      
                                                                                
Issued share capital                                                   
                                                                                
         71 928 412 ordinary shares of R0,01 each    719                        
         1 684 211 non-cumulative, non-redeemable,   17                         
non-participating preference shares of                                 
         R0,01 each                                                             
                                                                                
         Total issued share capital                  736                        

         Share premium                                                          
                                                                                
         On 71 928 412 ordinary shares of R0,01      347 146                    
each                                                                   
         On 1 684 211 non-cumulative, non-           154 589                    
         redeemable, non-participating preference                               
         shares of R0,01 each                                                   

         Total share premium                         501 735                    
                                                                                
                                                     R`000                      
After the specific issue                                               
                                                                                
         Authorised share capital                                               
                                                                                
100 000 000 ordinary shares of R,01 each    1 000                      
         100 000 000 non-cumulative, non-            1 000                      
         redeemable, non-participating preference                               
         shares of R0,01 each                                                   

         Total authorised share capital              2 000                      
                                                                                
         Issued share capital                                                   

         81 928 412 ordinary shares of R0,01 each    819                        
         1 684 211 non-cumulative, non-redeemable,   17                         
         non-participating preference shares of                                 
R0,01 each                                                             
                                                                                
         Total issued share capital                  836                        
                                                                                
Share premium                                                          
                                                                                
         On 81 928 412 ordinary shares of R0,01      647 046                    
         each                                                                   
On 1 684 211 non-cumulative, non-           154 589                    
         redeemable, non-participating preference                               
         shares of R0,01 each                                                   
                                                                                
Total share premium                         801 635                    
6.   GENERAL MEETING OF SHAREHOLDERS                                            
    A general meeting of shareholders of Capitec will be held in the Innovation 
    Boardroom of Capitec Bank, 14 Quantum Road, Technopark, Stellenbosch at     
10:00 on Thursday, 15 February 2007, to consider the ordinary resolutions   
    required to give effect to the specific issue proposed.                     
7.   IMPORTANT DATES AND TIMES                                                  
                                                 2007                           
Last day for receipt of forms of proxy for                                  
    the general meeting by the transfer          Tuesday, 13 February           
    secretaries, by 10:00 on                                                    
    General meeting to be held in the                                           
Innovation Boardroom of Capitec Bank at 14   Thursday, 15 February          
    Quantum Road, Technopark, Stellenbosch at                                   
    10:00 on                                                                    
    Results of the general meeting and listing                                  
of shares to be issued, announced on SENS    Thursday, 15 February          
    Results of the general meeting and listing                                  
    of shares to be announced in the financial   Friday, 16 February            
    press                                                                       
Anticipated listing of shares on or about    Monday, 19 February            
    Note :                                                                      
    1.   The above dates and South African times are subject to change.  Any    
         changes save for the listing date will be announced on SENS and        
published in the South African press;                                  
    2.   The listing date will, however, depend on fulfilment of the conditions 
         precedent.                                                             
8.   WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                      
The cautionary announcement referred to in 1 above is accordingly withdrawn 
    and shareholders are advised that they no longer need to exercise caution   
    in dealing in the company`s securities.                                     
Stellenbosch                                                                    
15 December 2006                                                                
PSG Capital Limited - Corporate adviser and sponsor                             
PricewaterhouseCoopers Inc. - Reporting accountants and auditors                
Date: 15/12/2006 07:58:02 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  



                                        
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