| Fri 14 May 2010, 17:34 | | CMG - Cenmag - Results of the general meeting and detailed cautionary |
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CMG
CMG
CMG - Cenmag - Results of the general meeting and detailed cautionary
announcement
CENMAG HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004821/06)
Share code: CMG & ISIN code: ZAE000001533
(`Cenmag" or `the company`)
ANNOUNCEMENT REGARDING:
THE RESULTS OF THE GENERAL MEETING;
A DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE RESTRUCTURING OF THE CENMAG
GROUP THROUGH A PROPOSED SPECIFIC REPURCHASE OF SHARES AND A SECTION 228
DISPOSAL OF SUBISIDIARIES;
A CHANGE IN CONTROL AND POTENTIAL OFFER TO MINORITY SHAREHOLDERS AND A RENEWAL
OF CAUTIONARY ANNOUNCEMENT
1. General Meeting
Shareholders are referred to the SENS announcement dated 5 May 2010
relating to the adjournment of the general meeting requisitioned by
shareholders in accordance with section 180 of the Companies Act, 1973 (as
amended): in terms of the SENS announcement dated 5 May 2010 the general
meeting was adjourned to 10h00 on Wednesday, 12 May 2010. As a result of
various agreements being concluded by the company, the resolutions to be
presented at the reconvened general meeting on 12 May 2010 were withdrawn.
The reconvened general meeting was accordingly closed without attending to
any business.
2. Introduction
Further to the cautionary announcement dated 21 April 2010, shareholders of
the company are advised that the company has entered into various
agreements, dated 11 May 2010, which when taken together will result in:
a) the company repurchasing 35.53% of its issued share capital ("the
Proposed Specific Repurchase"); and
b) the company disposing of its existing subsidiaries ("the Proposed
Disposal")
As a result of the Proposed Specific Repurchase and the Proposed Disposal,
the company will become a cash shell.
In addition, and as a result of the Proposed Transaction the board of
directors of the company will be reconstituted and the name of the company
will be changed. The current controlling shareholders of the company,
being Mr Victor Farkas ("Farkas") and Mrs Elaine Greenblatt ("Greenblatt"),
have entered into additional agreements, which when implemented with the
Proposed Specific Repurchase and the Proposed Disposal (together, "the
Proposed Transaction") will facilitate the restructuring of the company as
described above.
3. The Proposed Transaction
The Proposed Transaction which is to be implemented consists of four
separate, but indivisible transactions, as set out below:
- A settlement agreement has been concluded between Blaf Investments CC
("Blaf"), the company, Farkas, Greenblatt, Mr James Herbst ("Herbst"),
Herbst Investments 001 (Pty) Ltd ("Herbst Investments") and Pacific
Breeze Trading 417 (Pty) Ltd. In terms of this settlement agreement
all parties have agreed, subject to the implementation of the Proposed
Specific Repurchase and the Proposed Disposal and the fulfillment of
certain other conditions, to settle all disputes between each other.
The effect of the implementation of the settlement agreement is that
the existing controlling shareholders of Cenmag, being Farkas and
Greenblatt, will be replaced by Greenblatt, Herbst and Herbst
Investments as the new controlling shareholders of Cenmag;
- A sale of shares and claims agreement has been concluded by and
between Blaf and Farkas, as sellers, and the company as purchaser, and
Greenblatt, Herbst and Herbst Investments in terms of which Blaf and
Farkas will, subject to fulfillment of certain conditions precedent
and as one indivisible transaction, sell 1 009 293 ordinary shares and
2 402 105 ordinary shares held by them respectively in Cenmag to
Cenmag, for a consideration of R4 093 677.60 (four million and ninety
three thousand six hundred and seventy seven Rand and sixty cents),
being the equivalent of R1.20 per share ("the Proposed Specific
Repurchase Agreement"). The shares to be sold to Cenmag will be
repurchased by Cenmag by way of a reduction of share capital as
provided for in terms of Section 85 of the Companies Act, 1973 (as
amended), resulting in a cancellation of such shares. The effective
date of the Proposed Specific Repurchase Agreement is 27 February
2010; and
- A sale of shares and claims agreement has been concluded by and
between the company and Greenblatt as sellers, and Blaf, as purchaser,
in terms of which Cenmag and Greenblatt will, subject to fulfillment
of certain conditions precedent, sell off all of the shares held by
them in, and all the claims on loan account held by them against
subsidiaries of the company, namely, African Magnets (Pty) Ltd,
Century Electrical Wholesalers (Newcastle) (Pty) Ltd, Century
Electrical Wholesalers (Evander) (Pty) Ltd, Magnetic Technology
Consultants (Pty) Ltd, Castle Engineering Supplies (Vaal) (Pty) Ltd,
Castle Engineering Supplies (Evander) (Pty) Ltd, Castle Engineering
Supplies (Witbank) (Pty) Ltd, The Electro Magnet Company (Pty) Ltd and
Mechani Mag (Pty) Ltd, to Blaf ("the Proposed Disposal Agreement")
with effect from 27 February 2010, for a combined disposal
consideration of R4 093 677.60.
4. Conditions Precedent to the Proposed Transaction
The Proposed Transaction is subject to the conditions precedent that by no
later than 31 August 2010:
- The shareholders of Cenmag will have passed the necessary special
resolutions required in terms of sections 85 and 228 of the Companies
Act, 1973 (as amended) approving the Proposed Specific Repurchase and
the Proposed Disposal and that such resolutions will have been
registered by the Registrar of Companies;
- any other regulatory approvals which may be required in order to
implement the proposed Transaction, including, but not limited to the
JSE and the SRP, will have been obtained;
- the Greenblatt Sale Agreement will have become unconditional in
accordance with its terms and the company secretarial provisions of
the Settlement Agreement will have been implemented.
5. The Proposed Specific Repurchase
The company is in the process of finalising its annual results for the year
ended 28 February 2010. Following the release of these results, the
company will release an announcement setting out the salient terms of the
Proposed Specific Repurchase, including the date on which the specific
authority to repurchase will be sought, the date on which the securities
will be cancelled and date of termination of the listing of these
securities as well as the effect of the Proposed Specific Repurchase on
earnings per share, headline earnings per share, net asset value per share
and net tangible asset value per share.
6. The Proposed Disposal
The Proposed Disposal constitutes an affected transaction in terms of the
Securities Regulation Code on Takeovers and Mergers ("the Code") and is, in
terms of the JSE Listings Requirements, a related party transaction. An
independent expert will accordingly be appointed in accordance with the JSE
Listings Requirements and the Code in order to advise shareholders on the
fairness of the Proposed Disposal, which opinion will be included in a
circular to be posted to shareholders as set out in paragraph 13 below.
The proceeds from the Proposed Disposal will effectively be utilised in the
implementation of the Proposed Specific Repurchase, thereby making the
Proposed Transaction a cash neutral transaction for the company.
7. Rationale for the Proposed Disposal
Since the date of its incorporation in 1987, Cenmag has operated as an
investment holding company holding investments in subsidiaries which are
primarily involved in the manufacture of electromagnets, the rewinding of
motors and the distribution of electrical and related equipment. The
company`s share has traditionally been illiquid, with the increase in trade
and the share price over the past year being solely attributable to the
previously announced proposed transaction with Aurora Empowerment Systems
(Pty) Ltd, which transaction was terminated following the decision by
certain of the majority shareholders of Cenmag not to sign a re-instatement
agreement following the lapsing of the agreements relating to that proposed
Aurora transaction. The existing directors of Cenmag accordingly do not
believe that the market performance of the company warrants the costs
associated with maintaining a listing on the JSE.
8. Effect of the Proposed Disposal on the Listing of the Company
The Proposed Disposal will result in the company being classified as a
"cash shell" in terms of the JSE Listings Requirements and should it,
within a period of six months after such classification, fail to enter into
an agreement relating to the acquisition of viable assets that satisfy the
conditions for listing in terms of the JSE Listings Requirements, its
listing will be suspended.
9. Change of Name
The terms of the Proposed Transaction incorporate the sale by Cenmag and
the purchase by Blaf of the name "Cenmag" as well as the names of each of
the Cenmag subsidiaries and all logos and trademarks used in connection
therewith. Accordingly, as part of the implementation of the Proposed
Transaction, the company will change its name to such other name as may be
approved and allowed by the Registrar of Companies.
10. Change in Control and Mandatory Offer to Minority Shareholders
Following the implementation of the Proposed Specific Repurchase and as a
result of the cancellation of the shares acquired in terms of the Specific
Repurchase Agreement, there will be a change in control of the company.
Herbst and Greenblatt have accordingly agreed and undertaken that, to the
extent required by the Securities Regulation Panel, they shall make an
offer to the minority shareholders of Cenmag, excluding Blaf, Farkas,
Greenblatt, Herbst, Herbst Investments, and the Cenmag Share Trust, to
purchase all or any of the shares held by them at the same price and on
similar terms as the Proposed Specific Repurchase.
11. Reconstitution of the Board
Following the approval by shareholders of the Proposed Transaction, Farkas,
Justin Joseph Farkas and Casper Josewes Barend Le Roux will resign as
directors of the company and new directors will be nominated for
appointment by the new controlling shareholders.
12. Financial Effects
The pro forma financial effects of the Proposed Transaction will be
announced following the release of the annual financial statements for the
year ended 28 February 2010.
13. Documentation
In terms of the JSE Listings Requirements, the Proposed Transaction
constitutes a category one transaction. A circular compliant with the Code
and the JSE Listings Requirements and containing full details of the
proposed Transaction and a notice of general meeting of the company will be
posted to shareholders in due course.
14. Renewal of Cautionary Announcement
Shareholders are advised to continue to exercise caution in dealing in the
company`s securities until such time the pro forma financial effects of the
proposed Transaction have been announced on SENS.
Johannesburg
14 May 2010
Sponsor
Arcay Moela Sponsors (Pty) Ltd
(Registration number 2006/033725/07)
Date: 14/05/2010 17:34:05 Produced by the JSE SENS Department.
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