MultiChoice’s steps of change

After just over 13 years, Phuthuma Nathi shareholders will be given the opportunity to enjoy the freedom of an unrestricted share in the form of MultiChoice Limited shares (albeit in terms of just a small percentage of their current shareholding).

This is because a key part of Naspers’s unbundling of MultiChoice – and its subsequent listing on the JSE in February – was that the B-BBEE retail scheme would get a bonus share issue capped at 5% of the issued share capital of MultiChoice.

Transaction structure

The restructure will be executed in the following manner:

Step 1: Merger of Phuthuma Nathi 1 and Phuthuma Nathi 2

This involves a simplification of the current PN structure, whereby PN1 will acquire the entire issued share capital of PN2. PN2 will therefore become a wholly-owned subsidiary of PN1 and will be delisted from the Equity Express Securities Exchange (EESE). PN1 will continue to be listed on its own exchange. The combination of the PN entities will result in one listed entity with a single share price. If one looks at a share trading website, PN1 and PN2 sometimes have different share prices, which can be confusing to both existing and potential shareholders.

It should be noted that the transaction is still subject to PN1 and PN2 shareholders’ approval.

Step 2: Phuthuma Nathi and MultiChoice

The share exchange allows existing Phuthuma Nathi shareholders holding a minimum of 10 shares to exchange a maximum of 20% of their shares for MultiChoice Group shares. The exchange ratio is based on a 90day volume-weighted average price for MultiChoice Group on the JSE and Phuthuma Nathi 1 on the EESE. Considering that PN is trading cum dividend, the ratio of 0.97 MultiChoice Group shares for every one PN share will be applied.

The impact of the exchange will result in MultiChoice acquiring up to nine million ordinary shares in PN1 and up to 4.5 million ordinary shares in PN2. Up to 13 095 000 MultiChoice ordinary shares are in consideration for participating PN shareholders.

It should be noted that PN shareholders will be liable for the brokerage costs to implement the transaction, decreasing the allocation to 0.957 shares.

The results will be released after October 28, when the offer closes.