| Wed 22 Jun 2011, 16:48 | | IVT - Invicta - Announcement regarding aloeCap Transaction |
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IVT
IVT
IVT - Invicta - Announcement regarding aloeCap Transaction
Invicta Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1966/002182/06
Share code: IVT SIN code: ZAE000029773
("Invicta" or "the Company")
ANNOUNCEMENT REGARDING:
- THE FUNDING OF THERAMANZI INVESTMENTS (PROPRIETARY) LIMITED
("THEREMANZI") (A COMPANY THAT WILL BE 100% HELD BY A TRUST TO BE
ESTABLISHED ("HUMULANI EMPOWERMENT TRUST") AND RELATED SECURITIES;
- THE DISPOSAL BY ALOECAP PRIVATE EQUITY INVESTMENTS 1 (PROPRIETARY)
LIMITED ("aloeCap") OF ITS 20% ORDINARY SHARES IN HUMULANI INVESTMENTS
(PROPRIETARY) LIMITED ("HUMULANI"), AN INVICTA SUBSIDIARY, TO
THERAMANZI; AND
- WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION, BACKGROUND AND RATIONALE
Holders of the ordinary shares in Invicta ("Invicta Shareholders") are
referred to the cautionary announcement released on SENS on Wednesday, 13
April 2011 and in the press on Thursday, 14 April 2011 and renewed on 1 June
2011, wherein Invicta shareholders were advised that Invicta has entered
into negotiations with their BEE partner, aloeCap in respect of the possible
restructuring of aloeCap`s 20% ordinary shareholding in Humulani ("Humulani
Shares"), which, if successfully concluded, may have a material effect on
the price of Invicta`s securities.
As part of the Invicta group`s commitment to Black Economic Empowerment
("BEE") and to increase the participation of black women, black broad based
groups and black designated groups in its operations, Invicta has agreed to
facilitate the transaction in terms of which aloeCap would sell the Humulani
Shares to Theramanzi, prior to the expiry of the initial lock-in period,
being 17 March 2012 ("the Sale Transaction") and to provide funding to
Theramanzi for the Sale Transaction.
The funding will be provided to Theramanzi by a company to be named Invicta
Investments (Pty) Ltd ("Investments"). Investments, a wholly owned Invicta
subsidiary, will subscribe for cumulative, non-convertible, redeemable
preference shares to be issued by Theramanzi ("Theramanzi Preference
Shares").
Investments has agreed to provide a put option ("Put Option") over the
Humulani shares to Theramanzi. The Put Option will provide liquidity to
Theramanzi for the Humulani Shares and enable Theramanzi to redeem the
Theramanzi Preference Shares at their redemption date.
Theramanzi has agreed to provide Investments with a call option ("Call
Option") over the Humulani Shares whereby Investments will have the right to
buy the Humulani Shares from Theramanzi. The Call Option will enable the
Invicta group to buy back minorities in Humulani at the redemption date of
the Theramanzi Preference Shares.
The Humulani Empowerment Trust will be established to hold 100% of the
ordinary shares in Theramanzi.
The entering into of the Sale Transaction, Theramanzi Preference Shares
transaction, the Call Option, the Put Option and the Trust Formation are
collectively referred to as the "Transactions".
The Transactions are subject to the fulfillment of the conditions precedent
set out in section 3 below.
2. TERMS OF THE TRANSACTIONS
2.1 Sale Transaction - aloeCap will sell the Humulani Shares to Theramanzi
on 1 June 2011 for an amount equal to R176,035,562 plus an amount
equal to R176,035,562 multiplied by 0.000191781 multiplied by the
number of days from 1 August 2011 until the purchase consideration is
settled ("Acquisition Price"). The Acquisition Price is based on a
1.16 historical earnings before interest, taxation, depreciation,
amortisation and exceptional items ("EBITDA") multiple.
2.2 Theramanzi Preference Shares - Investments will subscribe for
cumulative, non-convertible, redeemable preference shares to be issued
by Theramanzi. The subscription price will be equal to the Acquisition
Price plus transaction costs. The Theramanzi Preference Shares will
carry a dividend rate of 16% nacs. Theramanzi will be obliged to
redeem the Preference Shares on 30 November 2017 or on the occurrence
of certain early redemption events ("Redemption Date").
2.3 The Put Option - Investments will grant Theramanzi the Put Option
whereby Theramanzi will have the right to sell the Humulani Shares to
Investments on the Redemption Date at a strike price determined as
follows:
- the lower of:
- 1.16 multiplied by the EBITDA of Humulani, calculated with
reference to the average of the most recent completed
financial year and prior financial year audited financial
statements of Humulani ("the Humulani EBITDA"); and
- the Invicta EBITDA multiple (calculated with reference to the
most recent audited financial statements of Invicta)
multiplied by the Humulani EBITDA,
- subject to a minimum value equal to the aggregate of the
outstanding redemption amount of the Theramanzi Preference
Shares plus any taxes arising on the disposal of the Humulani
Shares and arising on the redemption of the Theramanzi
Preference Shares.
2.4 The Call Option - Theramanzi will grant Investments the Call Option
whereby Investments will have the right to buy the Humulani Shares on
the Redemption Date at a strike price determined as follows:
- the lower of:
- 1.16 multiplied by the Humulani EBITDA; and
- the Invicta EBITDA multiple (calculated with reference to the
most recent audited financial statements of Invicta)
multiplied by the Humulani EBITDA,
- subject to a minimum value equal to the aggregate of the
outstanding redemption amount of the Theramanzi Preference Shares
plus any taxes arising on the disposal of the Preference Shares
and arising on the redemption of the Theramanzi Preference Shares.
2.5 The Trust Formation - the Humulani Empowerment Trust will constitute a
broad-based trust, with its beneficiaries including Invicta employees,
Invicta employees` immediate families, communities and other broad-
based initiatives as determined by the trustees. It is the intention
that the Humulani Empowerment Trust will facilitate and enhance the
participation of black women, black broad based groups and black
designated groups of Invicta and Humulani in terms of the Broad-Based
BEE Codes of Good Practice.
2.6 Change in legislation - The Draft Taxation Laws Amendment Bill, 2011
("the Bill") was issued for public comment on 2 June 2011. The Bill
contains certain provisions which may have a material impact on the
Transactions. Should tax legislation be introduced which may have an
impact on the Transactions, Invicta will have the right to restructure
the Transactions to cater for such consequences.
3. CONDITIONS PRECEDENT
The Sale Transaction is subject to the following conditions precedent, to be
fulfilled no later than 30 September 2011 or such later date as agreed
between the parties:
- Invicta shareholder approval to:
- approve the Sale Transaction, the Theramanzi Preference
Shares, the Put Option and the Call Option; and
- authorise the directors of Invicta to restructure the
Transactions due to changes in tax legislation.
- Regulatory approvals to the extent necessary.
- In respect of the shareholder approvals required, irrevocable
undertakings from 62.14% of Invicta shareholders have been
obtained.
4. PRO-FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro-forma financial effects of the
Transactions. These pro forma financial effects are the responsibility of
the Company`s directors and are presented for illustrative purposes only to
provide information regarding how the Transactions may have impacted on
Invicta`s financial position had the Transactions been implemented on 31
March 2011 and impacted on Invicta`s financial results had the Transactions
been implemented on 1 April 2010.
The unaudited pro forma financial effects are based on the audited financial
information of Invicta for the twelve months ended 31 March 2011 as
announced on SENS on 1 June 2011 and has been prepared in accordance with
the accounting policies of Invicta at that date. Due to the nature of the
pro forma financial information, it may not fairly present the Group`s
financial position or financial results after the Transactions.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
Before the After the %
Transactions Transactions Change
Earnings per share (cents) 504 532 6%
Headline earnings per share 496 568 15%
(cents)
Diluted headline earnings 473 541 14%
per share (cents)
Net asset value per share 2 303 2 341 2%
(cents)
Tangible net asset value 1 785 1 823 2%
per share (cents)
Number of shares in issue 69 954 69 954 0%
net of treasury shares
(`000)
Weighted average shares in 70 211 70 211 0%
issue (`000)
Notes and assumptions:
a. The "Before the Transactions" column has been extracted from the
published audited financial statements of Invicta for the year
ended 31 March 2011 as released on SENS on 1 June 2011;
b. For the purpose of calculating earnings per share, headline
earnings per share and diluted headline earnings per share in the
"After the Transactions" column, it was assumed that the
Transactions were implemented on 1 April 2010;
c. For the purpose of calculating net asset value per share and net
tangible asset value per share in the "After the Transactions"
column, it was assumed that the Transactions were implemented on
31 March 2011;
d. Invicta will consolidate the Humulani Empowerment Trust,
Theramanzi and 100% of Humulani in terms of SIC12;
e. Earnings are reduced by the loss of interest on working capital
balances at a rate of 5.5% naca; and
f. Estimated once off Transaction costs amount to R3.76 million.
5. CATEGORY
The Sale Transaction, the Theramanzi Preference Shares, the Put Option and
the Call Option are collectively classified as a related party transaction
as defined in section 10.1(b) of the JSE Listings Requirements, as aloeCap
is a material shareholder holding 20% of the issued share capital of
Humulani before the Transactions. The fairness opinion on the Sale
Transaction, Theramanzi Preference Shares transaction, the Call Option
transaction and the Put Option transaction, by an independent expert, as
required by the JSE Listings Requirements, will be included in the circular
referred to below.
6. CIRCULAR
A circular, containing details of the Transactions and including a notice of
general meeting and a form of proxy will be posted to Invicta shareholders
in due course.
7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
As details of the Transactions have been provided in this announcement,
Invicta`s shareholders are advised that they no longer need to exercise
caution when dealing in their Invicta securities.
22 June 2011
Cape Town
Corporate advisor
Bravura Equity Services (Pty) Limited
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Reporting accountants
Deloitte & Touche
Attorneys for the Humulani Empowerment Trust
Bernadt Vukic Potash & Getz
Attorneys for Invicta
Robyn Hey and Associates
Corporate advisor to aloeCap Private Equity Investments 1 (Proprietary)
Limited
aloeCap (Proprietary) Limited
Date: 22/06/2011 16:48:01 Produced by the JSE SENS Department.
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