| Mon 3 May 2010, 8:40 | | BJM - BJM - Announcement Regarding: a transaction between BJM and Renaissance |
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BJM
BJM
BJM - BJM - Announcement Regarding: a transaction between BJM and Renaissance
Securities Holdings (SA) (Proprietary) Limited; and further cautionary
announcement
BARNARD JACOBS MELLET HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1995/004798/06)
JSE code: BJM
ISIN: ZAE000014262
("BJM" or "the Company" or "the Group")
ANNOUNCEMENT REGARDING:
A TRANSACTION BETWEEN BJM AND RENAISSANCE SECURITIES HOLDINGS (SA) (PROPRIETARY)
LIMITED; AND
FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders of BJM ("Shareholders") are referred to the cautionary
announcement released on the Securities Exchange News Service ("SENS") on
Friday, 26 March 2010 and published in the press on Monday, 29 March 2010
and are advised that an agreement has been entered into on 30 April 2010
between BJM and Renaissance Securities Holdings (SA) (Proprietary) Limited
("Rencap Securities"), a wholly owned subsidiary of Renaissance Capital
("Rencap") relating to the sale by BJM of Barnard Jacobs Mellet Securities
(Proprietary) Limited ("BJM Securities"), a wholly owned subsidiary of BJM
to Rencap ("the Agreement") for a maximum cash consideration of R207
million ("the Maximum Consideration"), subject to the fulfilment of certain
conditions as set out in paragraph 0 below ("the BJM Securities
Transaction").
Accordingly, Rencap Securities will acquire the entire issued share capital
of BJM Securities in terms of section 228 of the South African Companies
Act, 1973 (Act 61 of 1973), as amended. In terms of the Agreement, the
effective date of the BJM Securities Transaction is the first business day
following the fulfilment of the conditions as set out below ("the Effective
Date").
2. THE BJM SECURITIES TRANSACTION
2.1 Background on BJM, BJM Securities and Rencap
BJM is a South African listed holding company of leading stock broking and
affiliated businesses.
BJM Securities provides a broad offering of research products and execution
capabilities in equity, derivative and fixed income markets. It is
consistently ranked as a top tier broker in its domestic and international
markets.
Rencap is Russia`s leading investment bank that operates in high-
opportunity emerging markets. It is a top-ranked investment bank for
mergers and acquisitions, equity and debt capital markets as well as
securities sales and trading. Rencap focuses exclusively on emerging
markets, including Russia, the Commonwealth of Independent States (CIS),
and sub-Saharan Africa. It was founded in 1995 by a group of founding
partners including Stephen Jennings, who is today Chief Executive Officer
of the Renaissance Group.
Subsequent to the BJM Securities Transaction, the Group will consist of:
- Barnard Jacobs Mellet Private Client Services (Proprietary) Limited,
an independent private wealth manager and stockbroker, with
approximately 12,000 active clients and some R35 billion under
administration;
- Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited, a
leading provider of corporate finance and corporate advisory services;
- Finsettle Services (Proprietary) Limited, which offers settlement,
administration and scrip lending services; and
- BJM (USA) LLC and BJM UK Ltd, which comprise research, research sales
and sales trading to institutional investors in Europe and North
America.
These businesses may be restructured to take cognisance of the BJM
Securities Transaction and the further cautionary announcement as set out
below.
2.2 Rationale
During 2009 and 2010, the board of directors of BJM ("the Board") undertook
to effect a strategy that would improve the competitive platform of the
Group (and its subsidiaries) and create or unlock value for Shareholders.
The BJM Securities Transaction was pursued against these criteria.
The BJM Securities Transaction is mutually beneficial to BJM and Rencap and
provides BJM Securities with access to greater international transactional
distribution, access to capital and a broader range of products. It
provides Rencap with a top rated research and trading team, and strengthens
its African presence.
BJM Securities will trade as "Renaissance BJM" from the Effective Date.
2.3 The Consideration and payment
In terms of the Agreement, the Consideration (as set out in paragraph 1
above), is an amount equal to 1.318 multiplied by the net asset value of
BJM Securities at 11h59 on the closing date of the BJM Securities
Transaction, which is three business days after the Effective Date ("the
Closing Date").
The proceeds payable by Rencap will be settled as follows:
- At Closing Date, Rencap shall pay BJM 90% of the net asset value of
BJM Securities as at the final trading day of the JSE Limited in March
2010, multiplied by 1.318 (`the first payment"); and
- After closing, the final purchase price shall be calculated on the
basis of the actual net asset value on the Closing Date, and the
difference between the first payment and the actual net asset value
multiplied by 1.318 shall be paid by one party to the other as the
case may be, subject to the Maximum Consideration. However, in order
to cater for minor variances in the net asset value and the potential
impact such variance might have on the purchase price, the parties
have agreed that, provided the actual net asset value on the Closing
Date exceeds R152 million, the purchase price shall remain the Maximum
Consideration.
2.4 Application of the Consideration
The Board is currently considering various options against its strategic
objectives regarding the application of the proceeds of the BJM Securities
Transaction and will in due course advise Shareholders accordingly.
2.5 Conditions of the BJM Securities Transaction
The BJM Securities Transaction is subject to the fulfilment of the
following suspensive conditions:
- approval by Shareholders in general meeting of the necessary
resolutions and registration of such resolutions (if applicable) by
the Companies and Intellectual Property Registration Office;
- approval in writing for the implementation of the Agreement in
accordance with the requirements of the Competition Act from the
Competition Commission and/or Competition Tribunal provided that any
such approval does not contain any conditions or requirements the
satisfaction of which are material in the context of the size of the
Transaction, in which case Rencap may terminate the BJM Securities
Transaction;
- necessary regulatory approvals including, inter alia, approval by the
JSE Limited, Securities Regulation Panel in terms of the Securities
Regulation Code on Takeovers and Mergers ("SRP") and the South African
Reserve Bank, and the necessary shareholder communication and
announcements; and
- employment of certain key personnel of BJM Securities.
The BJM Securities Transaction is subject to the resolutive conditions that
none of the representations and warranties given by BJM is proven to be
untrue or incorrect in any material respect at and as of the Closing Date.
2.6 Pro forma financial effects of the BJM Securities Transaction
BJM is currently in the process of finalising its results for the year
ended 31 March 2010 which will be released on SENS on or about 3 June 2010.
A further announcement setting out the pro forma financial effects of the
BJM Securities Transaction, based on the 31 March 2010 results, will follow
the results announcement.
2.7 Warranties, Representations and Indemnities
BJM has provided warranties, representations and indemnities in relation to
the BJM Securities Transaction which are standard for transactions of this
nature, including:
- since the final trading day determined by the JSE Limited of March
2009 there has been no material change on the business of BJM
Securities up to Closing Date;
- that neither BJM Securities nor its subsidiary has declared,
authorised, paid or made any dividend or other distribution nor has it
reduced paid-up share capital, except in circumstances where such
dividends, other distributions or reduction in paid-up share capital
would not have a material adverse effect on BJM Securities;
- neither BJM Securities nor its subsidiary has made any changes in
terms of employment, including pension fund commitments, except in
circumstances where such changes in the terms of employment would not
have a material adverse effect on BJM Securities; and
- There has been no material increase or decrease in the levels of
debtors or creditors or in the average collection or payment periods
for the debtors and creditors respectively of BJM Securities and its
subsidiary to the extent that the same will or may reasonably be
expected to have a material adverse effect on BJM Securities and its
subsidiary.
The aforegoing warranties, representations and indemnities are subject to
full and proper disclosure by BJM to Rencap.
2.8 Restraint
BJM has agreed not to be engaged or concerned or interested economically or
otherwise in any manner in any competing institutional business with Rencap
in South Africa for a period of two years after the Closing Date.
2.9 Indemnities
BJM has provided the required indemnities in relation to the BJM Securities
Transaction which are standard for transactions of this nature.
2.10 Termination
In terms of the Agreement, Rencap may terminate the BJM Securities
Transaction prior to closing in the event of any material adverse change
occurring in respect of the business of BJM Securities and BJM fails to
cure such material adverse change within a period of 30 (thirty) days from
receipt on a written notice, or if sooner, prior to the Closing Date.
Both Rencap and BJM are entitled to terminate the BJM Securities
Transaction prior to closing in the event that the other party fails in any
material respect to perform any of its obligations and undertakings
contained in the Agreement when performance thereof is due and the
breaching party does not cure such failure within a period of 30 (thirty)
days of receipt of written notice calling upon it to cure the same.
The parties termination rights are subject to arbitrator dispute
resolution.
Either party may elect to terminate the BJM Securities Transaction if
closing shall not have occurred by 17h30 on 31 December 2010.
3. OPINIONS AND RECOMMENDATIONS
3.1 PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
("PricewaterhouseCoopers") has been appointed by the Board to provide
independent advice to the Board on the terms and conditions of the BJM
Securities Transaction.
3.2 The Board has furthermore appointed an independent sub-committee comprising
independent non-executive directors ("the Sub-Committee") to consider,
assess, negotiate and carry out any obligations that may be required of
them on behalf of BJM in regard to implementing the BJM Securities
Transaction.
4. DOCUMENTS AND GENERAL MEETING
4.1 A circular, containing full details of the BJM Securities Transaction, the
final opinion of PricewaterhouseCoopers and the notice convening the
general meeting to approve the BJM Securities Transaction ("the General
Meeting") will be posted to BJM shareholders in due course.
4.2 A further announcement setting out the salient dates and times of the
General Meeting will be released in due course.
5. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that they need to continue to exercise caution when
dealing in their BJM securities until such time as the pro forma financial
effects in respect of the BJM Securities Transaction have been announced.
Shareholders are also advised that BJM has entered into further negotiations
which, if successfully concluded, may have a material effect on the price of the
Company`s securities. Accordingly, shareholders are advised to exercise caution
when dealing with the Company`s securities until a further announcement is made.
Illovo
3 May 2010
Independent Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Corporate Adviser
Deloitte Corporate Finance
Tax and Legal advisers
Deloitte Tax & Legal
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Attorneys to Rencap
Bowman Gilfillan
Independent expert
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Date: 03/05/2010 08:40:10 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
