| Thu 3 Jun 2010, 17:23 | | YRK - York Timber Holdings Limited - Company Announcement |
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YRK
YRK
YRK - York Timber Holdings Limited - Company Announcement
York Timber Holdings Limited
(Registration number 1916/004890/06)
Share code: YRK
ISIN: ZAE000133450
("York" or "the Company")
ANNOUNCEMENT REGARDING:
- THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF YORK:
- TO ALLOW FOR THE EARLIER CONVERSION OF THE VOTING CONVERTIBLE NON-
REDEEMABLE CUMULATIVE PREFERENCE SHARES; and
- TO PROVIDE THE CHAIRMAN OF THE BOARD OF DIRECTORS ("the BOARD") WITH A
SECOND CASTING VOTE IN THE EVENT OF A DEADLOCK; AND
- A RELATED PARTY TRANSACTION
1. INTRODUCTION
Shareholders of York ("Shareholders") are advised that an agreement was
entered into between York, Main Street 488 (Proprietary) Limited
("Community SPV"), Main Street 493 (Proprietary) Limited ("Staff SPV") and
Blackstar (Cyprus) Investors Limited ("Blackstar Cyprus") (collectively
"the Parties") on 14 December 2009 ("the Agreement") and a further
agreement between the Parties on 26 April 2010 ("the Additional Agreement")
to allow for the earlier conversion of 2 870 529 unlisted voting
convertible non-redeemable cumulative preference shares of five cents each
in the share capital of York ("Convertible Preference Shares"), which is
currently stipulated in the Articles of Association to be 14 September 2010
("the Conversion Date")("the Early Conversion").
In addition, Shareholders are advised that York wishes to amend the
Articles of Association to make provision for the chairman of the Board to
have a second casting vote at Board meetings in the event that the Board
are evenly split on a vote and cannot take action ("the Deadlock
Amendment").
A circular to Shareholders setting out the full details of the Early
Conversion and the Deadlock Amendment, including the special resolutions
regarding the amendments to the Articles of Association to allow for the
Early Conversion and the Deadlock Amendment, was posted to Shareholders
yesterday, 2 June 2010 ("the Circular").
2. BACKGROUND
Shareholders approved the creation, allotment and issue of 2 870 529
Convertible Preference Shares of five cents each in the share capital of
York, representing a 26% interest in the Company in March 2007.
At the time of issuing the Convertible Preference Shares, one of York`s
principal strategic objectives was the implementation of a Broad Based
Black Economic Empowerment structure that would result in approximately 26%
of the Company`s equity and voting rights being beneficially held by black
people. 1 104 050 Convertible Preference Shares, representing a 10%
interest in York, were issued to the Staff SPV and the balance of 1 766 479
Convertible Preference Shares, representing a 16% interest in York, were
issued to the Community SPV ("the 2007 Blackstar Transaction").
This 2007 Blackstar Transaction was funded by the Blackstar Group plc ("the
Blackstar Group") through the subscription for redeemable preference shares
with a par value of five cents each in the capital of the Community SPV and
the Staff SPV("collectively, the SPVs) ("the Redeemable Preference
Shares"), which Redeemable Preference Shares were subsequently transferred
to Blackstar Cyprus during 2010 ("Change in Ownership").
In terms of the Articles of Association of York, the Convertible Preference
Shares will be convertible into York ordinary shares on a one-for-one basis
at the instance of the holders of the Convertible Preference Shares, on the
date three years and six months from date of issue.
As a result of the change in ownership of the SPV`s ordinary shares, the
original intention of the 2007 Blackstar Transaction, being the empowerment
of staff and communities to participate in the share capital of York, could
not be realised.
Consequently, the Board, Blackstar Cyprus and the SPV`s (as holders of the
Convertible Preference Shares) entered into the Agreement in terms of which
the Convertible Preference Shares would be converted at an earlier date,
subject to obtaining the required approvals.
3. RATIONALE
York has the opportunity to ensure the conversion of the Convertible
Preference Shares at an earlier date, which will result in the Company
reducing its exposure to future cash outflows in the form of preference
dividends which each holder of a Convertible Preference Share is entitled
to receive in terms of the Articles of Association.
4. RELATED PARTY TRANSACTION AND FAIRNESS OPINION
Blackstar Group has been a material shareholder in York up to October 2009,
with a shareholding of 10.01%.
Mr A Bonamour, Chief Executive Officer of Blackstar Group, was a director
of York until his resignation on 5 October 2009. Mr Bonamour also has an
indirect shareholding in Blackstar Group of 9.76%.
Accordingly, the amendments to the Articles of Association of York and the
terms of the Convertible Preference Shares to allow for the Early
Conversion is a related party transaction as defined in the Listings
Requirements of the JSE Limited ("the JSE").
Furthermore, as a "fair and reasonable opinion" was provided on the
original terms of the Convertible Preference Shares and the related party
element of the 2007 Blackstar Transaction, a fairness opinion is required
on the related party transaction and the amended terms of the Convertible
Preference Shares.
Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited has been
appointed by the Board as independent expert to provide an independent
opinion on the Early Conversion. Their fair opinion is reproduced in the
Circular.
5. UNDERTAKINGS
In terms of the Additional Agreement, York has irrevocably and
unconditional undertaken to:
- procure that a fairness opinion by an independent professional expert
is obtained as soon as practicable;
- convene a general meeting of Shareholders ("the General Meeting") to
propose the special resolution regarding the amendments to the
Articles of Association to allow for the Early Conversion ("the
Special Resolution"), and if approved, to lodge the Special Resolution
with Companies Intellectual Property Registration Office for
registration;
- use reasonable commercial endeavours to obtain irrevocable
undertakings from certain significant Shareholders to vote in favour
of the Special Resolution prior to the General Meeting taking place;
and
- use all reasonable commercial endeavours to procure that the Early
Conversion occurs as soon as practicable and in any event before the
Conversion Date.
Subject to approval by Shareholders at the General Meeting, all Convertible
Preference Shares in the issued share capital of York will be converted
into 2 870 529 York ordinary shares. Blackstar Cyprus, by virtue of owning
the ordinary share capital of both SPV`s, will consequently indirectly own
2 870 529 (or 0.87%) of York`s ordinary share capital.
6. FINANCIAL EFFECTS OF THE EARLY CONVERSION
The Early Conversion will have no material effect on York`s earnings,
headline earnings, net asset value or tangible net asset value and
accordingly, in terms of the JSE Listings Requirements, York is not
required to present pro forma financial effects.
7. SALIENT DATES AND TIMES
The salient dates and times in respect of the General Meeting are as
follows:
2010
Circular posted to Shareholders on Wednesday, 2 June
Last day to lodge forms of proxy for General Tuesday, 22 June
Meeting by 10h00 on
General Meeting to be held at 10h00 at the offices Thursday, 24 June
of Prinsloo, Tindle & Andropoulos Inc being 1st
Floor, 17 Fricker Road, Illovo Boulevard, Illovo,
Johannesburg, 2196 on
Results of General Meeting released on SENS on Thursday, 24 June
Results of General Meeting published in the press Friday, 25 June
on
Notes:
1. Any material change to the above dates and times will, subject to
approval by the JSE, be communicated to Shareholders by notification
on SENS and in the press.
2. All times indicated above are South African local times.
Sabie
3 June 2010
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Legal Advisor
Prinsloo, Tindle & Andropoulos Inc.
Date: 03/06/2010 17:23:02 Produced by the JSE SENS Department.
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