| Fri 14 May 2010, 16:53 | | HLM - Hulamin Limited - Terms of the rights offer and withdrawal of cautionary |
|
HLM
HLM
HLM - Hulamin Limited - Terms of the rights offer and withdrawal of cautionary
announcement
Hulamin Limited
Incorporated in the Republic of South Africa
(Registration number: 1940/013924/06)
ISIN: ZAE000096210
Share Code: HLM
("Hulamin" or "the Company")
TERMS OF THE RIGHTS OFFER AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Hulamin announced on SENS on 26 April 2010 and in the press on 28 April
2010 that the board of directors ("the Board") has resolved to raise R750
million equity capital by way of a rights offer of ordinary shares to
ordinary shareholders ("Rights Offer").
Hulamin has recently completed a major expansion of its rolled products
capacity which will enable the business to grow its sales significantly in
the medium-term, and which will result in increased working capital. This,
coupled with the expansion of the Company`s slab casting facilities and the
effects of aluminium price volatility on working capital levels, has
resulted in Hulamin`s current funding structure not being well aligned with
its growth and operational objectives. The Company therefore proposes
applying the proceeds of the Rights Offer to reducing its current short-
term debt and to repay long-term debt falling due in the next two years.
This will enable the Company to fund the expected growth in sales volumes
from the already installed capacity, cater for increased slab casting
facilities, and reduce borrowing costs and liquidity risks.
2. Terms of the Rights Offer
In terms of the Rights Offer, 100 000 000 ordinary shares ("Rights Offer
Shares") will be offered to ordinary shareholders at a subscription price
of R7.50 per Rights Offer Share, on the basis of 46.25457 Rights Offer
Shares for every 100 ordinary shares held at the close of business on the
record date of the Rights Offer, being Friday, 4 June 2010.
The subscription price represents a discount of 29.9% to the closing share
price of ordinary shares on 13 May 2010 of R10.70 per share, and a 22.6%
discount to the theoretical ex-rights price of R9.69 per ordinary share
calculated on the same day.
The Rights Offer Shares issued will rank pari passu with the existing
ordinary shares in issue.
3. Excess subscriptions
Ordinary shareholders are invited to apply for additional Rights Offer
Shares over and above their entitlement. Should there be excess Rights
Offer Shares available, the pool of such excess Rights Offer Shares will be
allocated equitably between the ordinary shareholders, taking cognisance of
the number of ordinary shares held by the ordinary shareholder just prior
to such allocation, including those taken up as a result of the Rights
Offer, and the number of excess Rights Offer Shares applied for by such
ordinary shareholder.
4. Undertakings and underwriting
The Company has procured irrevocable undertakings from ordinary
shareholders holding approximately 72% of the issued ordinary share capital
of Hulamin to follow all of their rights in relation to the rights offer.
Details of the irrevocable commitments are set out below:
Shareholder No of % Rights Offer Value (R)
ordinary sharehol Shares
shares ding
held(see
Note 1)
Industrial 64 673 503 29.9% 29 914 451 224 358 383
Development
Corporation
Coronation 60 114 234 27.8% 27 805 580 208 541 850
Asset
Management
Investec 30 353 388 14.0% 14 039 829 105 298 717
Asset
Management
Total 155 141 125 71.7% 71 759 860 538 198 950
Note (1)Exact shareholdings as at the record date for the Rights Offer are
subject to change as result of client fund flows or changes to existing
client mandates.
The Rights Offer has been partially underwritten up to a maximum value of
R211.8 million, representing 28 240 140 Rights Offer Shares or 28.3% of the
Rights Offer. Details of the underwriting are set out below:
Underwriter % Rights Rights Offer Value
Offer Shares underwritten
underwritten underwritten (R)
Old Mutual 21.2% 21 180 105 158 850 788
Investments
Group(South Africa)
(Pty) Ltd
Abax Investments 7.1% 7 060 035 52 950 262
(Pty) Ltd
Total 28.3% 28 240 140 211 801 050
In terms of the underwriting agreement, an underwriting fee equal to 3.0%
of the value underwritten is payable by the Company to each of the
underwriters. The underwriting fee is, in the opinion of the Board, not
greater than the current market rate charged by independent underwriters.
The underwriting fee is only payable upon fulfilment of the commitments by
the underwriters pursuant to the underwriting agreement.
5. Unaudited pro forma financial effects
The unaudited pro forma financial effects set out below have been prepared
to assist ordinary shareholders to assess the impact of the Rights Offer on
the earnings per share ("EPS"), headline earnings per share ("HEPS"), net
asset value ("NAV") per share and tangible net asset value ("TNAV") per
share of Hulamin. Due to the nature of these pro forma financial effects,
they are presented for illustrative purposes only and may not fairly
present the Company`s financial position or the results of its operations
or cash flows after the Rights Offer.
The unaudited pro forma financial effects have been prepared in accordance
with 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 31 December 2009
Before the Pro forma After the Percentag
Rights adjustments Rights Offer e change
Offer
Basic EPS (cents) 42 4 46 10%
Diluted EPS (cents) 41 5 46 12%
HEPS (cents) 42 5 47 12%
Diluted HEPS 42 4 46 10%
(cents)
NAV per share 1 732 (315) 1 417 (18%)
(cents)
TNAV per share 1 718 (310) 1 408 (18%)
(cents)
Weighted average 215 931 041 100 000 000 315 931 041 46%
number of ordinary
shares in issue
Diluted weighted 218 828 748 100 283 180 319 111 928 46%
average number of
ordinary shares in
issue
Notes and assumptions:
a) Pro forma adjustments to the income statement are calculated on the
assumption that the Rights Offer proceeds were received on 1 January 2009.
b) Pro forma adjustments to the balance sheet are calculated on the assumption
that the Rights Offer proceeds were received on 31 December 2009.
c) Gross Rights Offer proceeds of R750 million at a subscription price of 750
cents per Rights Offer Share.
d) Rights Offer proceeds, net of estimated transaction costs, were assumed to
pay down senior debt and short-term borrowings.
e) The interest impact on the income statement has been calculated by
analysing the Group`s borrowings on a monthly basis. Effective monthly
interest rates have been applied to the borrowings and cash balances, as
applicable, during the year.
f) A statutory tax rate of 28% has been applied to the interest adjustment.
g) No additional dividend payments would have been made to ordinary
shareholders as a result of the Rights Offer.
h) Estimated transaction costs of R12,3 million, relating to the Rights Offer,
have been taken into account in determining the financial effects and have
been written off against share premium.
6. Conditions precedent
The implementation of the Rights Offer is subject to the fulfilment of the
following conditions:
- approval being obtained from the JSE Limited ("JSE") for the Rights Offer
circular;
- approval being obtained from the JSE for the application for listing of the
letters of allocation and the application for listing of the Rights Offer
Shares;
- the necessary approvals of all resolutions required to implement the Rights
Offer being obtained from shareholders; and
- registrations being obtained for any special resolutions, the Rights Offer
circular and form of instruction from the Companies and Intellectual
Property Registration Office of South Africa.
7. Salient dates and times
2010
Last day to trade in ordinary shares in order to Friday, 28 May
participate in the Rights Offer (cum entitlement)
Ordinary shares commence trading ex-entitlement at Monday, 31 May
09:00 on
Listing of and trading in the letters of Monday, 31 May
allocation on the JSE commences at 09:00 on
Record date for the Rights Offer for purposes of Friday, 4 June
determining ordinary shareholders entitled to
participate in the Rights Offer at the close of
trade on
Rights Offer circular and revised listing Monday, 7 June
particulars as well as a form of instruction,
where applicable, posted to ordinary shareholders
Rights offer opens at 09:00 on Monday, 7 June
Letters of allocation credited to an electronic Monday, 7 June
account held at the transfer
secretaries in respect of holders of certificated
ordinary shares
CSDP or broker accounts credited with entitlements
in respect of holders
of dematerialised ordinary shares
Last day for trading letters of allocation on the Friday, 18 June
JSE in order to settle trades by the close of the
Rights Offer
For certificated ordinary shareholders wishing to Friday, 18 June
sell or renounce all or part of their entitlement,
forms of instruction to be lodged with the
transfer secretaries by 12h00 on
Listing of Rights Offer Shares and trading therein Monday, 21 June
on the JSE commences at 09:00 on
Rights offer closes at 12:00 on Friday, 25 June
For certificated ordinary shareholders wishing to Friday, 25 June
accept all or part of their entitlement, payment
to be made and forms of instruction to be lodged
with the
transfer secretaries by 12h00 on
Record date for the letters of allocation Friday, 25 June
Rights Offer Shares issued on or about Monday, 28 June
CSDP or broker accounts in respect of holders of Monday, 28 June
dematerialised ordinary
shares debited and updated with Rights Offer
Shares and share certificates
posted to certificated ordinary shareholders by
ordinary post on or about
Results of the Rights Offer and basis of Monday, 28 June
allocations of excess Rights Offer Shares
announced on SENS
Results of the Rights Offer and basis of Tuesday, 29 June
allocations of excess Rights Offer Shares
published in the press
Refund cheques and/or share certificates posted to Wednesday, 30 June
certificated ordinary shareholders in respect of
excess applications, if applicable, on or about
Notes:
a) Share certificates in respect of ordinary shares may not be dematerialised
or rematerialised between Monday, 31 May 2010 and Friday, 4 June 2010, both
days inclusive.
b) CSDPs effect payment on a delivery versus payment method in respect of
qualifying ordinary shareholders holding dematerialised shares.
c) If you are a qualifying ordinary shareholder holding dematerialised
ordinary shares you are required to notify your duly appointed CSDP or
broker of your acceptance of the Rights Offer in the manner and time
stipulated in the custody agreement governing the relationship between you
and your CSDP or broker.
d) Unless otherwise indicated, all times are South African times and are
subject to change. Any such change will be published on SENS and in the
press in South Africa.
8. Jurisdiction
The distribution of this announcement and the Rights Offer circular, the
form of instruction and the transfer of the Rights Offer Shares and/or the
rights to subscribe for the Rights Offer Shares in jurisdictions other than
South Africa may be restricted by law. It is the responsibility of any
person outside South Africa (including, without limitation, nominees,
agents and trustees for such persons) receiving this announcement and
wishing to take up rights under the Rights Offer, to satisfy himself as to
full observance of the applicable laws of any relevant territory, including
obtaining any requisite governmental or other consents, observing any other
requisite formalities and paying any issue, transfer or other taxes due in
such territories. Any failure to comply with any of those restrictions may
constitute a violation of the laws of any such jurisdiction.
9. Finalisation announcement
It is anticipated that the finalisation announcement for the Rights Offer
confirming the fulfilment of all conditions precedent will be released on
SENS on or about Friday, 21 May 2010.
10. Posting of Rights Offer circular
Shareholders are advised that a circular containing full details of the
terms of the Rights Offer and a form of instruction in respect of a letter
of allocation, only for use by certificated ordinary shareholders, will be
posted to all ordinary shareholders registered on the record date for the
Rights Offer on or about Monday, 7 June 2010.
11. Amendments to BEE schemes and employee share incentive schemes
The Rights Offer will result in the dilution of voting and other benefits
in relation to the A ordinary shares held by the BEE SPV, Chaldean Trading
67 (Proprietary) Limited, and the B ordinary shares held by the Hulamin
Employee Share Ownership Trust and the Hulamin Management Share Ownership
Trust ("BEE Schemes"), and awards made under the employee share incentive
schemes. Subsequent to the Rights Offer, Hulamin will approach ordinary
shareholders, where necessary, to approve certain proposed adjustments to
these BEE Schemes to place the scheme participants in the same economic
position they would have been prior to the Rights Offer and to ensure that
Hulamin`s BEE rating is preserved, and for any approvals required to
preserve any benefits under employee share incentive schemes.
12. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 26 April
2010, and are advised that as the terms of the Rights Offer have been
published caution is no longer required to be exercised by ordinary
shareholders when dealing in their ordinary shares.
14 May 2010
Joint advisor and sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Joint advisor
Standard Bank
Legal Advisor
Bowman Gilfillan Inc.
Reporting Accountants
PricewaterhouseCoopers Inc.
Date: 14/05/2010 16:53:05 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.
