| Wed 16 Apr 2008, 16:58 | | ACC - Acc-Ross - Proposed Acquisition By Acc-Ross |
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ACC
ACC
ACC - Acc-Ross - Proposed Acquisition By Acc-Ross Of The Pinnacle Group,
Potential Change In Control And Renewal Of Cautionary Announcement
Acc-Ross Holdings Limited Pinnacle Point Holdings
(Proprietary) Limited
(Incorporated in the Republic (Incorporated in the Republic
of South Africa) of South Africa)
(Registration number (Registration number
2000/000059/06) 2006/016889/07)
JSE share code: ACC ("Pinnacle")
ISIN Number: ZAE000077335
("Acc-Ross" or "the Company")
PROPOSED ACQUISITION BY ACC-ROSS OF THE PINNACLE GROUP, POTENTIAL CHANGE IN
CONTROL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Acc-Ross has entered into an agreement with Pinnacle Point Holdings
(Proprietary) Limited, Property Promotions and Management (Pty) Ltd and New
Port Finance Company (Pty) Ltd ("the Sellers"), in terms of which Acc-Ross
will acquire all of the shares held by the Sellers in the following
companies:
- Pinnacle Point Investments (Pty) Ltd 100%
- Pinnacle Point Resorts (Pty) Ltd 100%
- Pinnacle Point Platinum Ltd 100%
- Annford Investments (Pty) Ltd 100%
- Goldfields Plaza (Pty) Ltd 100%
- Festival Bay Trading 55 (Pty) Ltd 100%
- Flashing Star Trading 98 (Pty) Ltd 100%
- Wheatfields Investments No 170 (Pty) Ltd 100%
- Manupont 105 (Pty) Ltd 100%
- Grindstone Investments 127 (Pty) Ltd 100%
- Mascador 182 (Pty) Ltd 100%
- Pinnacle Point Financial Services (Pty) Ltd 100%
(collectively "the Sale Shares" which comprises the entire business of the
Pinnacle Point Group)
Acc-Ross will pay for the Sale Shares through a fresh issue of Acc-Ross
shares so that on completion the Sellers will, on a fully diluted basis,
hold 60% of the Acc-Ross shares then in issue ("the Transaction"). The
Sellers are not related parties to Acc-Ross.
This Transaction is an affected transaction in terms of the Securities
Regulation Code and Rules of the SRP ("SRP Code") and as such is governed by
the Securities Regulation Panel ("SRP"). The Acc-Ross board will appoint an
independent adviser to advise on whether the terms and conditions of the
Transaction are fair to the Acc-Ross shareholders.
The Transaction is subject to the fulfilment of the conditions precedent set
out in paragraph 7 below ("Conditions Precedent").
2. Details relating to the companies being acquired
The companies being acquired house the following prime residential and
leisure developments and operations:
- Pinnacle Point Beach and Golf Estate ("Pinnacle Point") including the
golf course operations and facilities. Pinnacle Point is made up of 406
residential plots, 120 golf lodges and 114 villas, all subtly
integrated with an eighteen-hole championship golf course, with
dramatic Cliffside holes designed by renowned golf architect Peter
Matkovich. Pinnacle Point was recently ranked as one of the ten best
new golf courses in the world.
- Festival Bay Villas and Oysterbay properties on the Pinnacle Point
Estate. Oyster Bay is an exclusive beachfront enclave within Pinnacle
Point.
- The Goldfields Plaza, a retail centre in Welkom.
- Grindstone Properties, Sales office in Port Elizabeth.
- Clarens Golf and Trout Estate ("Clarens") in the Eastern Cape. Clarens
includes 20 lodges, 23 villas and 209 residential erven overlooking the
eighteen-hole golf course featuring streams, trout dams and waterfalls.
- Wedgewood Village Golf and Country Estate in Port Elizabeth. The
Wedgewood development will include an eighteen-hole golf course, 486
residential erven, tennis courts, a swimming pool and other amenities,
all of which will be accessible by residents of the Village.
- Wedgewood retirement village on the Golf Estate in Port Elizabeth. The
Wedgewood retirement village will comprise of 307 residential plots
alongside the eighteen-hole golf course.
- Romansbaai Beach and Fynbos Estate near Hermanus in the Western Cape
which is residential lifestyle estate development consisting of 379
residential erven, 80 sectional title units and a boutique hotel.
- Wesselheim residential Estate in Bethlehem consisting of 224
residential erven.
- Cecelia Park residential lifestyle Estate in Bloemfontein consisting of
353 residential erven, 80 development sites and in the final phase, a
retirement village consisting of 303 sectional title and free standing
units.
- Seychelles Ile Aurore Nouvelle development on a private Island which
includes a luxury residential development consisting of 198 villas and
100 condominiums, an 18 hole international Golf course, a Luxury Hotel
and Marinas, a Casino and a commercial and retail centre.
- Nigeria, Lagos development comprising, a 400 hectare Golf Estate with
300 residential erven and a marina.
- All Pinnacle Point sales and marketing and development operations.
3. Rationale
It is the intention of the parties to merge the respective businesses of Acc-
Ross and Pinnacle ("the Group") in order to exploit the benefits of the
substantial synergies that exist and cost savings that will be achieved and
thereby increase shareholder value. In terms of the agreement, Acc-Ross
representatives of at least 56% of the shareholders` voting rights have
irrevocably undertaken to support the Transaction and have committed to
providing on-going support for the newly constituted group.
The Group will have significant residential, leisure, hotel, retirement,
commercial and gaming development opportunities. These assets are situated
in South Africa, Seychelles Nigeria and Mozambique. The majority of the
combined projected revenue from existing opportunities will be generated in
Euros and US Dollars.
The combined operations will give the new Group the critical mass to finance
new projects on more favourable terms and give it easier access to large
development opportunities both in South Africa and beyond the borders of
South Africa. The Pinnacle Group have built a formidable "in house" sale,
marketing and development capability, which is needed by Acc-Ross. Various
other "in house" capabilities, such as project management skills, fractional
unit management, hotel and leisure capabilities, etc, will be consolidated
into the new operation thus making these important and scarce skills
available "in house" to the Group,
4. Group Black Economic Empowerment ("BEE")
Acc-Ross will obtain the benefit of a BEE partner through the proposed
merger as a BEE consortium, headed by Lazarus Zim (former Anglo American
South Africa CEO, Immediate Past President of the Chamber of Mines and
current chairman of Mvelaphanda Resources, Kumba Iron Ore and TransHex
Group) which holds a 26% stake in the Pinnacle Group. Unipalm Investment
Holdings, which is part of the BEE consortium, has 35 000 previously
disadvantaged people as shareholders. Pursuant to the approval of the
Transaction, it is envisaged that Lazarus Zim will be appointed as non-
executive Chairman of Acc-Ross.
5. Purchase consideration
As consideration for the Transaction, the Sellers will receive approximately
2.1 billion ordinary shares in Acc-Ross (or whatever number of shares as
shall then constitute 60% of the Acc-Ross shares then in issue), to be
issued as fully paid up shares at an issue price to be agreed between the
Sellers and those Acc-Ross shareholders who have irrevocably undertaken to
support the Transaction, limited to a maximum of 71 cents per Acc-Ross
share. The obligation to pay the issue price will be fully satisfied by the
transfer of the Sale Shares, detailed in paragraph 1 above, to Acc-Ross.
6. Irrevocable undertakings
Acc-Ross shareholders holding 800 000 000 ordinary Acc-Ross shares (56.3%)
have irrevocably undertaken to support the Transaction.
7. Conditions Precedent
The Transaction is subject to, inter alia, the fulfilment of the following
Conditions Precedent by 31 August 2008 (which date may be extended by
agreement):
7.1 A satisfactory due diligence of the Pinnacle Point group of companies,
7.2 The Acc-Ross shareholders and the Sellers adopting the necessary
special and ordinary resolutions to implement the Transaction;
7.3 a ruling being obtained from the SRP waiving the requirement that a
mandatory offer be made to Acc-Ross shareholders provided that a simple
majority of independent shareholders of Acc-Ross agree to the waiver of
this requirement; and
7.4 Regulatory approval being obtained for the Transaction, including,
inter alia, the approval of the JSE Limited ("JSE"), the SRP and the
Competition Authorities.
The SRP has advised that it is willing to consider an application to grant a
dispensation to the Sellers in terms of the SRP Code, from the obligation to
make a mandatory offer, if the Acc-Ross shareholders in general meeting
waive their right to require the Sellers to make a mandatory offer and
subject to the SRP considering any representations (if any) made by the Acc-
Ross shareholders.
8. Capital raising
The Group intends to raise approximately R400 million from interested
offshore investors and the local market. The funds will be used to finance
certain of the new projects listed above such as the Seychelles Ile Aurore
Nouvelle development.
9. Documentation and JSE and SRP requirements
The transaction is a Category 1 transaction for Acc-Ross in terms of section
9.5 (c) of the JSE Listings Requirements and a requisite circular,
incorporating revised listings particulars, details of which are set out in
paragraph 10 below, will be posted to Acc-Ross shareholders in accordance
with the timing requirements of the JSE and the SRP.
10. Further announcement, documentation and renewal of cautionary
announcement
Further to the above:
- An announcement setting out the salient dates and times and the pro
forma financial effects of the Transaction on Acc-Ross shareholders
will be made in due course; and
- A circular containing information as required in terms of the JSE
Listings Requirements and the SRP Code and incorporating a notice
convening an Acc-Ross general meeting to approve the Transaction will
be posted to Acc-Ross shareholders in accordance with the timing
requirements of the JSE and the SRP.
Acc-Ross shareholders are therefore advised to exercise caution in trading
in their securities in Acc-Ross until such time as a further announcement is
released.
Johannesburg
16 April 2008
Designated Advisor: Transactional Advisor Attorneys to Pinnacle and
and deal broker: Acc-Ross shareholders:
Arcay Moela Sponsors QuestCo Sponsors Hofmeyr, Herbstein &
(Proprietary) Limited (Proprietary) Limited Gihwala Inc.
Commercial bankers to Commercial bankers to Attorneys to Acc-Ross:
Acc-Ross: Pinnacle: Webber Wentzel
Nedbank Limited Rand Merchant Private
Bank
Date: 16/04/2008 16:58:32 Produced by the JSE SENS Department.
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