| Wed 7 Nov 2007, 16:35 | | CGR - Calgro M3 Holdings Limited - Abridged Prospe |
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CGR1
CGR - Calgro M3 Holdings Limited - Abridged Prospectus
Calgro M3 Holdings Limited
(formerly Double Ring Trading 332 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/027663/06)
Share code: CGR & ISIN: ZAE000109203
("Calgro M3" or "the company" or "the Group")
ABRIDGED PROSPECTUS
Relating to a private placement of shares by way of:
- an offer for subscription of a maximum of 12 000 000 new ordinary shares
with a par value of 0.001 cent in the share capital of Calgro M3 at a
subscription price of 300 cents per share;
- an offer for sale by certain existing shareholders of Calgro M3 of a
maximum of 6 600 000 ordinary shares with a par value of 0.001 cent in the
share capital of Calgro M3 at a purchase price of 300 cents per share; and
- the subsequent listing of the shares of Calgro M3 on the Alternative
Exchange of the JSE ("ALTx").
This abridged prospectus is not an invitation to the general public to subscribe
for or purchase shares in Calgro M3. The private placement is made to invited
institutional and retail investors and selected private clients only.
1. INTRODUCTION
The JSE Limited ("JSE") has formally approved the listing of a maximum of
120 000 000 shares, with a par value of 0.001 cent each, in the share
capital of Calgro M3 with effect from commencement of business on Friday,
16 November 2007 on the AltX, subject to the achievement of the required
spread of public shareholders. The shares will trade under the abbreviated
name "Calgro M3", with the share code "CGR" and ISIN: ZAE000109203.
A total amount of R55.8 million, before expenses, will be raised through
the private placement to qualifying investors. The proceeds of the private
placement will first be applied to the offer for subscription of R36.0
million thereafter, the proceeds of the private placement will be applied
to the offer for sale of R19.8 million which will allow existing
shareholders to partially realise approximately 6.6% of their current
investment in the company and similarly to facilitate the shareholder
spread required by the Listings Requirements of the JSE ("Listings
Requirements").
2. INCORPORATION AND HISTORY
The founders of Calgro M3 have been involved in the civil engineering and
construction industry since 1996 (11 years) with experience across a range
of developments including infrastructure, road construction, conversion of
hostels into residential units, refurbishment of medical centres,
construction of conference centres, gymnasiums, cluster developments,
affordable housing and RDP projects. Calgro Developments was founded by
Derek Steyn and Deon Steyn in 1995. They were later joined by Douw Steyn.
In 2001, Derek, Deon and Douw and the two founders of M3 Developments, Ben-
Pierre Malherbe and Brand Malherbe, merged their respective businesses and
pooled their skills.
Calgro M3 is one of a few South African companies constructing RDP, GAP,
affordable and cluster homes. The spread mitigates against risk in the
portfolio from interest rate hikes, the implications of the National Credit
Act 2005, and any sudden economic downturns. Calgro M3 has an experienced
and quality management team to take the company forward.
The company, having 25.1% BEE ownership, is committed to delivering a
higher quality product and service than its competitors, for instance
building RDP houses to a higher than national specification requirement.
Furthermore, Calgro M3 is one of only two residential construction
companies in the country that is currently delivering on Government`s
policy of integrated and sustainable developments.
3. NATURE OF BUSINESS
Calgro M3 is built strategically on separate specialist business units
focusing on high growth niche markets. Each operating company has its own
board of directors and management team operating within the Group framework
and structure.
Calgro M3 operates in the residential property sector and provides a range
of solutions including:
- Project management of turnkey construction projects;
- Procurement and servicing of land alone and in strategic partnerships
- with municipal councils and financial institutions;
- Construction of top structures (houses); and
- Marketing for cluster, affordable and low cost homes.
These skills are employed across a large range of housing market sectors:
- RDP homes up to R52 000: Calgro M3 builds to a specification higher than
national standards, ensuring more equity in the property for the homeowner
and financial institution.
- GAP market from RDP to R240 000: this price class is as stipulated in the
Financial Sector Charter. The major commercial banks and financial
institutions earn Charter scorecard points by bond and rental stock
participation up to R240 000 values per house. Calgro M3 is one of few
companies operating in this select niche.
- Affordable homes from R240 000 to R600 000: this vibrant sector caters for
a wide range of emerging class clients with diverse home needs.
- Sectional title from R550 000 to R950 000: a relatively new development in
Calgro M3`s offering, presenting significant opportunities for the Group.
- Cluster homes from R600 000 to R1 600 000: contingent on the major driving
forces in this market which are location, timeous construction, quality and
proven marketing practices, Calgro M3 is a major player in this market and
has a sound track record and strong order book in this sector.
4. PROSPECTS
Calgro M3 is in the process of securing three projects in the RDP and
affordable housing sectors that will result in over 30 000 homes being
constructed over the next seven years. With an expected turnover of R6.2
billion over the period. The finalisation of these projects is still
subject to certain conditions being met, and is therefore not a certainty.
Furthermore, the company is in negotiations on three new projects to the
value of R3.8 billion over the next five years with the development of over
34 000 homes.
5. DIRECTORS` DETAILS
The full names, nationalities, ages, business addresses and functions of the
directors are set out below:
Full name and age Business address Function
Executive directors
Peter Muriuki Waweru (44) Cedarwood House Chief Executive
B.Sc Ballywoods Office Park Officer
33 Ballyclare Drive, Bryanston
Craig Terence Daly (40) Cedarwood House Financial Director
CA(SA) Ballywoods Office Park
33 Ballyclare Drive, Bryanston
Ben Pierre Malherbe (41) Cedarwood House Operations Director
MBA, B.Sc (QS) Ballywoods Office Park
33 Ballyclare Drive, Bryanston
Frederik Johannes Steyn (44) Cedarwood House Marketing and
B.Sc (QS) Ballywoods Office Park Strategic Planning
33 Ballyclare Drive, Bryanston Director
Non-executive directors
Pumla Fundiswa Radebe (51) Cedarwood House Independent
BA Ballywoods Office Park Chairperson
33 Ballyclare Drive, Bryanston
Sonwabo Edwin Funde (64) Cedarwood House Independent
M.Sc Ballywoods Office Park Non-Executive
33 Ballyclare Drive, Bryanston Director
Quinton Encombe Woods (45) Cedarwood House Non-Executive
MBA Ballywoods Office Park Director
33 Ballyclare Drive, Bryanston
Hatla Ntene (53) 32 Impala Road Independent
B.Sc (QS) Chiselhurston Non-Executive
Sandton Director
All of the directors are South African citizens, except for Peter Waweru, who
is Kenyan, resident in South Africa.
6. SHARE CAPITAL
Authorised and issued share capital
The authorised and issued share capital of Calgro M3, before and after the
private placement, are set out below:
R
Authorised
500 000 000 shares of 0.001 cent each 5 000
Issued, before the private placement
108 000 000 shares of 0.001 cent each 1 080
Share premium 42 750 000
Issued, after the private
120 000 000 shares of 0.001 cent each 1 200
Share premium 78 750 000
All the authorised and issued shares are of the same class and rank pari passu
in every respect. Subject to the shareholder spread requirements of the
Listings Requirements being achieved, the entire share capital of Calgro M3
will be listed on the AltX with commencement of trade on Friday, 16 November
2007. The shares will be issued in dematerialised form.
7. Dividends
There will be no dividend declared in respect of the financial year ending 29
February 2008.
8. FINANCIAL INFORMATION
A summary of the historical and forecast income statements of Calgro M3 for the
years ended 28 February 2007, 29 February 2008 and 28 February 2009, the
preparation of which is the responsibility of the directors, is set out below.
The forecast has been examined by the reporting accountants and limited
assurance advisors and should be read in conjunction with their report thereon.
Actual Forecast Forecast
2007 2008 2009
R`000 R`000 R`000
Gross revenue 124 168 562 812 838 640
Cost of Sales (104 578) (443 767) (658 760)
Gross profit 19 590 119 045 179 880
Overheads (12 847) (30 482) (49 689)
Operating profit 6 743 88 563 130 191
Net finance costs (176) (36 280) (39 251)
Profit before taxation 6 567 52 283 90 940
Taxation (2 193) (14 582) (25 745)
Profit after taxation 4 374 37 701 65 195
Minority interest (207) - -
Headline earnings attributable
to ordinary shareholders 4 167 37 701 65 195
Pro forma weighted average number
of shares in issue 108 000 111 551 120 000
Pro forma headline earnings
per share (cents) 3,9 33,8 54,3
Pro forma earnings per share (cents) 3,9 33,8 54,3
9. THE PRIVATE PLACEMENT
A total amount of R36 million, before expenses, will be raised by the issue
of a maximum of 12 000 000 new shares by the company for cash, and a total
amount of R19 800 000, before expenses, will be raised from the sale of a
maximum of 6 600 000 shares by the existing shareholders for cash, to
qualifying investors. The proceeds received in terms of the private
placement will first be applied to the offer for subscription, thereafter,
to the offer for sale. The proceeds from the offer for subscription will be
utilised to grow the company`s market share in the construction business,
through potential acquisition opportunities and to facilitate the working
capital requirements of the existing business.
The purpose of the private placement and the listing are:
- to raise new capital for new strategic land acquisitions;
- to make capital resources available for the Group to secure land and future
projects and therefore to create stability and sustainability;
- to strengthen the balance sheet to support financial requirements. The
listing is not an exit strategy for the vendors and the cash will be
utilized to achieve Group strategies;
- to raise the Group`s public profile and elevate its status in terms of key
stakeholder negotiations with Government, councils, banks, municipalities,
etc.; and
- to attract a higher percentage of BEE participation in the Group.
10. SALIENT DATES AND TIMES
The offer opens at 09:00 on Thursday, 8 November 2007 and is expected to close
at 16:00 on Friday, 9 November 2007.
2007
Abridged prospectus released on SENS on Wednesday, 7 November
Prospectus available on Thursday, 8 November
Opening date of the private placement at 09:00 on Thursday, 8 November
Expected closing date of the private placement at 16:00 on Friday, 9 November
Final allocation of the private placement shares on Monday, 12 November
Results of private placement published in the press on Tuesday, 13 November
Settlement and anticipated listing date of Calgro M3 on
the JSE at 09:00 on Friday, 16 November
Note:
The above dates and times are subject to change. Any such change will be
released on SENS and published in the press.
11. COPIES OF PROSPECTUS
This abridged prospectus is a summary of the full prospectus and has been
prepared and issued in relation to the private placement and the listing of
Calgro M3. It contains the salient features of the prospectus, dated 8 November
2007, which should be read in its entirety for a full appreciation thereof.
Copies of the full prospectus may be obtained during office hours at the
registered office of the company: 112, 11th Street, Parkmore, Sandton, 2196 and
the office of the Designated Advisor of Calgro M3, Bridge Capital Advisors (Pty)
Limited, 2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo, 2196.
Johannesburg
7 November 2007
Corporate and
designated advisor
BRIDGE CAPITAL
Reporting accountants
and auditor
ARC Incorporated
Registered Chartered Account and Auditors (SA)
Attorneys
Webber Wentzel Bowens
Limited assurance advisor
PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers
Advisory Services (Pty) Ltd
(Registration number 1999/024417/07)
Company Secretary
Hofmeyr
Hofmeyr Herbstein & Gihwala Inc.
Registration number 1997/001523/21)
Corporate and investor relations
ENVISAGE
INVESTOR & CORPORATE RELATIONS
Company attorneys
Douglas Smart Attorneys
Date: 07/11/2007 16:35:56 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
