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Unbundling Of Capitec Shareholding – Apportionment Of Tax Cost For South African Income Tax Purposes
PSG GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1970/008484/06)
JSE Limited (“JSE”) share code: PSG
ISIN code: ZAE000013017
LEI code: 378900CD0BEE79F35A34
(“PSG Group” or “the Company”)
UNBUNDLING OF CAPITEC SHAREHOLDING – APPORTIONMENT OF TAX COST FOR
SOUTH AFRICAN INCOME TAX PURPOSES
Shareholders are referred to the Company’s various announcements released on SENS
(“Announcements”) regarding the distribution by PSG Group of 32 502 856 ordinary shares
held by it in the issued ordinary share capital of Capitec Bank Holdings Limited (“Capitec”),
comprising approximately 28.11% of the total issued ordinary share capital of Capitec
(“Capitec Distribution Shares”), to PSG Group ordinary shareholders (“Shareholders”) by
way of a pro rata distribution in specie, in the ratio of 14 Capitec shares for every 100 PSG
Group shares held (“Distribution Ratio”) (“PSG Group Unbundling”), as well as to the
Company’s circular in this regard, dated 1 July 2020 (“Circular”).
Capitalised terms used below and that are not otherwise defined, bear the meanings ascribed
to them in the Circular. The disclaimers set out in the Announcements and the Circular apply
to this announcement.
1. INTRODUCTION
The purpose of this announcement is to notify Shareholders of the apportionment ratio
to be applied by Shareholders in determining the portion of their past costs (and market
value, if relevant) to be allocated to i) the unbundled Capitec Distribution Shares to be
distributed to Shareholders and ii) the remaining ordinary shares in the issued share
capital of PSG Group (“PSG Group Shares”) held by Shareholders following the PSG
Group Unbundling.
2. APPORTIONMENT TAX PRINCIPLES
2.1. The summary below represents general comments and is not intended to constitute
a complete analysis of the tax consequences of the PSG Group Unbundling for
Shareholders in terms of existing South African tax law. It is not intended to be, nor
should it be considered as legal or tax advice. Neither PSG Group, its associates, its
advisors, its directors or employees can be held responsible for the tax consequences
of the PSG Group Unbundling and therefore Shareholders are advised to consult their
own tax advisors in this regard.
2.2. PSG Group Shares held as trading stock
2.2.1. Any Shareholder holding PSG Group Shares as trading stock will be deemed to
acquire the Capitec Distribution Shares as trading stock.
2.2.2. The combined expenditure of the PSG Group Shares and Capitec Distribution
Shares will be the amount taken into account by the Shareholder in respect of the
PSG Group Shares, as contemplated in section 11(a), section 22(1) or section
22(2) of the Income Tax Act. The portion of the above combined expenditure to be
allocated to the Capitec Distribution Shares will be determined by applying the
ratio that the market value of the Capitec Distribution Shares bears to the sum of
the market value of the PSG Group Shares and the Capitec Distribution Shares
as at the last day to trade, plus one Business Day, being Wednesday,
26 August 2020, taking the Distribution Ratio into account. The expenditure so
allocated to the Capitec Distribution Shares will reduce the expenditure relating to
the retained PSG Group Shares, as set out in paragraph 3 below.
2.3. PSG Group Shares held as capital assets
2.3.1. Any Shareholder holding PSG Group Shares as capital assets will be deemed to
acquire the Capitec Distribution Shares as capital assets.
2.3.2. The combined expenditure of the PSG Group Shares and Capitec Distribution
Shares will be the original expenditure incurred in respect of the PSG Group
Shares, that is allowable in terms of paragraph 20 of the Eighth Schedule to the
Income Tax Act, and where the PSG Group Shares were acquired before 1
October 2001, the expenditure and/or market value, as the case may be, adopted
or determined as contemplated in paragraph 29 of the Eighth Schedule to the
Income Tax Act. The portion of the above combined expenditure and/or market
value, as the case may be, to be allocated to the Capitec Distribution Shares will
be determined by applying the ratio that the market value of the Capitec
Distribution Shares bears to the sum of the market value of the PSG Group Shares
and the Capitec Distribution Shares as at the last day to trade, plus one Business
Day, being Wednesday, 26 August 2020, taking the Distribution Ratio into
account. The expenditure so allocated to the Capitec Distribution Shares will
reduce the expenditure relating to the retained PSG Group Shares, as set out in
paragraph 3 below.
2.4. Non-Resident Shareholders
Shareholders who are non-resident for tax purposes in South Africa are advised to
consult their own professional tax advisors regarding the tax treatment of the PSG
Group Unbundling in their respective jurisdictions, having regard to the tax laws in
their jurisdiction and any applicable tax treaties between South Africa and their country
of residence.
3. APPORTIONMENT RATIO
Shareholders are hereby advised that the expenditure of their PSG Group Shares as
referred to above and their unbundled Capitec Distribution Share must be apportioned
in accordance with the apportionment ratio set out below (“Apportionment Ratio”). The
Apportionment Ratio is based on the closing price of 4 020 cents per PSG Group Share
and 93 265 cents per Capitec Distribution Share on the last day to trade, plus one
Business Day, being Wednesday, 26 August 2020, and has been calculated as follows:
Apportionment Ratio of Capitec Distribution Share = (A / (A+B))
Where:
A = the closing price of an unbundled Capitec Distribution Share multiplied by the
Distribution Ratio, i.e. 13 057.1 cents (calculated as 93 265 cents * 0.14)
B = the closing price of a PSG Group Share, i.e. 4 020 cents
= 13 057.1 cents / (13 057.1 cents + 4 020 cents)
= 76.45970%
Accordingly, shareholders are hereby advised that the expenditure of their PSG Group
Shares must be apportioned in the ratio of 23.54030% to a PSG Group Share held after
the PSG Group Unbundling and 76.45970% to an unbundled Capitec Distribution
Share received.
Stellenbosch
26 August 2020
Transaction Advisor and Sponsor
PSG Capital Proprietary Limited
Independent Sponsor
UBS South Africa Proprietary Limited
Date: 27-08-2020 07:05:00
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