WHAT IS THE MULTICHOICE GROUP SHARE EXCHANGE OFFER?

Phuthuma Nathi (PN) shareholders have an opportunity to exchange up to 20% of the Phuthuma Nathi (PN) shares for the MultiChoice Group (MCG)shares. The MCG shares are listed on the JSE and are freely tradeable. PN shareholders need to hold at least 20 PN shares at all times, even after having exchanged a portion of their PN shares for MCG shares.

If you choose to exchange a portion of your PN shares for MCG shares, you will own both PN and MCG shares. If you want to sell your MCG shares, you will be able to sell them to any investor on the JSE as they are freely tradeable.

If you choose not to exchange a portion of your PN shares, you will keep all your current shares and will not receive any MCG shares.

HOW MANY MCG SHARES WILL SHAREHOLDERS  RECEIVE WHEN THEY EXCHANGE THEIR PN SHARES?

For every 1 PN share you will receive 0.957 MCG share after transaction fees. For example, if you exchange 1000 PN shares you will receive 957 MCG shares.

WHO QUALIFIES TO PARTICIPATE IN THE SHARE EXCHANGE OFFER?

This offer is open to individuals and groups who are PN shareholders as at 25 October 2019. The PN shareholder must more than 20 PN shares.

HOW DO SHAREHOLDERS PARTICIPATE IN THE SHARE EXCHANGE?

Participation in this offer is completely voluntary. The decision to participate or not in this opportunity is completely up to a shareholder.

WHAT ARE THE CHOICES FOR SHAREHOLDERS?

A shareholder can take one of the following actions;

A) ACCEPT offer and exchange up to 20% of your PN shares for the MCG shares.

B) IGNORE the offer and continue to hold your PN shares. In this case, the shareholder does not need to do anything and will not be affected by the offer.

WHEN DO SHAREHOLDERS PARTICIPATE IN THE SHARE EXCHANGE OFFER?

The Share Exchange offer will opens at 09:00 on 25 September 2019 and closes at 14:00 on 28 October 2019.

Shareholders will be sent important documents (attached below) from 20 September 2019. They must read the documents carefully and take the necessary actions required. The documents are as follows:

1. Offer Circular

The Offer Circular provides more information about the MCG Offer and actions shareholders are required to take. They can either accept or ignore the offer.

2. Prospectus

The Prospectus provides shareholders with additional information about MCG and the MCG shares. The prospectus is for shareholders information only and no actions are required for shareholders to take.

HOW DO SHAREHOLDERS ACCEPT THE OFFER?

The shareholder can accept the offer in one of the following ways;

  • Contact the Phuthuma Nathi call centre on 0860 116 226 from 07:00 to 18:00 during weekdays (excluding public holidays) to advise that you are accepting the offer and how many PN shares you are exchanging.

OR

    • Use the online offer platform on www.EESE.co.za to indicate that you are accepting the offer and how many PN shares you are exchanging. To make use of this platform, PN shareholders are required to register. You will use your username and password to login to the platform.
    • A user guide explaining how to use the online process will be available on the Phuthuma Nathi and MultiChoice Group websites. This platform will be available from 09:00 on Wednesday, 25 September 2019 until 14:00 on Monday, 28 October 2019

OR

  • Complete the Acceptance and Transfer Form (pink) attached to the offer document to accept the offer.The completed form must be submitted to the below address to be received by no later than 14:00 on Monday, 28 October 2019. Please note no late acceptances will be allowed:

Singular System
PO Box 785261
Sandton
2146

Further information will be contained in the documents that will be sent to shareholders from the 20 September 2019.

MULTICHOICE GROUP SHARE EXCHANGE OFFER FAQs

How many MCG shares will shareholders receive when they exchange their PN shares?

For every 1 PN share you will receive 0.957 MCG share. For example, if you exchange 1000 PN shares you will receive 957 MCG shares.

How do we know that the offer and the exchange ratio is fair to us?

The exchange offer has been determined by market prices and recommended by independent experts. It has been approved by both the MCG and PN boards

Can I decide to exchange a lower percentage than the 20%?

Yes, you can choose to exchange less than 20% of your PN shares. Anywhere between 0% and 20% of your PN shares can be exchanged

Can I decide to exchange a higher percentage than the 20%?

No, you may not exchange more than 20% of your PN shares. If you submit more than 20% of your PN shares for the exchange, the number of shares that exceed the 20% limit will not be accepted and will be returned to you

Will I have to pay transaction fees to exchange my shares?

Yes you will have to pay 1.265% transactional costs including VAT for the share exchange. These charges are taken into account in the number of MCG shares that you will receive and therefore you are not required to make any cash payment to EESE or Singular in order to receive the MCG shares.

Will I be able to trade my MCG shares on the JSE?

Yes. MCG is listed on the JSE and the MCG shares can be freely traded. If you exchange a portion of your PN shares for MCG shares, you will be able to sell your MCG shares on the JSE using the Equity Express Securities Exchange (EESE) (www.EESE.co.za) trading platform or by calling the Phuthuma Nathi call centre. In other words, you will be able to trade the MCG shares in the same way that you currently trade your PN shares.

Can the MCG shares be delivered into our own trading account if we don’t wish to use EESE?

Yes, MCG shares can be transferred into a valid JSE trading account, once the account details are provided to Singular Systems.

Why not list the entire PN on the JSE?

We evaluated the listing of PN on the JSE and concluded that EESE was the most optimal trading platform for the PN companies.

What are the implications of the MCG Offer on the number and value of PN shares in issue?

MCG will make an offer to all PN shareholders to exchange up to 20% of their PN shares for MCG shares . If a PN shareholder choose to accept this offer by exchanging a portion of their PN shares for MCG shares, MCG, in turn, will acquire the PN shares exchanged by PN Shareholders and MCG will therefore hold shares in PN after the exchange. The offer does not include the issue of new shares in PN.

What are the tax implications for PN shareholders when they accept the offer?

PN shareholders who accept the offer will not be liable to pay any South African tax. However, if the MCG shares amount that they receive is rounded off to cater for transactional and fractional costs, there may be a possible amount that is subject to the South African tax.

The PN shareholder may also have to pay South African tax in the event the ruling MCG share price is greater than the cost of the PN share when the share exchange happens. The taxable amount will be the difference between the ruling MCG share price and the cost of the PN share.

PN shareholders that are not South African tax residents are advised to consult their own professional tax advisors regarding the tax treatment of the offer in their respective jurisdictions.

What are the tax implications when I sell my MCG shares after I have received them in the exchange offer?

If you sell the MCG shares then you will have tax consequences depending on your personal circumstances. We cannot provide tax advice. We advise that independent tax advice be obtained from relevant practitioners.

When should I expect the payment of dividends for the MCG shares?

MCG’s financial year end is 31 March. The first MCG dividend is expected to be declared in June 2020 and paid in September 2020. Going forward, if dividends are declared, it is anticipated that MCG will pay its dividends around September. In line with the communication at listing, the board has not declared a dividend for FY19 but, subject to relevant factors and circumstances at the time, intends to declare a dividend of R2.5bn for FY20.

Will I get less PN dividend payout when I exchange my PN shares for MCG shares?

If the MCSA dividend stayed the same in the future then your dividends would go down as you have less PN shares. As you will now also be an MCG shareholder, you would be entitled to dividends on those new shares in MCG, subject to MCG declaring dividends.

When will the share exchange offer open?

The Share Exchange offer will open at 09:00 on Wednesday, 25 September 2019 and will close at 14:00 on Monday, 28 October 2019.

Who qualifies to participate in the share exchange offer?

This offer is open to individuals and groups who are PN shareholders as at 25 October 2019. The PN shareholder must hold more than 20 PN shares.

Do I have to exchange my shares?

Participation in this offer is completely voluntary. The decision to participate or not in this opportunity is completely up to a shareholder.

Have the Phuthuma Nathi shareholders been consulted on this share exchange?

Naspers, MCG and PN have made numerous announcements about the share exchange in the media, on SENS and in the MCG pre-listing statement on its website. We are on this roadshow to meet with PN shareholders to explain how this offer works. Further details on this offer have been communicated to PN shareholders in a formal offer circular which was sent to PN shareholders on Friday, 20 September 2019.

What options did you consider to do the flip up. Was this the only option?

The share exchange option was the most optimal in terms of the following:

  • Time frame
  • Shareholder choice (Voluntary)
  • MultiChoice SA Licence requirements
  • Spirit of BBBEE

Multichoice Group is not a black owned company and would not ordinarily qualify to be a shareholder. After this flip up the single largest shareholder will be a white owned company. Do you intend to fix that in future?

Though MultiChoice Group is a company with operations in and outside South Africa, with a number of shareholders from around the world, its biggest shareholder is in SA and the company is committed to broad, socio-economic transformation and B-BBEE The exception to allow MCG to up hold 20% of PN is required so that the share exchange can materialise.

Is a share exchange offer a once off event or ongoing?

The share exchange offer is a once off event.

How am I affected if I choose not to exchange my PN shares for MCG shares?

If you chose not to participate in the offer, you will retain your existing shares in PN. You will continue to receive dividends from PN if they are declared and be able to trade your PN shares on EESE where the PN shares are currently listed.

How will participating in the share exchange affect my PN shareholding?

If you participate in the offer, you will have fewer PN shares than you initially held. Your shareholding in PN will be reduced but you will, in turn, receive MCG shares in the ratio of 0.957 MCG shares for every one PN share exchanged.

Why can’t I exchange my PN shares for Naspers shares?

MCG was unbundled from Naspers and separately listed on the JSE in February 2019. This means that MCG and Naspers are now completely separate from each other. The offer is being made by MCG to PN shareholders in relation to MCG shares. If you wish to acquire Naspers shares, you can do so directly on the JSE.

Why can’t I exchange all my PN shares for MCG shares?

MultiChoice South Africa is required to have no less than 30% ownership by black people. In order to achieve this, MultiChoice South Africa implemented a B-BBEE scheme through PN. Allowing more PN shares to be exchanged would result in MultiChoice South Africa having less than the required ownership by black people. If you wish to hold more MCG shares, you can buy them directly on the JSE via the PN call centre or the online platform (www.EESE.co.za) .

Would you recommend that I exchange my PN shares for MCG shares or keep all of my PN shares?

We cannot provide financial advise whether or not you should exchange a portion of your PN shares for MCG shares. The decision to exchange a portion of your PN shares for MCG shares or not is entirely up to the individual shareholder.

For how long can I keep the MCG shares after the exchange?

You can keep your MCG shares for as long as you wish.

What documents should the shareholders expect to receive?

1. Offer Circular
The Offer Circular provides more information about the MCG Offer and actions shareholders are required to take. You can either accept or ignore the offer.

2. Prospectus
The Prospectus provides shareholders with additional information about MCG and the MCG shares. The prospectus is for shareholders information only and no actions are required for shareholders to take.

What is the difference between MultiChoice South Africa and MCG?

MultiChoice South Africa represents the South African operations of MCG. MCG includes MultiChoice South Africa, MultiChoice Africa, Connected Video and Irdeto
Why do you require amendments to the MOI?

The amendments are required to the MOI in order to implement the MCG offer and the merger of PN and PN2.

  • References to MIHH to be changed to MCG
  • Change reference to BBBEE shareholders
  • To allow shareholders to exchange shares with MCG (currently only BBBEE can hold PN shares)
  • Amend MOI to allow MCG to be able to hold up to 20% of the PN shares
  • Important to make these changes for share exchange to be implemented

When will the amendments be implemented?

The amendments will be implemented after PN shareholders approve them. A PN shareholders meeting to approve these amendments will be held 21 October 2019 at MultiChoice City in Randburg.

What are the next steps

We will be providing you with a brochure that details the next steps, and provides you with a summary of the information we shared today. You can also call our call centre on 0860116226 for more information or visit the Phuthuma Nathi website