| Thu 1 Oct 2009, 9:00 | | OLI - O-Line Holdings Limited - Announcement |
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OLI
OLI
OLI - O-Line Holdings Limited - Announcement
O-Line Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 2006/034685/06
Share code: OLI
ISIN code: ZAE000110730
("O-Line" or "the Company")
Detailed terms announcement regarding the heads of agreement entered into
between O-Line, Tiso Group (Pty) Limited ("Tiso Group"), Alizay Properties 46
(Pty) Limited ("Tiso SPV"), a wholly owned subsidiary of the Tiso Group, and
certain current shareholders of O-Line, being Graeme Smart, Richard Jay, Edwin
Jay, Dave Fensham, Tom Loughran and Edzard Verseput ("the key shareholders")
(collectively referred to as "the Parties") insofar the acquisition of
approximately 34.09% interest by Tiso SPV in O-Line is concerned ("the Tiso
Transaction").
1 Introduction
Shareholders of O-Line ("O-Line shareholders") are referred to the
O-Line cautionary announcement dated 2 September 2009 and are advised
that O-Line has entered into an agreement with Tiso Group, Tiso SPV and
the key shareholders on 30 September 2009, in terms of which Tiso SPV is
set to acquire an approximate 34.09% interest in O-Line ("the founding
agreement"). The Tiso Group, established over eight years ago, is one
of South Africa`s leading black-controlled and managed principal
investment companies. The Tiso Group has achieved considerable success
in concluding and sustaining investment partnerships in the mainstream
commercial environment. Its asset portfolio primarily comprises
investments in the infrastructure, resources, industrial and financial
services sectors. The Tiso Group also has strategic holdings in
construction, steel merchanting, coal, lime production, power and
property development companies. The Tiso Group`s vision is to build a
principal investment business spanning the African continent in strategic
partnerships with industry leading companies.O-Line`s leading position in
the cable management and structural support systems industry together
with its expanded portfolio of construction and infrastructure-related
products as a result of its recent acquisition of Armco Superlite (Pty)
Limited were the two features of key attraction to the Tiso Group. A
strong track record of earnings, probable synergies between the Tiso
Group and O-Line`s existing portfolio, highly motivated experienced
management team and an attractive deal entry price for a company
well-positioned for long-term growth, provided additional compelling
rationale for the Tiso Group`s investment decision in O-Line. O-Line
regards their association with the Tiso Group as a major incentive to
its business endeavours not only in Southern Africa, but also in other
African countries such as Mozambique, Angola, Ghana and Nigeria. In
addition thereto, the Tiso Transaction contributes to O-Line`s commitment
to black economic empowerment. The Tiso Transaction represents five
related transactions being (1) the subscription by Tiso SPV of 42
million new shares in O-Line ("the Subscription"), (2) the sale of 18
million shares in O-line to Tiso SPV by the key shareholders ("the
Share Sale"), (3) the O-line undertaking (as defined hereunder), (4) the
pro rata offer to purchase from O-Line shareholders 1 share for every 5
shares held by O-Line shareholders ("the Tiso OTP") and (5) the
subscription by Tiso SPV and the repurchase of O-Line shares from the
O-Line shareholders by a subsidiary of O-Line to be appointed ("the
O-Line Buy-back"). Tiso SPV will secure all funding required to give
effect to the Tiso Transaction ("the transaction funding") from a
reputable, financial institution or development financial institution,
as the case may be by no later than 30 November 2009. The details of
the transactions contemplated by the Tiso Transaction are set out
hereunder.
2 The Subscription
The salient features of the Subscription are:
2.1 On 30 September 2009 Tiso SPV subscribed for 42 million new O-Line
shares at a rate of R1.00 per O-Line share, subject to the conditions
precedent set out in paragraph 7;
2.2 The purchase price shall be paid by Tiso SPV from funds secured under
the transaction funding on or before 4 December 2009;
2.3 Within 7 days of making the payment referred to in paragraph 2.2
above, the shares under the Subscription will be allotted by O-Line
and issued to Tiso SPV; and
2.4 The Subscription will effectively provide Tiso SPV with an approximate
17.61% equity interest in O-Line.
3 The Share Sale
The salient features of the Share Sale are as follows:
3.1 The key shareholders sell to Tiso SPV, who purchase, 18 million O-Line
shares collectively held by them at a rate of 95 cents per O-Line
share so as to facilitate the Tiso Transaction;
3.2 The purchase price payable by Tiso SPV for the O-Line shares under the
Share Sale shall be paid in full from funds secured through the
transaction funding by no later than 4 December 2009;
3.3 Upon payment of the amount stated in paragraph 3.2 the key
shareholders shall deliver to Tiso SPV the relevant transfer forms
relating to the O-Line shares acquired by Tiso SPV together with a
written instruction to the relevant transfer house, being
Computershare, to transfer the aforesaid shares into the name of Tiso
SPV within 7 days from making the payment in paragraph 3.2;
3.4 The Share Sale is subject to the conditions precedent set out in
paragraph 7 hereunder;
3.5 The Share Sale will effectively ensure that Tiso SPV holds an
approximate 25.16% equity interest in O-Line.
(Note: As Tiso SPV wishes to hold an effective 34.09% interest in O-Line, 4
an amount of 21 300 000 O-Line shares in addition to the shares acquired
under the Subscription and the Share Sale is required by Tiso SPV ("the
outstanding equity stake"). Therefore, O-Line and the key shareholders
undertook to use their respective reasonable commercial endeavours to
assist Tiso SPV to procure the outstanding equity stake from current
shareholders of O-Line other than the key shareholders ("the O-Line
undertaking"). It is endeavoured that the outstanding equity stake is to be
secured under either of the O-Line undertaking, and/or the Tiso OTP and/or
the O-Line Buy-back, as the case may be.)
4 O-Line undertaking
The salient features of the O-Line undertaking are:
4.1 The O-Line undertaking shall be facilitated concurrently with the
Subscription and Sale contemplated above;
4.2 The purchase price payable by Tiso SPV for the O-Line shares acquired
through the O-Line undertaking shall be paid in full from funds
secured under the transaction funding on or before 4 December 2009;
4.3 The shareholders who sell their shares to Tiso SPV under the O-Line
undertaking shall deliver to Tiso SPV, against release of the relevant
funds to the shareholder concerned, the relevant transfer forms
pertaining to such O-Line shares acquired by Tiso SPV together with a
written instruction to the relevant transfer house, being
Computershare, to transfer the aforesaid shares into the name of Tiso
SPV within 7 days from making the payment referred to in paragraph 4.2
above; and
4.4 The O-Line undertaking is conditional upon the conditions precedent
set out in paragraph 7 hereunder.
5 The Tiso OTP
In the event that, subsequent to the O-Line undertaking, a certain amount
of the outstanding equity stake remains to be acquired by Tiso SPV, then
Tiso SPV at its sole discretion shall make the Tiso OTP to the shareholders
of O-Line. Tiso through the Tiso SPV shall elect on or before 4 December
2009 whether it wishes to make the Tiso OTP offer or not. The making of the
Tiso OTP offer is also subject to the fulfilment of the conditions
precedent set out in paragraph 7. O-line shareholders should note that
there is no firm intention to make an offer for now. The salient features
of the Tiso OTP are as follows:
5.1 On or about 7 December 2009 Tiso SPV shall make an offer to the O-Line
shareholders to purchase O-Line shares:
5.1.1 at a rate of 1 O-Line share for every 5 O-Line shares held
by any O-Line shareholder, but collectively to a maximum of
the difference between the outstanding equity stake and the
actual number of shares acquired by Tiso SPV as set out in
clauses 4.1 to 4.3 above ("the maximum take-up"); and
5.1.2 at a prevailing market price at the time, but not at a
purchase price more than a maximum of 95 cents per O-Line
share.
5.2 The Tiso SPV shall by no later than 7 December 2009, pay the purchase
price for the maximum take-up into an escrow account ("the OTP funds")
operated by the attorneys of O-Line to be held on behalf of Tiso SPV;
5.3 Current O-Line shareholders will be given a period of time
(approximately 21 days) to accept the Tiso OTP ("the OTP offer
period");
5.4 Any current O-Line shareholder can tender more than the proposed ratio
of 1 O-Line share for every 5 O-Line shares held referred to in clause
5.1.1 above;
5.5 Upon expiry of the OTP offer period, the shareholders of O-Line who
sell their shares to Tiso SPV in terms hereof shall deliver to Tiso
SPV, against release of the relevant funds to the shareholder
concerned, the relevant transfer forms relating to the O-Line shares
acquired by Tiso SPV together with a written instruction to the
relevant transfer house, being Computershare, to transfer the
aforesaid shares into the name of Tiso SPV within 7 days from making
the aforesaid payment;
5.6 In the event that the maximum take up is exceeded by Tiso SPV in terms
of the Tiso OTP, then Tiso SPV and the management of O-Line shall do
an allocation on a fair and equitable basis, to ensure that the
maximum take up is achieved;
5.7 Tiso SPV shall not at any time be obliged to accept offers from the
shareholders of O-Line in excess of the maximum take up; and
5.8 The Tiso OTP is conditional upon the conditions precedent set out in
paragraph 7 hereunder.
6 The O-Line Buy-back
In the event that the outstanding equity stake has not been secured upon
expiry of the Tiso OTP (should Tiso through the Tiso SPV elect to make the
Tiso OTP), then Tiso SPV shall at its election, on the first business day
succeeding the expiry of the OTP offer period, subscribe for so many shares
in the share capital of O-Line that will secure such amount required under
the outstanding equity stake. Subsequent thereto O-Line will effect the O-
Line Buy-Back. The salient features of the O-Line Buy-back are:
6.1 O-Line shall only be obliged to allot and issue the same number of O-
Line shares to Tiso SPV as are bought back by it under the O-Line Buy-
back by no later than 31 March 2010;
6.2 The purchase price payable by Tiso SPV in respect thereof shall be
paid from the OTP funds;
6.3 The O-Line Buy-back will only occur subsequent to the Tiso OTP and
only in the event that the maximum take up is not achieved by Tiso SPV
and Tiso SPV makes the election as contemplated in this paragraph 6;
6.4 The O-Line buy-back shall be concluded at the prevailing market price
at the time, but not at a purchase price more than a maximum of 95
cents per O-Line share;
6.5 The O-Line Buy-back shall be effected in terms of section 89 of the
Companies Act, 1973 and it being recorded that the board of directors
of O-Line is granted a general authority to effect such buy-backs in
terms of a special resolution to be passed by the shareholders at the
Annual General Meeting of the shareholders of O-Line to be held on 20
November 2009;
6.6 The O-Line Buy- back is conditional upon the conditions precedent set
out in paragraph 7 hereunder; and
6.7 The O-Line shares acquired in terms of the O-Line Buy-back shall be
held by the subsidiary as treasury shares in terms of Section 89 of
the Companies Act, 1973.
7 Conditions Precedent to the the Tiso Transaction
The Tiso Transaction is conditional on the fulfilment of the following
conditions precedent:
7.1 The conclusion by the Parties of all formal agreements, embodying the
salient features of the founding agreement and such other terms and
conditions as are generally required in transactions of such a nature.
It being recorded that the subscription agreement required to
implement the Subscription concerned will be concluded on or before 9
October 2009;
7.2 The Subscription and the Share Sale are indivisible and interdependent
transactions and therefore in the event that either one shall fail to
be fulfilled, the other shall also fail;
7.3 Completion of all due diligence investigations, being a financial
taxation and legal due diligence;
7.4 Securing the transaction funding; and
7.5 Obtaining all board, shareholder and prescribed regulatory approvals
required to implement the Tiso Transaction.
8 Definitive agreements, financial effects and further cautionary
announcement
A further detailed announcement including the financial effects pertaining
to the transaction will be published in due course once the definitive
agreements have been signed. Accordingly, shareholders are advised to
exercise caution when dealing in the Company`s shares until a further
announcement is made.
1 October 2009
Selby
Designated Advisor: QuestCo Sponsors (Pty) Limited
Attorneys: Edwin Jay
Auditors: Aidan Smith Inc
Date: 01/10/2009 09:00:03 Produced by the JSE SENS Department.
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