Holding(s) in Company

RNS Number:8868A
Liberty Group Ld
15 July 2004

Liberty Group Limited

(Incorporated in the Republic of South Africa)

(Registration number: 1957/002788/06)

Share code: LGL

ISIN: ZAE000024543

("Liberty Life" or "the Company")



THE PROPOSED INTRODUCTION OF DIRECT BLACK SHARE OWNERSHIP

TO LIBERTY LIFE



1. INTRODUCTION



Liberty Life has approved a series of transactions whereby it proposes to

facilitate the acquisition of an effective 10% interest in its South African

operations by broad-based black groupings, subject to the fulfilment of the

conditions precedent set out in paragraph 5.1 below, which includes the

approval of Liberty Life ordinary shareholders ("Liberty Life shareholders").



The broad-based black groupings include:



- black strategic partners being: Safika Holdings (Proprietary) Limited

("Safika") and Millennium Consolidated Investments (Proprietary) Limited

("MCI") ("the Tutuwa Consortium"), which will together acquire approximately

10.3 million Liberty Life ordinary shares ("Liberty Life shares");

- approximately 840 current black managers, as well as future black managers

of Liberty Life, represented by a trust ("the black managers' trust"), which

will acquire approximately 10.3 million Liberty Life shares; and

- a trust to be formed for the benefit of various black educational and other

empowerment groupings ("community trust"), which will acquire approximately

5.2 million Liberty Life shares,



(collectively, "the black partners").



The shareholders of Liberty Life are advised that Liberty Life:



- will propose a scheme of arrangement ("the scheme") in terms of section 311

of the Companies Act, 1973 (Act 61 of 1973) ("the Companies Act"), that will,

subject to the fulfilment of the conditions precedent set out in paragraph

5.1, result in four wholly-owned subsidiaries of Liberty Life (collectively,

"the empowerment subsidiaries"), acquiring in aggregate 9.4% of the issued

share capital of Liberty Life pro rata from all existing Liberty Life

shareholders for a cash consideration of R48.50 per share; and

- has entered into a set of agreements and will enter into further agreements

with the black partners, in terms of which the black partners will, subject to

fulfilment of the conditions precedent set out in paragraph 5.1 below, acquire

all of the ordinary shares in the empowerment subsidiaries, thereby acquiring

beneficial ownership of Liberty Life shares representing 10% of the value of

the South African operations of Liberty Life,



(collectively, "the black ownership initiative").



Liberty Life shareholders are advised that as a result of the black ownership

initiative each shareholder will dispose of 94 shares for every 1 000 Liberty

Life shares held, at a price of R48.50 per Liberty Life share. Furthermore,

current shareholders will retain the right to receive any dividend to be paid

by Liberty Life in respect of the first half of 2004. The empowerment

subsidiaries will be capitalised through floating rate preference shares with

a 20-year term, although the redemption is anticipated to occur in less than

20 years. The redemption profile will not be linked to the Liberty Life share

price performance, thus enhancing the sustainability of the black ownership

initiative.



In addition, subject to the conditions precedent set out in paragraph 6 below,

Liberty Life will propose a general staff scheme ("the general staff scheme")

in terms of which approximately 4 600 employees of Liberty Life based in South

Africa, which excludes the black managers who will participate in the black

ownership initiative and white managers that participate in the existing share

incentive scheme ("qualifying staff"), will be awarded 100 Liberty Life shares

each, at no cost to them, which will be held by an employee trust ("the

general staff scheme trust"). The rights to the Liberty Life shares will vest

immediately in the qualifying staff but they will not be entitled to dispose

of their ordinary shares or the rights attaching thereto until the expiry of a

three-year lock-in period, regardless of whether they remain employed by

Liberty Life.



At present, 10% of Liberty Life's South African operations is valued at R1.3

billion and is equivalent to approximately 9.4% of the issued ordinary share

capital of Liberty Life. On implementation of the black ownership initiative,

the black partners will hold approximately 25.8 million Liberty Life shares,

representing 10% of the value of Liberty Life's South African operations.



2. RATIONALE



2.1 Liberty Life's commitment to black economic empowerment



Liberty Life is firmly committed to black economic empowerment ("BEE") in

South Africa. The Company accepts that meaningful participation by black

people in the mainstream economy is essential to sustaining South Africa's

successful economic and democratic structures.



Liberty Life has for many years followed a BEE strategy aimed at achieving:



- a meaningful number of black directors and executives in Liberty Life;

- a staff complement that reflects South Africa's diverse demographic profile;

- a procurement policy that recognises BEE;

- a growing and economically active customer base drawn from previously

economically disadvantaged communities; and

- social development and educational programmes that are primarily directed at

developing and empowering previously disadvantaged communities.



Liberty Life is a large South African based institution that is part of the

fabric of South Africa. Accordingly, the Liberty Life board of directors ("the

board") believes that Liberty Life needs to facilitate an empowerment

transaction that seeks to embrace the spirit as well as the requirements of

the Financial Sector Charter ("the Charter").



2.2 The Charter



Many of Liberty Life's long-practiced BEE philosophies were formally embodied

in the Charter, which was adopted on 17 October 2003 by participants in the

South African financial sector, including the Life Offices' Association. This

sector-wide commitment to BEE is aimed at contributing towards sustained

economic growth, development and social transformation in South Africa.



The six key areas of BEE embraced by the Charter are:



- business ownership and control;

- development of human resources;

- procurement and enterprise development;

- access to financial services;

- empowerment financing; and

- corporate social investment.



The empowerment rating scorecard set out in paragraph 16 of the Charter ("the

scorecard") provides an objective and broad-based set of indicators for

measuring each financial institution's success in meeting the requirements of

the Charter.  It is intended that the scorecard will be used by:



- financial institutions to assess their own progress in achieving BEE;

- the Charter Council, to be established in terms of paragraph 15.1 of the

Charter, in evaluating a financial institution's adherence to the Charter; and

- the Government and private sector, when adjudicating business to be awarded

to financial institutions.



In terms of the Charter, in order for a financial institution to earn the

maximum 12 direct ownership points, 10% of the equity value of the South

African operations of that company, together with control over all of the

voting rights attaching to that equity interest, must be held by black people

by 31 December 2010. The maximum direct ownership points will only be achieved

if the Charter's control requirements are met i.e. a minimum of 33% black

representation on the board of directors of that financial institution by

2008.



3. THE BLACK PARTNERS



The broad-based nature of the black partners is designed to mirror the spread

of Liberty Life's South African business network and maximise the business

case for BEE by aligning the interests of the black partners, many of whom are

already stakeholders in Liberty Life as shareholders, customers,

intermediaries, employees, suppliers and members of communities in which

Liberty Life operates, with those of Liberty Life.



3.1 The Tutuwa Consortium



Liberty Life considers it imperative to have leaders among its black partners

and it envisages that the strategic partners will provide such leadership and

assist it in providing co-ordination between the black partners to meet its

strategic objectives and grow its business.



Both Safika and MCI are black companies founded by prominent black individuals

who were influential in driving South Africa's democratic process in the early

1990s and who have since established themselves as businessmen with proven

track records.



Liberty Life's black ownership initiative provides a unique opportunity to

strengthen and entrench relationships with Safika and MCI who will be value-

adding strategic partners to the operations of Liberty Life.



The approximate 10.3 million Liberty Life shares effectively acquired by the

Tutuwa Consortium will be held in separate entities by Safika and MCI in the

ratio of 60:40. Safika will therefore effectively hold approximately 6.2

million Liberty Life shares and MCI approximately 4.1 million Liberty Life

shares.



Safika



Safika is an empowerment investment holding company with investments in the

fields of, inter alia, communication, information technology, human capital,

natural resources and financial services.



Safika currently partners Liberty Life in STANLIB Limited ("STANLIB"), where

it leads a consortium that holds an interest of 25.2% in STANLIB.  Safika has

successfully assisted STANLIB in generating meaningful additional business

since becoming a shareholder in this company.



The effective direct and indirect shareholders of Safika are: Moss Ngoasheng

(20%); Vuli Cuba (20%); Saki Macozoma (20%); Marc Ber (10%); Soto Ndukwana

(5%) and Richard Chauke (5%). In addition, 20% of the shares in Safika are

reserved for future strategic shareholders.



Saki Macozoma is currently a member of the board of Liberty Life.



Liberty Life and Standard Bank Group are in advanced discussions to acquire,

in total, a 20% strategic shareholding in Safika. This acquisition is not

linked to the black ownership initiative.



MCI



MCI is a black-owned and managed investment holding company founded by Cyril

Ramaphosa, James Motlatsi and several black professionals. MCI has investments

in the resources, property, industrial and financial sectors.  MCI's

principals have been active participants in the BEE landscape in South Africa

since 1996.



The shareholders of MCI are: the Ramaphosa family (30%); management and staff

(25%); James Motlatsi and other individuals (10%); Standard Bank Group Limited

(15%); Investec Limited (15%) and community trusts (5%).



3.2 The black managers



Liberty Life believes that one of the most effective ways to achieve broad-

based empowerment is to empower its black staff. Accordingly, the black

managers' trust will be established for the benefit of current and future

Liberty Life black managers.



Liberty Life currently has approximately 840 black South African managers who

will participate in the black ownership initiative. An internal committee

("the allocation committee") has been tasked with formulating the criteria to

determine the equitable participation of those black managers in the black

managers' trust. The allocation committee will submit proposals to a sub-

committee of the board and thereafter the final allocations will be confirmed.

It is anticipated that Liberty Life will finalise the initial allocation of

interests in the black managers' trust during the fourth quarter of 2004.



The empowerment of only black managers through the black ownership initiative

is a sensitive matter, which needs to be managed and communicated properly. To

this end, Liberty Life has developed a comprehensive communication and

education programme that will be aimed at addressing any concerns of

employees.



3.3 The educational and other empowerment groupings



The board is committed to fulfilling its social responsibilities and considers

it appropriate to empower broad-based educational and other empowerment

groupings, which is in line with the South African Government's aims of

achieving broad-based empowerment initiatives and educating the nation.  In

seeking to contribute to the delivery of quality education to all South

Africans, the Liberty Foundation has developed initiatives in education such

as The Liberty Learning Channel, the Mindset Network, the Sunday Times/Liberty

ReadRight programme and Primary Matters and Matric Matters, which are

published in partnership with the Independent Group.



Market research has shown that as a result of the Liberty Foundation's

activities, Liberty Life is recognised as a leading education company by the

lower-income segment of the South African market. Therefore, it is considered

appropriate to build on this community-upliftment platform by giving the

benefits of direct equity ownership to educational and other empowerment

groupings.



Safika and MCI have committed to assisting Liberty Life in the identification

of these educational and other empowerment groupings.  It is envisaged that

the selection of the educational and other empowerment groupings will be

completed by

31 December 2004.



 4. VALUE OF THE SOUTH AFRICAN OPERATIONS OF LIBERTY LIFE



JPMorgan Chase Bank ("JPMorgan") was appointed to perform a valuation of

Liberty Ermitage Jersey Limited ("Ermitage"), which is based in Jersey and has

operations in London, Luxembourg and Bermuda.  Having regard to the fair value

of Ermitage and the empowerment value of STANLIB (as determined by the value

at which Liberty Life and Standard Bank Group Limited, collectively, disposed

of 25.2% of the equity of STANLIB to a black empowerment consortium in 2003),

which values are included in the market value of Liberty Life, the board is of

the view that in order to comply with the Charter's direct ownership

requirements (10% of the South African operations), it is necessary for the

black partners to acquire 9.4% of the issued share capital of Liberty Life.



Description                                                    R million

Liberty Life market capitalisation (1)                            14 068

Value of Ermitage (2)                                               (635)

Equity value of South African operations                           13 433

10% of Liberty Life's South African operations

- gross empowerment value                                           1 343

Less: Empowerment value of STANLIB (3)                                (28)

Net empowerment value                                               1 316

Net empowerment value as a percentage of Liberty Life's

market capitalisation                                                 9.4%



Notes:

(1) At the close of business on 9 July 2004.

(2) JPMorgan valuation.

(3) Based on equity value at transaction date.



5. THE BLACK OWNERSHIP INITIATIVE



5.1 The scheme



Liberty Life will establish the empowerment subsidiaries, whose sole purpose

will be to acquire and own Liberty Life shares, and capitalise them by

subscribing for cumulative, redeemable preference shares, with an aggregate

value of approximately R1.3 billion, with a term of 20 years ("the preference

shares").



The important terms of the preference shares are as follows:

- Liberty Life will receive a cumulative preference dividend calculated at a

variable dividend rate equal to 65% of the prime interest rate; and

- the dividends paid to each empowerment subsidiary in respect of the Liberty

Life shares to be acquired by them through the scheme ("scheme shares"), less

any costs necessary for the administrative functions of the subsidiary, will

be used to pay the preference dividends and to redeem the preference shares,

although the black partners may be entitled to receive 10% of the surplus of

such dividend flow over the preference dividends at a point in the future.



Liberty Life will propose the scheme for the acquisition by the empowerment

subsidiaries of 9.4% of the Liberty Life shares on a pro rata basis from

current shareholders of Liberty Life for a cash price of R48.50 per share. The

aggregate purchase consideration in respect of the approximately 25.8 million

Liberty Life shares will be approximately R1.3 billion.



The scheme will be conditional upon the fulfilment of the following:

- Liberty Life shareholders in general meeting adopting a special resolution

approving the purchase by the empowerment subsidiaries of the scheme shares

and that resolution being registered by the Registrar of Companies;

- the Registrar of Long-term Insurance approving the purchase by the

empowerment subsidiaries of the scheme shares in terms of the scheme;

- Liberty Life shareholders in general meeting adopting an ordinary resolution

approving the disposal by Liberty Life of the issued ordinary shares of the

empowerment subsidiaries to the black partners;

- the scheme being approved by a majority representing not less than three-

fourths (75%) of the votes exercisable by Liberty Life shareholders present

and voting at the scheme meeting;

- the High Court granting an order that the scheme be sanctioned in terms of

section 311 of the Companies Act and be approved in terms of section 37 of the

Long-term Insurance Act, 1998 (Act 52 of 1998), and the order in terms of

section 311 of the Companies Act being registered by the Registrar of

Companies; and

- any other regulatory approvals that may be required.



Immediately following the implementation of the scheme, the value of the

Liberty Life shares acquired by the empowerment subsidiaries in terms of the

scheme will be matched in the empowerment subsidiaries by a corresponding

preference share obligation to Liberty Life, resulting in the net asset value

of the ordinary shares of each empowerment subsidiary being insubstantial.



5.2 The sale of the empowerment subsidiaries



The black managers' trust and community trust will each independently agree,

and Safika and MCI have each independently agreed, with Liberty Life, to

purchase the entire issued ordinary share capital of the relevant empowerment

subsidiary for a purchase consideration equal to the net asset value of each

empowerment subsidiary ("the subsidiary disposals"), with effect from the day

following implementation of the scheme. The subsidiary disposals are subject

to the fulfilment of the conditions precedent set out in paragraph 5.1 above.



After the black ownership initiative has been concluded, assuming a share

price of R51.00, being the closing price per Liberty Life share on 9 July

2004:



- the Tutuwa Consortium will own the ordinary shares in two of the empowerment

subsidiaries ("Stratco 1" and "Stratco 2"), which will, collectively, own

approximately 10.3 million Liberty Life shares, with a market value of

approximately R525 million;

- the black managers' trust will own the ordinary shares in an empowerment

subsidiary ("Staffco"), which will own approximately 10.3 million Liberty Life

shares, with a market value of approximately R525 million; and

- the community trust will own ordinary shares in one of the empowerment

subsidiaries ("Commco"), which will own approximately 5.2 million Liberty Life

shares, with a market value of approximately R265 million.



5.3 The shareholders' agreements



Safika and Liberty Life have entered into a shareholders' agreement with

respect to Stratco 1 and MCI and Liberty Life have entered into a

shareholders' agreement with respect to Stratco 2. The black managers' trust

and Liberty Life will enter into a shareholders' agreement with respect to

Staffco and the community trust and Liberty Life will enter into a

shareholders' agreement with respect to Commco. These agreements will regulate

the relationship between Liberty Life (as preference shareholder) and the

relevant black partner (as ordinary shareholder) of the relevant empowerment

subsidiary to ensure, insofar as possible, the continued compliance by Liberty

Life with the direct ownership requirements of the Charter.



The shareholders' agreements will provide that, without Liberty Life's

consent, the black partners will not be entitled to dispose of their interest

in the relevant empowerment subsidiary and the relevant empowerment subsidiary

will not be entitled to dispose of its Liberty Life shares, until the expiry

of a minimum lock-in period (which could be in 2011, depending on when the

Charter Council ownership review takes place, but will not end later than

midnight on 31 December 2014). Furthermore, until the end of the lock-in

period, the black partners will undertake that each empowerment subsidiary

will remain a "Black Company", as defined in the Charter.



6. THE GENERAL STAFF SCHEME



Liberty Life seeks to promote an equitable and diversity-friendly workplace

environment and would like to encourage share ownership by employees at all

levels of the business across Liberty Life.



Liberty Life will establish the general staff scheme trust, the sole purpose

of which will be to acquire and hold Liberty Life shares on behalf of the

qualifying staff. Each qualifying staff member will receive the rights through

the general staff scheme to 100 shares in Liberty Life and will be entitled to

the dividends in respect of those shares. The rights to the Liberty Life

shares will vest in the qualifying staff immediately, but they will not be

entitled to dispose of these rights for a period of three years from receipt

thereof. The acquisition of Liberty Life shares by the general staff scheme

trust will be funded by the payment of bonuses of approximately R34 million to

qualifying staff. These bonuses will be the amount required to fund the

acquisition of the necessary shares at the time of transfer to the general

staff scheme trust.  It is intended that Liberty Life will dispose of Liberty

Life shares currently held within the Liberty Life group, to meet the

requirements of the general staff scheme.



The implementation of the general staff scheme is conditional upon:



- shareholders approving the ordinary resolution approving the sale of the

relevant Liberty Life shares to the general staff scheme trust; and

- the fulfilment of the conditions precedent set out in paragraph 5.1 above,

relating to the scheme.



7. RESULTANT STRUCTURE OF LIBERTY LIFE



For a diagrammatic explanation of the resultant shareholding structure of

Liberty Life subsequent to the implementation of the black ownership

initiative and the general staff scheme, please refer to the press

announcement to be published in the press tomorrow (Friday, 16 July 2004).



8. ECONOMIC COST



Liberty Life has estimated the economic cost of the black ownership initiative

and the general staff scheme, both incurred and potential, quantified using

recognised financial risk pricing methodologies and assumptions, to be

approximately R375 million. This translates to 2.7% of the market

capitalisation of Liberty Life with reference to the closing Liberty Life

share price of R51.00 per share on 9 July 2004. JPMorgan reviewed this

estimation.



9. ACCOUNTING TREATMENT



The principle underlying the accounting treatment is compliant with South

African Statements of Generally Accepted Accounting Practice and the

International Accounting Standards on which they are based ("GAAP"). GAAP may

require a transaction to be accounted for in a different manner to its legal

substance and form. The accounting treatment described below has been

determined based on both local and international accounting advice and

interpretations of GAAP.



9.1 The black ownership initiative



The acquisition of the Liberty Life shares by the empowerment subsidiaries is

accounted for as a reduction in equity in Liberty Life's company and

consolidated annual financial statements. The preference share capital

provided to the empowerment subsidiaries does not meet the definition of a

financial asset in terms of GAAP, as the repayment of the preference share

obligation will effectively be financed by Liberty Life's ordinary dividends.

As a result, Liberty Life's dividend and capital redemption payments received

on the preference shares are eliminated against gross ordinary dividends

declared.



For purposes of the calculation of earnings per share ("EPS"), the weighted

average number of Liberty Life shares in issue is reduced by the number of

Liberty Life shares held by those empowerment subsidiaries, which have been

sold to the black partners. The weighted average number of Liberty Life shares

in issue will be restored on full repayment of the preference shares by the

black partners, or to the extent transferred to a third party, upon such

transfer.



In considering the applicability of International Financial Reporting

Standards ("IFRS"): Share-based Payments ("IFRS 2"), Liberty Life has been

advised that the black ownership initiative is not regarded as a "good" or a

"service" as envisaged by IFRS 2. The transaction is performed for a purpose

other than the payment for a good or a service supplied by Liberty Life and

the requirements of IFRS 2 are, therefore, not considered to be applicable.



9.2 The general staff scheme



As the acquisition of the Liberty Life shares by the qualifying employees in

terms of the general staff scheme is funded by remuneration, the cost of the

general staff scheme will be treated as an employee cost on implementation.



10. FINANCIAL EFFECTS



The pro forma financial effects set out below have been prepared to assist

Liberty Life shareholders to assess the impact of the black ownership

initiative and the general staff scheme on the EPS, headline EPS ("HEPS"), net

asset value ("NAV") per share, tangible net asset value ("TNAV") per share,

embedded value per share, total return on equity, headline return on equity

and capital adequacy requirement cover.  These pro forma financial effects

have been disclosed in terms of the Listings Requirements of the JSE

Securities Exchange South Africa ("the JSE") and do not constitute a

representation of the future financial position of Liberty Life on

implementation of the black ownership initiative and the general staff scheme.

The board is responsible for the pro forma financial effects, which are

provided for illustrative purposes only.



   Before the black ownership initiative and the general

staff scheme (1)   After the black ownership initiative

 and the general

staff scheme   Percentage change

EPS (cents)                            424.0       433.1 (2)       2.1

HEPS (cents)                           346.4       347.4 (2)       0.3

NAV per share (cents)                3 197.4     3 016.5 (3)      (5.7)

TNAV per share (cents)               3 096.9     2 905.6 (3)      (6.2)

Embedded value per share (cents)     5 758.5     5 843.1 (3)       1.5

Total return on equity (%)             13.1%       14.5% (2)       1.4

Headline return on equity (%)          10.7%       11.6% (2)       0.9

Capital adequacy requirement cover (x)   2.6         2.2 (3)       N/A



Notes:

1. The EPS, HEPS, NAV per share, TNAV per share, embedded value per share,

total return on equity, headline return on equity and capital adequacy

requirement cover "Before the black ownership initiative and the general staff

scheme" are based on the audited results for the year ended 31 December 2003.

In respect of EPS, HEPS, total return on equity and headline return on equity,

the weighted average number of Liberty Life shares in issue, as per the 2003

audited results, of 274.0 million was used. In respect of the NAV per share,

TNAV per share, embedded value per share and capital adequacy requirement

cover, the number of Liberty Life shares in issue at 31 December 2003, as per

the 2003 audited results, of 274.7 million was used.

2. The EPS, HEPS, total return on equity and headline return on equity "After

the black ownership initiative and the general staff scheme" are based on the

assumption that the black ownership initiative and the general staff scheme

were implemented on 1 January 2003 using 248.2 million shares in issue (274.0

million weighted average ordinary shares in issue as per the 2003 audited

results less 25.8 million shares owned by the black partners).

3. The NAV per share, TNAV per share, embedded value per share and capital

adequacy requirement cover "After the black ownership initiative and the

general staff scheme" are based on the assumption that the black ownership

initiative and the general staff scheme were implemented on 31 December 2003

using 248.9 million shares in issue (274.7 million shares in issue as per the

2003 audited results less 25.8 million shares owned by the black partners).

4. The "After the black ownership initiative and the general staff scheme"

column reflected above, makes the following assumptions:

- Liberty Life, through its empowerment subsidiaries, acquires 25.8 million

ordinary shares at R48.50 per share in terms of the scheme. The pro rata share

repurchase is funded by R1.3 billion of capital in Liberty Life;

- the pro rata share repurchase is debited to equity;

- dividends on preference shares paid by the empowerment subsidiaries to

Liberty Life equal the dividends on Liberty Life shares paid to the

empowerment subsidiaries;

- the cumulative preference dividends on the preference shares are calculated

at 65% of the prime interest rate (nominal annual compounded semi-annually);

- the pro rata repurchase of R1.3 billion is financed from shareholders' funds

through Liberty Life's existing available cash and the sale of equity unit

trusts, which would have earned an after-tax return of 5.8% per annum;

- a bonus of approximately R34 million is paid to Liberty Life employees,

which will be used by employees to acquire approximately 460 000 Liberty Life

shares from Liberty Life shares currently held; and

- the total return on equity is based on average shareholders' funds for the

period.



11. LIBERTY LIFE POLICYHOLDERS



Liberty Life policyholders will not be directly affected by the black

ownership initiative and the general staff scheme, as the proposed

transactions will use shareholders' funds.



12. OPINIONS AND RECOMMENDATIONS



12.1 Independent expert's opinion



Although not a requirement in terms of the Listings Requirements of the JSE,

JPMorgan was appointed as an independent expert to advise the board as to

whether the terms and conditions of the black ownership initiative are fair

and reasonable from a financial point of view to Liberty Life. JPMorgan has

considered the terms and conditions of the black ownership initiative and,

based on a review of the information available to it and its discussions with

management of Liberty Life, is of the opinion that, collectively, the terms

and conditions of the black ownership initiative are fair and reasonable from

a financial point of view to Liberty Life.



12.2 Opinion of the board



The board, together with Liberty Life's advisers, has structured the black

ownership initiative and the general staff scheme in an attempt to ensure that

they are in line with the long-term strategy of the Company.



The board is mindful that a failure by Liberty Life to embark on a BEE

strategy that complies with the Charter will have negative consequences for

the financial performance and sustainability of the Company.



Taking the above factors into account, the board has considered the terms and

conditions of the black ownership initiative and JPMorgan's opinion and is of

the unanimous opinion that they are fair and reasonable to Liberty Life.

Accordingly, the board recommends that shareholders vote in favour of the

scheme at the scheme meeting and the resolutions to be proposed at the general

meeting to be held on the same date and same venue as the scheme meeting,

details of which will be set out in the circular referred to in the paragraph

below.  In respect of their personal holdings in Liberty Life, the directors

intend to vote in favour of the scheme and the resolutions to be proposed at

the general meeting.



Saki Macozoma recused himself from the decision-making process of the board

due to his 20% interest in the issued share capital of Safika.



13. FURTHER IMPORTANT DETAILS AND THE CIRCULAR



Liberty Life shareholders will be advised in due course as to the important

dates and times relevant to the black ownership initiative and the general

staff scheme.



The circular setting out the full details of the black ownership initiative

and the general staff scheme and the meetings required to approve them will be

posted to Liberty Life shareholders in early September 2004.



Johannesburg
15 July 2004



Investment bank and joint sponsor
Standard Bank



Independent financial adviser
JPMorgan



Independent lead sponsor
Merrill Lynch



Attorneys
Werksmans



Reporting accountants and auditors
PWC



Financial adviser to MCI
MCI Advisers



Attorneys to the Tutuwa Consortium

Prinsloo, Tindle & Andropoulos Inc.Attorneys

Derek H. Rabin Attorneys

Moss Morris Attorneys








                      This information is provided by RNS
            The company news service from the London Stock Exchange
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