| Fri 25 Jun 2010, 13:45 | | CSP - Chemical Specialities Limited - Final terms of the rights offer specific |
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CSP
CSP
CSP - Chemical Specialities Limited - Final terms of the rights offer, specific
issue and withdrawal of cautionary announcement
Chemical Specialities Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/039947/06)
Share code: CSP
ISIN: ZAE000109427
("Chemspec" or "the Company")
FINAL TERMS OF THE RIGHTS OFFER, SPECIFIC ISSUE AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
Chemspec shareholders are referred to the announcement dated 13 April 2010 ("the
Initial Rights Offer Announcement") regarding the proposed rights offer and
potential specific issue for cash. All of the terms referred to in this
announcement bear the same meaning to the terms as defined in the Initial Rights
Offer Announcement.
1 Final terms of the rights offer
1.1 The board of directors of Chemspec ("the Board") is pleased to
announce that the terms and conditions relating to the rights offer
have been finalised, namely:
1.1 1 Total amount sought to be R99 999 999.90
raised in terms of the rights offer:
1.1.2 Ratio of entitlement 35.84229 rights offer shares for
every 100 Chemspec shares held on the
record date for the rights offer, as
per paragraph 5 below
1.1.3 Rights offer share price (the the issue price of 90 cents per
issue price) Chemspec ordinary share
1.1.4 Excess applications Excess applications will be allowed
and all excess rights offer shares
will be allocated equitably
1.2 The issue price of 90 cents per rights offer share represents a discount of
14.17% to the 30 day volume weighted average traded price of Chemspec
ordinary shares on the JSE Limited ("JSE") 30 business days prior to the
publication of the Initial Rights Offer Announcement;
1.3 Qualifying shareholders recorded in the register of Chemspec at the close
of business on the record date below, will be entitled to participate in
the rights offer;
1.4 In terms of an underwriting and subscription agreement entered into between
Chemspec and RMB Asset Management (Pty) Limited ("the Underwriter") ("the
Agreement"), the rights offer has been partially underwritten by the
Underwriter up to a maximum of 27 777 777 rights offer shares at the rights
offer share price ("the underwritten rights offer shares");
1.5 The Agreement is conditional upon, inter alia, the passing of the whitewash
resolution (as defined below) and the obtaining of the Rule 8.7 Exemption
(as defined below). Accordingly, if the whitewash resolution or the Rule
8.7 Exemption are not obtained, the Agreement shall lapse and be of no
further force or effect and the Underwriter shall not subscribe for the
underwritten rights offer shares and/or the shares in terms of the specific
issue (as detailed below), unless the Underwriter waives such conditions.
1.6 In terms of the Agreement, an underwriting fee of R500 000.00, being 2% of
the total underwriting commitment (being R24 999 999.30) is payable to the
Underwriter. The underwriting fee is, in the opinion of the Board, not
greater than the current market rate charged by independent underwriters
and is not subject to any terms that will render the underwriting
commission unreasonable or detrimental to Chemspec shareholders. The
payment of the underwriting fee is in accordance with the Companies Act No.
61 of 1973 (as amended) ("the Act") and the provisions of Chemspec`s
articles of association.
1.7 Qualifying shareholders will be entitled to apply for excess applications
in respect of those rights offer shares that have not been taken up on the
closing date per paragraph 5 below. Any rights offer shares that remain
unallocated thereafter shall then be allocated in terms of any excess
applications by the Board on an equitable basis;
1.8 Certain Chemspec shareholders, being Corvest 6 (Pty) Limited ("Corvest"),
Shalamuka Capital (Pty) Limited (formerly Tandem Capital (Pty) Limited),
Ivan Clark, Investec Bank Limited and certain members of Chemspec
management ("the specific shareholders"), holding approximately a combined
78% of the entire issued share capital of Chemspec (being approximately 241
800 000 Chemspec shares in aggregate), have provided Chemspec with rights
offer irrevocable undertakings to either in part or in full follow their
rights, which, in aggregate represent 61% of the rights offer shares.
1.9 Chemspec obtained dispensation from the JSE to the early issue, listing and
allotment of some or all of such rights offer shares to be followed by the
specific shareholders by virtue of their signed rights offer irrevocable
undertakings ("the subject shares"), on condition that:
1.9.1 the early issue, listing and allotment has been approved in advance by
the Board;
1.9.2 the subject shares shall only be issued in certificated format;
1.9.3 the subject shares will be allotted, issued and listed on Monday, 5
July 2010, however the share certificates in respect thereof shall be
held in ESCROW by Chemspec until the closing of the rights offer;
1.9.4 the certificated shares held in ESCROW by Chemspec shall not be traded
before the rights offer closes; and
1.9.5 the specific shareholders will only be handed their share certificates
upon closing of the rights offer.
2 Final terms of the specific issue
2.1 In terms of the Agreement, if the Underwriter, by virtue of its
underwriting, is not allotted at least 27 777 777 rights offer shares,
Chemspec has undertaken, subject to shareholder approval, to allot and
issue up to a maximum of 10 000 000 new ordinary shares ("the specific
issue shares") in the capital of Chemspec at the rights offer share
price to the Underwriter (in addition to any rights offer shares that
might have been allotted) such that the Underwriter will hold a
minimum of 10 000 000 ordinary shares and a maximum of 27 777 777
ordinary shares.
2.2 The salient terms of the specific issue of shares to the Underwriter
are as follows:
2.2.1 the Chemspec shares to be issued to the Underwriter will be of the
same class and will rank pari passu with the existing ordinary shares
in issue; and
2.2. the resolutions authorising the specific issue of shares to the
Underwriter require a 75% majority of the votes to be cast in favour
of the resolutions, excluding any parties and their associates
participating in the specific issue in terms of paragraph 5.51(g) of
the JSE Listing Requirements. As set out in the notice of a special
general meeting attached to and forming part of the Circular document
(as defined below), Chemspec shareholders (excluding any parties and
their associates participating in the specific issue in terms of
paragraph 5.51(g) of the JSE Listing Requirements) will be afforded
the opportunity to cast their votes in favour of such resolution; and
2.2.3 the specific issue price of 90 cents per Chemspec share represents a
14.17% discount to the 30 day VWAP per Chemspec ordinary share in the
30 business days prior to the Initial Rights Offer Announcement.
2.3 Chemspec shareholders are advised that the specific issue of shares for
cash is a separate process independent from the rights offer. It is
specifically stated that the two corporate actions are not dependent upon
each other and that the rights offer will proceed unconditionally (save as
disclosed herein) as set out in this announcement whether or not the
specific issue of shares for cash materialises.
2.4 The JSE has ruled that Corvest and the Underwriter are related parties as
defined in Section 10 of the JSE Listings Requirements and that an
independent expert should advise Chemspec shareholders as to whether the
specific issue of shares for cash is fair and reasonable, or otherwise to
Chemspec shareholders other than Corvest ("the Fairness Opinion"). The
Board appointed PSG Capital (Pty) Limited ("PSG Capital") as the
independent advisor to provide such advice. PSG Capital has provided
Chemspec with the Fairness Opinion, in which it advised the independent
members of the Board that the specific issue of shares for cash to the
Underwriter is unfair but reasonable.
2.5 The independent members of the Board have considered the Fairness Opinion
of PSG Capital and the terms and conditions of the specific issue and,
having taken into account these and other factors, accept that the specific
issue and the terms and conditions of the specific issue are unfair but
reasonable to the shareholders. The salient considerations behind the
Boards opinion to implement the specific issue on this basis without delay,
is that given Chemspec`s demand for access to adequate working capital as
soon as possible, it is in the best interest of both the Chemspec
shareholders and the Company.
2.6 The purpose for including the terms of the specific issue of shares for
cash into the Circular document to be posted to Chemspec shareholders("the
Circular document") is solely to avoid unnecessary expenses and ensure
transparent communication to Chemspec shareholders.
3. Mandatory offer and waiver thereof
3.1 The Underwriter and Corvest are viewed by the Securities Regulation Panel
("SRP") as concert parties in terms of the Securities Regulation Code on
Takeovers and Mergers and the Rules of the SRP established by the SRP in
terms of section 440C of the Act ("the Code") and, accordingly, the
Underwriter and Corvest together as concert parties, or (in any event,
irrespective of such concert party relationship) if either of them alone,
come to control 35% or more of the votes attaching to the issued shares in
Chemspec, pursuant to the subscription for shares in terms of the rights
offer and/or the underwriting and/or the specific issue, then such
subscription for shares will be regarded by the SRP as an "affected
transaction" requiring a mandatory offer to be made by the Underwriter
and/or Corvest.
3.2 However, in terms of Rule 8.7 of the Code, the SRP may waive the
requirement to make a mandatory offer if such waiver is supported by a
majority of independent shareholders in general meeting.
3.3 As set out in the notice of a special general meeting attached to and
forming part of the Circular document, independent Chemspec shareholders
will be afforded the opportunity to cast their vote in favour of a
resolution waiving the requirement for a mandatory offer to be made in
terms of the Code ("the whitewash resolution"). Should the requisite
majority of independent votes be cast in favour of the whitewash
resolution, subsequent application will be made to the SRP for the
exemption by the SRP from the obligation to make a mandatory offer in terms
of Rule 8.7 of the Code ("the Rule 8.7 Exemption"). The SRP has advised
that it is willing to consider an appplication to grant the Rule 8.7
Exemption, subject to the the passing of the whitewash resolution by a
majority of Chemspec shareholders, who are independent from the Underwriter
and Corvest. Prior to granting the Rule 8.7 Exemption, the SRP will
consider any objections or representations (if any) made by parties as
contemplated in the paragraphs below. PSG Capital advised the Board that
the potential mandatory offer of 90 cents per Chemspec share is unfair but
reasonable considering the discount to the intrinsic value of between R1.06
and R1.18 per Chemspec share.
3.4 Any interested party who wishes to object to the Rule 8.7 Exemption shall
have at least 14 (fourteen) calendar days following the date of the special
general meeting to raise such an objection with the SRP. Objections
should be made in writing and addressed to the "Executive Director,
Securities Regualtion Panel" at any one of the following addresses:
Physical Postal Fax
Ground Floor PO Box 91833 +27 11 482 5635
2 Sherborne Road (off Jan Auckland
Park
Smuts Avenue) 2006
Parktown Johannesburg
2193
3.5 Objections should reach the SRP by no later than the close of business on
Thursday, 10 August 2010 in order to be considered.
3.6 If any submissions are made to the SRP within the permitted timeframe, the
SRP will consider the merits thereof and, if necessary, provide the
objectors with an opportunity to make representations to the SRP.
Thereafter, subject to the waiver at the special general meeting being
approved by shareholders as aforesaid, the SRP will rule on the requirement
for a mandatory offer.
3.7 Chemspec shareholders are advised that Chemspec has obtained irrevocable
undertakings from independent shareholders, representing 62% of the total
issued share capital of the Company, to vote in favour of the whitewash
resolution.
4 Regulatory approvals
4.1 The circular document has been approved by both the SRP and the JSE
and, save as disclosed herein, all conditions precedent to the rights
offer have now been fulfilled;
4.2 The Issuer Services Division of the JSE has approved the listings of:
4.1.1 An amount of 111 111 111 renounceable (nil paid) letters of
allocation ("LA`s") and an amount of 111 111 111 rights offer
shares to be issued pursuant to the rights offer; and
4.2.2 An amount of 10 000 000 ordinary Chemspec shares of
R0.000005 each in the share capital of the company to be offered
to the Underwriter at an issue price of 90 cents per specific
issue share pursuant to the rights offer.
4.3 The South African Reserve Bank has granted the necessary exchange control
approval in respect of the rights offer.
4.4 The form of instruction in respect of the rights offer, together with the
Circular document, is in the process of being registered by the Registrar
of Companies in terms of Section 146(A) of the Act.
4.5 The nil paid letters of allocation in paragraphs 4.2.1 and 4.2.2 above will
trade under the share code "CSPN" and ISIN number "ZAE000147732".
4.6 The Circular document and all other required documents have been submitted
to the Companies and Intellectual Property Office ("CIPRO") for its
approval, which is expected to be obtained on Monday 28 June 2010. A
further announcement in confirmation of CIPRO approval will be released on
SENS on Monday 28 June 2010.
5. The important dates and times are as follows
2010
Declaration data released on SENS on Tuesday, 13 April
Finalisation data released on SENS on Thursday, 24 June
Circular posted to shareholders on Tuesday, 29 June
Last day to trade in Chemspec shares in order Friday, 2 July
to qualify to participate in the rights offer
(cum rights) on
Listing and trading of letters of allocation Monday, 5 July
on the JSE while Chemspec shares trade ex-
rights commences at 09:00 on
Listing of the maximum number of rights offer Monday, 5 July
shares on the JSE at 9:00 on
Record date for the rights offer for purposes Friday, 9 July
of determining shareholders entitled to
participate in the rights offer at the close
of business on
Dematerialised shareholders will have their Monday, 12 July
accounts at their CSDP or broker
automatically credited with their letters of
allocation on
Certificated shareholders will have their Monday, 12 July
letters of allocation credited to an
electronic register at the transfer
secretaries (being Computershare Investor
Services (Pty) Limited) ("Transfer
Secretaries")on
Form of instruction posted to certificated Monday, 12 July
shareholders
Rights offer opens at 09:00 on Monday, 12 July
Proxy forms to be received by 10:00 Monday, 26 July
Special general meeting of Chemspec Tuesday, 27 July
shareholders to be held at 10:00
*Last day to trade in letters of allocation in Thursday, 5 August
order to settle trades by the close
of the rights offer and participate in the
rights offer at the close of business on
Last day for forms of instruction of Thursday, 5 August
certificated shareholders wishing to sell all
or part of their entitlement to be lodged with
the Transfer Secretaries by 12h00 on
Trading of rights offer shares on the JSE Friday, 6 August
commences
*Record date for letters of allocation Friday, 13 August
Rights offer closes at 12h00 and payment to be Friday, 13 August
made and forms of instruction lodged by
certificated shareholders with the Transfer
Secretaries by 12h00 on (see note 2 below)
CSDP/broker accounts in respect of Monday, 16 August
dematerialised shareholders credited
with rights offer shares and debited with any
payments due in respect of
rights offer shares on
Results of rights offer and basis of Monday, 16 August
allocations of excess rights offer shares
announced on SENS on
Share certificates posted to certificated Tuesday, 17 August
shareholders by registered post
on or about
Dematerialised shareholders will have their Tuesday, 17 August
accounts at their CSDP or broker credited with
excess rights offer shares, where applicable
and debited with any payment due on or about
Refund cheques and/or share certificates Wednesday, 18
posted to certificated shareholders in respect August
of excess applications, if applicable, on or
about
Adjustments to the number of rights offer
shares listed effected on the Wednesday, 18
JSE, on or about August
Notes to the above dates:
1 Dematerialised shareholders are required to inform their CSDP or
broker of their instructions in terms of the rights offer in the
manner and time stipulated in the agreement governing the
relationship between the shareholder and their CSDP or broker.
2 Share certificates may not be dematerialised or rematerialised
between Monday, 5 July 2010 and Friday, 9 July 2010, both days
inclusive.
3 Dematerialised shareholders will have their accounts at their
CSDP automatically credited with their rights and certificated
shareholders will have their rights credited to an account at the
Transfer Secretaries.
4 CSDPs effect payment in respect of dematerialised Shareholders on
a delivery versus payment basis.
5 The above dates and times are subject to amendment. Any material
variation of the above dates and times will be approved by the JSE
and released on SENS.
6 The dates referred to in these two sections above and the
announcement thereof is further subject to the announcement of
Chemspec`s reviewed results for the year ended 31 March 2010 (`the
March review"). Any delay in the announcement of the March review
would imply a delay in the dates and times set out in the
"Important Dates and Times"- section above. To avoid any
unnecessary delays in the rights offer, dispensation was obtained
from the JSE to proceed with the rights offer based on the
unaudited results for the six months ended 30 September 2009 until
the March review has been announced. Chemspec agreed to publish
the March review and the updated pro forma financial effects of
this rights offer once the results have been made available.
7 The rights offer shares issued in terms of the rights offer will not be
registered for purposes of the rights offer with the Securities and Exchange
Commission, Washington, D.C., the Canadian Provincial Securities Commission, or
the Australian Securities Commission under the Australian Corporation Law, as
amended. Accordingly, the rights offer will not be made to or be open for
acceptance by persons with registered addresses in the United States of America
or any of its territories, dependencies, possessions or commonwealths or in the
District of Columbia or in the Dominion of Canada or in the Commonwealth of
Australia, its states, territories or possessions. The CSDP or broker will
ensure that where such persons are holding Chemspec ordinary shares in
dematerialised form that the CSDP or broker adheres to the above restrictions.
6 Pro forma financial information
6.1 The table below sets out the unaudited pro forma financial effects of the
rights offer based on the Company`s unaudited reviewed results for the six
months ended 30 September 2009 and are presented in a manner consistent
with the format and accounting policies adopted by Chemspec.
6.2 The unaudited pro forma financial effects are presented for illustrative
purposes only and because of their nature may not give a fair reflection of
the Company`s financial position after the rights offer.
6.3 It has been assumed for purposes of the pro forma financial effects that
the rights offer took place with effect from 30 September 2009 for balance
sheet purposes and 1 April 2009 for income statement purposes.
6.4 These pro forma financial effects are the responsibility of the Board.
Before the After the After the
rights rights specific
offer(1) offer(2)(3) issue(5)
(4)
Published Pro forma Pro forma
Basic earnings/(loss) per 7.45 6.54 6.47
share (cents)
Headline earnings/(loss) per 7.44 6.54 6.46
share (cents)
Net asset value per share 60.62 67.20 67.73
(cents)
Net tangible asset value per 47.94 57.86 58.61
share (cents)
Weighted average number 310,000,000 421,111,111 431,111,111
of shares in issue
Number of shares in issue at 310,000,000 421,111,111 431,111,111
period end
Notes to the pro forma financial information:
1. The "before the rights offer" financial information has been extracted
without adjustment from Chemspec`s unaudited published results for the six
months ended 30 September 2009.
2. The "after the rights offer" net asset value and net tangible asset value
per share have been adjusted to include the issue of 111,111,111 ordinary
shares at 90 cents per share less the payment of the estimated transaction
costs relating to the rights offer which have been written off against
share premium.
3. It has been assumed that the total value of the proceeds received from the
rights offer is R100 000 000.
4 The pro forma adjustments assume R25 000 000 of the rights offer proceeds
are utilised to pay down the FNB medium term loan facility (R7 621 172
adjustment to long term other financial liabilities and a R17 378 828
adjustment to short term other financial liabilities) and R30 000 000 is
utilised to pay back the outstanding Corvest loan (adjustment to short term
other financial liabilities), with R40 049 972 of proceeds being utilised
to pay down the bank overdraft so as to improve the Company`s cash position
to enable it to fund its working capital needs.
5 The "after the specific placing" assumes that all the rights offer shares
are subscribed for and the required whitewash resolutions obtained thus
necessitating the specific placing to the Underwriter as per the
underwriting and subscription agreement to ensure the Underwriter receives
its minimum of 10 000 000 shares at 90 cents per share, the proceeds of
which are assumed to be utilised to pay down the bank overdraft.
6 The rights offer is assumed to result in an after tax interest saving of R4
463 721 (calculated using 3-month JIBAR plus 2.8% for the FNB facility
repaid, prime plus 5% for the Corvest loan repaid and an average rate of
prime less 0.5% for the bank overdraft facility repaid, with a tax rate of
28%) while the specific placing is assumed to result in an after tax
interest rate saving of R329 400 (calculated using an average rate of prime
less 0.5% for the bank overdraft facility repaid, with a tax rate of 28%).
7 Posting of the Circular document
Per the salient dates and times as set out in paragraph 5 above, the Circular
document, together with the form of instruction in respect of certificated
shareholders only, will be posted to qualifying shareholders on Tuesday, 25 June
2010. The Circular document will also contain the notice of special general
meeting, which notice of special general meeting will also incorporate the
ordinary resolutions to be proposed thereat.
8 Withdrawal of cautionary announcement
The cautionary announcement as referred to in the Initial Rights Offer
Announcement is accordingly withdrawn and shareholders are advised that they no
longer need to exercise caution when trading their securities in the Company.
Bryanston
25 June 2010
Designated Advisor: QuestCo Sponsors (Pty) Limited
Fundraising Advisor: Purple Capital Limited
Attorneys to the proposed rights offer: Edward Nathan Sonnenbergs Inc.
Independent Advisor: PSG Capital(Pty) Limited
Date: 25/06/2010 13:45:01 Produced by the JSE SENS Department.
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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,
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