WHL - Woolworths Holdings - Sale by Woolworths and withdrawal of cautionary [JSE Securities Exchange - SENS]
WHL - Woolworths Holdings - Sale by Woolworths and withdrawal of cautionary     
WOOLWORTHS HOLDINGS LIMITED                                                     
(Incorporated in the Republic of South Africa)                                  
(Registration number 1929/001986/06)                                            
Share code: WHL & ISIN: ZAE000063863                                            
("Woolworths" or "the Company")                                                 
1.   INTRODUCTION                                                               
Further to the cautionary announcements dated 14 December 2007, 25 January 2008 
and 7 March 2008, the board of directors of Woolworths ("the board") is pleased 
to announce that Woolworths (Proprietary) Limited has entered into an agreement,
in terms of which Woolworths (Proprietary) Limited will, subject to the         
fulfillment of the conditions precedent to which the agreement is subject, some 
of which are set out in paragraph 3.4 below, dispose of 50% plus one ordinary   
share of its interest in WFS to Absa ("the Proposed Transaction").              
2.   RATIONALE FOR THE PROPOSED TRANSACTION                                     
Financial services is important to the Woolworths strategy and overall customer 
proposition and provides Woolworths with a deeper understanding of customers'   
behaviour, enabling the business to tailor the retail offering to better meet   
customer needs.                                                                 
The WFS business, which includes the store card, personal loans, Visa credit    
card and selected insurance products, has grown significantly and has become a  
sizeable business with an active credit account base of over 1.6 million        
customers. At December 2007, the last reported 26 week period, Woolworths had   
net financial services assets of R5 558,7 million, which included the           
consolidated assets of Account on Us (Proprietary) Limited ("AOU") under the    
securitised asset backed note programme.                                        
The board, after having assessed the strategy for financial services, identified
the need to access specialist financial services skills to accelerate future    
growth and to consider new funding arrangements to support this growth. It was  
decided that access to the required specialist skills and funding would best be 
achieved through a partnership with Absa and the disposal of a 50% plus one     
ordinary share interest in WFS to Absa.                                         
Absa, supported by Barclays Bank PLC, manages one of the leading consumer       
finance businesses in South Africa, offering a full range of credit card and    
other financial services to individual customers, together with card and other  
payment facilities to retailers and other businesses.                           
The Proposed Transaction is expected to deliver significant financial and       
operational benefits to WFS through access to Absa's funding, leading credit    
risk and customer value management capabilities, and expertise in enhancing     
existing and launching new consumer finance products including a premium        
Barclaycard offering.                                                           
The joint venture also intends to maximise the opportunities presented by the   
Barclaycard brand, which Absa will make available through its license agreement 
with Barclays Bank PLC.                                                         
The joint venture therefore brings together three powerful brands in Woolworths,
Absa and Barclaycard with a common vision of extending the existing WFS brand   
into an even more compelling and attractive proposition for existing and new    
3.1  Purchase consideration                                                     
The purchase price payable by Absa for 50% plus one ordinary share of the issued
share capital of WFS is R875 million.  The purchase price is payable on the     
completion date of the Proposed Transaction, which is the last business day of  
the month in which the last of the conditions precedent to the Proposed         
Transaction, as documented in the share purchase agreement, is fulfilled.       
3.2  Warranties and indemnities                                                 
Warranties and indemnities, as are normal for a transaction of this nature, have
been given by Woolworths to Absa.                                               
3.3  Effective date                                                             
The Completion Date for the Proposed Transaction is expected to be in the third 
quarter of the 2008 calendar year.                                              
3.4  Conditions precedent                                                       
The Proposed Transaction is subject to the fulfilment of, inter alia, the       
following conditions precedent before 30 September 2008:                        
-    a restructure of WFS to include all existing financial services products   
    under WFS;                                                                  
-    unconditional approval of the Proposed Transaction by the South African    
    Competition Authorities or approval on such conditions as are reasonably    
    acceptable to both Woolworths and Absa; and                                 
-    the execution of other ancillary legal agreements necessary to give effect 
    to the Proposed Transaction.                                                
3.5  Debt funding of WFS                                                        
Absa has agreed to provide all required debt funding to WFS on the Completion   
Date on a non-recourse basis and hence it is the intention to repay holders of  
the asset backed notes issued by AOU, under the store card securitisation       
programme.  Woolworths will be communicating with note holders in due course in 
this regard.                                                                    
The unaudited pro forma financial effects set out below have been prepared to   
assist Woolworths shareholders to assess the impact of the Proposed Transaction 
on earnings per share ("EPS"), headline EPS ("HEPS"), net asset value ("NAV")   
per share and tangible NAV ("TNAV") per share and are based on the unaudited    
results for the 26 weeks ended December 2007. Due to the nature of these pro    
forma financial effects, they are presented for illustrative purposes only and  
may not fairly present the Company's financial position, changes in equity and  
the results of its operations after the Proposed Transaction.                   
The pro forma financial effects, which have been prepared in terms of the JSE   
Limited ("JSE") Listings Requirements, are the responsibility of the board. The 
material assumptions are set out in the notes following the table.              
   Pro    forma   financial Before the           After      the Change          
   effects   for   the   26 Proposed             Proposed       (%)             
   weeks   ended   December Transaction(1)       Transaction                    
   EPS (cents)              56.9                 101.9 (2)      79.1            
   HEPS (cents)             56.9                 60.2 (2)       5.8             
   NAV per share (cents)    415.4                460.2 (3)      10.8            
   TNAV per share (cents)   412.6                457.4 (3)      10.9            
   Ordinary    shares    in 812.1                812.1          -               
   issue  (net of  treasury                                                     
   shares) (million)                                                            
   Weighted average  number 810.0                810.0          -               
   of  ordinary  shares  in                                                     
   issue  (net of  treasury                                                     
   shares) (million)                                                            
1.   Extracted from the published audited results of Woolworths for the 26 weeks
    ended December 2007.                                                        
2.   For the purposes of calculating EPS and HEPS it was assumed that the       
    Proposed Transaction was implemented on 1 July 2007 and that the            
    consideration received by Woolworths, net of estimated transaction costs    
    and capital gains tax, was used to settle interest bearing liabilities at   
    an after tax interest rate of 8.0% for the 26 weeks ended December 2007.    
    For the purposes of calculating HEPS the profit on the disposal, net of     
    estimated transaction costs and capital gains tax, has been excluded.       
3.   For the purposes of calculating NAV per share and TNAV per share it was    
    assumed that the Proposed Transaction was implemented at end December 2007. 
5.   CATEGORISATION                                                             
The Proposed Transaction has been categorised as a category 2 transaction in    
terms of section 9.5(a) of the JSE Listings Requirements.                       
6.   FURTHER ANNOUNCEMENT                                                       
Woolworths shareholders will be advised by way of a SENS announcement when all  
the conditions precedent have been fulfilled and once the Completion Date has   
It is the current intention of the board following the Completion Date to       
distribute R2,25 billion of the cash proceeds arising from the disposal and the 
cash realised from the transfer of the financial services assets into the joint 
venture after settling the notes issued by AOU.                                 
The balance of cash realised will be utilised to retire other debt.             
It is expected that the distribution to shareholders will be implemented by way 
of a special dividend of R750 million, and, subject to prevailing market        
conditions at the time, an open market share repurchase of the balance.         
7.   WITHDRAWAL OF CAUTIONARY                                                   
Shareholders are advised that, given the disclosure of the terms of the Proposed
Transaction, caution is no longer required to be exercised by shareholders when 
dealing in their Woolworths securities.                                         
Cape Town                                                                       
16 April 2008                                                                   
Investment bank to Woolworths                                                   
The Standard Bank of South Africa Limited                                       
Legal advisor to Woolworths                                                     
Tabacks and Associates (Proprietary) Limited                                    
Sponsor to Woolworths                                                           
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Date: 16/04/2008 08:30:03 Produced by the JSE SENS Department.                  
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