| Wed 1 Oct 2008, 14:38 | | JDH - John Daniel Holdings - Acquisition Of Further Shares In Vinguard Limited |
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JDH
JDH
JDH - John Daniel Holdings - Acquisition Of Further Shares In Vinguard Limited
("Vinguard"), Convertible Loan, Proposed Share Consolidation, Withdrawal Of
Cautionary Announcement, Trading Statement And Group Restructuring
JOHN DANIEL HOLDINGS LTD
(Incorporated in the Republic of South Africa)
(Registration Number 1998/013215/06)
Share code: JDH & ISIN: ZAE000044343
("the Company" or "JDH")
ACQUISITION OF FURTHER SHARES IN VINGUARD LIMITED ("Vinguard"), CONVERTIBLE
LOAN, PROPOSED SHARE CONSOLIDATION, WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT,
TRADING STATEMENT AND GROUP RESTRUCTURING
1. INTRODUCTION
JDH continues to conduct business as a Venture Capital Investment Holding
Company, focussing on investing in high technology start-up companies. In
particular, these companies are required to produce products or provide
services with high barriers to entry, have clear global markets, with
minimal competition, and be strategic in nature, both in local and global
markets.
Currently JDH, has two subsidiaries i.e. Lazaron Biotechnologies and
Vinguard.
JDH has been instrumental in establishing these subsidiaries and has
provided resources and capital to nurture these companies through their
critical start up phase to the point of being established trading entities,
with a clear and defined market and business strategy.
An opportunity has arisen for JDH to substantially increase its holding in
Vinguard and concurrently restructure the group, in order to more rapidly
grow its current investment portfolio and to invest in new business
opportunities. Accordingly the board is pleased to advise stakeholders as
follows:
2. ACQUISITION OF SHARES
Mondi Limited ("Mondi") was previously granted global distribution rights
for Vinguard in terms of which, inter alia, Mondi was required to globally
distribute its products. Following a change in strategy, Mondi has
formally informed Vinguard that it does not wish to continue with such an
arrangement, and accordingly wishes to divest of its shareholding in
Vinguard. Accordingly, Mondi has agreed to transfer its entire
shareholding in Vinguard and loan account to JDH for a consideration of R1
(one Rand), the number of ordinary paid-up shares being 36 076 923 (thirty
six million seventy six thousand nine hundred and twenty three) shares.
Vinguard and JDH have in turn agreed to indemnify Mondi against any legal
claims, particularly any claims relating to the previous exclusive
distribution agreement and related funding requirements. Whilst the
acquisition is immaterial in terms of consideration, it is strategic in
nature, taking JDH`s shareholding in Vinguard from 36.69% to 73.38% with
effect from 30 June 2008. However, JDH has been required to secure working
capital for Vinguard, as detailed in paragraph 3 below.
Vinguard primarily manufactures polymeric So2 sheets for optimal post
harvest protection of table grapes. The Vinguard product was developed in
a 6 year research project at Stellenbosch University and is one of only two
similar products available in the global market. The product extends the
post harvest storage life of table grapes for up to ten weeks and has
registered its patents in all major table grape producing countries. During
the past four years the products efficacy has been proven in thirteen of
the largest table grape producing countries with independent scientific
verifications from various prestigious research organizations inter alia
the Vulcani Institute in Israel, the University of Vitoria, Sicily and
various other institutions. The product has been approved for use by the
largest supermarket chains in the United Kingdom, this market being one of
the major markets for high quality table grapes. The potential global
market for the product is considered to be up to R500 M per annum.
3. CONVERTIBLE LOAN
JDH has entered into a convertible loan agreement with Golden Oak Corporate
Advisors (Pty) Limited ("Golden Oak") dated 15 July 2008 in terms of which
the Company has secured a loan of R10 million, of which R6 million has been
received and the balance of R4 million being payable by latest 15 October
2008. Golden Oak is not a related party to JDH.
The loan will be convertible at any time up to 15 July 2009, at the option
of Golden Oak following the intended consolidation of the authorised and
issued share capital of JDH detailed in paragraph 3 below. The conversion
price will be the lower of 35 cents per share or a 10% discount to the 30
day Volume Weighted Average Price ("VWAP") as per the JSE Limited at the
date of notification of exercise of the option, which conversion may be
subject to approval by JDH shareholders in general meeting, in the event
that the discount to the 30 day VWAP exceeds 10% or the issue exceeds 10%
of the issued share capital of the company. The loan bears interest at the
prime interest rate as published by the Standard Bank of South Africa
Limited.
It is noted that, in the event that shareholder approval for the conversion
is required, Messrs H Minnie, N Ackermann and L F Harris have irrevocably
undertaken to vote in favour of such conversion in respect of shares held
by them and their associates representing approximately 42% of the existing
issued share capital of the company and have further undertaken not to
dispose of such shares until the date of the conversion of the loan.
4. PROPOSED SHARE CONSOLIDATION
In order to restructure the share capital of the group and flowing from
paragraph 2 above, it is intended that the authorised and issued share
capital of the Company be consolidated on the basis of 1 share for every
100 shares held. The authorised and issued share capital before and after
the share consolidation is shown below:
Before: R
Authorised
15 000 000 000 shares of 0.000001 cents 1 500 000
each
Issued:
5 851 975 905 shares of 0.000001 cents 585 178
each
After:
Authorised
150 000 000 shares of 0.0001 cents each 1 500 000
Issued:
58 019 759 shares of 0.0001 cents each 585 178
Documentation will be circulated to shareholders in due course,
incorporating a notice of general meeting. Salient dates of the proposed
share consolidation will be published once documentation has been
finalised.
5. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Vinguard acquisition and the
convertible loan are set out below. The reporting of pro forma financial
effects which are the responsibility of the directors, have been prepared
for illustrative purposes only and due to their nature, may not give a fair
reflection of the balance sheet, statement of changes in equity, results of
operations or cash flows of JDH after the acquisition has been implemented.
JDH Vinguard Loan Pro forma
31 December Change from 31 December % change
2007 associate 2007
Before to subsidiary After
"A" "B" "B" and "C"
"C"
Earnings (0.014) (0.004) (0.021) (0.039) (176.59)
per
share
(cents)
Headline (0.014) (0.004) (0.021) (0.039) (176.59)
earnings
per
share
(cents)
Weighted 5 851 975 905 -
average
number
of 5 851 975 905 5 851 975 905 5 851 975 905
shares
Net 0.086 (0.008) - 0.078 (9.30)
asset
value
per
share
(cents)
Net 0.058 (0.008) - 0.050 (13.79)
tangible
asset
value
per
share
(cents)
Number 5 851 975 905 -
of
shares
in issue 5 851 975 905 5 851 975 905 5 851 975 905
Assumptions
1. Column "A" is extracted from the company`s last published results for the
period ended 31 December 2007.
2. Column "B" shows the pro forma effects of the change in JDH`s shareholding
in Vinguard from 36.69 % to 73.38 %.
3. Column "C" shows the pro forma effects of the loan, which assumes an
interest rate of prime, as well as costs associated with the loan. No
conversion of the loan into equity has been assumed.
4. The minority shareholding of 26.62 % in Vinguard has been assumed.
5 No goodwill or negative goodwill or other intangibles arises on the
acquisition.
6. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement dated 28 July
2008, and are advised that caution is no longer required to be exercised by
shareholders when dealing in their securities.
7. TRADING STATEMENT
In terms of the Listings Requirements of the JSE Limited ("JSE"), companies
are required to publish a trading statement as soon as they become
reasonably certain that the financial results for the period to be reported
on next will be more than 20% different from the previous corresponding
period.
Accordingly, shareholders are advised that the group results for the year
ending 30 June 2008 differ compared to the previous corresponding period.
Shareholders are advised that group turnover is expected to be 21% lower
than the previous corresponding period. Headline earnings are expected to
show a decline of 2400% and the earnings per share an increase of 106% if
compared to the previous reporting period. The difference in headline
earnings and earnings per share is mainly attributable to:
1. Cash flow constraints experienced in the Group`s subsidiary Vinguard
and the resultant inability to produce enough products and extend
credit.
2. The impairment of an investment in AfriSan.
The company`s results for the year ending 30 June 2008 are expected to be
published on or about 03 October 2008.
8. GROUP RESTRUCTURING
As a result of the recapitalisation of the Group and the substantial
increase in working capital, the Directors are of the opinion that it is
currently the appropriate time to restructure the Group in order to exploit
various new opportunities available to the Group and in particular finance
will be provided to Vinguard in order for this subsidiary to take up its
rightful place as a global force in the SO2 sheet market. More information
in this regard will be provided to stakeholders in due course.
Johannesburg
1 October 2008
Sponsor
Arcay Moela Sponsors (Pty) Ltd
Date: 01/10/2008 14:38:02 Produced by the JSE SENS Department.
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