| Mon 14 Dec 2009, 17:28 | | HCI - Hosken Consolidated Investments Limited - Transaction between Tsogo |
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HCI
HCI
HCI - Hosken Consolidated Investments Limited - Transaction between Tsogo
Investment Holding Company (Proprietary) Limited("TIH"), a 74.67% held
subsidiary of HCI, and NAFCOC Investment Holding Company (Proprietary)
Limited ("Nafhold") pursuant to which the HCI group increases its interest in
TIH.
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
(Share code: HCI ISIN: ZAE000003257)
("HCI")
Transaction between Tsogo Investment Holding Company (Proprietary)
Limited("TIH"), a 74.67% held subsidiary of HCI, and NAFCOC Investment
Holding Company (Proprietary) Limited ("Nafhold") pursuant to which the HCI
group increases its interest in TIH.
Introduction
Shareholders are advised that TIH has entered into an agreement with Nafhold
in terms of which TIH will repurchase from Nafhold, in terms of section 85 of
the Companies Act of 1973, Nafhold`s 25% interest in the issued ordinary
share capital TIH ("the repurchase transaction"). As a result of the
repurchase transaction HCI`s interest in the ordinary share capital of TIH
will increase to 99.56%. The main business of TIH is to hold ordinary shares
in Tsogo Sun Group (Proprietary) Limited ("TSH").
Rationale
The HCI group believes it is opportune to increase its indirect interest in
the issued ordinary shares of TSH to above 50%.
Particulars of the transaction
In terms of the repurchase transaction TIH will repurchase all of the shares
held by Nafhold in the ordinary share capital of TIH (comprising 25% of the
issued ordinary capital of TIH) ("the repurchase shares") in exchange for the
repurchase consideration set out below, with effect from the 3rd business day
after the repurchase transaction becomes unconditional ("the effective
date").
Upon implementation the HCI group will own 99.56% of the issued ordinary
share capital of TIH giving it an additional 12.75% indirect interest in TSH
and an overall indirect interest of 50.78% in TSH.
The transaction also provides for the immediate postponement of all
proceedings in relation to present disputes between the TIH, HCI and Nafhold
and, following the discharge by TIH of its obligation to pay the repurchase
consideration, the full and final settlement of each such dispute.
HCI has provided a written guarantee to Nafhold in terms of which HCI grants
a guarantee to all the holders of the preference shares to be issued by TIH
(as set out below) in relation to the obligations of TIH in respect of such
preference shares.
Conditions Precedent
1. Shareholders of Nafhold holding in excess of 75% (seventy five percent)
of the voting rights at a meeting of shareholders of Nafhold have
executed written undertakings in terms of which they have irrevocably
undertaken to bind themselves to vote in favour of the repurchase
transaction and the resolution referred to in 2 below and Nafhold
delivers copies of such undertakings to TIH on or before 11 December
2009 and certified copies thereof on or before 31 January 2010;
2. the sale by Nafhold of the repurchase shares in terms of the repurchase
transaction is approved by:
2.1 the board of directors of Nafhold on or before 11 December; and
2.2 a special resolution of Nafhold`s shareholders in terms of section
228 of the 1973 Companies Act and Nafhold delivers a certified copy
thereof to the Company on or before 15 March 2010;
3. the registration by the Registrar of Companies of the special resolution
contemplated in clause 2 on or before 31 March 2010;
4. special resolutions are adopted at a general meeting of TIH in the form
and substance reasonably acceptable to Nafhold to:
4.1 amend the articles of association of TIH to:
4.1.1 allow for the repurchase of TIH`s shares;
4.1.2 provide for the creation of 15,625 cumulative redeemable
non-participating preference shares of R0.01 (One Cent)
each in the capital of TIH having such rights, privileges
and conditions as have been agreed between TIH and
Nafhold ("Nafhold preference shares"); and
4.1.3 provide that, on a poll, each ordinary shareholder shall
be entitled to that proportion of the total votes in the
TIH which the aggregate amount of the par value of the
ordinary shares held by him bears to the aggregate amount
of the par value of all the shares issued by the TIH;
4.2 authorise TIH by way of a specific authority in terms of section
85(2) of the 1973 Companies Act, to acquire the repurchase shares
for the repurchase consideration in terms of the repurchase
transaction;
4.3 amend TIH`s authorised share capital by creating the Nafhold
Preference Shares;
and certified copies of such resolutions are delivered to Nafhold
on or before 28 February 2010;
5. the special resolutions contemplated in 4 are registered by the
Registrar of Companies on or before 31 March 2010;
6. ordinary resolutions are adopted at a general meeting of TIH in the form
and substance reasonably acceptable to Nafhold to authorise the
directors of the TIH by way of a specific authority in terms of section
221 of the 1973 Companies Act, to allot and issue the Nafhold Preference
Shares to Nafhold in terms of the repurchase transaction and certified
copies of such resolutions are delivered to Nafhold on or before 28
February 2010;
7. the agreement entered into between Nafhold and a third party for the
acquisition of Nafhold`s shares in TIH:
7.1 lapses on or before 31 January 2010, or
7.2 is cancelled or otherwise terminated on or before 31 January 2010;
and
8. the acquisition of the repurchases shares is approved unconditionally,
or subject to such conditions as may be reasonably acceptable to TIH and
Nafhold, by the relevant gambling authorities within 30 days of Nafhold
calling for such approval by written notice to the and HCI (provided
that no such written notice shall be given on or before 31 July 2010).
Purchase consideration
The aggregate purchase consideration for the repurchase shares is the sum of
R1,200,000,000 (One Billion Two Hundred Million Rand) payable partly by way
of set-off against the subscription consideration, being the sum of
R500,000,000 (Five Hundred Million Rand), payable by Nafhold to TIH for the
subscription of the Nafhold Preference Shares and the remainder in cash,
being the sum of R 700,000,000 (Seven Hundred Million Rand).
In the event that the effective date occurs after 31 July 2010 then the cash
portion of the purchase consideration shall attract interest at the rate of
5% per annum with effect from 1 August 2010 to the actual date of payment
thereof in full, calculated and compounded monthly in arrears.
Funding of the transaction
Nafhold and/or certain Nafhold shareholders will subscribe for the Nafhold
Preference Shares for an aggregate subscription price of R 500,000,000 (Five
Hundred Million Rand).
The additional funding required for the repurchase transaction will be funded
from the cash resources of TIH at the relevant time.
Pro forma financial effects
The preparation of the unaudited pro forma financial effects of the
transaction is the responsibility of the directors of HCI. The unaudited pro
forma financial effects of the transaction are presented for illustrative
purposes only to provide information on how the transaction may impact on an
HCI shareholder and, due to the nature thereof, may not give a fair
reflection of HCI`s actual financial position after the transaction.
The pro forma financial effects of the transaction are based on the published
unaudited abridged consolidated group results of HCI for the six months ended
30 September 2009. The pro forma financial effects of the transaction on
HCI`s earnings and headline earnings are set out below. The transaction has
no pro forma effect on HCI`s net asset value and net tangible asset value as
reported at 30 September 2009.
Per HCI share Before After % change
Earnings (cents) 100.09 115.37 15.26
Headline earnings 104.02 119.29 14.69
(cents)
Notes:
1. The unaudited pro forma financial effects of the transaction are
indicative only and have been based on the assumptions set out
below:
2. The transaction was effected on 1 April 2009 for income statement
purposes and on 30 September 2009 for balance sheet purposes.
3. The proceeds from sale are invested with financial institutions at
daily call rates. An average rate of 7,53%, after deducting
taxation at a rate of 28%, was used for the period.
4. The coupon on the preference shares issued was assumed to be a
8.27% for the period. It has been assume that TIH will have
sufficient STC credits at the relevant dividend dates
5. Goodwill and intangible assets have been excluded in the
calculation of NTAV per HCI ordinary share.
Categorisation of transaction
In terms of the Listings Requirements of the JSE limited, this transaction is
categorised as a Category 2 transaction.
14 December 2009
Cape Town
Investment Bank and Sponsor Investec Bank Limited
Attorneys to HCI Edward Nathan Sonnenbergs Inc.
Date: 14/12/2009 17:28:01 Produced by the JSE SENS Department.
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