| Tue 15 May 2007, 11:23 | | ERM/SBL - ERM/Sable - Option agreement between ERM |
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ERM SBL
ERM SBL
ERM/SBL - ERM/Sable - Option agreement between ERM and Sable; further cautionary
Enterprise Risk Management Limited
Incorporated in the Republic of South Africa
(Registration number: 1995/001603/06)
Share code: ERM & ISIN: ZAE000037701
("ERM")
Sable Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1968/010636/06)
Share code: SBL & ISIN: ZAE000006383
("Sable")
OPTION AGREEMENT BETWEEN ERM AND SABLE
FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the announcement dated 16 February 2007 ("the previous
announcement"), shareholders are advised that ERM and Sable have, on 14 May
2007, signed an agreement in terms of which Sable has granted an option ("the
option" or "the option agreement") to ERM to subscribe for further shares in
Sable.
2. Background and update on the previous announcement
Following the successful conclusion of the two transactions announced on 16
February 2007, the holding structure between ERM and Sable will result in ERM
holding a 21.49% interest in Sable, which in turn will hold 100% of Amrich 58
Properties (Pty) Ltd ("Amrich"). Amrich is the holding company of Rotaflex
Investments (Pty) Ltd ("Rotaflex"), which owns a portfolio of properties with a
net value of approximately R95 million. ERM and Sable jointly acquired 34% of
Rotaflex in November 2006 and the remaining balance was acquired in January
2007. Subsequent to this transaction, and in terms of two agreements signed on
16 February 2007 ("the sale of shares agreement" and "the subscription
agreement") ERM agreed to sell its 50% holding in Amrich to Sable in exchange
for an issue of 1 187 500 new Sable shares at R40.00 per share as well as to
subscribe for an additional 392 500 shares at R40.00 per share to bring ERM`s
holding in Sable to 21.49%.
Shareholders are advised that the due diligence investigation referred to in the
previous announcement, confirming the Sable share price, is still ongoing.
Thereafter the companies will proceed with the process of satisfying the
remaining conditions precedent as contained in the sale of shares agreement and
the subscription agreement.
3. Salient terms of the option agreement
Isdale Holdings BV ("Isdale") is currently the controlling shareholder of Sable
holding 5 873 643 shares being 65.57% of the total issued share capital of Sable
excluding treasury shares. In terms of the option agreement signed on 14 May
2007, Sable has granted an option to ERM to subscribe for 3 948 822 new shares
in Sable, at a price of R40.00 per share, or so many newly issued shares in
Sable as will bring the total holding of ERM equal to the total number of shares
held by Isdale. The shares so issued will rank pari passu in all respects with
the shares held by Isdale.
The option may be exercised at any time prior to 16:00 on 30 November 2007. In
the event that the option is exercised, ERM will make an offer to minority
shareholders and Isdale has undertaken to take up so many of the shares on offer
by the minority shareholders as will maintain parity in the shareholdings
between ERM and Isdale.
In the event that the option lapses, ERM and Sable have agreed that the sale of
shares agreement and the subscription agreement referred to above shall be
terminated and the parties shall take such steps as may be required to return
them to the status existing prior to the signature of the sale of shares
agreement and the subscription agreement.
4. Conditions precedent to the option agreement
The option agreement is conditional upon inter alia:
* Isdale providing an irrevocable written undertaking, within seven days of
signature of the option agreement, that it will vote in favour of the Sable
shareholder resolutions required to implement the option agreement; and
* by no later than 17:00 on 31 October 2007;
* Written confirmation by the ERM board that it is satisfied, in its sole
discretion, that the subscription price for the Sable shares will be the
price per share as approved by shareholders of both ERM and Sable`s
shareholders at a general meeting to be held for the purpose of approving
the sale of shares agreement and the subscription agreement;
* The fulfilment or waiver of all the conditions of the sale of shares
agreement and the subscription agreement;
* The approval of the option agreement by the shareholders of Sable and ERM;
* Sable shareholders approving an increase in the authorised share capital of
the company to enable it to issue shares in terms of the option agreement;
and
* Regulatory approvals, including those of the JSE Limited, the Securities
Regulation Panel and the Competition Authorities.
5. Rationale for the option agreement
Further to the previous announcement, ERM and Sable have identified a
synergistic association through which both companies wish to grow, expand and
diversify their property activities. Both companies strongly believe that this
synergy will unlock significant value for shareholders through consolidating
many years of experience, management skills, financial and other resources. The
new shareholding structure illustrated above will expose both companies to a
well diversified and managed property portfolio. The main objective of this
structure is to maximize returns and expand its property interests to a long
term sustainable level, capable of effectively competing in the real estate
industry. Shareholders will enjoy the benefits of a well diversified development
and investment portfolio, where the risks are spread and returns maximized.
Executive management of both companies wish to take advantage of the current
phenomenal expansion in infrastructural spending in the real estate industry in
South Africa. Keen investor interest and growth in the real estate industry will
further enhance this process.
6. Categorisation and documentation
In the event that the option is exercised, the transaction will be an affected
transaction in terms of the Companies Act, 1973, as amended. Accordingly, should
ERM exercise the option, it will be required to make an offer to the minority
shareholders of Sable in terms of the Securities Regulation Code on Takeovers
and Mergers.
In terms of the JSE Listings Requirements, the option will be a category 1
transaction for ERM, which requires the posting of a circular and notice of a
general meeting to ERM shareholders. The issue of shares by Sable for cash in
terms of the option agreement will require the posting of a circular and notice
of a general meeting to Sable shareholders.
7. Further cautionary announcement
Further to the above, shareholders in both ERM and Sable are advised that they
should continue to exercise caution when dealing in the respective companies`
securities until a further announcement is made which will include the financial
effects relating to both the sale of shares agreement and the option agreement.
Randburg
15 May 2007
Corporate Adviser and Sponsor to ERM and Sable
Sasfin Capital
A division of Sasfin Bank Limited
Legal Adviser to ERM and Sable
Routledge Modise Attorneys
Date: 15/05/2007 11:23:03 Produced by the JSE SENS Department.
