| Mon 31 May 2010, 17:13 | | ABK - African Brick - Proposed rights offer to shareholders |
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ABK
ABK
ABK - African Brick - Proposed rights offer to shareholders
AFRICAN BRICK CENTRE LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 1999/006214/06)
Share Code: ABK
ISIN: ZAE000105169
("African Brick" or "the Company")
PROPOSED RIGHTS OFFER TO SHAREHOLDERS
1. INTRODUCTION AND TERMS OF THE RIGHTS OFFER
Shareholders are advised that African Brick is undertaking an approximate
R20 million capital raising by way of a rights offer ("the rights offer").
The rights offer will give all shareholders registered as such on the
record date an equal opportunity to participate in the capital raising.
In terms of the rights offer, a total of 671,311,614 new African Brick
ordinary shares in the authorised but unissued share capital of African
Brick ("the rights offer shares") will be offered for subscription to
shareholders, by way of renounceable rights, at a subscription price of 3
cents per African Brick ordinary share ("the issue price"), in the ratio of
215 rights offer shares for every 100 existing African Brick ordinary
shares held at the close of trade on the record date of the rights offer,
thereby raising a total amount of R20,139,348 before costs.
2. RATIONALE AND PURPOSE OF THE RIGHTS OFFER
The recessionary conditions in the building industry during the last two
years have severely impacted African Brick, leading to comprehensive losses
being recorded for the last two financial years ended 28 February 2009 and
2010 of R76,8 million and R15,3 million, respectively. The Company has not
been breaking even and the controlling shareholder, Yakani Infraco
(Poprietary) Limited ("Yakani Infraco"), has had to advance a R5 million
loan, as working capital to finance the operating losses.
Management has implemented a stringent programme of right sizing the
business for the current economic climate by, inter alia, closing the
Lenasia plant,spinning off and/or closing its retail stores, adopting
energy saving measures in its plants and generally reducing overhead costs.
There are clear signs that these measures are starting to show effect and
that African Brick is now close to break even. The brick market is showing
signs of a recovery in demand to the extent that a modest increase in
prices was made possible recently. African Brick is invested in high
quality assets in both Krugersdorp and Port Elizabeth, including clay
rights and plant and equipment and is extremely well positioned to benefit
from any recovery in the building industry.
However, African Brick`s balance sheet has been seriously weakened by the
recent losses and impairments and requires a recapitalisation to alleviate
any liquidity strain and sustain its turnaround strategy. It was concluded
that the recapitalisation should take the form of a rights offer at 3 cents
per rights offer share. As part of the rights offer, Yakani Infraco has
agreed to restructure its R5 million loan by effectively converting the
loan into equity.
3. FRACTIONS
Only whole numbers of new African Brick shares will be issued and African
Brick shareholders will be entitled to rounded numbers of shares once the
ratio has been applied, using the rounding principle where allocations will
be rounded down to the nearest whole number if they are less than 0.5 and
rounded up to the nearest whole number if they are equal to or greater than
0.5.
4 EXCESS APPLICATIONS
African Brick shareholders will be permitted to apply for new African Brick
shares in excess of their entitlement. Should there be excess rights offer
shares available for allocation, these will be allocated to applicants in a
manner viewed as equitable in terms of the Listing Requirements of the JSE
Limited ("JSE").
5. IRREVOCABLE UNDERTAKINGS AND UNDERWRITING
Yakani Infraco, which has a holding of 51.02% in the Company`s shares, has
irrevocably committed to follow its rights, through the conversion of its
R5 million loan into shares and the balance in cash, i.e. a total amount of
approximately R10.2 million.
The balance of the rights offer is not underwritten.
6. IMPORTANT DATES AND TIMES
2010
The salient information announcement regarding Monday, 31 May
the rights offer to be released on SENS by
close of business (17:00)
Last day to trade in African Brick ordinary Friday, 16 July
shares in order to participate in the rights
offer (cum entitlement)
Listing of and trading in the letters of Monday, 19 July
allocation in respect of new African Brick
shares on the JSE commences at 09:00
African Brick ordinary shares commence trading Monday, 19 July
ex- rights on the JSE at 09:00
Record date for the rights offer Friday, 23 July
Rights offer opens at 09:00 and the rights Monday, 26 July
offer circular posted to shareholders
Certificated shareholders will have their Monday, 26 July
letters of allocation credited to an
electronic account held at the transfer
secretaries
Dematerialised shareholders will have their Monday, 26 July
accounts at their CSDP or broker credited with
their entitlement
Last day for trading letters of allocation on Thursday, 5 August
the JSE
Listing of rights offer shares and trading Friday, 6 August
therein on the JSE commences
Rights offer closes at 12:00. Payment to be Friday, 13 August
made and form of instruction lodged by
certificated shareholders at the transfer
secretaries
Record date for the letters of allocation Friday, 13 August
Rights offer shares issued and posted to Monday, 16 August
shareholders in certificated form on or about
CSDP or broker accounts in respect of Monday, 16 August
dematerialised shareholders will be updated
with rights offer shares and debited with any
payments due
Results of rights offer announced on SENS Monday, 16 August
CSDP or broker accounts in respect of Tuesday, 17 August
dematerialised shareholders will be updated
with excess rights offer shares (where
applicable) and debited with any payments due
on or about
Excess Rights offer shares issued (where Wednesday, 18 August
applicable) and posted to shareholders in
certificated form on or about
* CSDPs effect payment in respect of dematerialised shareholders on a
delivery versus payment method.
Notes:
(1) Unless otherwise indicated, all times are South African times.
(2) African Brick shareholders may not dematerialise or rematerialise
their African Brick ordinary shares between Monday, 19 July 2010 and
Friday, 23 July 2010, both dates inclusive.
7. REGULATORY APPROVALS
7.1. Application will be made to the Issuer Services Division of the JSE to
approve the listings of:
* 671,311,614 renounceable (nil paid) letters of allocation
("LAs"); and
* 671,311,614 rights offer shares to be issued pursuant to the
rights offer.
7.2. Application will also be made to The South African Reserve Bank to
grant approval for the rights offer.
7.3. Application for the registration of the form of instruction in respect
of the rights offer by the Registrar of Companies appointed under the
Companies Act No. 61 of 1973, will be made in this regard in due
course.
8. PRO FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the
rights offer on the audited results for the year ended 28 February 2010.
The pro forma financial effects, which are the responsibility of the
directors of African Brick, have been prepared for illustrative purposes
only and, because of their nature, may not give a true reflection of
African Brick`s financial position, changes in equity and results of
operations or cash flows.
Before(1) After (2) % change
(cents) (cents)
Earnings/(loss) per share (4,9) (1,4) 71,6%
Headline earnings/(loss) per share (3,8) (1,0) 72,6%
Net asset value ("NAV") per share 16,1 7,1 (56,2%)
(cents)
Tangible net asset value 14,4 6,5 (54,8%)
("TNAV")per share (cents)
Number of shares in issue (`000) 312,237 983,549 215,0%
Weighted number of shares ("000") 312,237 983,549 215,0%
Notes:
1. The `before` column is based on the audited results for the year ended
28 February 20102.
2. The `after` column has been adjusted for the effects of the rights
offer.
3. The financial effects are calculated on the assumptions that:
a. All shareholders follow their rights and African Brick raises
R20,139,348 through the issue of 671,311,614 new African Brick
ordinary shares at the issue price;
b. The cash proceeds have been received and the rights offer shares
issued on 1 March 2009 for the income statement effect;
c. The expenses of the rights offer of R1 million have been offset
against the proceeds from the rights offer;
d. The proceeds from the rights offer are used to repay debt at a
cost of 8.5%
e. The cash proceeds have been received and the rights offer shares
issued on 28 February 2010 for the balance sheet impact; and
f. Transaction costs relate to the fees paid to professional
advisers and legal and compliance fees. This is not expected to
have a continuing effect on African Brick.
9. DOCUMENTATION
A circular to African Brick shareholders, incorporating listing
particulars, setting out full details of the rights offer, will be posted
to shareholders on or about Monday, 26 July 2010. A form of instruction in
respect of the LAs will be enclosed with the circular for use by African
Brick shareholders who have not dematerialised their African Brick shares.
10. RESTRICTIONS
The granting of the right to subscribe for rights offer shares in certain
jurisdictions other than South Africa may be restricted by law and a
failure to comply with any of those restrictions may constitute a violation
of the securities laws of any such jurisdiction.
The shares have not been and will not be registered for the purposes of the
rights offer under the securities laws of the United Kingdom, Canada,
United States of America or any other country outside South Africa and
accordingly, are not being offered, sold, taken up, re-sold or delivered
directly or indirectly to rights recipients with registered addresses
outside South Africa.
The rights offer does not constitute an offer in any area of jurisdiction
in which it is illegal to make such an offer.
Johannesburg
31 May 2010
Corporate adviser and sponsor
Grindrod Bank Limited
(Registration number 1994/007994/06)
Date: 31/05/2010 17:13:01 Produced by the JSE SENS Department.
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