| Mon 4 Aug 2008, 17:24 | | ENV - Enviroserv Holdings Limited - Firm intention to make an offer to |
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ENV
ENV
ENV - Enviroserv Holdings Limited - Firm intention to make an offer to
acquire the issued share capital of Enviroserv and declaration of special
dividend
ENVIROSERV HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1994/000280/06
Share code: ENV
ISIN: ZAE000010989
("EnviroServ")
FIRM INTENTION TO MAKE AN OFFER TO ACQUIRE THE ISSUED SHARE CAPITAL OF
ENVIROSERV AND DECLARATION OF SPECIAL DIVIDEND
1. INTRODUCTION
Further to the cautionary announcement released on the Securities Exchange
News Service ("SENS") of the JSE Limited ("JSE"), shareholders are advised
that the board of directors of EnviroServ ("the board") has received a
statement of a firm intention to make an offer ("the offer") to acquire the
entire issued share capital of EnviroServ, being the 113,371,208 ordinary
shares in EnviroServ with a par value of R0.01 each, including the shares
issued pursuant to the acceleration of the vesting dates of shares
outstanding in terms of the staff share incentive scheme, but excluding
11,727,647 treasury shares and 294,825 shares issued to the share trust of
the aforementioned staff share incentive scheme which have not been
allocated ("scheme shares"), from Parchment Trading 72 (Proprietary) Limited
("Parchment Trading 72"), an entity affiliated with Absa Capital Private
Equity ("ACPE") on Monday, 4 August 2008, for a consideration of R16.60 per
scheme share ("the scheme consideration"). The offer is to be implemented,
subject to the conditions set out in paragraph 7 below, by way of a scheme
of arrangement in terms of section 311 of the Companies Act 61 of 1973, as
amended ("the Companies Act"), to be proposed by Parchment Trading 72
between EnviroServ and its shareholders ("the scheme").
2. TERMS OF THE OFFER
In terms of the offer, EnviroServ shareholders will be offered the scheme
consideration in cash. If the scheme becomes operative, EnviroServ
shareholders eligible to participate in the scheme ("scheme participants")
will be entitled to receive ("the aggregate consideration"):
the scheme consideration of R16.60 per ordinary share; and
interest on the scheme consideration, at an interest rate of 1% below the
prime rate (nominal annual compounded monthly in arrear) quoted by Absa Bank
Limited for the period from 7 October 2008 to the date on which the scheme
consideration is paid, including the first day and excluding the last.
Following a successful implementation of the scheme, EnviroServ will be a
wholly-owned subsidiary of Parchment Trading 72 and the listing of
EnviroServ on the JSE will be terminated.
3. SPECIAL DIVIDEND DECLARATION
The directors have on 4 August 2008 declared a special cash dividend of 35
cents per share to be paid on Monday, 29 September 2008. The last day to
trade in order to participate in the dividend (cum dividend) will be
Thursday,18 September 2008. The shares will trade "ex" dividend from the
commencement of business on Friday, 19 September 2008. The record date on
which shareholders must be registered in order to participate in the
dividend will be Friday, 26 September 2008. Share certificates may not be
dematerialised or rematerialised between Friday, 19 September and Friday, 26
September 2008, both dates inclusive.
4. UNDERTAKINGS
Parchment Trading 72 has received conditional undertakings ("the
undertakings") from The Bidvest Group Limited (30.23%) and Zader Investments
SPV2 (Proprietary) Limited (7.92%) ("the supporting shareholders") who hold
in aggregate approximately 38.15% of the scheme shares (and have the right
to vote 49.52% of the aggregate number of votes exercisable by
shareholders), to vote in favour of the scheme. In addition, the supporting
shareholders have undertaken to vote against any other resolutions required
to implement any competing offer ("competing offer") received and proposed
by the board, unless such competing offer is received on more favourable
terms and conditions, and such competing offer is not matched by Parchment
Trading 72. Such more favourable terms and conditions would require, in
aggregate, that the cash consideration payable under the competing offer
exceeds the aggregate consideration of the offer by at least 10%.
5. RATIONALE
Parchment Trading 72`s rationale for proposing the scheme is to acquire the
entire issued share capital of EnviroServ. EnviroServ has agreed to
facilitate the scheme as the scheme represents an opportunity for EnviroServ
shareholders to dispose of their shareholding at a significant premium to
the price at which EnviroServ shares traded on the JSE up to Thursday, 3
July 2008, being the last trading day before the publication of the first
cautionary announcement in relation to the offer ("the cautionary
announcement date"), being a premium of:
41.9% to the closing price of the shares on the cautionary announcement
date, being R11.70; and
36.5% to the volume weighted average trading price of the shares during the
30 trading days up to and including the cautionary announcement date, being
R12.16.
6. PROPSED BLACK ECONOMIC EMPOWERMENT ("BEE") TRANSACTION
EnviroServ is desirous of improving the ownership representation of
previously disadvantaged individuals and shortly after the implementation of
the scheme, it is contemplated that a BEE entity or a consortium of BEE
entities will acquire indirectly 20% of the underlying assets and business
of EnviroServ.
7. CONDITIONS PRECEDENT TO THE SCHEME
The implementation of the scheme is subject, inter alia, to the fulfillment
of the following conditions precedent by no later than 4 December 2008:
7.1 the obtaining of all necessary regulatory and third party
approvals and consents in respect of the scheme, including but not
limited to approvals from the competition authorities, the South
African Reserve Bank, the JSE and the Securities Regulation Panel ("the
SRP");
7.2 the ordering by the High Court of the convening of a meeting of
EnviroServ shareholders ("scheme members") to consider the scheme ("the
scheme meeting");
7.3 the approval of the scheme by 75% of the votes exercisable by the
scheme members present and voting, in person or by proxy, at the scheme
meeting;
7.4 the sanctioning of the scheme by the High Court and a certified
copy of the order of the High Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Companies Act;
and
7.5 no material adverse change in the position of EnviroServ coming to
the attention of Parchment Trading 72 after the date of completion of
its due diligence investigations (which ended on 1 August 2008) and
before the date of sanctioning of the scheme by the High Court (the
"MAC period"), where material adverse change means the occurrence of
any event or events specific to EnviroServ and/or its subsidiaries
and/or one or more of their businesses, as a result of the conduct of
the business of EnviroServ and/or any of its subsidiaries outside of
the ordinary course, which individually and/or in aggregate, either (i)
has reduced, and/or is reasonably likely to reduce (within the next
succeeding 12 month period), the net profit after tax of EnviroServ by
R15 million or more; and/or (ii) has resulted, and/or is reasonably
likely to result (within the next succeeding 12 month period), in a
loss or liability to EnviroServ in an amount of R20 million or more.
Any event or events which occurred prior to the MAC period but which
would, had it or they occurred during the MAC period, have constituted
a material adverse change, shall be deemed to have occurred within the
MAC period if they were not disclosed to Parchment Trading 72 by
EnviroServ during the due diligence investigations.
8. INFORMATION RELATING TO PARCHMENT TRADING 72
Parchment Trading 72 is a newly established private company which has been
acquired solely for the purpose of acquiring the scheme shares. After the
implementation of the scheme, Parchment Trading 72 and the EnviroServ Group
will be restructured. The ultimate beneficial owners of the underlying
assets and business of EnviroServ will be certain private equity investment
funds under the management of ACPE (or its affiliates, fund investors or co-
investors), Alexander Mclean, being the Executive Chairman of EnviroServ
(and currently holding directly or indirectly, either beneficially or non
beneficially, 20.75% of the EnviroServ shares), members of the executive
management of EnviroServ, and a BEE entity or consortium of BEE entities.
9. OPINIONS AND RECOMMENDATIONS
The board has appointed Merrill Lynch South Africa (Pty) Limited ("Merrill
Lynch") to advise the board on the offer. Pursuant to the requirements of
the SRP Code on Takeovers and Mergers ("the SRP Code"), the substance of the
advice furnished to the board shall be made known to scheme participants in
a form and manner approved by the SRP.
10. MARKET AND FINANCIAL INFORMATION
Information regarding the price at which EnviroServ shares traded
immediately prior to the publication of EnviroServ`s first cautionary
announcement in relation to the scheme consideration, as well as a
comparison of the scheme consideration to the net asset value and tangible
net asset value at 31 December 2007 divided by the scheme shares is set out
in the table below.
Before Scheme
the Scheme consideration Premium
(cents) (cents) (%)
Market price on 3 July 2008 1 170(1) 1 660 41.9
30-day volume-weighted average price
to 3 July 2008 1 216(2) 1 660 36.5
Net asset value per scheme share 335(3) 1 660 395.5
Tangible net asset value per scheme share 303(3) 1 660 447.9
Notes:
1. Closing price of EnviroServ shares on the JSE on the cautionary
announcement date.
2. Volume-weighted average price at which EnviroServ shares traded on
the JSE for the 30 trading days up to and including the cautionary
announcement date.
3. Being the net asset value and tangible net asset value per the
interim financial results as at 31 December 2007 divided by 113,371,208
scheme shares.
11. CONFIRMATION OF FUNDS
Parchment Trading 72`s financial advisers have provided the necessary cash
confirmation to the SRP, as required by Rule 2.2(b) and Rule 21.7 of the SRP
Code and the Rules of the SRP.
12. DOCUMENTATION
The scheme circular providing further information on the offer and
containing, inter alia, a notice of scheme meeting, a form of proxy and a
form of surrender will be posted to EnviroServ shareholders after the High
Court has ordered the convening of the scheme meeting.
13. IMPORTANT DATES AND TIMES
EnviroServ shareholders will be advised of the important dates and times of
the scheme in due course.
14. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
EnviroServ shareholders are advised that the cautionary announcement
referred to in paragraph 1 above is hereby withdrawn.
Germiston
4 August 2008
Sponsor to EnviroServ
Investec Bank Limited
Independent adviser to EnviroServ
Merrill Lynch South Africa (Pty) Ltd
Attorneys to EnviroServ
Cliffe Dekker Inc
Reporting accountants to EnviroServ
Ernst & Young
Lead private equity sponsor and transaction arranger
Absa Capital Private Equity
Investment Bank to Parchment Trading 72
Standard Bank
Attorneys to Parchment Trading 72
Roodt Inc
Due diligence advisers, tax advisers and corporate law advisers to Parchment
Trading 72
KPMG Services (Pty) Ltd
Corporate adviser to Bidvest
Investec Bank Limited
Legal adviser to Bidvest
Edward Nathan Sonnenbergs
Date: 04/08/2008 17:24:01 Produced by the JSE SENS Department.
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