| Thu 3 Jul 2008, 17:06 | | AFT - Afrimat Limited - Introduction of a consortium led by Mvelaphanda Holdings |
|
AFT
AFT
AFT - Afrimat Limited - Introduction of a consortium led by Mvelaphanda Holdings
(Pty) Limited ("MVELA") ("THE MVELA CONSORTIUM") as a black economic empowered
("BEE") partner and the issue of options to the Mvela consortium to acquire
Afrimat ordinary shares
Afrimat Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/022534/06)
Code: AFT ISIN: ZAE 000086302
("Afrimat" or "the Company")
INTRODUCTION OF A CONSORTIUM LED BY MVELAPHANDA HOLDINGS (PTY) LIMITED ("MVELA")
("THE MVELA CONSORTIUM") AS A BLACK ECONOMIC EMPOWERED ("BEE") PARTNER AND THE
ISSUE OF OPTIONS TO THE MVELA CONSORTIUM TO ACQUIRE AFRIMAT ORDINARY SHARES
1 Introduction
Afrimat is committed to BEE and as a result has introduced the Mvela Consortium
as its BEE partner to achieve its transformation objectives and as Afrimat`s
strategic partner to assist with the expansion of Afrimat`s business in Africa.
The Mvela Consortium has secured options to purchase 14,392,575 ordinary shares
in the issued share capital of Afrimat from existing BEE shareholders. Upon
exercise, it will result in the Mvela Consortium holding 10.8% of the issued
ordinary share capital of the Company. The Mvela Consortium is in advanced
discussions with Kwezi Mining (Pty) Limited to secure options to purchase
7,852,751 shares held by them, upon exercise, it will result in the Mvela
Consortium holding 16.6% of the issued ordinary share capital of the Company.
Furthermore, the Mvela Consortium is in negotiations with certain existing
shareholders to acquire a further interest in the Company.
In order to provide the Mvela Consortium with an opportunity to increase its
holding in Afrimat, Afrimat has entered into an agreement granting the Mvela
Consortium options to subscribe for and be issued 13,376,274 ordinary shares
over a 3 year period ("the Issue"). Specific details of the Issue are detailed
below.
2 Background to Mvela
Mvela is one of the largest black-owned and controlled businesses in South
Africa with a strong and proven track record in significant and highly accretive
investments over a broad range of industries. It was founded in 1998 by Tokyo
Sexwale, Mikki Xayiya and Mark Willcox and is currently the controlling
shareholder of JSE listed Mvelaphanda Group Limited and has a significant
interest in Mvelaphanda Resources Limited. Mvela also has other substantial
interests in the mining, energy, real estate and various other industrial
sectors in South Africa and the rest of Africa.
3 Rationale for the Issue
Afrimat is committed to BEE and the Issue is being implemented in the context of
Afrimat`s overall BEE strategy. The Issue will provide the Mvela Consortium with
the opportunity to increase its holding with the ultimate objective of achieving
at least 26% black ownership as required by the Mining Charter.
The Mvela Consortium has furthermore undertaken to assist Afrimat in the
conversion of Afrimat`s "old order" mining rights into "new order" mining
rights.
The Mvela Consortium`s activity on the African continent should provide
opportunities for Afrimat to enter markets in which Afrimat currently does not
operate. The relationship could provide the foundation for Afrimat`s strategy to
expand its operations outside of South Africa in cooperation with the Mvela
Consortium.
4 Effective date
The effective date of the Issue will be the fifth business day after all
conditions precedent have been fulfilled.
5 Salient terms of the Issue
Salient features of the Issue include inter alia;
5.1 The options may be exercised at any time for a period of 3 years following
the effective date;
5.2 Each option is exercisable at a price of R8.50 per ordinary share plus an
amount per ordinary share equal to the amount that would have accrued had
the exercise price accrued interest at a rate of 70% of the publicly quoted
prime rate of interest from the effective date up to the relevant date of
exercise;
5.3 The Mvela Consortium undertakes in favour of the company that it shall not:
5.3.1 sell any ordinary shares issued and allotted to it pursuant to
exercise of the options during the first year following the effective
date; and
5.3.2 during the 2 years thereafter, sell any ordinary shares issued and
allotted to it pursuant to exercise of the options to anyone other
than Historically Disadvantaged South Africans ("HDSA") individuals or
companies controlled by HDSAs, reasonably acceptable to the Company;
5.4 The Mvela Consortium shall be entitled to be represented by up to two
directors on the board of the Company;
5.5 During the option period no person shall have the right to subscribe for
shares for cash, without such right first being offered to the Mvela
Consortium; and
5.6 The Company may not enter into an agreement with any third party to
underwrite a rights offer without first offering the Mvela Consortium the
right to underwrite such an offer.
6 Conditions precedent
The Issue is subject, inter alia, to the fulfilment of the following
suspensive conditions:
6.1 The requisite shareholder approvals being obtained prior to 8 September
2008, i.e.:
6.1.1 shareholders of the Company passing an ordinary resolution conferring
on the directors specific authority to issue the options; and
6.1.2 shareholders of the Company passing a special resolution conferring on
the directors specific authority to repurchase the ordinary shares
held by the Mvela Consortium in the Company (other than those shares
purchased on the market) if the Mvela Consortium breaches the terms on
which it acquired those shares;
6.2 JSE approval being granted on or before 15 August 2008; and
6.3 Receipt of written confirmation from the Mvela Consortium`s funders by no
later than 4 August 2008 that they will provide the funding required by the
Mvela Consortium to exercise the options as detailed above.
7 Pro forma financial effects of the Issue
The unaudited pro forma financial effects of the Issue, as set out below, are
based on Afrimat`s results for the year ended 29 February 2008. The unaudited
pro forma financial effects are presented for illustrative purposes only, to
provide information on the impact of the Issue. Due to the nature of the
unaudited pro forma financial effects, they may not give a fair representation
of Afrimat`s financial position and the results of its operations after the
Issue. Afrimat`s directors are responsible for the preparation of the unaudited
pro forma financial information.
Before After Percenta
Issue of Issue of ge
Options Options Change
Earnings per share (Cents) 72.3 71.5 -1.1%
Headline earnings per share (Cents) 70.4 69.7 -1.1%
Diluted earnings per share (Cents) 72.3 69.5 -3.9%
Diluted headline earnings per share 70.4 67.8 -3.8%
(Cents)
Net asset value per share (Cents) 347.9 347.9 0.0%
Net tangible asset value per share 263.9 263.9 0.0%
(Cents)
Total number of shares in issue 133,643,17 133,643,17
5 5
Weighted average number of ordinary 131,381,66 131,381,66
shares 2 2
Diluted weighted average number of 131,381,66 144,757,93
ordinary shares 2 6
Notes:
1 The financial information has been extracted, without adjustment, from the
reviewed consolidated financial results of Afrimat for the 12 month period
ended 29 February 2008.
2 The earnings per share and headline earnings per share "After Issue of
Options" are based on the assumption that the Issue was implemented on 1
March 2007.
3 The net asset value per share and net tangible asset value per share "After
Issue of Options" are based on the assumption that the Issue was
implemented on 29 February 2008.
4 In terms of IFRS 2, the fair value of the option is an expense which will
be charged through the income statement. This is viewed as being a
nonrecurring expense.
5 The value of the option was calculated as R1,013,561, using a binomial
option pricing model. The closing share price as at 01 July 2008 was used
in valuing the option.
6 The actual deemed option value will finally be determined based on
assumptions applying on the date that the issue becomes unconditional.
Accordingly, the actual option expense charged to the income statement of
Afrimat will differ from the pro forma calculation.
7 The option value is carried on the balance sheet as a share based payment
reserve under the equity portion of the balance sheet.
8 Diluted earnings per share and diluted headline earnings per share include
the effect of the after-tax interest saving resulting from the cash
received as a result of the option being exercised. The exercise price is
assumed to be R8.50. This amounted to an interest saving of R9,176,401. No
interest earned has been added for the cash balance remaining after
settlement of the outstanding debt.
9 Transaction costs have not been taken into consideration in the preparation
of the pro forma financial effects.
Circular to shareholders
A circular to shareholders setting out full details of the Issue and
incorporating the notice of the general meeting and form of proxy will be
distributed to shareholders in due course.
Johannesburg
03 July 2008
Corporate advisor and sponsor: Bridge Capital Advisors (Pty) Limited
Attorneys to Afrimat: Webber Wentzel incorporating Mallinicks
Attorneys to Mvela: Read Hope Phillips
Date: 03/07/2008 17:06:01 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.
