| Fri 10 Jun 2011, 17:47 | | JDH - John Daniel Holdings Limited - Detailed cautionary announcement |
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JDH
JDH
JDH - John Daniel Holdings Limited - Detailed cautionary announcement
including terms of a conditional partly underwritten rights offer to JDH
shareholders, application for a waiver of a mandatory offer and renewal of
cautionary announcement
JOHN DANIEL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: JDH - ISIN: ZAE000136677
("the Company" or "JDH" or "the Group")
DETAILED CAUTIONARY ANNOUNCEMENT INCLUDING TERMS OF A CONDITIONAL PARTLY
UNDERWRITTEN RIGHTS OFFER TO JDH SHAREHOLDERS, APPLICATION FOR A WAIVER OF A
MANDATORY OFFER AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
The board of directors have been investigating acquisition opportunities that
will improve both the net asset value as well as the consistency of cash
generation for the Group. It is the specific intention of the board to
develop a robust and complementary group of companies that will provide
sustainable returns.
Funding is required to strengthen the Company`s balance sheet and will also
be used to reduce the level of group borrowings, including repayment of R5
million of the loan from Escalator Capital Limited ("Escalator" and "the
Escalator Loan", respectively) and to enable the Company and Group to meet
ongoing working capital requirements.
Shareholders are referred to the cautionary announcements released by the
Company on SENS on 07 February 2011, 24 March 2011 and 20 May 2011 in which
shareholders were advised that the Company was renegotiating the terms of the
conversion of the Escalator loan by way of Escalator underwriting a rights
offer. The Escalator loan balance currently amounts to approximately R5
million.
The Board is pleased to announce that from the above-mentioned negotiations,
the Company has resolved to raise R15 million through a rights offer at 7
cents per share, partially underwritten by Escalator to a minimum value of
R10 (ten) million subject to the terms detailed in the underwriting paragraph
below.
APPLICATION OF THE RIGHTS OFFER FUNDS
The R15 million will be utilised, on an approximate basis, as follows:
- R5 million to repay the Escalator loan;
- R2.7 million to settle group trade creditors (excluding shareholder
loans and other term finance);
- R5.8 million to fund ongoing working capital requirements;
- R1.5 million to settle shareholder loans.
TERMS OF THE RIGHTS OFFER
JDH is offering for subscription by way of a renounceable rights offer to JDH
shareholders, at a rights offer price of 7 cents per rights offer share in
the ratio of 138.12376 rights offer shares for every 100 JDH shares held on
the record date of the rights offer, the terms and conditions of which will
be set out in full in a circular to shareholders. Excess application will be
allowed and allocated by directors on a fair and equitable basis.
Letters of allocation in respect of the rights offer will be issued in
dematerialised form and an electronic record for certificated shareholders
will be maintained by the transfer secretary. This will enable both
dematerialised and certificated shareholders to sell or renounce some or all
of their rights offer shares in accordance with the procedures set out in the
circular.
UNDERWRITING
Escalator has agreed to underwrite the rights offer to the value of R10
million subject to Escalator not being required to make an offer to
minorities as detailed below, in which case Escalator will only underwrite a
portion of the rights offer by an amount to be determined at a future date.
Escalator is not a related party.
Escalator may, as a consequence of fulfilling its proposed rights offer
underwriting obligations of R10 million hold 47.93904% in JDH in the event
that none of the existing shareholders follow their rights. Should all the
shareholders follow their rights it will result in Escalator holding no
equity stake in JDH. Escalator will not charge the Company an underwriting
fee.
Escalator`s potential acquisition of shareholding in JDH may constitute an
"affected transaction" for JDH in terms of the Companies Act, 71 of 2008 and
the Regulations thereto (collectively referred to as "the Act"), and
accordingly in the event that Escalator`s shareholding equals or exceeds 35%
in JDH, Escalator would be required to make a mandatory offer to all JDH
shareholders.
However, the Act allows for a waiver to be given to an offeror / acquirer
from the obligation to make a mandatory offer, if such waiver is approved by
independent shareholders, in person or by proxy, holding more than 50% of the
general voting rights of all the issued shares of JDH in a general meeting
("waiver").
CONDITIONS PRECEDENT OF THE RIGHTS OFFER
The rights offer is subject to the following conditions precedent:
- Passing of a special resolution by JDH shareholders to issue more than
30% of issued shares in terms of Section 41 (3) of the Act;
- Passing of a resolution by JDH shareholders to waive the mandatory
offer;
- Registration of the special resolution to increase the authorised share
capital of the Company with CIPC; and
- Regulatory approvals where required.
PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects have been prepared to illustrate
the impact of the proposed rights offer on the reported financial information
of JDH for the six months ended 31 December 2010, had the proposed rights
offer occurred on 1 July 2010 for statement of comprehensive income purposes
and on 31 December 2010 for statement of financial position purposes. The pro
forma financial effects have been prepared using accounting policies that
comply with IFRS and that are consistent with those applied in the unaudited
results of JDH for the six months ended 31 December 2010.
The unaudited pro forma financial effects set out below are the
responsibility of JDH`s directors and have been prepared for illustrative
purposes only and because of their nature may not fairly present the
financial position, changes in equity, results of operations or cashflows of
JDH after the rights offer.
Before After Rights Change
Offer (%)
Loss per share (cents) (1.42) (0.51) 64%
Diluted loss per share (1.38) (0.50)
(cents) 64%
Headline loss per share (1.38) (0.50)
(cents) 64%
Diluted headline loss per (1.34) (0.48)
share (cents) 64%
Net asset value per share (0.64) 3.72
(cents) 681%
Tangible net asset value (1.27) 3.47
per share (cents) 373%
Weighted average number of 150 500 364 786 142%
shares in issue (`000)
Number of shares in issue 150 500 364 786 142%
(`000)
Assumptions:
1. The "Before" column is extracted from the Company`s unaudited, published
results for the six months ended 31 December 2010.
2. The unaudited pro forma information assumes that the rights offer will
be fully subscribed, resulting in 214 285 714 new shares being issued at
7 (seven) cents a share, generating rights offer proceeds totaling R15
million.
3. The proceeds of the rights offer would be utilised to fund working
capital requirements, shareholders` loans and settle current creditors.
4. The "After Rights Offer" column assumes that the R15 million rights
offer proceeds were received at the beginning of the period for
statement of comprehensive income purposes and that the interest and
transaction fees savings were realised over the six month period. The
interest saving will have a continuing effect whilst the transaction
costs will have a once off effect.
5. The "After Rights Offer" column for statement of financial position
purposes assumes the rights offer proceeds were received in cash as at
31 December 2010.
6. The interest saving and transaction costs would impact the holding
company`s statement of comprehensive income only and therefore no non-
controlling shareholder adjustment would arise.
7. Transaction costs of R450 000 have been assumed.
8. Notional taxation of 28% has been assumed.
DOCUMENTATION AND SALIENT DATES
A circular to shareholders detailing the terms of the rights offer,
incorporating revised listing particulars will be drafted and distributed to
shareholders in due course.
The Company has lodged the special resolution passed at the annual general
meeting with CIPC (formerly CIPRO) to increase the authorised share capital
to enable the issue of shares in terms of the above-mentioned rights offer.
This special resolution has been submitted for registration with CIPC and
accordingly the Company will have sufficient shares to issue for the rights
offer.
Salient dates of the rights offer shall be announced in due course.
FURTHER CAUTIONARY ANNOUNCEMENT IN RELATION TO A PROPOSED LAZARON
BIOTECHNOLOGIES (SA) LIMITED ("LAZARON") RIGHTS OFFER, A PROPOSED ACQUISITION
BY JDH OF THE MAJOR PORTION OF LAZARON`S UNDERTAKING, AND A GENERAL OFFER TO
LAZARON SHAREHOLDERS
Shareholders are referred to the SENS announcement on 2 June 2011 and are
advised that a further announcement in respect of a corporate action
involving Lazaron, a subsidiary of JDH, will be released shortly.
FURTHER CAUTIONARY ANNOUNCEMENT IN RELATION TO VINGUARD LIMITED
Shareholders are advised that JDH and Vinguard Limited ("Vinguard"), a
subsidiary of JDH, boards are continuing the process of evaluating a number
of alternatives in relation to the Vinguard business.
Accordingly, shareholders are advised that they should continue to exercise
caution when dealing in their securities until a further announcement in this
regard is made.
Johannesburg
10 June 2011
Sponsor
Arcay Moela Sponsor (Proprietary) Limited
Date: 10/06/2011 17:47:00 Produced by the JSE SENS Department.
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