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MULTICHOICE GROUP LIMITED - Proposed acquisition by Multichoice of up to 20% of the shares in Phuthuma Nathi and Phuthuma Nathi 2

Release Date: 30/08/2019 15:00
Code(s): MCG     PDF:  
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Proposed acquisition by Multichoice of up to 20% of the shares in Phuthuma Nathi and Phuthuma Nathi 2

MULTICHOICE GROUP LIMITED
(formerly MultiChoice Group Proprietary Limited and K2018473845 (South Africa) Proprietary Limited)
(incorporated in the Republic of South Africa)
(Registration number: 2018/473845/06)
JSE Share Code: MCG ISIN: ZAE000265971
("MultiChoice", "MCG" or "the Company")

PROPOSED ACQUISITION BY MULTICHOICE (MCG) OF UP TO 20% OF THE SHARES IN PHUTHUMA
NATHI INVESTMENTS (RF) LIMITED (“PN1”) AND PHUTHUMA NATHI INVESTMENTS 2 (RF) LIMITED
(“PN2”) (COLLECTIVELY “PN”)

1.    Introduction and rationale

On 21 January 2019, MultiChoice issued its pre-listing statement (“PLS”) in relation to its listing on
the Johannesburg Stock Exchange (“JSE”) on 27 February 2019. In the PLS, MultiChoice announced
its intention to make an offer to shareholders of PN1 and PN2 (“PN shareholders”) to exchange up
to 20% of their shares in PN that are listed on the Equity Express Securities Exchange (“EESE”) for
shares in MCG (the “Proposed Acquisition” or the “MCG Offer”). The purpose of the Proposed
Acquisition is to provide PN shareholders with an opportunity to gain exposure to the rest of MCG’s
assets, while providing additional liquidity to PN shareholders through the JSE listed MCG shares.
This reinforces MCG's commitment to broad, socio-economic transformation in South Africa by
providing opportunities to historically disadvantaged groups and allowing PN shareholders to
participate in potential future value creation.

2.    Description of MultiChoice

Since launching the first pay-TV operation outside the United States in 1986, MultiChoice has grown
into the leading video entertainment operator on the African continent. Today, MCG entertains
over 15.1 million households (18.6m on a 90-day active basis) in 50 countries across multiple
platforms, including digital satellite and terrestrial television, as well as over-the-top video
entertainment services.

3.    Details of the Proposed Acquisition

In terms of the Proposed Acquisition an exchange ratio of 0.97 MCG shares for every 1 PN share
held will be applied. The exchange ratio was based on a 90-day volume weighted average price for
MCG on the JSE and Phuthuma Nathi 1 on EESE, taking into account that PN is trading cum-div. This
will result in MultiChoice acquiring up to 9,000,000 ordinary shares in PN1 (“PN1 shares”) and up
to 4,500,000 ordinary shares in PN2 (“PN2 shares”) and issuing up to 13,095,000 MCG ordinary
shares in consideration (“MCG consideration shares”) 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 MCG Offer. An indirect ownership stake in MultiChoice South Africa Holdings (Pty) Limited
(“MCSA”) of up to an additional 5% will occur through a maximum 20% share exchange with PN
shareholders, potentially increasing MCG’s total stake in MCSA up to 80% from 75% currently. The
costs of brokerage to fund an accepted offer will be borne by the PN shareholder. Including
brokerage costs, a PN shareholder will receive 0.957 MCG shares for every 1 PN share.

Participation in the Proposed Acquisition is completely voluntary and PN shareholders are not
obliged to participate in the Proposed Acquisition. As MCG’s shares are listed on the JSE, they can
be sold to any investor, whereas PN shares can only be sold to qualifying black South African
investors in terms of the PN entities’ Memoranda of Incorporation (“MOI’s”).

The MCG Offer will be available to all PN shareholders who hold more than 20 shares, and is
expected to open on Wednesday, 25 September 2019 and close on Monday, 28 October 2019 (the
“MCG Offer Period”). The Proposed Acquisition will be effective from Tuesday, 29 October 2019,
following the closing of the MCG Offer.

4.    Conditions precedent

The Proposed Acquisition will be subject to the fulfilment or waiver of the following conditions by
no later than 17h00 (South African time) on 25 October 2019, or such later date as MCG may
determine in its sole discretion:
-     the PN1 shareholders having adopted by special resolution at a meeting of the PN1
      shareholders the proposed amendments to the PN1 MOI, which amendments propose to,
      inter alia, amend the restriction on who may hold PN1 shares to allow MCG to acquire the
      PN1 shares;
-     the PN2 shareholders having adopted by special resolution at a meeting of the PN2
      shareholders the proposed amendments to the PN2 MOI, which amendments propose to,
      inter alia, amend the restriction on who may hold PN2 shares to allow MCG to acquire the
      PN2 shares; and
-     application having been made and granted for the listing of the MCG consideration shares on
      the JSE.

5.    Further announcement
The final number of PN shares acquired and MCG shares to be issued in consideration of the
acquisition of the PN shares will be announced following the closing of the MCG Offer.

Randburg
30 August 2019

Financial Advisor and JSE Sponsor to MCG
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Legal and Tax Advisor to MCG and PN
Webber Wentzel

Auditors
PricewaterhouseCoopers

Independent Advisor and Financial Advisor to PN
Tamela Holdings Proprietary Limited

Important notice

Shareholders should take note that, pursuant to a provision of the MultiChoice memorandum of
incorporation, MultiChoice is permitted to reduce the voting rights of shares in MultiChoice (including
MultiChoice shares deposited in terms of the American Depositary Share ("ADS") facility) so that the
aggregate voting power of MultiChoice shares that are presumptively owned or held by foreigners to
South Africa (as envisaged in the MultiChoice memorandum of incorporation) will not exceed 20% of the
total voting power in MultiChoice. This is to ensure compliance with certain statutory requirements
applicable to South Africa. For this purpose, MultiChoice will presume in particular that:

-   all MultiChoice shares deposited in terms of the MultiChoice ADS facility are owned or held by
    foreigners to South Africa, regardless of the actual nationality of the MultiChoice ADS holder; and
-   all shareholders with an address outside of South Africa on the register of MultiChoice will be
    deemed to be foreigners to South Africa, irrespective of their actual nationality or domicilium,
    unless such shareholder can provide proof, to the satisfaction of the MultiChoice board, that it
    should not be deemed to be a foreigner to South Africa, as envisaged in article 40.1.3 of the
    MultiChoice memorandum of incorporation.

Shareholders are referred to the provisions of the MultiChoice memorandum of incorporation available
at www.multichoice.com for further detail. If shareholders are in any doubt as to what action to take, they
should seek advice from their broker, attorney or other professional adviser.

Date: 30/08/2019 03:00:00
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