| Fri 31 Oct 2008, 9:35 | | BRT/TBS - Brimstone/Tiger Brands - Joint announcem |
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BRT TBS BRN
BRT TIIH
BRT/TBS - Brimstone/Tiger Brands - Joint announcement regarding the acquisition
of 73.16% of Sea Harvest Corporation Limited
BRIMSTONE INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/010442/06)
Share Code: BRT
ISIN Number: ZAE000015277
Share Code: BRN
ISIN Number: ZAE000015285
("Brimstone")
TIGER BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS
ISIN: ZAE000071080
("Tiger Brands")
JOINT ANNOUNCEMENT REGARDING THE ACQUISITION BY A BRIMSTONE LED CONSORTIUM OF
73.16% OF SEA HARVEST CORPORATION LIMITED ("SEA HARVEST") FROM TIGER BRANDS AND
CAUTIONARY ANNOUNCEMENT TO BRIMSTONE AND TIGER BRANDS SHAREHOLDERS
1 Introduction
Further to the cautionary announcement released by Brimstone on 17 October 2008,
Brimstone and Tiger Brands shareholders are advised that a consortium led by
Brimstone, which includes key members of Sea Harvest management (the
"Consortium"), have submitted an offer (the "Offer") to purchase 78 753 841 Sea
Harvest ordinary shares held by Tiger Brands, representing 73.16% of the total
number of Sea Harvest ordinary shares in issue. The Offer has been accepted by
Tiger Brands and is subject to certain conditions precedent, which are set out
in paragraph 6 below (the "Transaction").
In terms of the Securities Regulation Code on Takeovers and Mergers, once the
Transaction has been completed, a comparable mandatory offer will be required to
be made to all remaining Sea Harvest shareholders (the "Mandatory Offer").
The current shareholders of Sea Harvest are Tiger Brands (73.16%), Brimstone
(21.52%) and Sea Harvest employees (5.32%). It is envisaged that the Consortium
will hold 100% of the Sea Harvest ordinary shares in issue after the successful
conclusion of the Transaction, the Mandatory Offer and the restructuring
described in paragraph 5 below (the "Restructuring").
Brimstone intends to increase its effective shareholding in Sea Harvest to at
least 55% after the conclusion of the Transaction, the Mandatory Offer and the
Restructuring.
2 Nature of the Sea Harvest business
Sea Harvest is a deep-sea trawler fishing and value-added fish processing
company ideally situated close to the highly productive fishing grounds of the
cold Benguela Current Ecosystem. Established in 1964, Sea Harvest is based in
Saldanha Bay on the West Coast of South Africa, approximately 140km from Cape
Town.
The principal business of Sea Harvest is deep sea trawling, primarily for the
two Cape Hake species, the processing of its catch into frozen and chilled
seafood products, and the marketing of its production both locally and
internationally. Sea Harvest employs approximately 2,200 people and operates a
fleet of 14 fresh fish trawlers and one factory freezer ship.
The modern processing facilities, built on a deep water quay, have over
20,000mSquared of production space. The facilities incorporate state of the art
processing techniques and equipment. The primary processing plant produces a
wide range of natural products, both chilled and frozen, for the retail and food
service markets. The further processing plant specialises in the adding of
flavours, sauces, crumbs and batters to carefully selected raw materials. It is
an efficient and cost effective operation with ongoing development of new
technology and processes for the marketing of differentiated products. A
25,000m3 mobile racked cold store adjacent to the processing plants ensures
swift temperature controlled product transfer.
3 Rationale for the Transaction
Brimstone currently holds 21.52% of the issued Sea Harvest ordinary shares and
has held a strategic equity interest in Sea Harvest since 1998. Brimstone has
from time to time indicated a desire to increase its shareholding in Sea
Harvest. It also enjoys a put option against Tiger Brands in respect of its
current shareholding in Sea Harvest, which option will fall away upon the
Transaction taking place. The Transaction enables Tiger Brands to assist
Brimstone in achieving its objectives and will result in a significant increase
in Sea Harvest`s empowerment shareholder base. The Transaction will be the
largest empowerment transaction to have taken place in the South African fishing
industry.
Brimstone is familiar with the operations of Sea Harvest and is positive about
the long-term outlook of the South African fishing industry. Strong
international and local demand for Sea Harvest`s products, as well as strong
rand diversification, makes Sea Harvest an attractive asset. The Consortium has
significant empowerment credentials and believes that it is well placed to
assist Sea Harvest in strengthening its position as a market leader, a view
shared and endorsed by Tiger Brands.
4 Consideration and financing for the Transaction
The purchase consideration for the Transaction is R541 million, to be settled in
cash, which amount will escalate at a pre-determined rate from the effective
date of 1 October 2008 until payment is made upon fulfilment of all conditions
precedent.
Brimstone will lead and arrange the financing for the Transaction. The long-term
funding structure of the Transaction and the Restructuring will comprise a
combination of equity and third party debt financing.
5 The Restructuring
Brimstone is in the process of establishing a new company which is to be the
entity which represents the interests of the Consortium and which will be the
acquiring entity in terms of the Transaction. The optimal legal, ownership and
funding structure for the Transaction might result in the acquiring entity
further restructuring its operations in order to align itself with the
Consortium`s long term objectives.
6 Conditions precedent
The Transaction is subject to, inter alia, the following conditions precedent:
a) a comprehensive due diligence investigation incorporating, but not limited
to, environmental, commercial, financial, tax, insurance, legal and
technical issues;
b) Competition Commission or Competition Tribunal approval by not later than
150 days following the date of registration of the merger filing in respect
of the Transaction (which period may be extended by a further 60 days at
the election of either the Consortium or Tiger Brands);
c) if required in terms of the JSE Limited Listings Requirements ("Listings
Requirements"), approval of the Transaction by the shareholders of
Brimstone in general meeting, in which case irrevocable letters of
undertaking will be required from its key management shareholders, holding
approximately 30% of the voting rights in Brimstone, that they will vote in
favour of the Transaction;
d) Brimstone attaining satisfaction that all the fishing rights, quotas and
licences held by Sea Harvest and any of its associates and subsidiaries,
have been or will be transferred to one or more entities forming part of
the reconstituted Sea Harvest group;
e) the Consortium having received binding, albeit conditional, commitments
from one or more funding institutions for debt funding on terms acceptable
to the Consortium; and
f) the conclusion of comprehensive legal agreements between the Consortium and
Tiger Brands, containing such terms as are typically included in
transactions of this nature.
All conditions other than for (b), (c) and (f) are for the benefit of Brimstone
and may be waived by Brimstone. If any of the conditions precedent are not
fulfilled or waived by the stipulated date for fulfilment thereof (or any
extension thereof agreed in writing), the agreement that results from the
acceptance of the Offer shall automatically fail and be of no further force or
effect.
7 Categorisation of the Transaction for Brimstone and circular to Brimstone
shareholders
In terms of the Listings Requirements, the Transaction will be categorised as
either a Category 1 or Category 2 transaction for Brimstone. Pursuant to this,
and if the Transaction is categorised as a Category 1 transaction, a circular
providing information on the Transaction and incorporating a notice convening a
general meeting at which Brimstone shareholder approval for the Transaction will
be sought, will be posted to Brimstone shareholders in due course.
8 Categorisation of the Transaction for Tiger Brands and small related party
transaction
In terms of the Listings Requirements, the Transaction will be categorised as a
small related party transaction for Tiger Brands.
Accordingly, Tiger Brands is required to appoint an independent professional
expert to provide an opinion confirming that the terms and conditions of the
Transaction are fair to Tiger Brands shareholders (the "Fairness Opinion"). The
Transaction will therefore be subject to obtaining the Fairness Opinion.
Details of the Fairness Opinion will be announced by Tiger Brands as soon as
practicable after the publication of this announcement and the Fairness Opinion
statement will lie for inspection at the registered offices of Tiger Brands for
a period of 28 days from the date on which the announcement regarding the
Fairness Opinion is released on SENS.
9 Pro forma financial effects and information contained in the comprehensive
legal agreements
a Brimstone
The pro forma financial effects of the Transaction on Brimstone`s earnings,
headline earnings, net asset value and net tangible asset value per share
will be provided in a further announcement, after the final capital
structure, proposed shareholding and funding arrangements have been
confirmed. Any material information further to the Offer contained in the
final transaction documents will also be included in a further
announcement.
b Tiger Brands
The pro forma financial effects of the Transaction on Tiger Brands
earnings, headline earnings, net asset value and net tangible asset value
per share will be provided in a further announcement.
10 Cautionary announcement
Brimstone and Tiger Brands shareholders are therefore advised to exercise
caution when dealing in their respective Brimstone and Tiger Brands
securities until a further announcement is made.
Cape Town Bryanston
31 October 2008
Investment bank and sponsor to Sponsor to Tiger Brands
Brimstone JP Morgan Equities Limited
Nedbank Capital
Legal advisers to Brimstone Legal advisers to Tiger
Cliffe Dekker Hofmeyr Brands
Edward Nathan Sonnenbergs
Date: 31/10/2008 09:00:01 Produced by the JSE SENS Department.
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