Limited ("Implats")
Gencor Limited
Incorporated in the Republic of South Africa
Registration number 1895/001232/06
Share code: GMF
ISIN: ZAE000013066
("Gencor" or "the Company")
Distribution by Gencor of its shareholding in Impala Platinum Holdings Limited
("Implats")
1. Introduction
Gencor shareholders are referred to the cautionary announcement published on
SENS on Thursday, 12 September 2002 wherein it was stated that the Gencor board
of directors ("the Gencor board") had resolved, subject to the fulfilment of
certain conditions precedent, to convene a meeting of shareholders of Gencor to
consider a resolution to authorise the distribution of the ordinary shares held
by the Company in Implats ("the proposed unbundling"). As indicated in the
announcement on 12 September 2002, the proposed unbundling could not be
considered until the expiry of certain contractual undertakings given by the
Company. These undertakings expired at the end of July 2002.
The Gencor board has therefore resolved, subject to the fulfilment of certain
conditions precedent, to distribute to the holders of Gencor shares ("Gencor
shareholders") recorded in the register on the record date, 11 October 2002
("the record date"), all of the Implats` shares held by Gencor on Monday, 4
November 2002 ("the Implats` distribution shares") by way of an unbundling,
effected by way of a dividend in specie and a reduction of the share premium
account.
2. Rationale for the unbundling
Following the disposal by Gencor of its non-precious metal assets to Billition
Plc in July 1997 and the unbundling during April 2000 of its investments in Gold
Fields Limited, Gold Fields of South Africa Limited and Standard Bank Investment
Corporation Limited, Gencor became a focused investment holding company with its
main asset being a strategic stake in Implats. Gencor`s listing was subsequently
transferred to the "Resources - Platinum" sector of the JSE Securities Exchange
South Africa ("JSE") lists.
Gencor had provided certain limited warranties and an indemnity to Billiton Plc
in relation to the businesses that were transferred to Billiton Plc on 1 July
1997. The indemnity was for five years and has at the date of this announcement
prescribed. Gencor has now reached the situation where there is no longer a
rationale for it to exist in its current form.
The proposed unbundling of the Implats shares will afford Gencor shareholders
the opportunity to obtain a direct interest and concomitant benefit in that
underlying investment and, in line with the stated intention of the Gencor
board, this should unlock shareholder wealth by means of the elimination of the
discount at which Gencor shares trade relative to the value of its underlying
investment.
3 Litigation
Gencor has received a total of 37 summonses, claiming R37 million in aggregate,
from persons purporting to be ex-employees of Griqualand Exploration and Finance
Company Limited ("GEFCO") and/or Msauli Asbes Beperk ("Msauli"), or other
companies alleged to have been controlled by GEFCO and/or Msauli. These
litigants are seeking damages from a variety of parties including Gencor, on the
basis of alleged asbestos related diseases incurred or contracted during the
periods from 1950 to 2001 whilst purportedly employed on mines operated by GEFCO
and/or Msauli and/or their subsidiaries. Gencor has considered each of the 37
summonses individually and has taken legal advice, including that of senior
counsel, on the summonses. The board of directors, having taken this advice, is
of the view that Gencor is not liable in South African law for any of the
amounts claimed from Gencor and has instructed its attorneys to defend each of
these claims. Gencor has not made any provision for any of these claims in its
annual accounts as it believes it has no liability under any of these claims.
Gencor has also received a letter from lawyers acting for potentially interested
parties, alleging that Gencor may have some liability in relation to the
potential inadequate rehabilitation (allegedly undertaken by GEFCO and/or other
parties) of a site in the North West province. The Gencor board is of the view
that Gencor is not liable for any such rehabilitation costs.
Notwithstanding this, Gencor has at today`s date cash reserves of approximately
R409 million, that it does not propose to distribute at this time but to
utilise, inter alia, to defend the 37 summonses and to cover any other potential
liability or obligation it may have. Once the proposed unbundling of the
Implats` distribution shares has been successfully completed the position of the
company will be further reviewed and shareholders advised accordingly.
4. The unbundling
Subject to the approval of shareholders of Gencor in general meeting to be held
on Wednesday, 2 October 2002, Gencor will unbundle all of the shares which it
holds in Implats on the date of the unbundling. Gencor currently holds 30 605
722 shares in Implats and will, subject to the next paragraph, distribute this
number of shares to its shareholders in the unbundling.
To the extent that there are any non-resident shareholders individually holding
more than 5% of the issued share capital of Gencor on the record date, Gencor
will not qualify for the various unbundling exemptions in respect of that
portion of the Implats` distribution shares to be distributed to such non-
resident shareholder(s). If there is one or more such non-resident
shareholder(s) on the record date, Gencor intends to sell so many of the
Implats` shares which it currently holds as is necessary to pay such tax
liability, and to unbundle all of the remaining Implats` shares (which will
constitute all of the shares it holds in Implats as at the date of the
unbundling) to its shareholders. As a result of this, the final unbundling ratio
to be announced on Tuesday, 29 October 2002 may be reduced from that shown in
the table of entitlement below.
Subject to the fulfilment of the conditions precedent set out in paragraph 5
below, Gencor shareholders registered as such on the record date will receive a
distribution of the Implats distribution shares by way of an unbundling,
effected by way of a dividend in specie and a reduction of the share premium
account.
On the assumption that Gencor owns 30 605 722 shares in Implats on the date of
the distribution, Gencor shareholders will receive the Implats` distribution
shares in accordance with the table of entitlement set out below. To the extent
that Gencor is required to sell some of its Implats` shares to settle any STC
liability referred to above prior to the unbundling, the entitlements will be
reduced pro-rata.
Number of Implats` shares
Number of shares to be unbundled per
to be unbundled 100 Gencor shares held
Implats 30 605 722 8,77986
The proposed unbundling ratio disclosed in the above table will be applied to
the holding of Gencor shareholders on the record date and the resultant number
of securities will be rounded down to the nearest whole number if they are less
than 0.5 and will be rounded up to the nearest whole number if they are equal to
or greater than 0.5.
The unbundling ratio set out above is based on the assumption that Gencor will
distribute 30 605 722 shares in Implats by way of the unbundling.
5. Conditions precedent
The proposed unbundling is subject to the fulfilment of the following conditions
precedent:
- the passing, at a general meeting of Gencor ordinary shareholders, of the
resolutions required to implement the unbundling; and
- the approval, insofar as may be necessary, of the relevant regulatory
authorities.
6. Pro forma financial effects of the proposed unbundling
Subsequent to the proposed unbundling, Gencor shareholders will directly hold
the Implats` distribution shares.
The unbundling will result in Gencor shareholders holding their proportionate
share of Gencor`s investment in Implats directly rather than indirectly and will
therefore have no material effect on the dividends received by or earnings or
the collective underlying net asset value attributable to Gencor shareholders.
The table below sets out the pro forma financial effects of the unbundling on a
Gencor shareholder, based on the assumptions set out below the table.
Pro forma
Actual "After Percentage
Per share "before" unbundling" decrease
Basic and fully diluted 636,0 26,4 95,8
earnings (cents)
Basic and fully diluted 610,0 3,4 99,4
headline earnings (cents)(1)
Net asset value (cents)(2) 1 333,0 105,7 92,1
1. The effect on the earnings per share is based on the 348,6 million weighted
average number of Gencor shares in issue during the year ended 30 June 2002.
In calculating the earnings per share, Gencor`s audited earnings for the year
ended 30 June 2002 were adjusted on the assumption that the unbundling was
implemented on 1 July 2001. The pro forma adjustments to Gencor`s audited
earnings for the year ended 30 June 2002 includes provision for various
unbundling related expenses.
2. The effect on the net asset value per share is based on the 348,6 million
Gencor shares in issue as at 30 June 2002, in the before and after unbundling
scenarios.
7. Transfer of listing
Subsequent to the unbundling, Gencor`s listing will be transferred from the
"Resources - Platinum" sector of the JSE lists to the "Financials - Speciality &
Other Finance" sector. In terms of the JSE Listings Requirements, Gencor`s
listing will be suspended 6 months after the unbundling and terminated 3 months
thereafter. Gencor will then be an unlisted public company and the Gencor board
will take a decision on any final distribution when appropriate.
8. Opinions and recommendations
The Gencor board, based on advice from experts, including that of senior
counsel, has considered the terms and conditions of the unbundling and is of the
opinion that the unbundling will be advantageous to Gencor shareholders and
recommends that Gencor shareholders vote in favour of the resolutions necessary
to implement the unbundling.
9. Salient dates and times
2002
Last day for lodging of forms of proxy
for the general meeting by 10:00 on Tuesday, 1 October
General meeting of Gencor shareholders
to approve the unbundling at 10:00 on Wednesday, 2 October
Results of the general meeting published
on Stock Exchange News Service ("SENS") on Wednesday, 2 October
Results of the general meeting published
in the press on Thursday, 3 October
Last day to trade in Gencor shares on the JSE
in order to participate in the unbundling
and the final Gencor dividend for the 2002
financial year Friday, 4 October
Gencor shares trade ex-rights to the
Implats` distribution shares Monday, 7 October
Transfer of sector Monday, 7 October
Record date to participate in the
unbundling and the dividend distribution Friday, 11 October
Payment of Gencor`s final dividend for the
2002 financial year Monday, 14 October
Annual general meeting of
Gencor shareholders Wednesday, 16 October
Announcement of final unbundling ratio
and apportionment of base cost for
Capital Gains Tax purposes Tuesday, 29 October
Shareholders entitled to trade
the Implats` distribution shares (in
anticipation of receipt of the Implats`
distribution shares on Monday, 4 November) Tuesday, 29 October
Implats` share certificates will be posted
by registered post to certificated
shareholders or credited to their
safe custody accounts in the case
of dematerialised shareholders, on Monday, 4 November
Dematerialised Gencor shareholders should note that they will not be able to
sell their entitlement to Implats` distribution shares between Monday, 7 October
2002 and Monday, 28 October 2002, both days inclusive. Certificated Gencor
shareholders should note that they will not be able to sell their entitlement to
Implats` distribution shares between Monday, 7 October 2002 and Monday, 4
November 2002, both days inclusive. This is due to the fact that the Implats`
distribution shares will only be posted by registered post to certificated
Gencor shareholders or credited to the safe custody accounts of dematerialised
Gencor shareholders registered as such on the record date, on Monday, 4 November
2002. Gencor shareholders who wish to sell Implats` shares during this time will
be required to borrow Implats` scrip for settlement from alternative sources.
Notes:
1. All times indicated above are South African times.
2. The above dates and times are subject to change. Any such change will be
published on SENS and in the press.
3. Gencor share certificates may not be dematerialised or rematerialised between
Monday, 7 October 2002 and Friday, 11 October 2002, both days inclusive, due to
the administration requirements of the distribution of Gencor`s final dividend
for the 2002 financial year and the unbundling process.
10. Documentation
A circular, setting out full details of the proposed unbundling, will be posted
to shareholders today, 16 September 2002.
Johannesburg
16 September 2002
Merchant bank
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06
Sponsor
Investec Bank Limited
(Registration number 1969/004763/06)
Legal adviser
Webber Wentzel Bowens
Reporting accountants and auditors
PricewaterhouseCoopers Inc
Chartered Accountants (SA)
Registered Accountants and Auditors
(Registration no 1998/012055/21)
Public relations advisers
Bairds
Renaissance (Pty) Ltd
Date: 16/09/2002 08:01:12 AM Produced by the JSE SENS Department
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