| Thu 2 Jul 2009, 9:39 | | CMG - Cenmag Holdings - Acquisition notification of mandatory offer withdrawal |
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CMG
CMG
CMG - Cenmag Holdings - Acquisition, notification of mandatory offer, withdrawal
of cautionary announcement and new cautionary announcement
CENMAG HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004821/06)
Share code: CMG ISIN code: ZAE000001533
(`Cenmag" or `the company`)
ACQUISITION OF CONTROL BY AURORA EMPOWERMENT SYSTEMS (PROPRIETARY) LIMITED
("AURORA"), NOTIFICATION OF MANDATORY OFFER, SECTION 228 DISPOSAL, WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT AND NEW CAUTIONARY ANNOUNCEMENT
1 Introduction
Further to the cautionary announcements dated 17 April 2009 and 1 June
2009, the board of directors of Cenmag is pleased to announce that
agreement has been reached with Aurora in terms of which Aurora has subject
to the conditions precedent set out in paragraph 9 below, acquired control
of a 71.07% interest in Cenmag ("the Aurora Agreement") and Cenmag will,
subject to the conditions precedent set out in paragraph 9 below, dispose
of its entire business as a going concern to Blaf Investments CC ("Blaf")
("the Blaf Disposal") (collectively referred to as "the Transaction").
2 The Transaction
The proposed Transaction is to be completed by way of two separate, but
indivisible transactions, as follows:
* The Aurora Agreement was concluded on 17 June 2009 with the
majority shareholders of Cenmag, as set out below, in terms of
which Aurora has, subject to the fulfilment of the conditions
precedent set out in paragraph 9 below, with effect from 1 March
2009, acquired 6 822 795 ordinary shares in Cenmag for an
aggregate purchase consideration of R6 140 515.50, equating to a
consideration of 90 cents per Cenmag share. These Cenmag shares
have been acquired from the majority shareholders in the
proportions set out below:
* 2 018 585 Cenmag shares from Blaf Investments CC ("Blaf");
* 2 402 105 Cenmag shares from Victor Farkas ("Farkas"); and
* 2 402 105 Cenmag shares from Elaine Greenblatt
("Greenblatt")
* The agreement in respect of the Blaf Disposal was concluded on 17
June 2009, in terms of which Cenmag has, subject to the
fulfilment of the conditions precedent set out in paragraph 9
below, disposed of its entire business (including its shares in,
and claims against, its subsidiaries) as a going concern to Blaf,
with effect from 1 March 2009, for a consideration of R6 140
515.50, which is to be settled in cash.
3. The Blaf Disposal
The Blaf Disposal constitutes a related party transaction as Blaf is a
major shareholder of Cenmag and Farkas and Greenblatt are the sole members
of Blaf. An independent expert will accordingly be appointed in accordance
with the JSE Listings Requirements and the Securities Regulation Panel`s
Code on Takeovers and Mergers ("the Code") in order to advise shareholders
on the fairness of the Blaf Disposal, which opinion will be included in a
circular to be posted to shareholders in due course. The proceeds from the
Blaf Disposal will remain with the company and will be utilised for working
capital purposes following the acquisition by the company of new assets.
4. Rationale for the Blaf Disposal
Since the date of its incorporation in 1987, Cenmag has operated as an
investment holding company holding investments in subsidiaries which are
primarily involved in the manufacture of electromagnets, the rewinding of
motors and the distribution of electrical and related equipment. The
existing directors of Cenmag do not believe that the market performance of
the company warrants the costs associated with maintaining a listing on the
JSE.
5. Nature of Business of Aurora
Aurora is a young, well-capitalised and dynamic company that was formed
with the intention of investing in emergent markets. The company has
strong local and Middle- Eastern shareholders who are committed to
providing real growth opportunities for emerging market companies. Aurora
intends to use Cenmag as a listed vehicle through which acquisitions in
strategic industries will be made.
6. Change of Name
In order to reflect the changed nature and profile of the company`s
business and corporate identity following the implementation of the
Transaction, it is proposed that, subject to shareholder approval, the
company will change its name.
7. Change in Control and Mandatory Offer to Minority Shareholders
As a result of the change in control following the implementation of the
Aurora Agreement, and in accordance with the provisions of the Code, a
mandatory offer will be made to all Cenmag shareholders at an offer price
of 90 cents per share, which represents a substantial premium to the
current marked price. Aurora`s attorneys have provided the Securities
Regulation Panel ("SRP") with the necessary cash confirmation to the
satisfaction of the SRP that Aurora has sufficient cash resources
specifically allocated to meet its obligation in relation to the mandatory
offer. The directors of Cenmag shall, in accordance with the requirements
of the Code, obtain a fairness opinion from an independent expert in
respect of the mandatory offer. Full details of the mandatory offer will be
contained in a circular to be sent to shareholders in due course and the
salient dates and times thereof will be released on SENS.
8. Reconstitution of the Board
Following implementation of the Transaction, the current directors will
resign and the Board will be constituted as follows
* Khulubuse Zuma (Chairman)
* Zondwa Gadaffi Mandela
* YM Raja Dato Zainal Alam Shah (Malaysian)
* Abdullah Belhoul (UAE)
* Sheshile Ngubane
9. Conditions Precedent
The Transaction is subject to the conditions precedent that:
* By no later than 3 July 2009, Aurora`s attorneys will have
confirmed in writing to Cenmag`s attorneys that the sum of R8 640
000, being the purchase consideration payable in terms of the
Aurora Agreement plus the maximum amount payable by Aurora to
minority shareholders in the event that the mandatory offer is
accepted by all minority shareholders, is being held in their
trust account for the aforementioned purposes and is free for
payment;
* By no later than 31 August 2009, the shareholders of Cenmag will
have passed the necessary special resolution(s) required in terms
of section 228 of the Companies Act, the JSE Listings
Requirements and the Code, approving of the Blaf Disposal, and
that such special resolution(s) will have been registered by the
Registrar of Companies. Shareholders holding 12.5% of the issued
share capital of the company have indicated their intention to
vote in favour of the Blaf Disposal. The votes of Blaf, Farkas
and Greenblatt will not be taken into account for the purposes of
determining the majorities required for this purpose in terms of
the JSE Listings Requirements and the Code; and
* By no later than 31 August 2009, any regulatory approvals that
may be required in order to implement the Transaction will have
been obtained.
10 Financial Effects
The table below sets out the unaudited pro forma financial effects of the
Blaf Disposal on Cenmag based on the published reviewed results for the
year ended 28 February 2009. The unaudited pro forma financial information
has been prepared in order to show the effects of the Blaf Disposal had it
taken place on 1 March 2008 for income statement purposes and as at 28
February 2009 for balance sheet purposes. The 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 fairly present
Cenmag`s financial position, changes in equity, cash flow or the results of
its operations.
Before After %
Blaf Blaf change
Disposal Disposal
"A" "B"
Earnings per share 43.30 (36.05) (183%)
(cents)
Headline earnings per 43.30 0.00 (100%)
share (cents)
Net asset value per 148.01 63.95 (57%)
share (cents)
Net tangible asset value 148.01 63.95 (57%)
per share (cents)
Weighted average number 9 600 9 600 --
of shares in issue
(`000)
Shares in issue at year 9 600 9 600 --
end (`000)
Notes
1 Column A is extracted from the published reviewed results of Cenmag as at
28 February 2009.
2 Column B shows the effect of the Blaf Disposal Agreement as though it was
effective at 28 February 2009 for balance sheet purposes. The loss on
disposal has been adjusted through retained income. The remaining net
asset value represents cash on hand received for the disposal.
3. Column B shows the effect of the Blaf Disposal Agreement as though it was
effective from 1 March 2008 for income statement purposes. A loss on
disposal has been calculated with effect from 1 March 2008 based on the
balance sheet as at 29 February 2008. No interest on the cash received for
the disposal has been assumed. No assumption has been made in relation to
any costs of disposal.
4. The above pro forma effects will be once off, albeit having a permanent
effect.
11. Documentation
In terms of the JSE Listings Requirements, the proposed Transaction
constitutes a category one transaction for Cenmag. A circular containing
full details of the proposed change in control, the Blaf Disposal and the
mandatory offer, and incorporating a notice of a general meeting of
shareholders will be posted to Cenmag shareholders within 28 days of the
announcement of fulfilment of the condition set out in bullet point one of
paragraph 8 above.
12. Withdrawal of Cautionary Announcement
Following the release of this announcement, the existing cautionary
announcement is now withdrawn.
13. Injection of New Assets and New Cautionary Announcement
Aurora is in advanced negotiations relating to the acquisition of an
international timber company, which company will, on fulfillment of the
suspensive conditions in clause 8 above and following the approval of
shareholders, be acquired by Cenmag. Shareholders are accordingly advised
to continue to exercise caution when dealing in Cenmag`s securities until a
full announcement in this regard is made.
Johannesburg
2 July 2009
Sponsor
Arcay Moela Sponsors (Pty) Ltd
(Registration number 2006/033725/07)
Attorneys to Cenmag
Fluxmans Incorporated
(Registration number: 2000/024775/21)
Date: 02/07/2009 09:39:31 Produced by the JSE SENS Department.
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