PSG Group / Capitec - Unbundling Of Capitec
PSG GROUP LIMITED CAPITEC BANK HOLDINGS
LIMITED
(Incorporated in the Republic (Incorporated in the Republic
of South Africa) of South Africa)
(Registration number (Registration number
1970/008484/06) 1999/025903/06)
ISIN: ZAE000013017 Share ISIN: ZAE000035861 Share
code: PSG code: CPI
("PSG Group") ("Capitec")
UNBUNDLING OF CAPITEC
1. INTRODUCTION AND BACKGROUND
1.1 PSG Group and Capitec shareholders are referred to the cautionary
announcement published in the press and on the Stock Exchange News Service on
Tuesday, 3 September 2003.
1.2 PSG Group started Capitec approximately 5 years ago from scratch. During
this period it transformed the company from a specialized micro-lending entity
to a bank controlling company holding 100% of Capitec Bank Limited ("Capitec
Bank").
1.3 The board of directors of PSG Group has resolved to effect the unbundling of
its 55.27% interest in Capitec ("the unbundling") for the reasons set out in 4
below.
1.4 After implementation of the unbundling, the PSG Group structure will be as
follows:
See press for details
1.5 The unbundling will be effective from 1 December 2003, subject to the
requisite approvals being obtained.
1.6 The board of directors of Capitec will not change pursuant to the
unbundling. The board of directors consists of : J F Mouton (non-executive
chairman), C A Otto (non-executive), Prof M C Mehl (independent non-executive),
Dr J van Zyl Smit (independent non-executive), J Solms (independent non-
executive) and executive directors C J Borstlap, A P du Plessis (FD), M S du
Pre le Roux (CEO) and R Stassen (MD).
1.7 The unbundling requires PSG Group shareholder approval by way of an ordinary
resolution.
2. THE UNBUNDLING
2.1 PSG Group holds a 55.27% interest in Capitec. PSG Group intends unbundling
this interest in Capitec to PSG Group shareholders. The board of directors of
PSG Group has accordingly resolved on 29 August 2003, subject to fulfillment of
the conditions precedent set out in paragraph 6 below ("the conditions
precedent"), that PSG Group distribute in specie, by way of a reduction in PSG
Group"s share premium in terms of section 90 of the Companies Act, 1973, as
amended ("the Companies Act"), all of the 38 047 205 Capitec shares held by PSG
Group ("the unbundled shares") to PSG Group shareholders on a pro rata basis.
2.2 In terms of the unbundling, PSG Group shareholders recorded in the register
on the record date, which is expected to be Friday, 21 November 2003, will
receive 33.08453 Capitec shares for every 100 PSG Group shares held on such
date.
3. NATURE OF BUSINESS OF CAPITEC
3.1 The main business of Capitec is that of a bank controlling company as
defined by the Banks Act, 1990. The company"s subsidiaries are involved in
financing and retail banking.
3.2 Capitec and PSG have developed Capitec Bank, a wholly owned subsidiary of
Capitec, into a unique retail bank which provides accessible and affordable
banking services to the mass market, via a countrywide network of branches.
3.3 Capitec Bank is in the process of rolling out its innovative and
technologically advanced bank platform to all its branches. This will enable
the provision of a range of savings accounts, loans and transacting facilities
via a single debit card to their target market. 84 of 265 branches are
presently fully enabled on the bank platform, with a further 66 due by end of
February 2004.
3.4 The business model of Capitec Bank is unique in the South African banking
context, in that it is based on a technology-driven, low cost bank
infrastructure, ensuring accessibility and affordability on an inter personal
basis.
3.5 Current market sentiment continues to restrict access to wholesale funding.
Capitec Bank, however, at present is not dependent on wholesale or retail
deposits. Given recent events in the banking industry, the conservative
approach to funding followed to date, will be maintained.
4. RATIONALE FOR THE UNBUNDLING OF CAPITEC
4.1 The main purpose of the unbundling, is for PSG Group shareholders to
acquire directly, by way of a distribution in specie, the Capitec unbundled
shares. The unbundling is the second step, after the R2 special distribution
earlier in the year, to unlock value for PSG Group shareholders.
4.2 The unbundling of Capitec will:
give PSG Group shareholders increased flexibility and the ability to retain or
dispose of the unbundled shares in accordance with their own investment policies
and preferences, with a single point of entry into PSG Group;
result in Capitec shares becoming more tradeable by providing liquidity in the
market;
unlock the full value of Capitec"s shares in favour of PSG Group shareholders;
implement the philosophy of the PSG Group of companies in enabling growth
opportunities to develop into a mature business. Capitec is now totally
independent, has its own business plan and culture, dedicated management and
staff and adequate capital to stand alone.
5. FINANCIAL EFFECTS OF THE UNBUNDLING
5.1 On PSG Group shareholders
The unbundling will not have a material effect on the earnings, headline
earnings, net asset value and net tangible asset value attributable to a PSG
Group shareholder, save that upon implementation of the unbundling, shareholders
will receive those numbers of unbundled shares which are equivalent to their
indirect effective interests in those shares prior to implementation of the
unbundling. Consequently, after implementation of the unbundling, earnings and
net asset value in respect of Capitec shares will be directly attributable to
PSG Group shareholders.
5.2 On PSG Group
The pro forma financial effects of the unbundling on PSG Group will be
provided as part of the announcement as referred to in paragraph 9.
A reporting accountants" report on the pro forma financial effects of the
unbundling on PSG Group will be included in the circular to PSG Group
shareholders referred to in paragraph 8.
6. CONDITIONS PRECEDENT TO THE UNBUNDLING
The unbundling is subject to:
the Reserve Bank (Exchange Control) and the JSE Securities Exchange South Africa
approving the unbundling circular;
6.2 PSG Group shareholders in general meeting passing the ordinary resolutions
required to implement the unbundling; and
6.3 such other regulatory approvals as may be required.
It is anticipated that the conditions precedent, excluding shareholder approval,
will be fulfilled by the beginning of November 2003. The unbundling has been
cleared with the Reserve Bank. Capitec will not have a controlling shareholder
after the unbundling, but directors, management and staff will hold a
substantial interest.
7. OPINIONS AND RECOMMENDATIONS
The PSG Group board has considered the terms of the proposed unbundling and
is of the opinion that the proposed unbundling will be advantageous to PSG Group
shareholders and recommends that PSG Group shareholders vote in favour of the
resolutions required to implement the proposed unbundling. The PSG Group board
will also consider the financial effects to be published and such announcement
will include a further recommendation, if appropriate.
8. DOCUMENTATION AND NOTICE OF GENERAL MEETING
A circular containing full details of the unbundling and a notice of general
meeting of PSG Group shareholders will be posted to PSG Group shareholders in
due course.
9. FURTHER ANNOUNCEMENT
A further announcement setting out details of the unbundling, including the
salient dates for the unbundling of Capitec, will be published on SENS and in
the press on or about 7 October 2003.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Both PSG Group and Capitec withdraw the cautionary announcement published
on 29 September 2003. Shareholders of Capitec do not need to exercise caution
anymore when dealing in their Capitec shares. Shareholders of PSG Group are,
however, reminded that until the interim results are published on or about 7
October 2003, that they should continue to exercise caution as stated in the
positive trading update of 1 September 2003.
Stellenbosch
29 September 2003
Corporate Advisor and Joint Attorneys
Sponsor to PSG GROUP
Hofmeyr, Herbstein & Ghiwala
PSG Capital Inc
Joint sponsor Auditors and reporting
accountants
PRICEWATERHOUSECOOPERS
CORPORATE FINANCE (PTY) LTD PRICEWATERHOUSECOOPERS INC
Date: 29/09/2003 04:04:48 PM Produced by the JSE SENS Department
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