| Thu 5 Aug 2010, 17:30 | | BDM - Notice of general meeting waiver of mandatory offer partial offer to |
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BDM
BDM
BDM - Notice of general meeting, waiver of mandatory offer, partial offer to
Buildmax shareholders, renounceable rights offer, and renewal of cautionary
BUILDMAX LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1995/012209/06)
Share code: BDM ISIN: ZAE000011250
("Buildmax" or the "company")
NOTICE OF GENERAL MEETING, WAIVER OF MANDATORY OFFER, PARTIAL OFFER TO
BUILDMAX SHAREHOLDERS, RENOUNCEABLE RIGHTS OFFER, AND RENEWAL OF CAUTIONARY
1. INTRODUCTION, RECAPITALISATION PROCESS AND GENERAL MEETING
1.1 Introduction
Shareholders are referred to previous announcements released on the
Securities Exchange News Service ("SENS"), the last of which was dated 7
July 2010, advising that the board of Buildmax had resolved to proceed
with a R300 million (three hundred million rand) rights offer ("proposed
rights offer") to recapitalise the company.
1.2 Recapitalisation process
Shareholders are informed that, subject to the entering into of relevant
written agreements and certain conditions under such agreements being
fulfilled, including but not limited to:
1.2.1 the granting of a waiver under rule 8.7 of the Securities
Regulation Panel Code and Rules of the SRP (the "Code"), of the
requirement for Brait IV Investment, L.P. and Brait IV SA
Partnership (together "Brait") and Coronation Asset Management
(Proprietary) Limited ("Coronation") to make a mandatory offer
at R0.25 (twenty five cents) per share, as more fully described
in 1.2.4 below; and
1.2.2 Buildmax making a renounceable rights offer to Buildmax
shareholders to subscribe for ordinary Buildmax shares, at an
issue price of R0.125 (twelve point five cents) per share, in
the ratio of 2.31 (two point three one) rights offer shares for
every one Buildmax share held at the relevant record ("rights
offer"),
Brait and Coronation, together have agreed to:
1.2.3 acquire a total number of 170 (one hundred and seventy) million
Buildmax shares representing approximately 16% (sixteen per
cent) of the issued share capital of the company from
Westbrooke Capital Partners (Proprietary) Limited, Westbrooke
Investments (Proprietary) Limited and Westbrooke Special
Opportunities (Proprietary) Limited (together "Westbrooke") and
Interactive Capital (Proprietary) Limited, Interactive Capital
Management (Proprietary) Limited and Cream Magenta 36
(Proprietary) Limited (together "Interactive") in equal blocks
of 85 (eighty five) million shares from each of Westbrooke and
Interactive, representing 53.5% (fifty three point five per
cent) of each of their respective shareholdings in Buildmax at
R0.25 (twenty five cents) per share (the "acquisition");
1.2.4 make an offer to acquire 53.5% (fifty three point five per
cent) of each of the shares held by Buildmax shareholders
excluding Brait, Coronation, Westbrooke and Interactive
("minority shareholders"), at R0.25 (twenty five cents) per
share ("partial offer"), subject to the granting of a waiver
under rule 8.7 of the Code, of the requirement for Brait and
Coronation to make a mandatory offer to minority shareholders
at R0.25 (twenty five cents) per share ("mandatory offer") as a
result of the increase in their shareholding in Buildmax that
is anticipated to result from the acquisition ("waiver"),
subject to Brait and Coronation together making the partial
offer prior to the implementation of the rights offer;
1.2.5 follow the rights to which they are entitled under the rights
offer; and
1.2.6 underwrite the balance of the rights offer after taking into
account irrevocable undertakings in the process of being
obtained from Brait, Coronation, Westbrooke, Interactive and
Vuwa Investments (Proprietary) Limited ("Vuwa"), and any
irrevocable undertakings that may be received from other
shareholders indicating that they will follow the rights to
which they are entitled under the rights offer ("underwrite"),
under terms to be contained in the rights offer circular
("rights offer circular"), prior to signature of the
underwriting agreement. The rights offer circular is expected
to be posted to shareholders on or about Monday, 11 October
2010, subject to the receipt by the company of all shareholder
and regulatory approvals required to implement the rights
offer.
1.3 General meeting
A circular containing a notice convening a general meeting of
shareholders to be held at 14h00 on Monday, 30 August 2010 at the offices
of Macquarie First South Advisers (Proprietary) Limited, The Place, 1
Sandton Drive, South Wing, Sandown, Johannesburg ("general meeting") will
be posted to shareholders tomorrow, Friday, 6 August 2010 ("waiver
circular") and will be made available for download from the company`s
website at www.buildmax.co.za. The waiver circular contains details of
proposals in respect of:
- an increase in the authorised share capital of the company;
- placing of the authorised but unissued shares under the control of
the directors; and
- the waiver,
together the "proposals".
2. THE WAIVER
2.1 Dispensation
The SRP has advised that, after the general meeting has been held, it
will consider an application from Brait and Coronation to grant to them a
dispensation from the requirement to make the mandatory offer at R0.25
(twenty five cents) per share ("dispensation"). The granting of the
dispensation is subject to a majority of independent Buildmax
shareholders voting in favour of the waiver and to the SRP considering
representations (if any) made by any interested party under the
provisions of the Code.
2.2 The waiver
If the waiver is not approved and the dispensation is not granted by the
SRP, Brait and Coronation are not obliged to implement the acquisition or
to make the partial offer, and they are also not obliged to underwrite
the rights offer.
The board has appointed PKF Corporate Finance (Proprietary) Limited as an
independent advisor to the company ("independent advisor"), to provide to
the board its opinion on the waiver of the mandatory offer at R0.25
(twenty five cents) per share ("advice"). The advice is contained in
Annexure 3 of the waiver circular.
3. THE PARTIAL OFFER
Subject to the waiver, the dispensation and the implementation of the
acquisition, Brait and Coronation will make the partial offer on terms to
be contained in a circular to shareholders expected to be posted to
shareholders on or about Tuesday, 31 August 2010 ("partial offer
circular").
Shareholders who elect to accept the partial offer may apply the proceeds
received from such acceptance ("proceeds") towards following the rights
to which they are entitled under the rights offer. Not taking into
consideration the particular circumstance and risk profile of
shareholders (which consideration may include any relevant tax
considerations), the proceeds are expected to cover 99.61% (ninety nine
point six one per cent) of minority shareholders` anticipated cash costs
to follow in full the rights to which they are entitled under the rights
offer. Minority shareholders who are financially constrained from
following their rights will as a result of electing to accept the partial
offer, be in a position to follow their rights on their remaining
shareholdings post acceptance of the partial offer and, in doing so, will
avoid being diluted further in the rights offer.
Brait and Coronation have advised that the SRP will be provided with
independent confirmation that Brait and Coronation together have
sufficient cash resources available to them to satisfy full acceptance of
the partial offer, prior to making the partial offer, subject to the
waiver and the dispensation having been obtained and the implementation
of the acquisition.
4. THE RIGHTS OFFER
The company will embark on the rights offer immediately following the
closing of the partial offer subject to all relevant regulatory and other
approvals required for the implementation of the rights offer having been
received.
4.1 Irrevocable undertakings
The company is in the process of obtaining irrevocable undertakings from
Brait, Coronation, Westbrooke, Interactive and Vuwa that they will follow
the rights to which they are entitled under the rights offer at the
relevant record date. Collectively the shares held by the aforementioned
shareholders represent 74.97% (seventy four point nine seven per cent) of
the issued share capital of Buildmax. The irrevocable undertakings from
Westbrooke and Interactive will be subject to the implementation of the
acquisition.
4.2 Underwriting commitment
Brait and Coronation have agreed to underwrite the balance of the rights
offer subject to, amongst others:
- the receipt of all regulatory and other approvals required for the
implementation of the rights offer;
- the acquisition becoming unconditional; and
- the waiver and the SRP granting the dispensation.
As consideration for underwriting the rights offer Brait and Coronation
shall be entitled to an underwriting fee of 3.5% (three point five per
cent) of their respective underwriting commitments.
If the rights offer is not underwritten by Brait and Coronation the
company is not assured of raising R300 million (three hundred million
rand) pursuant to the rights offer and, whilst the board will consider
other alternatives, Buildmax may not be in a position to continue its
operations in its current form.
5. USE OF RIGHTS OFFER PROCEEDS
A successful implementation of the rights offer will enable Buildmax to
continue to grow shareholder value by:
- strengthening the balance sheet of the Mining Services Business Unit
by reducing asset based financing liabilities and providing much
needed working capital;
- exiting unprofitable projects without the risk of defaulting on debt
repayments;
- divesting of second hand assets in an orderly fashion to maximise
value in a constrained market;
- investing in strategic facilities and resources to enable the future
growth and transformation strategy of Buildmax;
- providing security to access debt funding needed for replacement and
expansion capital expenditure;
- providing improved service levels to Buildmax customers and
suppliers;
- creating a stable working environment that will attract and retain
quality industry and leadership skills; and
- allowing management to fully focus their attention on the day-to-day
running of the business.
The rights offer remains subject to Buildmax shareholders approving the
proposals, and to all other regulatory and other approvals required for
the implementation of the rights offer.
6. INDICATIVE SALIENT DATES AND TIMES
The indicative salient dates and times relating to the waiver are set out
below:
2010
The waiver:
Posting of waiver circular Friday, 6 August
Last day to lodge forms of proxy in respect Friday, 27 August
of the general meeting by 14h00 on
The general meeting held at 14h00 on Monday, 30 August
Results of general meeting released on SENS Monday, 30 August
Note:
- The above dates and times are subject to amendment. Any such amendment
will be released on SENS and published in the press.
Full salient dates and times relating to the partial offer and the rights
offer will be contained in the partial offer and rights offer circulars
and be released on SENS in due course.
The company anticipates that the partial offer will open on or about
Tuesday, 31 August 2010 and close on or about Thursday, 23 September
2010. Proceeds will be paid to shareholders who have accepted the partial
offer within five business days of such acceptance. Buildmax will embark
on the rights offer as soon as practicably possible thereafter.
9 RENEWAL OF CAUTIONARY
Further to the cautionary announcements dated 24 May 2010 and 7 July
2010, shareholders are advised that an announcement setting out the
financial effects of the rights offer will be published in due course.
Accordingly, shareholders are advised to continue exercising caution when
dealing in Buildmax shares until the publication of the financial
effects.
5 August 2010
Corporate advisor, legal advisor and sponsor to Buildmax
Java Capital
Financial advisor to Buildmax
Macquarie First South Advisers (Proprietary) Limited
Independent advisor to Buildmax
PKF Corporate Finance (Proprietary) Limited
Legal advisor to Brait
Read Hope Phillips Attorneys
Corporate advisor to Brait
Questco (Proprietary) Limited
Date: 05/08/2010 17:30:05 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.
