| Mon 29 Nov 2010, 7:30 | | CLR - Clover Industries Limited - Abridged pre-listing statement |
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JSE
CLOV
CLR - Clover Industries Limited - Abridged pre-listing statement
CLOVER INDUSTRIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/030429/06)
JSE Ordinary share code: CLR ISIN: ZAE000152377
JSE Preference share code: CLRP ISIN: ZAE000152385
("Clover" or the "Company")
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA.
THE CONTENTS OF THIS ABRIDGED PRE-LISTING STATEMENT HAVE BEEN PREPARED BY
AND ARE THE SOLE RESPONSIBILITY OF CLOVER.
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of all of Clover`s
issued ordinary shares with a par value of R0.05 each("ordinary shares") by
way of an offer and the listing of Clover`s cumulative redeemable preference
shares with a par value of R0.10 each ("preference shares") by way of an
introduction on the main board of the securities exchange operated by the
JSE Limited ("JSE") with effect from the commencement of business on
Tuesday, 14 December 2010 (the "Listing Date").
Clover on Monday, 29 November 2010, issued pre-listing statements relating
to (i) the Offer (as defined below) and listing as of the ordinary shares on
the "Food Producers" sub-sector of the main board of the JSE and (ii) the
listing of the preference shares on the "Debt Securities - Preference
Shares" sub-sector of the main board of the JSE (collectively the "pre-
listing statements"). The information in this abridged pre-listing statement
has been extracted from the pre-listing statements.
This abridged pre-listing statement does not constitute an offer to sell or
subscribe for, or the solicitation of an offer to purchase or subscribe for,
any securities in Clover.
This abridged pre-listing statement does not constitute an offer to the
public (as defined in the South African Companies Act, no. 61 of 1973 (as
amended)) to purchase or subscribe for shares, but is issued in compliance
with the Listings Requirements of the JSE.
1. Offer particulars relating to the ordinary shares and the Offer
On 18 November 2010 the board of directors of Clover (the "board") resolved
to offer for subscription up to 47,619,048 new ordinary shares (assuming an
Offer Price (as defined below) at the midpoint of the Offer Price Range (as
defined below)) in the capital of Clover (the "Offer Shares"), subject to
certain conditions, to Eligible Investors, as set out below, to raise up to
R 500 million ("the Offer"). The Offer Shares will comprise approximately
27.7% (assuming an Offer Price at the midpoint of the Offer Price Range) of
the issued shares of Clover after the allotment and issue thereof (excluding
the Over-allotment Shares (as defined below)).
It is currently estimated that the price at which the Offer Shares will be
offered for subscription (the "Offer Price") will be between R9.00 and
R12.00 per Offer Share (the "Offer Price Range"). However, the Offer Price
may be outside the Offer Price Range.
The Offer is being made to the Eligible Investors only, who are:
(a) selected institutional investors to whom the Offer for Offer Shares is
specifically addressed;
(b) invited investors in South Africa who subscribe, as principals, for
Offer Shares for an amount of not less than R100,000;
(c) directors and officers of the company (who may not renounce the Offer);
and
(d) existing ordinary shareholders of Clover (who may not renounce the
Offer).
Clover intends to grant the stabilisation manager an option exercisable for
a period of up to 30 days after the Listing Date ("Stabilisation Period") to
purchase up to 7,142,857 ordinary shares (assuming an Offer Price at the
midpoint of the Offer Price Range) having a par value of R0.05 each in the
issued share capital of Clover (the "Over-allotment Shares") on the same
terms and conditions as those applicable to the Offer, solely to cover over-
allotments.
The Offer is subject to, inter alia, the Listing. The Listing is subject to
the Company attaining the JSE shareholder spread requirements (at least 300
public shareholders). The Listing will not proceed if, inter alia, the JSE`s
shareholder spread requirements are not met, and any acceptance of the Offer
shall not take effect and no person shall have any claim whatsoever against
Clover, the bookrunner or any other person as a result of the failure of any
condition.
Subject to the fulfilment of the conditions to the Listing, 171,969,010
(assuming an Offer Price at the midpoint of the Offer Price Range) fully
paid Clover ordinary shares (being the entire issued share capital of Clover
as at the Listing Date) will be listed on the Main Board of the JSE in the
Food Producers sub sector on the main board of the JSE under the short name
of "Clover", the share code "CLR" and with number ISIN: ZAE000152377, with
effect from the commencement of business on the Listing Date.
All ordinary shares (including any Offer Shares) that are in issue at the
Listing Date will rank pari passu in all respects.
2. Listing particulars relating to the preference shares
As at the Listing Date, Clover will have 89,442,022 issued and fully paid
preference shares, which were created and issued, pursuant to the conversion
of Clover from a co-operative into a company on 2 December 2003. Pursuant to
a capital restructuring that took place on 31 May 2010 and became effective
on the commencement date, being 1 June 2010, Clover`s articles of
association were amended in order to, inter alia, amend the rights,
privileges and conditions attaching to the preference shares so as to
constitute the preference shares as debt instruments which carry a fixed
dividend of 90% of the prime rate of interest charged by ABSA Bank Limited
and fall to be redeemed on 3 June 2013 (three years and one day after the
commencement date).
The JSE has granted Clover approval for the listing of 89,442,022 preference
shares by way of an introduction, in the Debt Securities - Preference Shares
sub-sector of the main board of the JSE under the short name of "Clover
Pref", the share code "CLRP" and with number ISIN: ZAE000152385, with effect
from the commencement of business on the Listing Date. Such listing will not
entail any offer for subscription for new preference shares or a sale of
preference shares.
All preference shares that are in issue as at the Listing Date will rank
pari passu in all respects. Clover`s ordinary shares will rank behind the
preference shares in the capital of the Company with regards to dividends
and return on capital in certain circumstances. The rights, privileges and
conditions attached to the preference shares are set out in the pre-listing
statements.
3. Overview of the business of Clover
Clover is a leading and competitive branded consumer goods and products
group operating in South Africa and selected African countries (the
"Group"), reaching a wide range of geographically dispersed customers and
consumers with a range of quality value-added dairy and non-dairy products,
delivered through one of the largest ambient and chilled distribution
networks in Southern Africa.
Clover is a branded consumer goods and products group with core competencies
in:
- the production of dairy and non-dairy consumer products;
- the distribution of chilled and ambient consumer products; and
- the sales and merchandising of consumer goods.
Clover produces and distributes (for itself and other fast moving consumer
goods ("FMCG") companies) a diverse range of dairy and non-dairy consumer
products to consumers and customers through one of the largest and most
extensive distribution networks in South Africa. The business platform,
created and sustained by the dairy business, provides the perfect platform
for the Group to reach an extensive cross section of South African customers
and consumers. Clover`s business platform spans the breadth of the value
chain from production to sales and integrates key value-added support
services such as logistics, supply chain management, sales and
merchandising. Clover`s market penetration (Clover delivers to approximately
14,000 delivery points across South Africa) coupled with its value-added
services offering, positions Clover to exploit attractive opportunities for
organic and acquisitive growth.
Clover has been operating, in one form or another, since 1898 and has
enjoyed a long and successful history as part of the development of South
Africa`s dairy and FMCG industry. Clover was converted from a co-operative
society into a public company in December 2003. Subsequent to the
conversion, Clover has evolved into a dynamic demand-driven branded consumer
products business with attractive growth prospects. As part of its
evolutionary process, Clover implemented a capital restructuring on 31 May
2010 in terms of which Clover, inter alia:
(i) severed the link between its ordinary shares and its delivery
agreements in respect of the supply of milk to Clover embodied in the
Company`s memorandum and articles of association such that parties other
than suppliers of milk to Clover could hold ordinary shares; and
(ii) amended the rights, privileges and conditions attaching to the
preference shares so as to constitute the preference shares as debt
instruments which (i) carry a dividend at 90% of the prime rate of interest
charged by ABSA Bank Limited, and (ii) fall to be redeemed on 3 June 2013.
The capital restructuring was a milestone in Clover`s corporate development
and resulted in both economic benefits and voting control vesting in the
ordinary shares. In addition, the de-linking of the ordinary shares from the
delivery agreements enabled persons other than dairy producers to acquire
ordinary shares, facilitating Clover`s ability to raise equity capital.
Capital scarcity has historically been a key constraint for Clover`s growth
and development.
The Board and management of Clover have identified key value-enhancing
capital projects to redress historical inefficiencies in the distribution
network, increase profitability and expand capacity to support current and
future growth plans. Clover`s primary value-enhancing capital project is
called Project Cielo Blu. Project Cielo Blu intends to relocate production
facilities closer to milk sources in order to reduce distribution and
related costs and expand the capacity of key distribution centres and
warehouses in order to create sufficient capacity to support current and
future growth.
Clover`s vision is to be a leading and competitive FMCG and products
business in South Africa and selected African countries, reaching consumers
on a daily basis with high quality branded consumer products which occupy
the number one or a strong number two positions in their respective product
segments. Clover envisages utilising the platform created and sustained by
its South African dairy business to reach widely dispersed customers and
consumers with timeous supply of quality branded consumer goods including
milk and related products, concentrated dairy products as well as non-dairy
products and beverages.
4. Competitive Strengths
Clover is a South African branded consumer goods company with:
- an iconic South African consumer brand with market recognition and
pricing power;
- exposure to an attractive industry supported by favourable
fundamentals;
access to one of the largest chilled and ambient distribution networks
in South Africa;
- value-enhancing expansion and optimisation projects (primarily Project
Cielo Blu);
- strong and unique relationships with milk producers;
- attractive growth opportunities; and
- a dynamic management team with significant experience in the dairy and
FMCG business.
5. Corporate Strategy
Clover`s corporate strategy is to build onto existing competencies within
the Group and to establish a culture of exceptional performance with a view
to creating a platform for future market expansion. Different companies
within the Group have different needs, and all are receiving company-
specific support to maximise their potential. Key to all of Clover`s
activities is the expansion of capacities to share in the strong growth in
consumption in the product segments in which it has a leading market share.
Clover has identified a unique set of strategic pillars on which the success
of the business is founded. These strategic pillars are managed and measured
by the Company across all business activities by means of a Balanced Score
Card. The strategic pillars are:
- to optimise the brand portfolio;
- to simplify and reduce costs in the supply chain by changing the
operational model to fit with the business model;
- to increase market share through sales and distribution by leveraging
off Clover`s strong distribution capabilities;
- to actively support the business in the most effective and efficient
manner;
- to constantly adapt Clover`s Human Resources capabilities in order to
fit its business model;
- to successfully complete value-enhancing capital projects through
proper planning, project management and the tracking of the business
case benefits; and
- to actively seek value-enhancing corporate activity.
6. Prospects
Clover is well positioned to leverage its competitive strengths and business
platform to facilitate growth and profitability in the business by
increasing product volumes, improving the product mix, increasing
efficiencies, reducing costs and actively seeking value-enhancing corporate
activity. Clover also believes that its logistical and supply chain
management and sales and merchandising skills can be leveraged to become
another significant contributor of income to the Group.
The funds received from the Offer will be used, inter alia, to improve
efficiencies in the current business platform and to develop Clover`s
infrastructure to create capacity for the next five to seven years. The
expansion of capacities through Project Cielo Blu is expected to create the
platform to facilitate the continued growth of the business. Clover also
believes that costs in the dairy supply chain are too high, and that the
fragmentation of the secondary dairy industry presents attractive
opportunities for Clover to eliminate duplicate costs. Clover`s ability to
access equity capital markets following the listing and/or utilise listed
scrip as currency will enable Clover to take advantage of these
opportunities as they arise.
Trading results for the first four months to 31 October 2010 were strong and
notably higher than over the corresponding prior year period. This is in
line with management`s expectations and reflects the benefits associated
with key strategic initiatives implemented by management over the last 18
months to optimise costs and stimulate volumes. Strong volume growth has
been achieved in all of the major product lines, with the exception of
cheese, for the four months ended 31 October 2010. Volume growth can be
attributed to Project Reset, which is still not fully implemented (Project
Reset is a strategic initiative by Clover to manage the product price point
differentials and comparative value propositions to stimulate product volume
growth). Management expects continued volume benefits from the roll out of
Project Reset nationally albeit at a lower gross margin but made good by
fixed cost savings. In addition, management expects the benefits of the cost
saving initiatives embarked upon at the end of 2009 to continue.
Consolidated operating profit and net profit after tax from continuing
operations were substantially better than for the 4 months ended 31 October
2009.
7. Directors
The names, ages, nationalities and business addresses of the directors of
Clover are set out below:
On the Listing Date, the board will comprise:
Name Business Address Occupation/Function
Executive directors
Johann Hendrik Vorster (46) Clover Park, Chief Executive
South African 200 Constantia Officer
Drive,
Constantia Kloof,
1709
Hermanus Bernardus Roode (58) Clover Park, Deputy Chief
South African 200 Constantia Executive Officer
Drive,
Constantia Kloof,
1709
Louis Jacques Botha (48) Clover Park, Chief Financial
South African 200 Constantia Officer and
Drive, Executive: Milk
Constantia Kloof, Procurement
1709
Dr Christiaan Philippus Lerm Clover Park, Executive: Brands
(44) 200 Constantia and Chief
South African Drive, Operations Officer
Constantia Kloof, of Clover Beverages
1709 Limited
Non-executive directors
John Allan Hutchinson Bredin Myhill District Chairman/ Milk
(63) Ixopo Producer
South African 3276
Hercules Petrus Fredrik Du Syferpan District Director/ Milk
Preez (46) Coligny Producer
South African 2725
Name Business Address Occupation/Function
Non-executive directors
(continued)
Werner Ignatius Buchner (43) Boslaagte Vice Chairman/
South African Paterson Milk Producer
6130
Martin Geoff Elliott (56) Kilmashogue Farm Director/
South African Mooiriver Milk Producer
Estcourt
3300
Dr Jacobus Christoffel Hendriks Bronkhorstfontein Director/
(61) District Milk Producer
South African Heilbron
9650
Vivian Peter Turner (56) Hlogoma Farm Director/
South African Underberg Milk Producer
3257
Thomas Alexander Wixley (70) * 25 Rutland Road Vice Chairman/
South African Parkwood Lead Independent
Johannesburg Director/ Director
2193 of companies
Stefanes Francois Booysen (48) 17 Pencarrow Lane Director/
* Cornwall Hill Director of
South African Irene companies
Centurion
Pretoria
Johannes Nicolaas Stephanus du The White House Director/
Plessis (61) * 3A Eton Road Director of
South African Parktown companies
2193
Nkateko Peter Mageza (56) * Unit 6 Kintamani Director/
South African Bryanston Director of
2021 companies
Notes:
* Independent director
8. Salient dates and times
2010
Opening date of the Offer at 09h00 Mon, 29 Nov
Publication of the ordinary shares pre-listing Mon, 29 Nov
statement
Publication of the preference shares pre-listing Mon, 29 Nov
statement
Publication of abridged pre-listing statement on Mon, 29 Nov
SENS
Publication of abridged pre-listing statement in Tues, 30 Nov
the press
Last date for indication of interest for the Wed, 8 Dec
purpose of the bookbuild at 16h00
Last date for submission of applications at Wed, 8 Dec
16h00
Expected closing date of the Offer at 16h00 Wed, 8 Dec
Offer price released on SENS Thurs, 9 Dec
Offer price published in the press Fri, 10 Dec
Proposed Listing Date of the ordinary shares on Tues, 14 Dec
the JSE and delivery of Offer Shares
Proposed Listing Date of the preference shares Tues, 14 Dec
on the JSE
Any material change to the above dates will be released on SENS and
published in the press.
9. Share capital
At the Listing Date, the (a) authorised share capital of the Company will be
comprised of 2,000,000,000 ordinary shares and 100,000,000 preference
shares, having a par value of R0.05 and R0.10 respectively, and (b) issued
share capital of the Company will be comprised of 171,969,010 fully paid
ordinary shares (assuming an Offer price at the midpoint of the Offer Price
Range) and 89,442,022 fully paid preference shares. Clover`s total share
premium at the Listing Date will be R853,960,389 (assuming an Offer price at
the midpoint of the Offer Price Range). Following closing of the Offer, all
the issued ordinary shares and preference shares of the Company are expected
to be listed on the main board of the stock exchange operated by the JSE. As
at the Listing Date no shares will be held by the Company or its
subsidiaries as treasury shares.
10. Copies of the pre-listing statements
Copies of the pre-listing statements are only available in English, which
copies may be obtained during normal business hours from Monday, 29 November
2010 until Wednesday, 8 December 2010 from Clover, Rand Merchant Bank, a
division of FirstRand Bank Limited and Computershare Investor Services
(Proprietary) Limited, at their respective physical addresses which appear
below:
The registered office of Clover: The office of Rand Merchant
200 Constantia Drive Bank:
Constantia Kloof 1 Merchant Place
1709 Cnr Rivonia Road and Fredman
South Africa Drive
Sandton
Johannesburg
2196
South Africa
The office of Computershare
Investor Services(Proprietary)
Limited
Ground Floor
70 Marshall Street
Johannesburg
2001
South Africa
Johannesburg
29 November 2010
Bookrunner, merchant bank, stabilisation manager and sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited
Placement agent
RMB Morgan Stanley (Proprietary) Limited
Attorneys
Webber Wentzel Attorneys, legal adviser to the bookrunner
Werksmans Inc., legal adviser to the Company
Reporting accountants and auditors
Ernst & Young Inc.
Financial communications adviser
College Hill (Proprietary) Limited
This abridged pre-listing statement does not constitute an offer of
securities for sale in the United States. Securities may not be offered or
sold in the United States absent registration or an exemption from
registration under the U.S. Securities Act of 1933, as amended (the
"Securities Act"). The securities being offered have not and will not be
registered under the Securities Act. There will be no public offering in the
United States.
This abridged pre-listing statement does not constitute an offer of
securities to the public in the United Kingdom. This abridged pre-listing
statement is directed only at (i) persons who are outside the United Kingdom
or (ii) persons who have professional experience in matters relating to
investments falling within Article 19(1) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (iii) high
net worth entities falling within Article 49(2) of the Order and (iv) other
persons to whom it may lawfully be communicated (all such persons together
being referred to as "relevant persons"). Any investment activity to which
this communication relates will only be available to, and will only be
engaged with, relevant persons. Any person who is not a relevant person
should not act or rely on this abridged pre-listing statement or any of its
contents.
Any offer of securities to the public that may be deemed to be made pursuant
to this communication in any EEA Member State that has implemented Directive
2003/71/EC (together with any applicable implementing measures in any Member
State, the "Prospectus Directive") is only addressed to qualified investors
in that Member State within the meaning of the Prospectus Directive.
Date: 29/11/2010 07:30:34 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.
