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ESR - Esorfranki Limited - Further announcement regarding the rights offer and

Release Date: 09/12/2010 13:09:02      Code(s): ESR
ESR - Esorfranki Limited - Further announcement regarding the rights offer and  
withdrawal of the cautionary announcement                                       
ESORFRANKI LIMITED                                                              
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1994/000732/06)                                           
JSE code: ESR                                                                   
ISIN: ZAE000133369                                                              
("Esorfranki" or "the company")                                                 
FURTHER ANNOUNCEMENT REGARDING THE RIGHTS OFFER AND WITHDRAWAL OF THE CAUTIONARY
ANNOUNCEMENT                                                                    
1    Introduction and terms of the rights offer                                 
Shareholders are referred to the announcement, dated 25 November 2010 and   
    are advised that the company has finalised terms in order to raise R200     
    million by way of a fully underwritten renounceable rights offer of 93 023  
    256 new ordinary shares ("rights shares") to its ordinary shareholders at a 
subscription price of R2.15 per rights share ("rights offer price") in the  
    ratio of 30.786 rights shares for every 100 Esorfranki shares held ("rights 
    offer"). The rights offer price represents a 6% premium to the 30 day       
    volume weighted average price of Esorfranki ordinary shares of R2.03 as at  
25 November 2010.  The rights shares, once issued, will rank pari passu in  
    all respects with the existing issued Esorfranki shares.                    
2    Underwriting agreements                                                    
    Underwriting agreements have been entered into between the company and      
Coronation Asset Management (Pty) Limited, and the company and Sanlam       
    Investment Management - a division of Sanlam Life Insurance Limited - and   
    Sanlam Investment Management (Pty) Limited (collectively "the               
    underwriters"), in terms of which the underwriters have agreed to subscribe 
for all of the rights shares at the rights offer price ("the                
    subscription"), subject to the conditions precedent set out in 3 below.     
    An aggregate underwriting fee of 1.9% of the rights offer proceeds is       
    payable to the underwriters.                                                
3    Conditions precedent                                                       
    The underwriting agreements are subject to the rights offer circular being  
    posted to shareholders on or about 7 February 2011 and:                     
                                                                                
-    to the extent required, all necessary regulatory approvals having been 
         obtained from all relevant regulatory authorities; and                 
    -    the JSE Limited having granted a listing in respect of the rights      
         shares.                                                                
4    Purpose of the rights offer and use of the proceeds                        
    The main purpose of the rights offer is to raise capital in order to expand 
    the operations of the company as considered appropriate by the board of     
    directors and to settle debt of approximately R175 million.                 
5    Financial effects of the rights offer                                      
    The unaudited pro forma financial effects of the rights offer, for which    
    the directors are responsible, are provided for illustrative purposes only  
    to show the effect thereof on earnings per share, diluted earnings per      
share, headline earnings per share and diluted headline earnings per share  
    as if the rights offer had taken effect on 1 March 2010 and on net asset    
    value per share and net tangible asset value per share as if the rights     
    offer had taken effect on 31 August 2010.  Because of their nature, the     
unaudited pro forma financial effects may not fairly present the company`s  
    financial position and performance.  The unaudited pro forma financial      
    effects have been compiled from the published reviewed results for the six  
    months ended 31 August 2010 and are presented in a manner consistent with   
the format and accounting policies adopted by Esorfranki and have been      
    adjusted as described in the notes below:                                   
                                               Before  After the          %     
                                                  the     rights     change     
rights      offer                
                                     Note       offer                           
    Earnings per share (cents)         2          4.2        4.7       11.7     
    Diluted earnings per share         2          4.2        4.7       11.9     
(cents)                                                                     
    Headline earnings per share        2          4.1        4.6       12.6     
    (cents)                                                                     
    Diluted headline earnings per      2          4.1        4.6       12.8     
share (cents)                                                               
    Net asset value per share          3        258.4      246.3      (4.7)     
    (cents)                                                                     
    Net tangible asset value per       3        161.1      172.5        7.0     
share (cents)                                                               
    Weighted average number of                293 403    386 426                
    shares in issue (000)                                                       
    Fully diluted weighted                    295 628    388 651                
average number of shares in                                                 
    issue (000)                                                                 
    Shares in issue at period end             293 651    386 674                
    (Net Treasury shares)(000)                                                  

    Notes:                                                                      
                                                                                
                                                                                
1  The information as reflected in the "Before the rights offer"            
    column has been extracted from the company`s consolidated reviewed          
    results for the six months ended 31 August 2010.                            
    2  The effects relating to earnings per share, diluted earnings per         
share, headline earnings per share and diluted headline earnings per        
    share are based on the following assumptions and information:               
    -  the rights offer was effective 1 March 2010;                             
    -  R200 million was received pursuant to the subscription for the 93        
023 256 rights shares; and                                                  
    -  the rights offer proceeds, net of transaction costs, were utilised       
    to settle interest-bearing debt, which debt would have attracted            
    interest at 9.2% per annum pre-tax, resulting in a reduced finance          
cost.                                                                       
    3  The effects relating to the net asset value per share and net            
    tangible asset value per share are based on the following assumptions       
    and information:                                                            
-  the rights offer was effective 31 August 2010;                           
    -  R200 million was received pursuant to the subscription for the 93        
    023 256 rights shares;                                                      
    -  expenses relating to the rights offer amount to R6.3 million and         
were written off against share premium;                                     
    -  the rights offer proceeds, net of transaction costs, were utilised       
    to settle interest-bearing debt of approximately R175 million.              
6    Further announcements and circular                                         
Further announcements will be made in due course relating the fulfilment of 
    the conditions precedent and in respect of the salient dates of the rights  
    offer.                                                                      
    A circular to shareholders, giving full details of the rights offer, will   
be mailed to shareholders in due course.                                    
7    Withdrawal of the cautionary announcement                                  
    Pursuant to the content of this announcement, the cautionary announcement   
    is withdrawn.                                                               
Sandton                                                                         
9 December 2010                                                                 
Corporate Adviser and            Legal adviser                                  
Sponsor                          Thomson Wilks Inc                              
Vunani Corporate Finance                                                        
Independent reporting                                                           
accountants and auditors                                                        
KPMG Inc                                                                        
Date: 09/12/2010 13:09:02 Supplied by www.sharenet.co.za                     
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