| Fri 30 Oct 2009, 15:04 | | PNG - Pinnacle Point Group - Final Terms Announcement in respect of the |
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PNG - Pinnacle Point Group - Final Terms Announcement in respect of the
Rights Offer and Issue of Shares for Cash (collectively the "Equity Capital
Raising")
PINNACLE POINT GROUP LIMITED
(Formerly Acc-Ross Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration Number 2000/000059/06)
JSE Share code: PNG
NSE Share code: PNG
ISIN: ZAE000127122
("Pinnacle Point" or the "Company")
Final Terms Announcement in respect of the Rights Offer and Issue of Shares
for Cash (collectively the "Equity Capital Raising")
Introduction
Shareholders of Pinnacle Point ("Shareholders") are referred to the
announcement released on SENS on 17 September 2009 in which Pinnacle Point
advised Shareholders, inter alia, that the board of directors of the
company ("Board" or "Directors") had resolved to implement an Equity
Capital Raising process in order to raise a minimum of R360 million through
a rights offer ("Rights Offer") and potentially through an issue of shares
for cash ("Issue for Cash"). The proceeds of the Equity Capital Raising
would be used to reduce the level of borrowings in Pinnacle Point by
approximately R165 million and raise new cash of at least R195 million.
Shareholders were further advised that new investors and/or existing
Shareholders would commit to subscribe for an additional R100 million worth
of ordinary shares in Pinnacle Point ("Shares") either in the Rights Offer
or to be issued under the general authority to issue Shares placed under
the control of the Directors.
Rationale for the Equity Capital Raising
It is the view of the Directors that the recapitalisation of Pinnacle Point
is required to enable the Pinnacle Point Group to meet its working capital
requirements, to allow the group to realise the potential of all its
property assets and to facilitate the conversion of:
i. The aggregate amount, including principal, interest and costs of
approximately R125 million debt owed by Pinnacle Point to Absa Bank Limited
("Absa"), comprising Absa`s existing debt facility in the amount of R70
million and a bridge loan advanced under the debt facility of R55 million
(the "Absa Loan"); and
ii. The aggregate amount, including principal, interest and costs, owing
by the Company to Goldbanc Management Associates Limited ("GMA") in terms
of a written loan agreement entered into between the Company and GMA on 10
March 2009, pursuant to which GMA advanced a loan of USD5,000,000.00 to the
Company, the equivalent rand amount of which aggregate amount has been
agreed between the Company and GMA to be R38,912,676.79 (the "GMA Loan").
In the cautionary announcement released on SENS on Monday, 3 August 2009,
Pinnacle Point advised Shareholders, inter alia, that the Board was of the
view that Pinnacle Point requires additional capital of R250 million, to be
raised through a proposed rights offer.
Due to the positive reaction by the market to the proposed recapitalisation
of Pinnacle Point, the Board has now resolved to increase the amount of
equity capital to be raised to approximately R460 million, R100 million in
terms of the issue for cash referred to below and R360 million in terms of
the Rights Offer. Up to R195 million in new cash may be raised under the
Rights Offer and, in terms of the issue for cash referred to below, R100
million in new cash will be raised. This new cash is intended to enable
Pinnacle Point to meet its working capital requirements and allow the
Company to realise the potential of its property assets The Rights Offer is
also intended to facilitate the conversion of the Absa Loan and GMA Loan
into equity.
Terms of the Issue for Cash
On 8 October 2009, Pinnacle Point entered into a subscription agreement
(the "Subscription Agreement") with the Trustees of the Trilinear
Empowerment Trust ("Trilinear").
In terms of the Subscription Agreement, Trilinear agreed to inject R100
million into the Company through the subscription by Trilinear for
666,666,667 Shares to be issued for cash at 15 cents per Share for an
aggregate consideration of R100 million. These Shares will be issued to
Trilinear by the Directors under the general authority to issue Shares
placed under the control of the Directors.
The Subscription Agreement will be implemented as follows:
i. an amount of R63,999,999.90 was placed in escrow on 21 October 2009
and will be released to the Company on or about 30 October 2009 against the
issue of 426,666,666 Shares at 15 cents per Share;
ii. an amount of R31,000,000.05 was placed in escrow on 23 October 2009
and will be released to the Company on or about 30 October 2009 against the
issue of 206,666,667 Shares at 15 cents per Share; and
iii. an amount of R5,000,000.10 was placed in escrow on 29 October 2009 and
will be released to the Company on or about 30 October 2009 against the
issue of 33,333,334 Shares at 15 cents per Share.
A commission of R5 million has been paid by the Company to TriLinear
Specialised Finance (Proprietary) Limited for services provided by
TriLinear Specialised Finance (Proprietary) Limited in sourcing the
aforesaid finance from Trilinear which payment complies with the provisions
of the Companies Act and the Company`s articles of association (the
"Articles").
Terms of the Rights Offer
The Rights Offer will be for a total of 2,400,000,000 Shares (the "Rights
Offer Shares") and will be made by way of renounceable rights to subscribe
for Shares, at a subscription price of 15 cents per Rights Offer Share on
the basis of 45.74561 Rights Offer Shares for every 100 Shares held on the
record date for the Rights Offer, being Friday 13 November 2009 (the
"Record Date"). Qualifying shareholders recorded in the register of the
Company at the close of business on the Record Date will be entitled to
participate in the Rights Offer. The Rights Offer may raise approximately
R360 million. Excess applications will be permitted.
Although the Rights Offer will not be made in Nigeria, Shareholders holding
Shares on the Nigerian Branch Register will be able to participate in the
Rights Offer through the JSE process.
Underwriting
In terms of the underwriting agreements between the Company and each of
Absa and GMA (the "Underwriting Agreements"):
i. Absa has agreed to partially underwrite the Rights Offer, up to a
maximum of R220 million; and
ii. GMA has agreed to partially underwrite the Rights Offer, up to a
maximum of R39,795,926.
An underwriting fee of R5 million, being 2.27% of R220 million, is payable
by the Company to Absa, the R220 million being the R55 million bridging
loan of the Absa Loan, the existing debt facility of R70 million and R95
million in cash. At a general meeting of Shareholders on 2 October 2009,
in terms of the Securities Regulation Code of the Securities Regulation
Panel (the "Code"), shareholders approved a waiver of an offer to minority
Shareholders in the event that the shareholding of Absa exceeds 35% as a
result of Absa acquiring additional Shares pursuant to Absa partially
underwriting the Rights Offer. On 14 October 2009, the Securities
Regulation Panel granted the relevant dispensation in terms of the Code.
An underwriting fee of R883,249.21, being 2.27% of R38,912,676.79 million,
is payable by the Company to GMA, the R38,912,676.79 million being the
equivalent rand amount of the US$5,000,000.00 loan advanced to the Company
by GMA on 12 March 2009 and accumulated interest and fees thereon.
The effect of the above underwriting is that the minimum subscription of
the Rights Offer of R259.8 million will be met. The underwriting fees are,
in the opinion of the Board, not greater than the current market rate
charged by independent underwriters and are in accordance with the
Companies Act and the provisions of the Articles. The underwriting fees are
payable upon fulfilment of the commitments by GMA pursuant to the GMA
Underwriting Agreement and upon the fulfilment of the commitment by Absa
pursuant to the Absa Underwriting Agreement (or upon the failure of the
conditions precedent therein). The underwriting fee debt payable to GMA
will be discharged by the Company to GMA by the issue of 5,888,328 of the
Rights Offer Shares being underwritten by GMA to extinguish the
underwriting fee debt (or, if there are insufficient Rights Offer Shares,
in cash).
The rights of the Underwriters to subscribe for the Rights Offer Shares in
terms of the Underwriting Agreements shall be subordinate to any/all excess
application(s).
Conditions
Save as disclosed below, all conditions precedent to the Rights Offer have
now been fulfilled including approval from the JSE Limited (the "JSE") for
the rights offer circular and for the listings of the letters of allocation
and the Rights Offer Shares. The necessary approvals and registrations
will be obtained from the Registrar of Companies at the Companies and
Intellectual Property Registration Office prior to Friday, 6 November 2009.
A further announcement will be made to Shareholders upon such registration.
Pro forma financial effects
The unaudited pro forma financial effects set out below have been prepared
to assist Shareholders to assess the impact of the Rights Offer on the
Earnings Per Share, Headline Earnings Per Share, Net Asset Value Per Share
and Tangible Net Asset Value Per Share of Pinnacle Point. Due to the nature
of these pro forma financial effects, they are presented for illustrative
purposes only and may not fairly present the financial position of the
Company, the results of its operations after the Rights Offer, cash flows
or changes in equity.
The unaudited pro forma financial effects have been prepared in accordance
with the Listings Requirements of the JSE (the "Listings Requirements") and
the Guide on Pro Forma Financial Information issued by The South African
Institute of Chartered Accountants. These unaudited pro forma financial
effects are the responsibility of the Board. The material assumptions on
which the pro forma financial effects are based are set out in the notes
following the table.
Pro forma financial effects for the year ended 28 February 2009
Audited Unaudited Percentag
financial pro forma e change
information financial
adjusted for informatio
Issue for n
Cash
EPS (cents) (0.01) 0.06 838%
Diluted EPS (cents) (0.01) 0.06 838%
HEPS (cents) (0.10) 0.01 107%
Diluted HEPS (cents) (0.10) 0.01 107%
NAV Per Share (cents) 23.60 19.97 (15%)
TNAV Per Share (cents) 23.08 19.65 (15%)
Shares in issue (`000) 5 246 450 7 646 450 45%
Weighted average 3 674 570 6 054 570 64%
number of Shares in
issue (`000)
Notes and assumptions:
1. The audited financial information has been extracted from the
published audited annual financial statements of Pinnacle Point for the
year ended 28 February 2009.
2. The pro forma adjustments to the above have been calculated on the
assumption that the proceeds from the Rights Offer were received on 1 March
2008 and that the proceeds were partially used to repay debt. The pro forma
adjustment to the above also includes the effects of the Issue for Cash
before the Rights Offer on the basis that 666 666 667 Shares were issued
under the Company`s general authority at 15 cents per Share.
3. The pro forma adjustments to the NAV and TNAV have been calculated on
the assumption that the proceeds were received on 28 February 2009.
4. A Rights Offer Price of 15 cents per Share has been used for the pro
forma adjustments with 2 400 000 000 Rights Offer Shares being issued for a
total quantum of R360 million.
5. The interest impact on the income statement has been calculated by
analysing the Group borrowings balance on a monthly basis. Interest rates
used for calculating the impact are an average rate of 15% on borrowings
(based on actual finance costs incurred on the underlying liabilities).
These rates have been applied to the borrowings balances as applicable
during the year. No interest is calculated on surplus cash funds. This is
in accordance with SAICA Guide on Pro Forma Financial Information (issued
September 2009), paragraph 82. .
6. A notional tax rate of 28% has been used, (it being the prescribed
taxation rate for the period), with income tax adjusted for the taxation
effect of the movements in finance costs.
7. Transaction costs of c.R13.7 million, relating to the Rights Offer,
have been taken into account in determining the financial effects. These
costs have been assumed to reduce share premium.
8. Transaction costs of R5 million relating to the Issue for Cash have
been taken into account in determining the financial effects. This cost is
assumed to reduce share premium.
Profit forecast
A summary of the forecast financial information of Pinnacle Point for the
12 months ending 28 February 2010 and 2011, together with detailed
information and bases and assumptions is set out below. This summary has
been reviewed by Mazars Moores Rowland whose report will be included in the
Rights Offer circular and will be available for inspection at the Company`s
registered office. This summary takes into account the Issue for Cash and
the impact of the Rights Offer.
Date: 30/10/2009 15:04:16 Produced by the JSE SENS Department.
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