MTN
MTN
MTN Group Limited - Proposed Transaction With Shareholders Of Investcom LLC and
Cautionary Announcement
MTN GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584)
(Share code: MTN)
(ISIN code: ZAE000042164)
("MTN Group" or the "Company")
PROPOSED TRANSACTION WITH SHAREHOLDERS OF INVESTCOM LLC AND CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
The board of directors of MTN Group announces that it has reached agreement with
Investcom LLC ("Investcom") on the terms of a recommended offer in terms of
which MTN Group will make an offer to acquire the entire issued ordinary share
capital of Investcom subject to certain pre-conditions as outlined in paragraph
4 below (the "Proposed Offer "or the "Proposed Transaction").
The Proposed Offer has been simultaneously announced via the appropriate
channels for disclosure in accordance with the rules and regulations applying to
companies listed on the Dubai International Financial Exchange ("DIFX") and the
London Stock Exchange ("LSE") where Investcom has primary and secondary
listings, respectively.
2. RATIONALE
The Proposed Transaction is firmly in line with MTN Group"s vision to be the
leading provider of telecommunications in emerging markets. MTN Group is
undertaking the Proposed Transaction to enhance its growth profile in Africa and
the Middle East, to gain further scale in emerging mobile markets, to strengthen
its operational capabilities and to diversify its financial profile, thereby
unlocking synergistic potential.
Investcom is a leading international provider of mobile telecommunications
services with operations in Africa, the Middle East and Europe. At the end of
2005, Investcom"s mobile operations had approximately 4.9 million subscribers in
Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan, Syria and Yemen. Investcom
has recently been awarded GSM licences to build and operate mobile networks in
Afghanistan and Guinea Republic, expanding its operations to ten countries and
boosting its combined population under licence to approximately 147 million.
There are no overlapping operations between MTN Group and Investcom. On a
combined basis, MTN Group and Investcom (the "Enlarged Group") would operate
mobile networks in 21 countries, covering a population under licence of
approximately 488 million people and serving approximately 28.1 million
subscribers (as of 31 December 2005). The footprint would also more
comprehensively cover important regional hubs such as West and Central Africa
with Nigeria, Ghana, Cameroon, Cote d"Ivoire, Benin, Congo Brazzaville, Liberia,
Guinea Bissau and Guinea Republic and East Africa with Sudan, Uganda and Rwanda.
Furthermore, the Proposed Transaction would expand MTN Group"s presence in the
Middle East through operations in Iran, Syria, Yemen and Afghanistan.
Given the attractive competitive position of MTN Group and Investcom in their
various markets, the Proposed Transaction would complement the Enlarged Group`s
strategy to be the leading mobile operator across its footprint.
Investcom"s cash generative operations would make a sizeable contribution to the
financial performance of MTN Group, enhancing its growth profile and
diversifying revenues and earnings. The Proposed Transaction also offers the
Enlarged Group the potential for increased revenue and reduced costs through
regional cross-selling opportunities, enhanced economies of scale, technology
and product sharing and the alignment of a centralised procurement system.
The addition of Investcom"s experienced personnel would also broaden the proven
management capacity of MTN Group, facilitate knowledge transfer within MTN
Group"s operations and enable MTN Group to develop its business further in the
Middle East.
3. OVERVIEW OF INVESTCOM
Investcom is a leading international provider of mobile telecommunications
services with operations in ten countries in Africa, the Middle East and Europe.
As at 31 December 2005, Investcom had a total of approximately 4.9 million
subscribers compared to approximately 2.5 million as at 31 December 2004.
Investcom operates five mobile telecommunications networks in Africa, namely
Benin, Ghana, Guinea-Bissau, Liberia and Sudan. In the Middle East, Investcom
operates mobile telecommunications networks in Syria and Yemen and in Europe,
Investcom operates a 3G mobile telecommunications network in Cyprus. In
addition, Investcom has recently been granted licences to operate in Afghanistan
and Guinea Republic. For the year ending 31 December 2005, Investcom had
revenues of approximately R5.7 billion and net income of approximately R1.2
billion. Investcom also provides international carrier services, principally
through Mediterranean Network SAM in Monaco and telecommunication engineering
and consulting services.
Investcom was incorporated in 1994 under the name Investcom Holding (Luxembourg)
S.A., as a Societe Anonyme domiciled in the Grand Duchy of Luxembourg.
Investcom is the holding company of the group companies with its head office
located in Beirut, Lebanon. In September 2005, Investcom changed its domicile
from the Grand Duchy of Luxembourg to the Dubai International Financial Centre
in the Emirate of Dubai in the United Arab Emirates. Following the change of its
domicile, Investcom"s name was changed from Investcom Holding (Luxembourg) S.A.
to Investcom LLC. In October 2005, Investcom went public with a primary listing
on the DIFX and a secondary listing on the LSE.
4. PRE-CONDITIONS
The making of the Proposed Offer is subject to pre-conditions which relate to
the obtaining of certain regulatory clearances for Investcom"s operating
companies in Ghana, Sudan, Syria and Yemen (the "Pre-conditions").
Unless MTN Group obtains a time extension from the Dubai Financial Services
Authority, it must make its Offer by 23 May 2006 unless a regulatory authority
has refused to grant a relevant approval or has intervened in certain aspects
and MTN Group has accordingly elected not to make the Offer.
5. TERMS
5.1 Consideration and funding
The Proposed Offer comprises:
- an all cash offer at US$ 3.85 per Investcom share (translating into US$19.25
per Global Depository Share ("GDS")) (the "Cash Offer"), or
- a cash and share alternative comprising US$ 2.0809 in cash and 0.1807 MTN
Group shares per Investcom share (translating into US$ 10.4047 in cash and
0.9035 MTN Group shares per Investcom GDS) (the "Cash and Share Alternative").
The total number of MTN Group shares to be issued under the Cash and Share
Alternative is limited to 204.3 million shares. Should more than 78.8% of
Investcom shareholders elect the Cash and Share Alternative, allocations of MTN
Group shares will be reduced on a proportionate basis with the difference
settled in cash.
This values the entire issued ordinary share capital of Investcom at
approximately US$ 5,526 million (R33.5 billion) on the basis of 1,435,257,519
Investcom shares in issue.
The equity portion of the consideration will be financed through the issue of
new MTN Group shares. The cash portion of the transaction will be financed
through a credit facility of US$3,850 million that has been committed by
Deutsche Bank AG, London Branch.
5.2 Conditions precedent
The offer, once made, will be subject to inter-alia, the fulfilment of the
following conditions precedent:
- valid acceptances being received in respect of not less than 75% (or such
lower percentage as MTN Group may decide) of the Investcom shares in issue;
- the shareholders of MTN Group approving the Proposed Transaction;
- the JSE Limited ("JSE") approving the listing of the additional MTN Group
ordinary shares to be issued as consideration; and
- other regulatory and third-party approvals.
6. IRREVOCABLE UNDERTAKING
M1 Limited has provided MTN Group with an irrevocable undertaking to accept the
cash and shares alternative for the Proposed Offer in respect of 1,013,572,574
Investcom ordinary shares, which represents approximately 70.6% of the ordinary
shares of Investcom.
7. LOCK-UP
M1 Limited would become a shareholder in MTN Group following the Proposed
Transaction. M1 Limited has agreed to a lock-up period of 14 months from the
date of issue of MTN Group ordinary shares it will receive in the Proposed
Offer.
8. CIRCULAR TO SHAREHOLDERS
The Proposed Transaction will constitute a Category 1 transaction in terms of
the JSE Listings Requirements. Accordingly, MTN Group will be required to issue
a circular to shareholders containing full details of the Transaction and to
seek shareholder approval to undertake the Proposed Transaction.
9. CAUTIONARY ANNOUNCEMENT
Further announcements will be made on SENS and in the press as soon as the
financial effects are finalised and/or the pre-conditions have been fulfilled.
Accordingly, MTN Group shareholders are advised to exercise caution when trading
in their securities until such time as a further announcement is made.
Johannesburg
2 May 2006
Joint financial adviser and transaction sponsor
Deutsche Securities (SA) (Proprietary) Limited
Member of the Deutsche Bank Group
Joint financial adviser
First Africa (SA) Pty. Ltd
South African legal adviser
Webber Wentzel Bowens
International legal advisers
Freshfields Bruckhaus Deringer
Sponsor
Merrill Lynch South Africa (Pty) Ltd
Date: 02/05/2006 09:13:25 AM Produced by the JSE SENS Department
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