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JOINT - UNITRANS & STEINHOFF CHANGE IN SHAREHOLDING STRUCT. OF UNIT

Release Date: 22/05/2000 08:16
Code(s): MUR SHF UTR
Wrap Text
MURRAY & ROBERTS HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1948/029826/06)
("M&R")
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1998/003951/06)
("STEINHOFF")
UNITRANS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1967/003403/06)
("UNITRANS")
JOINT ANNOUNCEMENT REGARDING:

- THE FORMATION OF A HOUSEHOLD GOODS LOGISTICS JOINT VENTURE BETWEEN UNITRANS AND STEINHOFF AS A PREPARATORY STEP TOWARDS ESTABLISHING A HOUSEHOLD GOODS ELECTRONIC E-COMMERCE MARKETPLACE; AND
- A CHANGE IN THE SHAREHOLDING STRUCTURE OF UNITRANS. INTRODUCTION
FURTHER TO THE SEPARATE CAUTIONARY ANNOUNCEMENTS OF M&R AND UNITRANS DATED 14 APRIL 2000 AND OF STEINHOFF DATED 17 APRIL 2000, GENSEC BANK LIMITED IS AUTHORISED TO ANNOUNCE THAT AGREEMENT IN PRINCIPLE HAS BEEN REACHED IN TERMS OF WHICH, SUBJECT TO THE CONDITIONS PRECEDENT REFERRED TO BELOW:
- M&R HAS AGREED TO DISPOSE OF 5 MILLION UNITRANS SHARES FOR AN AGGREGATE CASH CONSIDERATION OF R100 MILLION, EQUIVALENT TO 2 000 CENTS PER UNITRANS SHARE ("THE M&R SALE"). THESE SHARES WILL BE ACQUIRED BY AN INSTITUTIONAL INVESTOR AND STEINHOFF AS TO 2 839 000 SHARES AND 1 461 000 SHARES RESPECTIVELY. THE REMAINING 700 000 UNITRANS SHARES WILL BE ACQUIRED BY THE UNITRANS LIMITED SHARE SCHEME TRUST ("THE TRUST") FOR PURPOSES OF THE UNITRANS LIMITED SHARE SCHEME IN ORDER TO FACILITATE ACHIEVING THE OBJECTIVES OF THE TRUST;
- UNITRANS HAS AGREED, IN TERMS OF ITS GENERAL AUTHORITY TO ISSUE SHARES FOR CASH, TO ALLOT 5,539 MILLION UNITRANS SHARES TO STEINHOFF TO BE ISSUED AT 30 JUNE 2000 AT 2 000 CENTS PER SHARE, THEREBY RAISING R110,8 MILLION, BEFORE EXPENSES ("THE UNITRANS SHARE ISSUE"); AND
- STEINHOFF WILL PROCURE THE DISPOSAL, WITH EFFECT FROM 30 JUNE 2000, OF THE HOUSEHOLD GOODS LOGISTICS AND DISTRIBUTION OPERATION OF ITS ROADWAY DIVISION ("ROADWAY") TO A NEWLY FORMED JOINT VENTURE COMPANY ("THE JV") FOR A
CONSIDERATION EQUAL TO ITS ESTIMATED NET ASSET VALUE AT 30 JUNE 2000 OF APPROXIMATELY R55 MILLION IN EXCHANGE FOR A 50% SHAREHOLDING IN THE JV. THE JV IS TO BE JOINTLY CONTROLLED BY UNITRANS AND STEINHOFF, AND UNITRANS' MATCHING INVESTMENT IN THE JV WILL TAKE THE FORM OF A CASH SUBSCRIPTION TO THE VALUE OF APPROXIMATELY R55 MILLION, (COLLECTIVELY REFERRED TO AS "THE PROPOSALS").
STEINHOFF'S OBLIGATIONS PURSUANT TO THE UNITRANS SHARE ISSUE AND THE M&R SALE WILL BE FUNDED FROM INTERNAL RESOURCES AND AN ISSUE OF SHARES FOR CASH ("THE STEINHOFF SHARE ISSUE").
THE PROPOSALS HAVE BEEN NEGOTIATED AND CONCLUDED AS A SERIES OF INTER-DEPENDENT TRANSACTIONS AND CONSEQUENTLY, ALL ELEMENTS THEREOF NEED TO BE CONSUMMATED, FAILING WHICH THE PROPOSALS WILL FAIL TO BE IMPLEMENTED.
IT HAS FURTHERMORE BEEN AGREED IN PRINCIPLE THAT, SUBJECT TO THE NECESSARY DUE DILIGENCE INVESTIGATION, UNITRANS WILL ACQUIRE THE NON-HOUSEHOLD GOODS LOGISTICS AND DISTRIBUTION OPERATIONS OF ROADWAY (INCLUDING CERTAIN MEDIUM TERM DISTRIBUTION CONTRACTS) ON TERMS TO BE AGREED. RESULTANT CORPORATE STRUCTURE THE NET RESULT OF THE PROPOSALS WILL BE THAT:
- STEINHOFF WILL ACQUIRE A STRATEGIC INTEREST OF 9,2% IN UNITRANS AND M&R'S INTEREST IN UNITRANS WILL BE DILUTED TO 43,8% AFTER THE M&R SALE AND THE UNITRANS SHARE ISSUE. STEINHOFF AND M&R WILL HAVE RECIPROCAL PRE-EMPTIVE RIGHTS ON EACH OF THE OTHER PARTY'S SHAREHOLDING IN UNITRANS; AND
- THE JV WILL BE 50:50 CONTROLLED BY UNITRANS AND STEINHOFF AND WILL HAVE NET ASSETS OF APPROXIMATELY R110 MILLION INCLUDING APPROXIMATELY R55 MILLION IN CASH TO BE EMPLOYED IN THE ESTABLISHMENT OF A FULLY-FLEDGED HOUSEHOLD GOODS LOGISTICS OPERATION.
THE RESULTANT CORPORATE STRUCTURE IS DIAGRAMMATICALLY ILLUSTRATED AS FOLLOWS: 75,8 MILLION SHARES IN ISSUE M&R = 43,8% IN UNITRANS* STEINHOFF* = 9,2% IN UNITRANS*
STEINHOFF* AND UNITRANS* = 50% IN THE JV COMPRISING: - STEINHOFF'S HOUSEHOLD GOODS LOGISTICS BUSINESS - R55 MILLION CASH
*LISTED ON THE JOHANNESBURG STOCK EXCHANGE ("THE JSE") RATIONALE FOR THE PROPOSALS
THE UNITRANS BOARD HAS LONG BEEN OF THE VIEW THAT UNITRANS SHOULD BECOME INVOLVED AS A PARTICIPANT IN THE LOGISTICS OR SUPPLY CHAIN MANAGEMENT ARENA. THE PROPOSALS AFFORD UNITRANS THE OPPORTUNITY TO ENTER INTO A PARTNERSHIP WITH LEADING INDUSTRY PLAYERS AND IN THE PROCESS ALLOW UNITRANS TO BECOME A FORCE IN A SPECIFIC MARKET, NAMELY THE TIME SENSITIVE HOUSEHOLD GOODS MARKET. THE ALLIANCE BETWEEN UNITRANS AND STEINHOFF SHOULD RESULT IN SUBSTANTIAL
RATIONALISATION AND SYNERGISTIC BENEFITS THAT WILL IMPACT FAVOURABLY ON BOTH PARTIES' EARNINGS. THESE BENEFITS INCLUDE THE OPTIMAL UTILISATION OF FLEET, WORKSHOP AND WAREHOUSING CAPACITIES, IMPROVED TERMS OF SUPPLY, SHARED
INFRASTRUCTURE AND CONTROLS AND ENHANCED MANAGEMENT DEPTH.
THE DILUTION OF M&R'S CONTROL HOLDING IN UNITRANS FACILITATES UNITRANS SECURING THIS STRATEGIC ALLIANCE WITH STEINHOFF AND IS EXPECTED TO ENHANCE THE
TRADEABILITY OF UNITRANS SHARES, WHICH, COUPLED WITH IMPROVED EARNINGS AND A FOCUS ON THE HIGH GROWTH LOGISTICS INDUSTRY, IS EXPECTED TO RESULT IN
SUBSTANTIAL VALUE BEING UNLOCKED FOR UNITRANS SHAREHOLDERS OVER THE MEDIUM TERM M&R WILL REMAIN SUBSTANTIALLY INVESTED IN A COMPANY THAT WILL GAIN A
COMPLEMENTARY STRATEGIC FOCUS AS A LOGISTICS FULFILMENT PARTNER, WHICH SHOULD EARN ABOVE AVERAGE RETURNS FOR ITS SHAREHOLDERS. THE ALLIANCE WITH STEINHOFF WILL ALSO OPEN UP RAND-HEDGE OPPORTUNITIES FOR UNITRANS THROUGH THE FORMER'S WORLDWIDE CONTACTS AND NETWORKS.
AFTER THE IMPLEMENTATION OF THE PROPOSALS STEINHOFF WILL HAVE OUTSOURCED ITS ENTIRE HOUSEHOLD LOGISTICS AND DISTRIBUTION ACTIVITIES IN SOUTH AFRICA, BUT WILL, BY VIRTUE OF ITS INTEREST IN THE JV, STILL BE IN POSITION TO PROTECT THE DISTRIBUTION SIDE OF ITS BUSINESS THEREBY ENSURING THAT COST-EFFICIENCIES ARE MAXIMISED AND ITS CUSTOMERS' INTERESTS ARE BETTER SERVED.
AS IS THE CASE WITH UNITRANS, THE PROPOSALS WILL CREATE THE OPPORTUNITY FOR STEINHOFF TO INCREASE THE "FREE-FLOAT" OF ITS SHARES, WHICH, IN TURN, SHOULD ENHANCE SHARE LIQUIDITY. THE STEINHOFF SHARE ISSUE WILL RESULT IN THE STEINHOFF FAMILY'S INTEREST BEING DILUTED WHICH IS A FURTHER STEP TOWARDS ACHIEVING THE STATED OBJECTIVE OF A HOLDING OF LESS THAN 50% SET AT THE TIME OF STEINHOFF'S LISTING IN 1998.
A HOUSEHOLD GOODS ELECTRONIC E-COMMERCE MARKETPLACE
THE FORMATION OF THE JV REPRESENTS THE FIRST STEP IN ESTABLISHING AN ELECTRONIC E-COMMERCE MARKETPLACE FOR THE HOUSEHOLD GOODS INDUSTRY. FURTHER DEVELOPMENTS THAT ARE UNDER CONSIDERATION INCLUDE THE INVESTMENT BY THE JV IN A HOUSEHOLD GOODS ELECTRONIC E-COMMERCE MARKETPLACE ("HUB") IN CONJUNCTION WITH A REPUTABLE INFORMATION TECHNOLOGY PARTNER AND LEADING SOUTH AFRICAN RETAILERS AND MANUFACTURERS OF HOUSEHOLD GOODS ("THE INDUSTRY PLAYERS"). IT IS INTENDED THAT UPON THE INDUSTRY PLAYERS' ENTRY INTO THE HUB, CERTAIN OF THEIR PRESENTLY SEPARATE (AND TO A LARGE EXTENT REPLICATED) LOGISTICS AND DISTRIBUTION ASSETS WILL BE RATIONALISED. THE OPERATION OF SUCH A HUB IS EXPECTED TO SUBSTANTIALLY ENHANCE THE PROFITABILITY OF ALL PARTICIPANTS AND BENEFIT THE END-CONSUMER AS A RESULT OF ECONOMIES OF SCALE, IMPROVED COST-EFFICIENCIES AND WORKING CAPITAL MANAGEMENT, PROPER PRODUCTION PLANNING, BETTER UTILISATION OF IDLE CAPACITIES AND THE ELIMINATION OF DUPLICATED INFRASTRUCTURE AND FACILITIES.
FURTHER DETAILS OF DEVELOPMENTS IN THIS REGARD WILL BE ANNOUNCED IN DUE COURSE. BOARD APPOINTMENTS
FOLLOWING THE IMPLEMENTATION OF THE PROPOSALS, MESSRS MARKUS JOOSTE AND DANIE VAN DER MERWE WILL BE NOMINATED BY STEINHOFF FOR APPOINTMENT AS NON-EXECUTIVE DIRECTORS OF UNITRANS. FINANCIAL EFFECTS ON EARNINGS OF UNITRANS AND STEINHOFF
THE EFFECTS OF THE PROPOSALS ON THE EARNINGS OF UNITRANS AND STEINHOFF FOR THE CURRENT FINANCIAL YEAR ENDING 30 JUNE 2000 WILL BE IMMATERIAL. HOWEVER, IT IS ENVISAGED THAT THE FUTURE EARNINGS OF BOTH COMPANIES WILL BE MATERIALLY ENHANCED AS SYNERGIES AND RATIONALISATION BENEFITS ARE OPTIMISED AND THE JV AND THE HUB BECOME FULLY OPERATIONAL. ON NET ASSET VALUE OF UNITRANS AND STEINHOFF
BASED ON THE UNAUDITED CONSOLIDATED BALANCE SHEET OF UNITRANS AS AT 31 DECEMBER 1999 AND ON THE ASSUMPTION THAT THE PROPOSALS HAD BEEN EFFECTIVE ON THAT DATE, THE EFFECTS ON THE TANGIBLE NET ASSET VALUE OF UNITRANS WOULD HAVE BEEN AN INCREASE OF 72 CENTS FROM 1 011 CENTS TO 1 083 CENTS PER SHARE (IE AN INCREASE OF 7,1%).
THE EFFECTS OF THE PROPOSALS ON STEINHOFF'S NET ASSET VALUE PER SHARE WILL BE IMMATERIAL. ON M&R
THE EFFECTS OF THE PROPOSALS ON THE EARNINGS OF M&R FOR THE CURRENT FINANCIAL YEAR ENDING 30 JUNE 2000 WILL BE IMMATERIAL. THE ALLIANCE WITH STEINHOFF AND THE STRATEGIC REFOCUS OF UNITRANS ARE HOWEVER EXPECTED TO MATERIALLY BENEFIT M&R'S RESIDUAL INVESTMENT IN UNITRANS. THE PROCEEDS OF THE M&R SALE WILL BE UTILISED TO REDUCE M&R'S SOUTH AFRICAN BORROWINGS.
ON THE ASSUMPTION THAT THE PROPOSALS HAD BEEN EFFECTIVE ON 31 DECEMBER 1999 AND BASED ON M&R'S UNAUDITED CONSOLIDATED BALANCE SHEET AS AT THAT DATE, THE EFFECT ON M&R'S TANGIBLE NET ASSET VALUE PER SHARE WOULD HAVE BEEN AN INCREASE FROM 649 CPS TO 660 CPS (IE AN INCREASE OF 1,7%). CONDITIONS PRECEDENT
THE IMPLEMENTATION OF THE PROPOSALS IS SUBJECT TO THE TIMEOUS FULFILMENT OF THE FOLLOWING CONDITIONS PRECEDENT:
- THE APPROVAL OF THE JSE AND THE GRANTING OF A LISTING FOR THE UNITRANS SHARES TO BE ISSUED AND LISTED PURSUANT TO THE UNITRANS SHARE ISSUE;
- ALL REGULATORY APPROVALS, INSOFAR AS MAY BE NECESSARY, BEING OBTAINED; AND - THE CONCLUSION OF THE NECESSARY FORMAL AGREEMENTS IN WRITING BETWEEN M&R, STEINHOFF, UNITRANS AND THE JV. GENERAL
FURTHER DETAILS OF THE PROPOSALS WILL BE PUBLISHED IN PRESS ANNOUNCEMENTS FROM TIME TO TIME AND DISCLOSED IN THE DIRECTORS' REPORTS OF M&R, UNITRANS AND STEINHOFF FOR THE YEAR ENDING 30 JUNE 2000. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
THE JSE HAS AGREED TO REMOVE THE CAUTIONARY STATUS PREVIOUSLY APPLICABLE TO THE LISTINGS OF M&R, UNITRANS AND STEINHOFF.
ACCORDINGLY SHAREHOLDERS OF EACH OF THE COMPANIES NEED NO LONGER EXERCISE CAUTION IN THEIR DEALINGS IN EACH OF THE COMPANIES' SHARES. BEDFORDVIEW WYNBERG, SANDTON ILLOVO
19 MAY 2000 19 MAY 2000 19 MAY 2000 INVESTMENT BANK GENSEC BANK LIMITED A MEMBER OF THE SANLAM GROUP (REGISTRATION NUMBER 1996/004744/06) JOINT SPONSORING BROKERS TO M&R MERRILL LYNCH SMITH BORKUM HARE MERRILL LYNCH SOUTH AFRICA (PTY) LTD MEMBER OF THE JOHANNESBURG STOCK EXCHANGE REG NO 1995/001805/07 FLEMINGS ROBERT FLEMING SOUTH AFRICA LIMITED REG NO 1995/011812/06 SPONSORING BROKER TO STEINHOFF BOE SECURITIES(PTY) LIMITED (REGISTRATION NUMBER 1996/015589/07) MEMBER OF THE JOHANNESBURG STOCK EXCHANGE SPONSORING BROKER TO UNITRANS MERRILL LYNCH SMITH BORKUM HARE MERRILL LYNCH SOUTH AFRICA (PTY) LTD MEMBER OF THE JOHANNESBURG STOCK EXCHANGE REG NO 1995/001805/07

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