Johannesburg – No job cuts are expected if Mvelphanda Group succeeds with its cash and share offer for the remaining 79% it does not own of media and entertainment group Avusa [JSE:AVU]‚ interim CEO of Mvela‚ Andrew Bonamour‚ said on Tuesday.
He also said the plan was not to asset strip Avusa but to build it.
"What we are trying to do is not an asset strip... we are a builder‚" he told a news briefing.
There was also no plan to sell any of media group’s assets if Mvela succeeded with its R24 per share offer‚ he added.
He said the plan was to turn Avusa around and if everything was done right, there should be a turnaround in 18 months.
According to Bonamour‚ there was some wasteful expenditure that needed to be looked at but it was at the top.
"Avusa has not only underperformed the market, it's underperformed its peers‚" he added.
The cash and share offer announced by Mvela on Tuesday‚ which is being made through its wholly owned subsidiary‚ Richtrau No 229 (Proprietary) Limited‚ is estimated to be worth some R3bn.
Blackstar Group SE‚ a listed investment company that controls 28% of Mvela Group‚ is the arranger and promoter of the transaction and will assist management in driving the turnaround strategy in Avusa.
The transaction comprises a series of interconditional steps that will result in Richtrau becoming a listed entity on the JSE‚ housing all of Avusa’s assets.
The offer comprises a cash offer of R24.00 per Avusa ordinary share and a share exchange of Avusa ordinary shares (or a portion thereof) for ordinary shares in Richtrau.
The cash offer represents a premium of 19.6% to the Avusa 30-day volume weighted average price (VWAP) per ordinary share of R20.07 as at close of business on 11 June 2012.
The share exchange ratio is 1.478 Richtrau ordinary shares for every one Avusa ordinary share. The exchange ratio is based on Richtrau’s net asset value (existing Avusa ordinary shares owned plus cash less debt) and Avusa’s 30-day VWAP of R20.07.
In order to fund the cash offer‚ Mvela Group is injecting R480m of equity into Richtrau and raising R650m of bridge funding to finance the cash offer to Avusa shareholders.
In terms of the composite transaction‚ Richtrau proposes to implement the offer through a scheme of arrangement‚ the listing of all the ordinary shares of Richtrau on the JSE and Mvela Group unbundling its shares in Richtrau to its shareholders.
Upon listing‚ Richtrau will have a smaller board (maximum of nine people) that will consist of an independent chairperson and other experienced business professionals to support management and provide the necessary strategic guidance to the business.
Richtrau has chosen Colin Cary as the new head of Avusa following the conclusion of the proposed transaction. Cary‚ who is currently managing director of Avusa Retail Solutions‚ is the founder and former CEO of Hirt and Carter‚ which Avusa acquired with UHC in November 2010.
Richtrau has secured irrevocable undertakings from a number of key Avusa shareholders to vote in favour of the offer‚ which shareholders collectively hold 65.0% of those Avusa shares eligible to vote at the scheme meeting.