SENS Note - 06 April 2005
MTN -- Newshelf redemption of funding instruments
 
Further to the Newshelf announcement made on 20 December 2002, shareholders of MTN are advised that Newshelf has on 31 March 2005 concluded an agreement with, inter alia, Transnet and the Public Investment Commissioners for the purpose of redeeming early certain of the funding instruments which were issued by Newshelf between December 2002 and March 2003 to raise the funding to acquire 309 million MTN shares (18.7% of the issued share capital of MTN at the time). Newshelf is wholly owned by The Alpine Trust, whose beneficiaries are the management and staff of MTN, including the executive directors. The early redemption agreement, entered into pursuant to a request from certain of Newshelf`s funders will, after implementation, enable the funders and Newshelf to reduce the risk in the existing funding structure, thereby leaving Newshelf with an unencumbered holding in MTN for the benefit of The Alpine Trust`s beneficiaries.

The salient terms of the early redemption are as follows:
  • Newshelf will distribute 118 652 167 MTN shares to the PIC in full settlement of the Newshelf fixed rate redeemable preference shares (`B preference shares`) and the participating redeemable preference share `B participating preference share`) issued to the PIC; and
  • Newshelf will sell 75 242 411 MTN shares to the PIC to raise the funds to fully redeem the Newshelf participating redeemable preference share held by a wholly-owned subsidiary of Newshelf in which all economic benefits currently vest in Transnet, Newshelf 697 (Pty) Ltd (`Subco`) (`C participating preference share`). It is the intention that the C participating preference share redemption proceeds will be utilised by Transnet to redeem the promissory notes issued by Subco, which notes carry a Transnet and National Treasury guarantee.

The PIC has confirmed its intention to remain a long term investor in MTN. Newshelf will retain 115 105 422 MTN shares, equal to 6.9% of the aggregate issued share capital of MTN, prior to:
  • the sale of MTN shares, if any, for the settlement by Newshelf of the resultant costs and taxes, including Secondary Tax on Companies, of the early redemption; and
  • the redemption of the A preference shares, if applicable.

Further to the MTN announcements made on 11 April 2003 and 26 September 2003 regarding the exercise by the executive directors of MTN at the time of an option to acquire 0.23% of the economic interests of the B preference shares and 0.23% of the economic interests of the B participating preference share for a total consideration of R5m, shareholders of MTN are advised that, in terms of the early redemption agreement, the executive directors will dispose of their economic interests in the B preference shares and the B participating preference share back to the PIC for a consideration to be paid in the form of 276 837 MTN shares. The MTN shares will be distributed to the executive directors pro rata to their acquisition considerations.
 
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