2005/01/21
WOOLWORTHS HOLDINGS LIMITED - PRO RATA SHARE REPURCHASE [JSE Securities Exchange - SENS]
 
WOOLWORTHS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1929/001986/06)
Share code: WHL        ISIN: ZAE000028288
("Woolworths" or "the company")
PRO RATA SHARE REPURCHASE BY WAY OF A SCHEME OF ARRANGEMENT
1. INTRODUCTION
Shareholders are referred to the announcement dated Monday, 15 November 2004 in
which it was stated that Woolworths and its subsidiary companies ("the
Woolworths group") would proceed with the securitisation of its in-store card
book ("the securitisation"). It was stated further that, if successful, the
securitisation would result in capital surplus to the operational requirements
of the company amounting to approximately R1 billion. The company stated its
intention to distribute this excess capital to shareholders through a repurchase
by the company, in terms of section 85 of the Companies Act, 1973 (Act 61 of
1973), as amended ("the Act"), of a pro rata portion of their Woolworths
ordinary shares ("Woolworths shares") by way of a scheme of arrangement in terms
of section 311 of the Act.
Shareholders are advised that the process to give effect to the securitisation
is underway and that the board of directors of Woolworths ("the board") has
resolved to return to shareholders approximately R1 billion through a repurchase
of Woolworths shares, in terms of sections 85 and 89 of the Act, by Woolworths
and its wholly owned subsidiary, E-Com Investments 16 (Proprietary) Limited
("ECom") ("the repurchase"). The repurchase will be effected on a pro rata basis
by way of a scheme of arrangement in terms of section 311 of the Act ("the
scheme"), proposed by Woolworths, between Woolworths and its shareholders, other
than ECom and those participants of the Woolworths Holdings Share Trust ("the
WHST") holding Woolworths shares that cannot be freely traded in terms of the
WHST Deed, to the extent of such holding ("the excluded WHST shareholders")
("the scheme participants").
Prior to the implementation of the scheme, Woolworths will acquire, in terms of
section 85 of the Act, 82 415 720 Woolworths shares currently held by ECom as
treasury shares ("the ECom shares") for a consideration of 1 046 cents per
Woolworths share and such treasury shares shall be cancelled and restored to the
status of authorised but unissued shares in the ordinary capital of Woolworths
("the ECom acquisition").
2. TERMS OF THE SCHEME
In terms of the scheme, Woolworths and ECom will collectively acquire from each
scheme participant 11.10 Woolworths shares per 100 Woolworths shares held ("the
scheme shares") at the close of business on Thursday, 24 March 2005 ("the record
date") for a consideration of 1 046 cents per scheme share ("the scheme
consideration"), which equates to the five-day volume-weighted average price of
Woolworths shares on the JSE Securities Exchange South Africa ("the JSE") at the
close of business on Thursday, 20 January 2005.
In terms of the scheme, it is expected that a total of 95 851 385 scheme shares
will be acquired by Woolworths and ECom, representing approximately 10.92% of
the issued ordinary share capital of Woolworths subsequent to the completion of
the ECom acquisition.
3. RATIONALE FOR THE SCHEME
The current nature of funding of the substantial growth in Woolworths' financial
services operation has had an increasingly negative impact on Woolworths' return
on equity ("ROE").  The growth of the financial services operation has to date
been funded primarily by utilising overnight borrowings. The securitisation of
Woolworths' in-store card book will allow Woolworths to introduce debt into the
financial services operation in order to achieve an optimal capital structure
and will allow the Woolworths group to replace its short term overnight
borrowings with a longer term sustainable funding structure more in line with
the profile of the assets being financed.
Taking into account the cash-generating performance of the Woolworths group's
operations, the proceeds to be received from the securitisation and the banking
facilities available to the Woolworths group, the board is of the view that
Woolworths will have approximately R1 billion of capital surplus to its
requirements for funding the Woolworths group's current operations and organic
growth into the foreseeable future. In order that Woolworths may operate under
an optimal capital structure, the board has resolved that such surplus capital
should be returned to shareholders. The return of capital to Woolworths
shareholders will reduce Woolworths' capital employed with a resultant increase
in its ROE with a likely corresponding positive impact on shareholder value.
4. CONDITIONS PRECEDENT TO THE SCHEME
The scheme is subject to the fulfilment of the following conditions precedent:
4.1 the High Court of South Africa ("the Court") convening a meeting of
Woolworths shareholders, other than ECom and the excluded WHST shareholders
("scheme members"), to consider and, if thought fit, to approve the scheme ("the
scheme meeting");
4.2 the special resolution approving the ECom acquisition being duly passed at a
general meeting of Woolworths shareholders ("the general meeting") in accordance
with section 85 of the Act and the registration of such special resolution by
the Registrar of Companies ("the Registrar") in terms of the Act;
4.3  the special resolution approving the acquisition of the scheme shares by
Woolworths and ECom being duly passed at the general meeting in accordance with
sections 85 and 89 of the Act and the Listings Requirements of the JSE and the
registration of such special resolution by the Registrar in terms of the Act;
4.4 the scheme being approved at the scheme meeting by a majority representing
not less than three-fourths of the votes exercisable by scheme members present
and voting in person or by proxy at the scheme meeting;
4.5 Woolworths having successfully completed the securitisation;
4.6 the Court sanctioning the scheme; and
4.7 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar in terms of the Act.
5. FINANCIAL EFFECTS
The pro forma financial effects of the securitisation and the scheme on the
earnings per share ("EPS"), headline EPS ("HEPS"), diluted EPS and ROE of the
Woolworths group for the financial year ended 30 June 2004 and the net asset
value ("NAV") and tangible NAV ("TNAV") per share at that date are set out in
the table below. The pro forma financial effects have been prepared for
illustrative purposes only in order to provide information on how the
securitisation and the scheme might have affected the financial results and
position of the Woolworths group and, because of their nature, may not give a
true reflection of the actual financial effects of the securitisation and the
scheme.
                      Before the       After the       After the       Change(8)
                    securitisation   securitisation  securitisation
                    and the scheme   before the      and the scheme
                                    scheme
HEPS         (cents)    78.6(1)          76.5            79.5(2)(3)      3.9%
EPS          (cents)    77.4(1)          75.3            76.0 (2)        0.9%
Diluted EPS  (cents)    75.3(1)          73.2            73.7 (2)        0.7%
NAV and TNAV           328.3(4)         328.3           237.2 (5)      (27.8%)
per share    (cents)
ROE          (%)        25.7(6)          25.1            38.4(7)        53.0%
Notes:
1. The HEPS, EPS and diluted EPS as set out in the "Before the securitisation
and the scheme" column of the table are based upon the audited income statement
of the Woolworths group for the financial year ended 30 June 2004 and a weighted
average of 861.2 million Woolworths shares in issue and a diluted weighted
average of 885.7 million Woolworths shares in issue.
2. The HEPS, EPS and diluted EPS, as set out in the "After the securitisation
and the scheme" column of the table, are based upon a weighted average of 765.3
million Woolworths shares in issue and a diluted weighted average of 789.9
million Woolworths shares in issue and the assumptions that:
- the securitisation and the scheme became effective on 1 July 2003;
- the proceeds from the securitisation were received on 1 July 2003;
- the aggregate scheme consideration was paid on 1 July 2003;
- the securitisation funding incurred interest at a rate of 6.8% after taking
into account taxation at a rate of 30%; and
- R781.2 million of the securitisation funding was used to partially settle
Woolworths' overnight funding obligations, which incurred interest at a rate of
6.9% after taking into account taxation at a rate of 30%.
3. The HEPS figure shown in the "After the securitisation and the scheme" column
excludes the once off transaction costs of approximately R16.2 million.
4. The NAV and TNAV per share, as set out in the "Before the securitisation and
the scheme" column of the table, are based upon the audited balance sheet of the
Woolworths group as at 30 June 2004 and 868.3 million Woolworths shares in
issue.
5. The NAV and TNAV per share, as set out in the "After the securitisation and
the scheme" column of the table, exclude the scheme consideration received by
Woolworths shareholders and are based upon 772.5 million Woolworths shares in
issue and the assumptions that:
- the securitisation and the scheme became effective on 30 June 2004;
- the proceeds from the securitisation were received on 30 June 2004; and
- the aggregate scheme consideration was paid on 30 June 2004.
6. The ROE, as set out in the "Before the securitisation and scheme" column of
the table, is based upon the audited income statement and balance sheet of the
Woolworths group for the financial year ended 30 June 2004 using headline
earnings of R677.0 million and an average ordinary shareholders' equity of R2
631.6 million.
7. The ROE as set out in the "After the securitisation and the scheme" column of
the table, is based upon headline earnings of R608.1 million, an average
ordinary shareholders' equity of R1 585.2 million and the assumptions detailed
in note 2 above.
8 Calculated as the percentage change between the "After the securitisation,
before the scheme" column and the "After the securitisation and the scheme"
column.
6 INDICATION OF SUPPORT
Shareholders holding, in aggregate, 70.64% of the Woolworths shares currently in
issue (excluding the Woolworths shares held by ECom) have confirmed, in writing,
their support for the scheme.
7 TERMINATION OF LISTING OF THE ECOM SHARES AND THE SCHEME SHARES
7.1 As a consequence of the ECom acquisition, the 82 415 720 Woolworths shares
acquired by Woolworths will be cancelled and application will be made for the
termination of the listing thereof on the JSE, with effect from the commencement
of trade on or about Wednesday, 9 March 2005.
7.2 As a consequence of the scheme, the 8 972 839 scheme shares acquired by
Woolworths will be cancelled and application will be made for the termination of
the listing thereof on the JSE with effect from the commencement of trade on or
about Tuesday, 29 March 2005. The 86 878 546 scheme shares acquired by ECom will
be held as treasury shares and will remain listed.
8 SALIENT DATES AND TIMES
                                                    2005
Last day to trade Woolworths shares in order to be  Wednesday, 23 February
recorded in the register of members to vote at the
scheme meeting
Record date to vote at the scheme meeting           Wednesday, 2 March
Last day to lodge forms of proxy for the general    Wednesday, 2 March
meeting by 11:00 on
Last day to lodge forms of proxy for the scheme     Thursday, 3 March
meeting by 11:30 on
(provided that proxy forms may be handed to the
Chairman of the scheme meeting not later than 10
minutes prior to the commencement of the scheme
meeting)
General meeting to be held at 11:00 on              Friday, 4 March
Scheme meeting to be held at 11:30, or 10 minutes   Friday, 4 March
after the conclusion or adjournment of the general
meeting (whichever is the later), on
Announcement of results of the general meeting and  Friday, 4 March
the scheme meeting on SENS
Publication of results of the general meeting and   Monday, 7 March
the scheme meeting in the press
Court hearing to sanction the scheme                Monday, 14 March
Announcement on SENS regarding the sanctioning of   Monday, 14 March
the scheme
Publication in the press regarding the sanctioning  Tuesday, 15 March
of the scheme
If the scheme is sanctioned and implemented:
Last day to trade to participate in the scheme      Wednesday, 16 March
Shares will trade ex the right to participate in    Thursday, 17 March
the scheme
Record date on which shareholders must be recorded
in the register to be scheme participants and so
become entitled to receive the scheme               Thursday, 24 March
consideration, at the close of trade
Operative date of the scheme                        Tuesday, 29 March
If documents of title are received on or prior to   Tuesday, 29 March
the record date, the scheme consideration will be
transferred or posted (as the case may be) and new
Woolworths share certificates posted to scheme
participants holding certificated Woolworths
shares (failing that, within five business days of
the receipt of the relevant documents of title by
the transfer secretaries)
Safe custody accounts to be updated in the case of  Tuesday, 29 March
scheme participants who have dematerialised their
Woolworths shares
Notes
1. The abovementioned dates and times are subject to change.  Any such change
will be published on SENS and in the press.
2. If the general meeting is adjourned or postponed, forms of proxy must be
received by no later than 48 hours prior to the time of the adjourned or
postponed general meeting.
3. If the scheme meeting is adjourned or postponed, forms of proxy must be
received by no later than 24 hours prior to the time of the adjourned or
postponed scheme meeting or handed to the chairman no later than ten minutes
prior to the commencement of the adjourned or postponed scheme meeting.
4. Shareholders may not dematerialise or rematerialise their Woolworths shares
from Thursday, 17 March 2005 to Thursday, 24 March 2005, both days inclusive.
5. Unless otherwise indicated, all times are South African times.
9. NOTICE OF MEETINGS AND FURTHER DOCUMENTATION
If the Court convenes the scheme meeting:
- the general meeting will be held at 11:00 on Friday, 4 March 2005 at
Woolworths House, 93 Longmarket Street, Cape Town to consider and, if deemed
fit, approve the resolutions required to implement the ECom acquisition and the
scheme;
- the scheme meeting will be held at the same venue at 11:30 on Friday, 4 March
2005 or ten minutes after the conclusion or adjournment of the general meeting,
whichever is the later; and
- a circular providing further information relating to the scheme and
containing, inter alia, the scheme, the explanatory statement in terms of
section 312 of the Act, a notice of scheme meeting, a notice of general meeting,
a form of proxy in respect of the general meeting, a form of proxy in respect of
the scheme meeting and a form of surrender, will be posted to Woolworths
shareholders on or about Tuesday, 8 February 2005.
Cape Town
21 January 2005
Investment bank and transactional sponsor
Standard Bank
Corporate law advisers
Tabacks
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
CORPORATE FINANCE
Shareholders with questions in relation to this announcement and the scheme
document are invited to contact Woolworths' information agent service provider,
Computershare Investor Services 2004 (Proprietary) Limited, on 0861 100 634 or
+27 (0) 11 373 0010 if calling from outside South Africa. Calls may be monitored
for quality control purposes.
Date: 21/01/2005 05:43:39 PM Produced by the JSE SENS Department
Source: JSE Securities Exchange - SENS
 
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