| Mon 22 Nov 2010, 10:03 | | TRE - Trencor Limited - Specific share repurchase of Trencor shares and |
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TRE
TRE
TRE - Trencor Limited - Specific share repurchase of Trencor shares and
withdrawal of cautionary announcement
TRENCOR LIMITED
Incorporated in the Republic of South Africa
(Registration Number 1955/002869/06)
Share code: TRE
ISIN: ZAE000007506
("Trencor")
SPECIFIC SHARE REPURCHASE OF TRENCOR SHARES AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1 Introduction
Trencor shareholders ("Shareholders") are referred to the cautionary
announcement of 18 October 2010 wherein it was announced that Trencor had
entered into discussions in terms of which, subject to the unbundling by
Mobile Industries Limited ("Mobile") of its 46,25% shareholding in
Trencor ("the Unbundling") becoming unconditional and being implemented,
Trencor will acquire approximately 50% of the Trencor shares that will be
held post the Unbundling by Trusts ("the Trusts"), which are related to
Neil Jowell and Cecil Jowell ("the Jowells"), at a price of R38,61 per
Trencor share ("the Specific Share Repurchase").
The purpose of this announcement is to provide more detailed information
relating to:
- the terms and anticipated timetable of the Specific Share
Repurchase; and
- the conditions to be fulfilled before the Specific Share Repurchase
will be effected.
2 Details of the Specific Share Repurchase
2.1 Terms of the Specific Share Repurchase
Subject to the fulfilment of the conditions precedent set out in
paragraph 4 below, and in accordance with the salient dates and times set
out in paragraph 3 below, Trencor will repurchase 10 800 881 Trencor
shares ("Repurchased Shares") from the Trusts at a price of R38,61 per
Trencor share, being the intrinsic value of Trencor`s shares on the date
Trencor`s advisors commenced discussions with Shareholders. The Specific
Share Repurchase will take place on a date to be agreed in writing by the
Trusts and Trencor, but which date shall not be before Tuesday, 1 March
2011 and shall not be later than Monday, 4 April 2011 ("the
Implementation Date").
The consideration for the Specific Share Repurchase, which is
approximately R417 million, will be discharged by Trencor from existing
cash resources, thus no disposal of shares in Textainer Group Holdings
Limited ("Textainer") or any other assets will be required for this
purpose.
The Repurchased Shares will be cancelled as issued shares and will revert
to authorised but unissued share capital. The Specific Share Repurchase
will be in terms of section 85 of the Companies Act and section 5.69 of
the Listings Requirements of the JSE Limited ("JSE") ("the Listing
Requirements").
The Jowells are non-executive Mobile directors and executive Trencor
directors. Accordingly, the Trusts, of which the Jowells are, directly or
indirectly, among the beneficiaries, are related parties to Trencor and a
fairness opinion as required in terms of the Listings Requirements has
been prepared for the purposes of the Specific Share Repurchase by
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited, being an
independent JSE accredited expert, in terms of which the Specific Share
Repurchase was determined to be fair to Trencor Shareholders. Furthermore
the Jowells have recused themselves from the decision-making process in
respect of the Unbundling and Specific Share Repurchase by the Mobile
Board and Trencor Board, respectively.
2.2 Rationale for the Specific Share Repurchase
Trencor believes that the Specific Share Repurchase is in the best
interests of Shareholders given it achieves the following:
* Trencor undertaking to effect the Specific Share Repurchase
facilitates the requisite shareholder support for the Unbundling
which itself will result in the following key benefits:
* increased liquidity and tradability for all Trencor and Mobile
shareholders (in the case of the latter, through their unbundled
Trencor shares) and a potential significant value unlock;
* a simplified group structure, eliminating the "pyramid" structure
and reducing the number of listed entry points from 3 to 2 (namely
Trencor listed on the JSE and Textainer listed on the New York Stock
Exchange);
* retains Trencor`s beneficial position as a locally listed company
with exposure to Textainer as a New York Stock Exchange listed
company and United States dollar earnings stream. Trencor enables
South African investors to effectively invest in Textainer without
having to make use of foreign investment allowances;
* any discount in the Mobile share price as a result of the "pyramid"
structure, which has been as much as 20% over the past year, is
eliminated permanently;
* retains stability of Trencor and of Textainer and its management
team as:
- the Jowells will remain actively involved as directors of Trencor
(which holds a 61,74% indirect beneficial interest in Textainer) for
another 3 to 5 years; and
- the Trusts have signed a lock-up agreement agreeing not to dispose
of the balance of their unbundled Trencor shares post the Specific
Share Repurchase for a period of 2 years from the Implementation
Date of the Specific Share Repurchase. This ensures that the Jowells
remain committed as shareholders in addition to being directors. The
lock-up agreement expires immediately should:
- the Jowells cease to be directors on the Trencor Board of
directors through no fault of their own. Should this apply in
respect of only one of the Jowells, then the lock-up agreement
will only expire in respect of 50% of the remaining unbundled
Trencor shares; and / or
- an offer for a change in control (greater than 35%) of Trencor
or a section 228 disposal by Trencor in terms of the Companies
Act become unconditional; and / or
- a simple majority of Shareholders, other than the Trusts, for
any reason whatsoever agree to the expiry of the lock-up
agreement;
- enables orderly handover of part of the Jowells` shareholding in
Trencor after the Unbundling takes place at fair value;
- minimises a potential share overhang in Trencor; and
- enables collapse of the "pyramid" structure in an efficient manner.
3 Salient dates and times
The salient dates and times of the Specific Share Repurchase are as follows:
2010
Terms announcement released on Securities Monday, 22 November
Exchange News Service ("SENS")
Circular posted to Shareholders Monday, 22 November
Terms announcement published in South African Tuesday, 23 November
press
Last day for the receipt of forms of proxy for Monday, 13 December
the general meeting of Shareholders ("General
Meeting") by 10:15
General meeting to be held at 1313 Main Tower, Tuesday, 14 December
Standard Bank Centre, Heerengracht, Cape Town,
at 10:15 or so soon thereafter as the General
Meeting of Mobile shareholders to be held at
10:00 on the same date, is concluded, if later
Results of the General Meeting announced on Tuesday, 14 December
SENS
Results of the General Meeting published in Wednesday, 15 December
South African press
2011
Anticipated Implementation Date of the Tuesday, 1 March, and
Specific Share Repurchase to occur between Monday, 4 April
Notes:
1. All times given in this announcement are local times in South Africa.
2. These dates and times are subject to amendment, and any such amendment
will be announced on SENS and published in the South African press.
4 Conditions precedent
The Specific Share Repurchase is conditional upon the fulfilment of the
following conditions precedent:
- the approval by Shareholders of the special and ordinary resolutions
required to implement the Specific Share Repurchase;
- the registration of the special resolution by the Companies and
Intellectual Property Registration Office;
- the receipt by Trencor of the requisite regulatory approvals; and
- the Unbundling becoming unconditional and being implemented
according to its terms. In this regard Shareholders are referred to
the announcement by Mobile to Mobile shareholders on 22 November
2010 and available from that date on the Mobile website (www.mobile-
industries.net).
5 Financial effects
The table below sets out the unaudited pro forma financial effects of the
Specific Share Repurchase on Trencor`s earnings per share ("EPS"),
headline EPS ("HEPS"), net asset value ("NAV") and tangible NAV ("TNAV").
The unaudited pro forma financial effects have been prepared using
accounting policies that comply with International Financial Reporting
Standards and that are consistent with those applied in the unaudited
group interim results for the six months ended 30 June 2010 as well as
the audited group results of Trencor for the 12 months ended 31 December
2009.
The unaudited pro forma financial effects, which are the responsibility
of the Trencor Board, are provided for illustrative purposes only and,
because of their pro forma nature, may not fairly present Trencor`s
financial position, changes in equity, results of operations or cash
flow.
Before1 After Change
(cents) (cents) (%)
EPS2,4 120,0 121,8 2%
HEPS2,4 121,1 123,0 2%
NAV3,5 2 147,0 2 037,8 (5%)
TNAV3,5 1 985,9 1 866,8 (6%)
Weighted average 187 469 176 668
number of Trencor
shares in issue
(000`s)
Number of Trencor 187 469 176 668
shares in issue
(000`s)
Notes and assumptions:
1 The Trencor financial information reflected in the "Before" column
has been calculated from the most recent published unaudited group
interim results of Trencor (six months ended 30 June 2010) which were
prepared using accounting policies that comply with International
Financial Reporting Standards and are consistent with those applied in
the audited group results of Trencor for the 12 months ended 31 December
2009.
2 The pro forma adjustments to the unaudited condensed consolidated
statement of comprehensive income have been calculated on the assumption
that the Specific Share Repurchase was implemented on 1 January 2010.
3 The pro forma adjustments to the unaudited condensed consolidated
statement of financial position have been calculated on the assumption
that the Specific Share Repurchase was implemented on 30 June 2010.
4 In the unaudited condensed consolidated statement of comprehensive
income all adjustments are considered to have a continuing effect, except
for the adjustment detailed in note 7.
5 The share repurchase consideration has been removed from cash and
cash equivalents.
6 The effective interest rate of 1%, calculated using average cash
balances and interest earned on cash and cash equivalents for the six
month period, has been used net of income tax at a rate of 28% to
determine the interest adjustment in the statement of comprehensive
income if it is assumed that the Specific Share Repurchase was
implemented on 1 January 2010.
7 Transaction costs of R7,8 million, which are non-deductible for
income tax purposes have been expensed to the statement of comprehensive
income.
6 Documentation
A circular providing information on the Specific Share Repurchase and
incorporating a notice convening the General Meeting as well as a
circular by Mobile to Mobile shareholders providing information on the
Unbundling will be posted to Shareholders on Monday, 22 November 2010.
Both circulars will also be available on Trencor`s website
www.trencor.net, after they have been posted.
7 Undertakings
Commitments to vote in favour of the Specific Share Repurchase have been
secured from Shareholders holding 65% of the issued shares of Trencor
that are entitled to vote.
Shareholder Number of Percentage of
shares shareholding entitled
to vote
Coronation Fund Managers 32 197 738 31,95%
(Proprietary) Limited
Old Mutual Investment Group (South 17 678 327 17,54%
Africa) (Proprietary) Limited
Abax Investments (Proprietary) 16 002 141 15,88%
Limited
Total 65 878 206 65,37%
The JSE has ruled that Mobile is an associate of the Trusts in terms of
the Listings Requirements and therefore may not vote on the specific
share repurchase.
Mobile disagrees with this ruling and has indicated that it reserves its
right to pursue this matter further in order to protect its shareholder
rights.
8 Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement of 18 October
2010 and are advised that it is hereby withdrawn.
By order of the board of directors
Trencor Limited
Cape Town
22 November 2010
Investment bank and transaction Corporate law Sponsor
sponsor adviser
(Investec) (ENS) (RMB)
Date: 22/11/2010 10:03:13 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.
