| Thu 25 Nov 2010, 10:34 | | 1TM - 1Time Holdings Limited - 1Time BEE transaction and withdrawal of |
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1TM
1TM
1TM - 1Time Holdings Limited - 1Time BEE transaction and withdrawal of
cautionary
1TIME HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1999/017536/06)
Share code: 1TM ISIN: ZAE000102026
("1time" or "the company" or "the group")
1TIME BEE TRANSACTION AND WITHDRAWAL OF CAUTIONARY
Highlights
1time seals strategic deal with aviation focused BEE partners;
Secures R65 million funding; and
Positions itself for exciting growth opportunities.
1 Introduction
Shareholders are advised that 1time has entered into an agreement
("subscription agreement") with Mtha Aviation (Proprietary) Limited
("Mtha"), SKMT Sunrise Investment Group (Proprietary) Limited ("Sunrise")
and a new company subsequently incorporated as Oakleaf Investment Holdings
59 (Proprietary) Limited ("Oakleaf"), collectively hereinafter referred to
as the "BEE Consortium". Mtha and Sunrise, being the "strategic BEE
partners", will own 83% and 17% of Oakleaf, respectively. Oakleaf has been
incorporated as an investment holding company, whose sole purpose will be
to acquire and hold an equity stake in 1time.
Accordingly, Oakleaf has subscribed for 70 million ordinary shares in the
share capital of the company ("specific issue shares") at a 10% discount to
the 30 day volume weighted average price ("VWAP") to the share price of
1time on the effective date, being the date of fulfilment of the conditions
precedent set out in paragraph 7 below, subject to a maximum share price of
93 cents and a maximum aggregate price of R65.10 million ("specific
issue").
The specific issue will result in 25% of the issued share capital of the
company being held by the BEE Consortium.
2 Rationale
It has been the intention of the board of the directors of 1time ("board")
to raise new equity capital to support its plans to expand its airline,
aircraft maintenance and charter businesses, and to increase the group`s
BEE shareholding to realise its vision and strategy to create the largest
low cost airline in South Africa. The specific issue provides 1time with
the opportunity to meet both of these objectives.
The benefits that will accrue to the company as a result of the specific
issue include:
- the ability of the BEE Consortium to add value to 1time`s business
operationally and strategically;
- a capital injection to fund growth as further detailed in paragraph 4
below;
- no conflict of interest as a result of a competing investment;
- assistance from the BEE Consortium in respect of 1time`s
transformation;
- a vision and culture of the BEE Consortium which is in line with that
of the company;
- the commitment by the BEE Consortium to enter into a long-term
relationship with 1time; and
- the creation of numerous synergies between 1time and Mtha, who holds
83% in the BEE Consortium, as the two companies operate in the same
industry.
The improved BEE shareholding will significantly strengthen the group`s BEE
credentials, re-enforcing the group`s commitment to a multi-faceted
approach to BEE, which aims to increase the number of previously
disadvantaged individuals who manage, own and control the company.
3 Terms of the specific issue and effective date
The BEE Consortium will subscribe for 70 million new ordinary shares in
1time on the effective date. The specific issue shares shall rank pari
passu with all other issued ordinary shares in the share capital of the
company.
At the date on which 1time negotiated the terms of the funding of the
specific issue with a third party ("funder"), being 5 October 2010,
1time`s 30 day VWAP was 103 cents per share which, at a 10% discount rate,
resulted in a maximum subscription price of 93 cents per share being
established with the funder.
In the event that the 1time share price remains at a level where the board
determines the specific issue subscription price to be undesirable, the
board has reserved the right to exercise its discretion not to pass the
resolution required to ratify the terms of the subscription agreement, as
set out in paragraph 7 below, being the conditions precedent.
4 Funding
In order for the BEE Consortium to finance the specific issue, 1 000
preference shares in Oakleaf will be issued to the funder for a total
consideration of R63.15 million, which amounts to 97% of the funding
required for the specific issue. The remaining 3%, being R1.95 million,
will be contributed in cash by the shareholders of the BEE Consortium.
In addition to its own contribution and the security provided by the BEE
Consortium, the funder has requested that 1time provide a guarantee equal
to 10% of the maximum aggregate price of R65.10 milllion less the 3%
contribution by the shareholders of the BEE Consortium, resulting in a
guarantee in the amount of R4.56 million. As this is considered to be
financial assistance by the company, shareholder approval is required.
As part of the specific issue, the BEE Consortium will be entitled to
appoint two non-executive directors and one executive director to the
board.
5 Application of capital raised
The capital raised will be used to fund growth in the following areas:
5.1 1time airline
1time airline will utilise the funds for expanding its fleet,
introducing Lanseria operations and introducing new routes into
Africa.
5.2 Aircraft maintenance
The aircraft maintenance business will utilise a certain amount of the
capital raised to upgrade its facility in various areas.
5.3 Charter
The capital raised will also contribute towards fleet expansion within
the charter business.
6 Financial effects
The table below sets out the unaudited pro forma financial effects of the
specific issue on 1time`s earnings per share, headline earnings per share,
net asset value per share and net tangible asset value per share.
The unaudited pro forma financial effects have been prepared to illustrate
the impact of the specific issue on the reported financial information of
1time for the six months ended 30 June 2010, had the specific issue
occurred on 1 January 2010 for statement of comprehensive income purposes
and on 30 June 2010 for statement of financial position purposes.
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 results for the
six months ended 30 June 2010 as well as the audited results of 1time for
the 12 months ended 31 December 2009.
The unaudited pro forma financial effects, which are the responsibility of
the directors, are provided for illustrative purposes only and, because of
their pro forma nature, may not fairly present 1time`s financial position,
changes in equity, results of operations or cash flows.
Before After Change
(cents) (cents) (%)
Earnings per share 6.3 5.2 (17.5)
Headline earnings per share 7.0 5.8 (17.1)
Net asset value per share 84.3 85.4 1.3
Net tangible asset value per 76.0 79.3 4.3
share
Weighted average number of 210 000 280 000 33.3
shares in issue 000 000
Notes:
1 The "Before" column has been extracted from the reviewed interim results of
1time for the six months ended 30 June 2010.
2 The "After" column reflects the pro forma financial effects of the specific
issue on 1time.
3 The financial effects are based on the assumption that the specific issue
will raise R62.30 million in cash, net of the transaction costs of R2 800
000 which have been written off against share premium, which will be
invested at an average interest rate of 6.25% per annum before tax, which
is the current average interest rate obtained by the company on call
accounts. The South African corporate tax rate of 28% has been applied.
4 The effects on earnings per share and headline earnings per share are
calculated based on the assumption that the specific issue was effected on
1 January 2010.
5 The effects of net asset value per share and net tangible asset value per
share are calculated based on the assumption that the specific issue was
effected on 30 June 2010.
6 The pro forma financial information has been prepared in accordance with
IFRS and in terms of The Guide on Pro Forma Financial Information issued by
The South African Institute of Chartered Accountants, in line with the
Listings Requirements.
7 Conditions precedent
The specific issue is subject to the following conditions precedent:
- the receipt of written regulatory approval of the circular to be
issued to 1time shareholders in respect of the specific issue, as set
out in the subscription agreement, by JSE Limited;
- the passing of resolutions required to ratify the terms of the
subscription agreement by the shareholders of 1time, being the
ordinary resolution to issue ordinary shares for cash and the special
resolution to grant financial assistance to shareholders to acquire
shares;
- the passing of a resolution by the board ratifying the terms of the
subscription agreement;
- the delivery of Oakleaf`s registration documents to 1time, indicating
that Oakleaf has been successfully formed and/or incorporated, as well
as delivery of certified copies of duly issued CM29s illustrating the
successful appointment and registration of the directors appointed by
Mtha and Sunrise, respectively;
- the passing of a resolution by the board of directors of both Sunrise
and Mtha ratifying the terms of the subscription agreement, and
accepting the terms and conditions contained therein as binding on
Sunrise and Mtha, respectively; and
- the passing of a resolution by the board of directors of Oakleaf
ratifying the terms of the subscription agreement, and accepting the
terms and conditions contained therein as binding on the BEE
Consortium.
8 Circular to 1time shareholders
A circular containing full details of the specific issue and incorporating
a notice to convene a general meeting of 1time shareholders in order to
consider and, if deemed fit, to pass with or without modification, the
resolutions necessary to approve and implement the specific issue will be
sent to 1time shareholders on or about Thursday, 2 December 2010.
9 Withdrawal of cautionary
Further to the above, shareholders are advised that caution is no longer
required by shareholders when dealing in the shares of 1time.
Johannesburg
25 November 2010
Sponsor and Corporate adviser
Merchantec Capital
Legal adviser
Schindlers Attorneys, Conveyancers & Notaries
Reporting accountants
SAB&T Chartered Accountants Incorporated
Date: 25/11/2010 10:34:01 Produced by the JSE SENS Department.
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