| Wed 30 Apr 2008, 14:35 | | EQS - Eqstra Holdings Limited - Abridged Pre-Listi |
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JSE
EQS
EQS - Eqstra Holdings Limited - Abridged Pre-Listing Statement
Eqstra Holdings Limited
(Formerly Imperial Investment Holdings (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 1998/011672/06)
(Share code: EQS)
(ISIN number: ZAE000117123)
("Eqstra" or "the Company")
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of Eqstra on the JSE
Limited ("JSE") with effect from the commencement of business on 12 May 2008.
The information in this abridged pre-listing statement has been extracted
from the pre-listing statement to Imperial Holdings Limited ("Imperial")
shareholders, dated 20 March 2008.
This abridged pre-listing statement is not an invitation to the public to
subscribe for shares in Eqstra, but is issued in compliance with the JSE
Listings Requirements for the purpose of providing information to the public
with regard to Eqstra.
1. Introduction and rationale
On 18 April 2008, Imperial shareholders approved the listing of the Eqstra
ordinary share capital, the unbundling of Imperial`s interest in Eqstra ("the
unbundling"), the replication of the Imperial Black Economic Empowerment
("BEE") structure in Eqstra and the buy-out of the MCC group of companies`
("MCC") minority shareholders in exchange for shares in the listed Eqstra.
All conditions precedent to the listing of Eqstra on the JSE have been
fulfilled, other than the registration by the Companies and Intellectual
Property Registration Office ("CIPRO") of "the approval by special resolution
of the debenture holders in general meeting of the amendment of the debenture
trust deed to accommodate the unbundling". The resolution has been lodged
with CIPRO but confirmation of registration is still outstanding. A further
announcement would be made when such confirmation is obtained from CIPRO.
Accordingly, it is the intention for Eqstra`s ordinary shares to be listed in
the "Diversified Industrials" sub-sector of the "General Industrials" sector
of the JSE under the short name "Eqstra" and share code "EQS", with effect
from the commencement of business on 12 May 2008 and Imperial shareholders
who are recorded on the register on 16 May 2008 will receive one Eqstra
ordinary share for each Imperial ordinary share held on such date.
2. Overview of the business of Eqstra
Eqstra has transformed itself from a leasing company into a diversified
leasing, industrial, construction and mining equipment importer and
distributor as well as being a major player in the hard rock opencast
contract mining and plant hire sectors. This transformation is a result of a
combination of organic growth, acquisitions and successfully obtaining
distributorships for construction and mining equipment and industrial
products. Eqstra has an asset base of approximately R8 billion, comprising of
passenger and commercial vehicles, materials handling and earthmoving
equipment. It will consist of the following three divisions, which are
currently managed within Imperial as a stand-alone and autonomous division.
Passenger and Commercial Vehicles
Carries out leasing and value-added services in the passenger, light, medium
and heavy commercial vehicle markets in South Africa and various African
territories.
Industrial Equipment
Carries out the distribution, leasing and value-added services in the
industrial equipment, materials handling and power generation markets in
South Africa, various African territories and in the United Kingdom.
Construction and Mining
Imports and distributes heavy-duty capital equipment used in the construction
and mining sectors, carries out opencast hard rock contract mining and plant
hire. Operates in South Africa and various African territories.
3. Business model
Eqstra`s primary strategy is to be a business-to-business focused
organisation that differentiates its product offerings through value-added
products and vertical integration focused around specific asset classes.
Eqstra`s business model allows for the management of an asset "from factory
to scrap yard". Wholesale margin is captured at the initial point of the
asset life by supplying the product directly, negotiating directly with
original equipment manufacturers or distributors. Interest differential
margin is extracted via the ability of the division to leverage its balance
sheet and have a lower cost of financing than that of the customer. The value-
added margin is extracted by providing a complete package to clients via
operating rentals that include maintenance, parts, insurance and related
services such as operators, fleet management and reporting. The contracts are
priced in a way that ensures the full absorption of asset costs via the value-
added services. As a result, a profit is typically realised on disposal. The
disposal margin is captured through the in-house disposal outlets and where
prudent, assets are refurbished and either added to the relevant division`s
used equipment rental fleet or disposed.
4. Strengths
Eqstra`s strength lies in its long track record, vertical integration and
diversity. Eqstra is focused along a central theme of extracting the maximum
value from every asset through vertical integration and value-added products
and services. Over a long period Eqstra has accumulated expertise in
understanding the high-quality assets it leases out and owns. This often
allows for the creation of a second lease life for most equipment. Eqstra`s
focus is on movable assets of high quality, which ensures that assets are
easily tradable (sometimes internationally) and market value is readily
achievable. Established relationships with equipment suppliers ensure that
Eqstra`s assets are revenue generating, rather than held for inventory, and
as a result the business has a relatively low working capital requirement.
The average length of the leasing contracts varies from 42 to 72 months,
depending on the asset class. These leases provide annuity income that more
than covers the related interest, amortisation and value-added costs.
5. BEE Credentials
The directors of Eqstra are committed to social economic upliftment and
development in South Africa and subscribe to the government`s transformation
initiatives. At listing Eqstra will have three black empowerment partners,
namely Ukhamba Holdings (Proprietary) Limited ("Ukhamba"), Lereko Mobility
(Proprietary) Limited ("Lereko Mobility") and Nozala Investments
(Proprietary) Limited ("Nozala") with a combined shareholding of
approximately 16%.
Eqstra`s legal entities will be created prior to the unbundling without the
BEE equity ownership component. However, immediately after the unbundling,
Ukhamba will subscribe for "A" deferred ordinary shares and Lereko Mobility
will subscribe for "B" deferred ordinary shares, in Eqstra, respectively.
These two classes of shares will give the BEE shareholders a 12.9% interest
in Eqstra, thereby enabling them to enjoy similar rights as those which they
enjoy in relation to the corresponding shares in Imperial. In addition to the
existing BEE shareholders, Nozala, a BEE shareholder in MCC, will convert its
holding into 8 272 000 Eqstra ordinary shares upon listing.
Eqstra will comply with relevant BEE legislation and anticipates obtaining an
independent assessment from a recognised BEE rating agency.
6. Strategy and prospects
The directors of Eqstra are optimistic about the growth prospects available
in South Africa, Africa and internationally. The Company enjoys market
leadership in South Africa in leasing and fleet management, industrial
equipment, opencast hard rock contract mining and plant hire. Eqstra has
proven strategies in place to take advantage of the opportunities that exist,
which include, but are not limited to:
Stakeholders - Continue to re-invent the businesses to have a value-added and
sought after association with customers, shareholders, employees and business
partners.
Organic growth - Focus on organic growth in existing lines of business
through customer retention and increased market penetration.
Commodities and Construction - Positioned to benefit from the commodities and
construction boom.
International - Export and apply the business model to English speaking sub-
Saharan Africa and Europe by moving into countries where Eqstra operations
are already established ensuring appropriate returns versus risk profiles.
Diversification - Diversify the business into other medium-ticket asset
classes offering a total value-added proposition and develop businesses to
fill gaps in the current value chain.
Acquisitions - Identify complementary "bolt-on" businesses that will enhance
shareholder value and customer retention and fit into the Eqstra
decentralised and entrepreneurial philosophy.
Vertical Integration - Promote synergies between divisions and individual
business units to ensure maximum profitability and increase customer
offering.
Value add - Continue to develop new value-added products and services to
compliment the Eqstra business model.
In excess of 90% of Eqstra`s profits and revenues are derived in South
Africa. Eqstra is extremely well positioned to benefit from the
infrastructure spend and the continued demand for platinum and uranium. It is
anticipated that the demand for platinum and uranium will continue due to the
global demand for catalytic converters and nuclear power. This will create
significant opportunities for the contract mining business. The current
electricity crisis may impact underground mining operations but MCC will not
be directly affected as all the contract-mining activities are above ground
and are not dependent on electricity.
With the increased infrastructure spend and buoyant resources sector Terex
and New Holland Construction are ideally positioned to take advantage of this
increased demand. This, together with the financial backing of Eqstra to
create regional after sales support networks, will establish them in a very
strong market position in the Southern Africa region.
The Passenger and Commercial Vehicle and Industrial Equipment businesses will
continue to benefit from the anticipated growth in the South Africa economy.
Higher interest and inflation rates and the trend of a weakening currency
dramatically increases the corporate market`s desire to lease rather than own
vehicles. Impact Handling (UK) will benefit from the recently awarded Nissan
forklift dealership agreement which gives Eqstra a combined coverage in
excess of 50% of the UK forklift market.
Future growth will be achieved through a combination of organic growth,
selective acquisitions, diversification of asset classes and value-added
services.
7. Share capital
All of the issued Eqstra ordinary shares will be listed and the authorised
and issued share capital, as at the date of listing, will be as follows:
Authorised R`000
360,000,000 ordinary shares of 0.1 cent each 360
20,000,000 "A" deferred ordinary shares of 0.1 cent each 20
20,000,000 "B" deferred ordinary shares of 0.1 cent each 20
Total authorised share capital 400
Issued
258,389,870 ordinary shares of 0.1 cent each 258
16,781,968 "A" deferred ordinary shares of 0.1 cent each 17
14,516,617 "B" deferred ordinary shares of 0.1 cent each 15
Share premium 1,486,573
Total issued share capital 1,486,863
8. Directors
On the date of listing, the board of directors of Eqstra will comprise:
Name Address
Non-executive directors
Dr Daniel Christiaan Cronje (61)- 12 Corobrik Road, Meadowdale,
(Chairman) Johannesburg, 2008
Marthinus Johannes Croukamp (57) 12 Corobrik Road, Meadowdale,
Johannesburg, 2008
Salukazi Dakile-Hlongwane (57) Wedgefield Office Park, 17 Muswell
Road South, Bryanston, Johannesburg,
2021
Sankie Dolly Mathembi-Mahanyele (56) Suite 1, 3 Melrose Boulevard,
Melrose Arch; Johannesburg, 2076
Anthony John Phillips (61) 15 Crescent Drive, Westcliff,
Johannesburg, 2193
Dr Popo Simon Molefe (55) Metier Office Park, 1st Floor, 5
Commerce Square, 39 Rivonia Road,
Sandhurst, 2196
Veli Joseph Mokoena (48) 138 Boeing Road East, Bedfordview,
2008
Executive directors
Walter Stanley Hill (48) - CEO 12 Corobrik Road, Meadowdale,
Johannesburg, 2008
Erich Clarke (43) - CFO 12 Corobrik Road, Meadowdale,
Johannesburg, 2008
9. Salient dates and times
The salient dates relating to the transactions are set out below
2008
Last day to trade in Imperial ordinary Friday, 9 May
shares on the JSE to participate in
the unbundling on
Imperial ordinary shares trade "ex" Monday, 12 May
their entitlement to Eqstra shares on
Imperial ordinary shareholders Monday, 12 May
commence trading their unbundled
Eqstra shares (the JSE code will be
EQS and the ISIN will be ZAE000117123)
on
Announcement of specified ratio in Wednesday, 14 May
respect of the apportionment of the
cost/base cost of Eqstra for
taxation/CGT purposes on or about
Unbundling record date on Friday, 16 May
Dematerialised Imperial ordinary Monday, 19 May
shareholders will have their accounts
with their CSDP or broker updated with
the unbundled Eqstra shares on
Share certificates in respect of the Monday, 19 May
unbundled Eqstra shares will be
posted, by registered post, at the
risk of the certificated Imperial
ordinary shareholder concerned, to
certificated Imperial ordinary
shareholders on or about
Notes:
Any reference to time is a reference to South African time.
No dematerialisation or rematerialisation of Imperial ordinary share
certificates may take place between Monday 12 May 2008 and Friday 16 May
2008, both days inclusive.
10. Pre-listing statement
Copies of the pre-listing statement can be obtained during normal business
hours from the Eqstra registered office (12 Corobrik Road, Meadowdale,
Johannesburg, 2008 or P.O. Box 1050, Bedfordview, 2008) or from the Eqstra
website (www.eqstra.co.za).
Johannesburg
30 April 2008
Merchant bank, corporate adviser and transaction sponsor
RAND MERCHANT BANK (A Division of FirstRand Bank Limited)
Sponsor
Merrill Lynch South Africa (Proprietary) Limited
Legal adviser
Tugendhaft Wapnick Banchetti & Partners
Reporting accountants and auditors
Deloitte & Touche
Independent expert
Deloitte & Touche Corporate Finance
Date: 30/04/2008 14:35:01 Produced by the JSE SENS Department.
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