MultiChoice Group plans to offer shareholders in its two broad-based black economic empowerment schemes, Phuthuma Nathi (PN) 1 and 2, the opportunity to gain direct exposure to its shares listed on the JSE.
The company said on Friday that intends to make an offer to PN1 and PN2 shareholders to exchange up to 20% of their shares that are listed on the Equity Express Securities Exchange (EESE) for shares in MultiChoice Group. This will give PN shareholders the “opportunity to gain exposure to the rest of MultiChoice Group’s assets while providing additional liquidity to PN shareholders through the JSE-listed MultiChoice Group shares,” it said in a statement to shareholders.
“This reinforces MultiChoice Group’s commitment to broad socioeconomic transformation in South Africa by providing opportunities to historically disadvantaged groups and allowing PN shareholders to participate in potential future value creation,” it said.
In terms of the proposed acquisition, an exchange ratio of 0.97 MultiChoice Group shares for every PN share held will be applied. This figure is based on the 90-day volume weighted average price for the group on the JSE and PN1 on EESE. This will result in MultiChoice acquiring up to nine million ordinary shares in PN1 and up to 4.5 million ordinary shares in PN2 and issuing up to 13.1 million ordinary shares in consideration to participating PN shareholders.
“This will constitute no more than 3% of the issued share capital of the company prior to the implementation of the offer,” MultiChoice said. “An indirect ownership stake in MultiChoice South Africa Holdings of up to an additional 5% will occur through a maximum 20% share exchange with PN shareholders, potentially increasing the group’s total stake in MultiChoice South Africa up to 80%, from 75% currently.”
The costs of brokerage to fund an accepted offer will be borne by PN shareholders. Including brokerage costs, a PN shareholder will receive 0.957 MultiChoice Group shares for every PN share. Participation in the proposed acquisition is voluntary.
An advantage of holding listed JSE shares is they can be sold to any investor, MultiChoice said, whereas PN shares can only be sold to qualifying black South African investors due to restrictions in the PN entities’ memoranda of incorporation.
The offer is open to all PN shareholders who hold more than 20 shares. It is expected to open on 25 September and close on 28 October, to become effective on 29 October.
The final number of PN shares acquired and MultiChoice Group shares to be issued in consideration of the acquisition of the PN shares will be announced following the closing of the offer. — © 2019 NewsCentral Media