| Wed 7 Oct 2009, 17:45 | | SPG - Super Group - Rights Offer Declaration Announcement/Withdrawal Of |
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SPG
SPG
SPG - Super Group - Rights Offer Declaration Announcement/Withdrawal Of
Cautionary In Respect Of The Rights Offer/Renewal Of Cautionary In Respect Of
The Proposed Disposals
Super Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1943/016107/06
Share code: SPG ISIN: ZAE000011334
("Super Group" or "the Company")
RIGHTS OFFER DECLARATION ANNOUNCEMENT/WITHDRAWAL OF CAUTIONARY IN RESPECT OF THE
RIGHTS OFFER/RENEWAL OF CAUTIONARY IN RESPECT OF THE PROPOSED DISPOSALS
1. Introduction
Further to the announcement released on SENS on 18 March 2009, and the
subsequent cautionary announcements relating to the Super Group rights offer,
the latest being 25 September 2009, shareholders are advised that Super Group
is undertaking a R1 billion capital raising by way of a rights offer ("Rights
Offer"). The Rights Offer will give all shareholders registered as such on the
record date an equal opportunity to participate in such capital raising.
In terms of the Rights Offer, 2 727 580 820 shares in the authorised but
unissued share capital of Super Group will be offered for subscription to
shareholders in the ratio of 410 rights offer shares for every 100 Super Group
shares held at the close of trade on the record date ("Rights Offer Shares").
The issue price of the Rights Offer Shares will be 45 cents per share ("issue
price").
At a general meeting of shareholders held on 21 May 2009, a special resolution
to increase the authorised share capital of the Company, and an ordinary
resolution placing sufficient authorised but unissued shares in the capital of
the Company under the control of the directors for the specific purpose of
issuing such shares in terms of the Rights Offer, were passed by the requisite
majority of shareholders. Whilst it is expected that only approximately 2 222
222 222 shares will be issued pursuant to the Rights Offer, resulting in
proceeds of R1 billion, the resolutions proposed to shareholders made provision
for an increase in authorised share capital of 2 727 580 820 ordinary shares
due to the entitlements where any shareholding giving rise to a fraction of
less than half of a Rights Offer Share will be rounded down to the nearest
whole number and any shareholding giving rise to a fraction equal to or greater
than one half of a Rights Offer Share will be rounded up to the nearest whole
number. Certain lenders and bondholders, being Absa Bank Limited, Allan Gray
Limited ("Allan Gray"), Barclays Bank Plc, FirstRand Bank Limited (acting both
as principal and as agent on behalf of the Rand Mutual Assurance Company
Limited, RMA Life Assurance Company Limited, RMB Asset Management (Proprietary)
Limited, RMB Unit Trusts Limited and Export Credit Insurance Corporation of
South Africa Limited), Investec Bank Limited ("Investec"), KADD Capital
(Proprietary) Limited, Nedbank Limited and Futuregrowth Asset Management
(Proprietary) Limited ("collectively, the Underwriting Lenders"), as well as
Allan Gray (in its capacity as a shareholder in the Company), collectively, the
"Underwriters" have undertaken to underwrite the subscription of 2 222 222 222
Rights Offer Shares, which will ensure minimum proceeds of R1 billion.
Subsequent to the announcement of the proposed Rights Offer, Super Group and
its lenders entered into discussions with a strategic investor regarding an
alternative proposal to recapitalise Super Group pursuant to which the
strategic investor would become the controlling shareholder of the Company and
would provide a cash injection into the Company through three inter-
conditional arrangements. The proposal failed to materialise and the Rights
Offer and Debt Restructuring, as defined in paragraph 2 below, will be
implemented.
2. Rationale and purpose of the Rights Offer and Debt Restructuring
Until December 2008 the board of directors of Super Group ("the Board")
expected the R510 million proceeds from the rights offer undertaken by Super
Group during September and October 2008 ("the Previous Rights Offer") and the
anticipated proceeds from the disposal of non-core assets to be sufficient to
enable Super Group to operate free of any liquidity constraints.
Subsequent to the Previous Rights Offer and the reporting of the reviewed
financial results for the year ended 30 June 2008, Super Group identified an
exposure in Super Group Industrial Products ("SGIP") relating to its operations
in Angola. This exposure arose from the failure of a partner in Angola to meet
its contractual obligations. As a result SGIP was exposed to unsecured
receivables and inventory in respect of that partner. The Board reviewed and
restated the 2008 financial results and provided in full for both the Angolan
receivable (R97.1 million) and inventory (R100.3 million), resulting in a total
provision of R197.4 million in the amended 2008 audited financial results. To
date, Super Group has not been able to collect the outstanding receivables nor
to secure title to the inventory in Angola.
The resultant unsecured exposure in Angola, the decision to provide against the
exposure, the inability to timeously dispose of non-core assets due to
prevailing market conditions and FitchRatings` pessimistic outlook for the
industries in which Super Group and its subsidiaries ("the Group") operate
ultimately led to a credit re-rating of the Company by FitchRatings at the end
of 2008, which in turn triggered the conversion of certain of the Group`s term
borrowings into on-demand facilities.
The FitchRatings` re-rating coupled with the challenging macroeconomic and
trading conditions in which the Group operates, together with volatile credit
markets, projections of slower economic growth, further losses in SGIP and the
Group`s dependence on cost effective funding for its full maintenance lease
("FML") business, necessitated the Group to review and reconsider its funding
structure.
As part of the process, Super Group appointed Rand Merchant Bank, a division of
FirstRand Bank Limited ("RMB") to advise the Group on various strategic options
available to allow for a normalisation of the Group`s liquidity and credit
funding position. Accordingly, Super Group, in discussion with its major
shareholders and lenders, embarked on the process of restructuring its existing
debt and recapitalising the Group to the amount of at least R1 billion. The
Group continues to evaluate its options in relation to the disposal of non-core
assets. Where the Group is able to realise fair value for those assets,
potential disposals are being pursued.
It was concluded that the recapitalisation should take the form of a rights
offer at 45 cents per Rights Offer Share ("Equity Recapitalisation"). In
addition, certain lenders have agreed to restructure their debt facilities to
allow Super Group to continue its operations without undue liquidity
constraints ("Debt Restructuring").
3. Background to the Equity Recapitalisation and Debt Restructuring and
application of cash proceeds from Rights Offer
The Board has considered Super Group`s current financial position and believes
that the Company requires additional long-term equity funding to:
- restructure its short and long-term debt;
- further reduce its gearing ratio to within the range acceptable to the
Board; and
- provide the Group with additional financial resources to improve financial
flexibility.
Other than Investec, in relation to a portion of its underwriting obligations,
the Underwriting Lenders will not settle their underwriting obligations in
cash. Allan Gray (other than in its capacity as an Underwriting Lender) will,
however, be obliged to settle its underwriting obligations in cash.
In this regard, Allan Gray in its capacity as principal has undertaken to
procure that its clients fulfil their obligations to underwrite a minimum
number of 628 888 889 Rights Offer Shares for a minimum aggregate amount of
R283 000 000.
The cash proceeds from the Rights Offer received from the cash settlement of
Allan Gray and Investec`s underwriting obligations will be used by the Company
to:
- pay the expenses of the Rights Offer and related transaction costs; and
- settle any advance under the interim facility of R70 000 000 made available
to the Company by RMB (and accrued unpaid interest thereon), any accrued but
unpaid interest on the Corporate Bonds, settle new monies advanced to the Group
by lenders which are party to the restructuring agreement entered into between,
inter alia, Super Group and certain of its lenders (including the Underwriting
Lenders) on about 17 July 2009, after 19 December 2008 (the "Standstill Date"),
to settle an overdraft facility provided by ABN Amro Bank N.V. up to the
maximum principal amount of USD2 600 000 (plus accrued unpaid interest fees and
costs) (provided that prior Exchange Control approval is obtained for such
settlement) and to fund Super Group Australia (Pty) Limited`s acquisition of a
further 2.5% of the entire issued share capital of SG Fleet Proprietary Limited
(a company incorporated in Australia), up to a maximum amount of AUD3 250 000
(provided that prior Exchange Control approval is obtained for such funding).
Any cash proceeds remaining after the abovementioned payments have been made
will be retained in the Group as working capital.
To the extent that cash proceeds from public subscriptions are received, they
will be used to settle certain of the general banking facilities and Corporate
Bonds of the Underwriting Lenders.
All cash proceeds received from the cash settlement of Allan Gray`s and
Investec`s underwriting obligations, as well as all cash proceeds from public
subscriptions, will be deposited directly into a designated account to be
opened by Super Group with RMB for this purpose. In terms of the restructuring
agreement, RMB (in its capacity as facility agent) will apply the cash proceeds
from the Rights Offer as above on Super Group`s behalf.
Following the Rights Offer, a trade gearing ratio (excluding FML and Australian
non-recourse liabilities) of less than 20% will be achieved before the receipt
of any proceeds from the disposal of any non-core assets.
Capital structure Capital structure
prior to the subsequent to the
Rights Offer(1) Rights Offer(2)
Equity (R million) 1,188 2,130
Net debt (R million) 3,007 2,065
Net debt excluding Australia
and FML (R million) 1,298 357
Gearing ratio (book values) 253% 97%
Trade gearing ratio (book values) 120% 18%
Notes:
1. As at 30 June 2009.
2. Assumes 2 222 222 222 shares are issued at 45 cents per share in terms
of the Rights Offer.
4. Particulars of the Rights Offer
Super Group will offer, subject to fulfilment of the conditions precedent set
out in paragraph 6 below, for subscription at the issue price, by way of a
Rights Offer to shareholders, 2 727 580 820 Rights Offer Shares in the ratio of
410 Rights Offer Shares for every 100 shares held on the record date.
Only shareholders recorded in the register on the record date (other than
certain foreign shareholders resident in jurisdictions where the Rights Offer
is restricted by law) are entitled to participate in the Rights Offer.
The Rights Offer Shares will rank pari passu with the existing issued Super
Group shares.
The issue price of 45 cents per Rights Offer Share represents the following:
Cents Discount
per share %
90-day VWAP 1 160 71.8
60-day VWAP 1 136 66.9
30-day VWAP 1 86 47.5
Closing price 1 53 15.1
Closing price on 2 October 2009 89 49.4
Note:
1. Based on 17 March 2009 being the last trading day prior to the release
of the cautionary announcement announcing the Rights Offer.
5. Underwriting of the Rights Offer
The Rights Offer is underwritten by the Underwriters to the extent of
2 222 222 222 Super Group ordinary shares resulting in minimum proceeds
of R1 billion.
Allan Gray will be obliged to settle the issue price of any Rights Offer Shares
for which it is obliged to subscribe (other than in its capacity as an
Underwriting Lender) in cash. In this regard, Allan Gray in its capacity as
principal has undertaken to procure that its clients fulfil their obligations
to underwrite a minimum number of 628 888 889 Rights Offer Shares for a minimum
aggregate amount of R283 000 000.
Allan Gray may, by agreement with RMB (in its capacity as facility agent) and
Super Group increase its minimum underwriting obligations of R283 000 000, with
a corresponding reduction to the underwriting obligations of certain of the
Underwriting Lenders.
Investec will also be obliged to settle the issue price relating to a portion
of its potential underwriting in cash (in an amount equal to the Rand
equivalent of USD411 503 at the prevailing Rand/Dollar spot rate on the date on
which payment is effected by Investec Bank (Mauritius) Limited to Super Group
Trading Limited (a company incorporated under the laws of the Republic of
Mauritius).
Subject to the aforegoing in relation to Investec only, the Underwriting
Lenders, including Allan Gray in its capacity as an Underwriting Lender, will
not be obliged to settle the issue price of any Rights Offer Shares for which
they are obliged to subscribe pursuant to their underwriting obligations in
cash, in any circumstances whatsoever. Instead, their payment obligations in
this regard will be settled in full by applying set-off between such
underwriting obligations and their claims as lenders and bondholders against
the Group.
The total cost of the underwriting is 4% (400 basis points) of the total
underwriting value, which equates to a total aggregate underwriting fee of
R40 million, excluding VAT.
The underwriting obligations are unconditional and irrevocable, save that the
obligations of the Underwriters are subject to Allan Gray complying with its
minimum underwriting obligations.
6. Conditions precedent
The implementation of the Rights Offer is conditional upon:
- the necessary approvals and registrations being obtained from the Companies
and Intellectual Property Registration Office; and
- the execution of certain security documents.
It is anticipated that the above conditions will be met on or before the
finalisation date for the Rights Offer, being Friday, 16 October 2009.
7. Pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the
Rights Offer on the reviewed preliminary published results for the year ended
30 June 2009. The unaudited pro forma income statement, balance sheet and
financial effects, which are the responsibility of the directors of Super
Group, have been prepared for illustrative purposes only and, because of their
nature, may not give a true reflection of Super Group`s financial position,
changes in equity and results of operations or cash flows.
The unaudited pro forma financial information is intended to provide
information about how the Rights Offer might have affected the income statement
and balance sheet of Super Group for the year ended 30 June 2009 had the Rights
Offer been effected on that date and does not purport to be indicative of what
financial results would have been had the Rights Offer been implemented on a
different date.
Before(1) After(2) %
(cents) (cents) Change
Basic earnings per share (296.1) (47.7) 83.9
Adjusted basic earnings per share
(continuing operations) 6.4 3.9 (39.4)
Diluted earnings per share (296.1) (47.7) 83.9
Adjusted diluted earnings per share
(continuing operations) 6.4 3.9 (39.4)
Headline earnings per share (170.9) (26.4) 84.6
Adjusted headline earnings per share
(continuing operations) 35.0 8.8 (75.0)
Diluted headline earnings per share (170.9) (26.4) 84.6
Adjusted diluted headline earnings per
share (continuing operations) 35.0 8.8 (75.0)
Net asset value ("NAV") per share (cents) 199.6 71.1 (64.4)
Tangible net asset value ("TNAV")
per share (cents) (83.8) 19.3 123.0
Number of shares in issue (`000) 545 516 2 767 738 407.4
Weighted number of shares (`000) 457 002 2 679 224 486.3
Trade gearing (%) 120 18 85.3
Notes:
1. The "Before" column is based on Super Group`s published reviewed results
for the year ended 30 June 2009.
2. The "After" column has been adjusted for the issue of the Rights Offer
Shares.
3. The number of Super Group shares in issue has been reduced by 47 566 652
treasury shares held by the Group.
4. The financial effects are calculated on the assumptions that:
4.1 certain shareholders follow their rights and Super Group raises
R1 billion through the issue of 2 222 222 222 ordinary shares;
4.2 the cash proceeds have been received and the Rights Offer Shares
issued on 1 July 2008 for the income statement impact;
4.3 the expenses of the Rights Offer of R58 724 000 have been offset
against the cash proceeds from the Rights Offer and have reduced share
premium;
4.4 the proceeds from the Rights Offer are used to repay debt
facilities with interest at the prime rate; and
4.5 the cash proceeds have been received and the Rights Offer Shares
issued on 30 June 2009 for the balance sheet impact.
5. 2 720 171 734 Super Group shares were used to calculate NAV and
TNAV.
6. Transaction costs relate to the fees paid to professional advisors
and legal and compliance fees. This is not expected to have a
continuing effect on Super Group.
8. Excess subscriptions
Shareholders will be invited to apply for additional Rights Offer Shares over
and above their entitlement. Should there be excess Rights Offer Shares
available for allocation, these will be allocated to applicants in a manner
viewed as equitable in terms of the Listings Requirements of the JSE.
9. Salient dates and times
The salient dates and times in respect of the Rights Offer are set out below:
2009
Last day to trade in Super Group shares in order to
settle trades by the record date and to qualify to
participate in the Rights Offer (cum rights) Friday, 23 October
Listing and trading of letters of allocation on the
JSE while Super Group shares trade ex-rights
commences at 09:00 on Monday, 26 October
Record date for the Rights Offer for purposes of
determining shareholders entitled to participate
in the Rights Offer at the close of business on Friday, 30 October
Rights Offer circular incorporating revised listing
particulars posted to shareholders Monday, 2 November
Rights Offer opens at 09:00 on Monday, 2 November
Dematerialised shareholders will have their accounts
at their CSDP or broker automatically credited with
their letters of allocation Monday, 2 November
Certificated shareholders will have their letters of
allocation credited to an electronic register at the
transfer secretaries Monday, 2 November
Last day to trade in letters of allocation in order to
settle trades by the close of the Rights Offer and
participate in the Rights Offer at the close of business Friday, 13 November
Last day for forms of instruction of certificated
shareholders wishing to sell all or part of their
entitlement to be lodged with the transfer
secretaries by 12:00 on Friday, 13 November
Listing of the maximum number and trading of Rights
Offer Shares on the JSE commences at 09:00 on Monday, 16 November
Record date for letters of allocation Friday, 20 November
Rights Offer closes at 12:00 and payment to be made
and forms of instruction lodged by certificated
shareholders with the transfer secretaries by
12:00 on (see note 2 below) Friday, 20 November
CSDP/Broker accounts in respect of dematerialised
shareholders credited with Rights Offer Shares
and debited with any payments due in respect
of Rights Offer Shares Monday, 23 November
Share certificates posted to certificated shareholders
by registered post on or about Monday, 23 November
Results of Rights Offer and basis of allocations of
excess Rights Offer Shares announced on SENS on Monday, 23 November
Results of Rights Offer and basis of allocations of
excess Rights Offer Shares published in the press on Tuesday, 24 November
Refund cheques posted to certificated shareholders
in respect of excess applications, if applicable,
on or about Tuesday, 24 November
Adjustments to the number of Rights Offer Shares
listed effected on the JSE, on or about Tuesday, 24 November
Notes:
1. All times referred in the table above are local times in South Africa.
2. Dematerialised shareholders are required to inform their CSDP or broker
of their instructions in terms of the Rights Offer in the manner and time
stipulated in the agreement governing the relationship between the
shareholder and their CSDP or broker.
3. Share certificates may not be dematerialised or rematerialised between
Monday, 26 October 2009 and Friday, 30 October 2009, both days inclusive.
4. Dematerialised shareholders will have their accounts at their CSDP
automatically credited with their rights and certificated shareholders will
have their rights credited to an account at Computershare Nominees.
5. CSDPs effect payment in respect of dematerialised shareholders on a
delivery versus payment method.
6. Any material variation of the above dates and times will be approved by
the JSE, released on SENS and published in the South African press.
7. The Rights Offer Shares issued in terms of the Rights Offer will not be
registered for purposes of the Rights Offer with the Securities and
Exchange Commission, Washington D.C., the Canadian Provincial Securities
Commission, or the Australian Securities Commission under the Australian
Corporation Law, as amended. Accordingly, the Rights Offer will not be made
to or be open for acceptance by persons with registered addresses in the
United States of America or any of its territories, dependencies,
possessions or commonwealths or in the District of Columbia or in the
Dominion of Canada or in the Commonwealth of Australia, its states,
territories or possessions. The CSDP or broker will ensure that where such
persons are holding Super Group shares in dematerialized form that the CSDP
or broker adheres to the above restrictions.
10. Circular to shareholders
The Rights Offer circular, incorporating revised listing particulars and a form
of instruction in respect of a letter of allocation will be posted to Super
Group shareholders on Monday, 2 November 2009.
11. Withdrawal of cautionary
Shareholders are advised that they are no longer required to exercise caution
when dealing in Super Group shares in relation to the Rights Offer.
12. Further announcement
It is anticipated that the finalisation announcement for the Rights Offer will
be released on SENS on Friday, 16 October 2009.
13. Renewal of cautionary in respect of Super Group`s disposals
Shareholders are advised that negotiations with regard to the disposal of the
AutoZone and the Emerald Insurance businesses and Super Group Industrial
Products inventory are still in progress which, if successfully concluded, may
have a material effect on the price of Super Group`s shares. Shareholders
should therefore continue to exercise caution when dealing in Super Group
shares.
Johannesburg
7 October 2009
Merchant Bank and Corporate Advisors
RAND MERCHANT BANK
A division of FirstRand Bank Limited
Independent Sponsor
Deutsche Securities (SA) (Proprietary) Limited
(A non-bank member of the Deutsche Bank Group)
Corporate Law Advisors
FLUXMANS ATTORNEYS
Equity Capital Markets Advisor
RMB | MORGAN STANLEY
EQUITY SALES, TRADING & RESEARCH
Legal Advisors to Merchant Bank
WEBBER WENTZEL
Reporting Accountants
KPMG
Date: 07/10/2009 17:45:23 Produced by the JSE SENS Department.
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