| Wed 10 Aug 2011, 12:00 | | ADW - African Dawn Capital Limited - SPV Funding of Elite Group Two (Pty) |
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ADW
ADW
ADW - African Dawn Capital Limited - SPV Funding of Elite Group Two (Pty)
Limited ("Elite 2 SPV") by Sandown Capital (Pty) Limited ("Sandown Capital")
AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/020520/06)
JSE code: ADW
ISIN: ZAE000060703
("Afdawn" or "the company" or "the Group")
SPV FUNDING OF ELITE GROUP TWO (PTY) LIMITED ("ELITE 2 SPV") BY SANDOWN CAPITAL
(PTY) LIMITED ("SANDOWN CAPITAL")
1 Background
The board of directors of Afdawn ("the board") have actively been seeking
ways to raise capital so as to ensure the sustainable growth of the Group.
Due to the time taken in order to arrive at a workable recapitalisation of
the Group, the terms of which were released in SENS on 14 June 2011, the
company sought additional capital for Elite Group (Pty) Limited ("Elite"),
the Group`s wholly owned microfinance business.
The board is pleased to announce that Sandown Capital has agreed to provide
finance to be managed by Elite via a special purpose vehicle. Sandown
Capital will finance Elite 2 SPV, a wholly owned subsidiary of Sandown
Capital, with R10 million, to be managed by Elite. This SPV funding is in
addition to the funding to be raised from Sandown Capital as part of the
recapitalisation of Afdawn which was announced on 14 June 2011.
2 SPV Funding
Sandown Capital, Afdawn and Elite have entered into the SPV agreement,
classified as a material contract in the Group`s recapitalisation,in terms
of which the parties will enter into an SPV arrangement as follows:
2.1 Elite 2 SPV terms and conditions
2.1.1 Sandown Capital will finance Elite 2 SPV, to a maximum of R10 million
("the Sandown Capital Loan").
2.1.2 Elite shall manage Elite 2 SPV on behalf of Sandown Capital and shall
source potential clients to provide short term salary deducted personal
loans.
2.1.3 Elite will earn a monthly management fee, based on the income generated in
the SPV, subject to an annual maximum. Thereafter Elite and Sandown Capital
will share 50/50 in the profits of Elite 2 SPV, subject to certain loan
recovery targets. This allows Elite access to funding lines at a time when
the Group is in a period of stabilisation and recapitalisation. The Elite 2
SPV funding structure allows Elite to earn a management fee, to share in
the returns of Elite 2 SPV and to continue to grow its business.
2.2 Option
In terms of the SPV agreement and in consideration for the Sandown Capital
loan, Sandown Capital has been granted an option ("the Sandown Capital
option") as follows:
2.2.1 Sandown Capital will have the option, exercisable in July 2012, of selling
100% of the shares in Elite 2 SPV to Elite for a price based on the net
asset value ("NAV") of both Elite and Elite 2 SPV ("the Selling Price")
such that the value of Elite 2 SPV must equal 30% of the combined NAV of
Elite and Elite 2 SPV as at 1 August 2012. Should Elite 2 SPV`s NAV be less
than or greater than the 30%, as described, then Sandown Capital will
either recapitalise Elite 2 SPV or will arrange for Elite 2 SPV to
distribute capital so that the 30% target is met. Elite will settle the
Selling Price of Elite 2 SPV by the issue of Elite shares, such that
Sandown Capital will acquire 30% of the issued share capital of Elite,
subject to the Selling Price not exceeding 49% of the market capitalization
of Afdawn on the date of exercise of the Sandown Capital Option.
2.2.2 In the event that Sandown Capital exercises the Sandown Capital Option
then it will be obligated to provide a two year funding line to Elite of
R20 million, over and above the Sandown Capital loan of R 10 million
provided to Elite 2 SPV.
2.2.3 In the event that Sandown Capital advises Elite and/or Afdawn of its
intention to exercise the option then Elite and/or Afdawn will have 7 days
in which to advise Sandown Capital of its intention to purchase Elite 2 SPV
for a consideration equal to the NAV plus the outstanding Sandown Capital
Loan ("the Consideration"). Elite and/or Afdawn will thereafter have 30
days in which to settle the Consideration.
2.2.4 In the event that Sandown Capital decides not to exercise the Sandown
Capital Option then no new loans will be granted by Elite 2 SPV and Elite
will be retained to manage the remaining loan book (on a reducing
management fee) so as to repay the Sandown Capital Loan.
3. Categorisation
The Sandown Capital Option is a category 2 transaction in terms of the JSE
Limited ("JSE") Listings Requirements.
4 Financial effects
In terms of the Listings Requirements of the JSE Limited, the Sandown
Capital Option does not have any financial effect on Afdawn`s headline
earnings and earnings per share and NAV for the year ended 28 February
2011.
Johannesburg
10 August 2011
Designated advisor and corporate advisor: Sasfin Capital
A division of Sasfin Bank Limited
Date: 10/08/2011 12:00:01 Produced by the JSE SENS Department.
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