| Wed 27 Oct 2010, 14:50 | | BFS - Blue Financial Services - Amendments to the purchase of rights |
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BFS
BFS
BFS - Blue Financial Services - Amendments to the purchase of rights
agreement
Blue Financial Services Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1996/006595/06)
JSE Share code: BFS
ISIN: ZAE000083655
("Blue" or the "Company")
Mayibuye Group (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1998/022424/07)
("Mayibuye")
AMENDMENTS TO THE PURCHASE OF RIGHTS AGREEMENT
1. INTRODUCTION
Shareholders are referred to the update announcement released on the
Securities Exchange News Service of the JSE Limited on 7 October 2010 in
connection with the proposed recapitalisation of the Company by Mayibuye
("Recapitalisation")and the posting of a circular to Blue shareholders
dated 7 October 2010 ("Circular") containing details of the
Recapitalisation and incorporating the notice of a general meeting to be
held at 11h00 on Friday, 29 October 2010 at the registered office of the
Company, being Building 10, 107 Haymeadow Street, Boardwalk Office Park,
Faerie Glen, Pretoria, 0081.
2. AMENDMENTS TO THE PINEBRIDGE AGREEMENT
Shareholders are hereby advised that the purchase of rights agreement
entered into between Mayibuye and Pinebridge Global Emerging Markets
Partners II, L.P. ("Pinebridge"), on or about 9 August 2010 ("Pinebridge
Agreement"), in terms of which Mayibuye will acquire all indebtedness or
obligations of any nature whatsoever of the Company and any company in
which the Company, directly or indirectly, holds 50% or more of the
issued share capital ("Group Company"), to Pinebridge from time to time,
and any rights of any nature whatsoever which Pinebridge may have
against any Group Company, save for certain claims and rights
specifically excluded ("Sale Rights"), has lapsed due to delays in
finalising the Recapitalisation.
Accordingly, an agreement dated 27 October 2010 was entered into between
Mayibuye, Pinebridge, Blue and certain Group Companies which, inter
alia:
- revives the Pinebridge Agreement, subject to the amendments detailed
below; and
- excludes certain additional claims held by Pinebridge against Blue and
certain Group Companies from the claims acquired by Mayibuye from
Pinebridge in terms of the Pinebridge Agreement.
At the time the Pinebridge Agreement was entered into, the following
alleged claims ("Additional Excluded Claims") were not within the
contemplation of either the Company, Pinebridge or Mayibuye:
2.1 as a result of a directive issued by the Central Bank of
Nigeria, Pinebridge is required to transfer all of the
shares acquired by it in the share capital of BFS Nigeria
from Blue, back to Blue ("Applicable Shares").
In the circumstances, Pinebridge alleges that it has a claim
("Blue Nigeria Claim") for repayment of the purchase price
originally paid by Pinebridge as consideration for the Applicable
Shares being USD5,000,000 plus interest thereon accruing at a
rate of 8.5% per annum from the date the original sale agreement
was concluded until the date the Recapitalisation becomes
unconditional ("Blue Nigeria Claim Amount");
In calculating the estimated Rand value of the Blue Nigeria Claim
Amount due to Pinebridge, it has been assumed that interest (as
detailed in paragraph 2.1 above) will accrue for a period of 25
months resulting in an estimated Blue Nigeria Claim Amount of
R41.9 million. To the extent that the Company is able to settle
the Blue Nigeria Claim via the issue of Blue ordinary shares as
contemplated in paragraph 2.3 below, the estimated number of Blue
ordinary shares that may be issued to Pinebridge is 349 759 873
based on the 30 day volume weighted average price ("VWAP") of
Blue ordinary shares of 12 cents.
2.2 as a result of the restatement of the annual financial
statements of the Company in respect of the financial year
ended 28 February 2009, Pinebridge alleges that the number
of shares in the Company allotted and issued to Pinebridge
pursuant to the conversion of the Class C Preference Shares
held by it was incorrect and that it has a claim
("Blue Claim") for the allotment and issue of an
additional 22,731,279 Blue ordinary shares.
In light of the above, Mayibuye and Pinebridge have agreed to
exclude the Additional Excluded Claims from the Sale Rights.
At the same time, the Company and Pinebridge have agreed to
terminate the letter agreement entered into in the form of
annexure "1" to the Pinebridge Agreement and the Company has
agreed to settle the Additional Excluded Claims as follows -
2.3 in respect of the Blue Nigeria Claim, the original sale agreement
will be cancelled, against Pinebridge transferring the Applicable
Shares back to the applicable Group Company, the Company
acknowledges its indebtedness in respect of the Blue Nigeria
Claim Amount, which will be settled by the Company through the
allotment and issue of Blue ordinary shares to Pinebridge as part
of the debt to equity conversion contemplated in the debt
rescheduling agreement entered into between Blue and certain of
its existing lenders ("Debt Rescheduling Agreement") and/or any
debt to equity conversion implemented by the Company prior to the
3rd anniversary of the date on which Mayibuye receives its Blue
ordinary shares under the Recapitalisation ("Early Conversion");
2.4 in respect of the Blue Claim, Blue acknowledges that it is
indebted to Pinebridge in an amount equal to the aggregate of the
price per Blue ordinary share which the applicable funders will
be required to pay as part of any Early Conversion, multiplied by
the lesser of 22,731,279 and such number of Blue ordinary shares
that Pinebridge may be entitled to as part of any Early
Conversion, and/or the price per Blue ordinary share which the
applicable funders will be required to pay as part of the
conversion contemplated in the Debt Rescheduling Agreement,
multiplied by the difference between 22,731,279 and such number
of Blue ordinary shares allotted and issued to Pinebridge as part
any Early Conversion ("Blue Claim Amount"). The Blue Claim Amount
shall be converted into Blue ordinary shares as part of the
conversion contemplated in the Debt Rescheduling Agreement or as
part of any Early Conversion.
3. CONDITIONS
The Company`s obligation to issue further Blue ordinary shares (as
contemplated in paragraphs 2.3 and 2.4) in order to discharge its
obligations arising out of the Additional Excluded Claims, are subject
to the Company obtaining all necessary shareholder and regulatory
approvals (as the case may be), failing which the obligations arising
from the Additional Excluded Claims will be settled in cash in
accordance with the principles contained in the Debt Rescheduling
Agreement.
4. WARRANTY CLAIMS
Shareholders are referred to paragraph 4.5 of the Circular in which
shareholders were advised that in terms of the Recapitalisation, should
the Company breach any of the warranties contained in the amended and
restated subscription agreement, and upon a final determination of the
quantum of Mayibuye`s claims, losses or liabilities against Blue by
agreement between Mayibuye and Blue (provided that no directors of Blue
who are not independent of Mayibuye shall be entitled to vote on any
such agreement), an order of court or arbitration award ("Claim
Amount"), Mayibuye will be entitled, at its election, to have the Claim
Amount settled either in cash or through the issue of such number of
Blue ordinary shares (based on then 30 day volume weighted average price
per Blue ordinary share) which in aggregate would be equal to the value
of the Claim Amount.
Accordingly, shareholders are advised that subject to the process as
contemplated above being followed and assuming that Mayibuye elects to
receive Blue ordinary shares in settlement thereof, it is estimated that
Mayibuye may have a warranty claim in respect of a maximum number of 22
731 279 Blue ordinary shares in relation to the Blue Claim and a a
maximum number of 349 759 873 Blue ordinary shares in relation to the
Blue Nigeria Claim. In calculating the estimated warranty shares to be
issued to Mayibuye in connection with the Blue Nigeria Claim, it has
been assumed that interest (as detailed in paragraph 2.1 above) will
accrue for a period of 25 months resulting in an estimated Claim Amount
of R41.9million and that the 30 day VWAP per Blue ordinary share will be
12 cents. Shareholders are however alerted to the fact that the final
determination of warranty shares (if any) that may become payable to
Mayibuye in relation to the Blue Nigeria Claim will be dependent on an
assessment of the fair value of the shares in BFS Nigeria that are to be
transferred back to Blue (the "Blue Nigeria shares"). An assessment of
the fair value of the Blue Nigeria shares has not yet been undertaken by
the Company and in such instance where the fair value of the Blue
Nigeria Shares is assessed to be equal to the Blue Nigeria Claim Amount
the likelihood of warranty shares being issued to Mayibuye is limited.
5. SHAREHOLDERS MEETING
Shareholders are hereby reminded of the shareholders meeting scheduled
for Friday, 29 October 2010 at which the Recapitalisation Transaction is
due to be approved.
6. UPDATE ANNOUNCMENT TO SHAREHOLDERS
A further announcement(s) to shareholders will be made once it has been
established what shareholder and regulatory approvals contemplated in
paragraph 3 are required.
Pretoria
27 October 2010
Financial adviser to Blue
NM Rothschild & Sons (South Africa) (Proprietary) Limited
Designated adviser to Blue
Grindrod Bank Limited
Financial adviser to Mayibuye
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Legal adviser to Mayibuye
Cliffe Dekker Hofmeyr Inc
Date: 27/10/2010 14:50:39 Produced by the JSE SENS Department.
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