| Mon 15 Aug 2011, 16:56 | | CSP - Chemspec - Proposed raising of new permanent equity capital |
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CSP
CSP
CSP - Chemspec - Proposed raising of new permanent equity capital
Chemical Specialities Limited
Incorporated in the Republic of South Africa)
Registration number (2005/039947/06)
Share code: CSP
ISIN: ZAE000109427
("Chemspec" or "the Company")
PROPOSED RAISING OF NEW PERMANENT EQUITY CAPITAL
1 SPECIFIC ISSUES FOR CASH AND EMPLOYEE SHARE INCENTIVE SCHEME
Chemspec is pleased to announce that it has reached agreement in
principle with the Industrial Development Corporation of South Africa
Limited ("IDC") to raise approximately R60 million. The transaction is
subject to the signing of legal agreements and the fulfilment of
certain conditions as pertaining to these agreements. The IDC intends
to enter into a convertible loan agreement and share subscription
agreement in an amount of R30 million during August 2011. This loan
will be converted to ordinary shares as set out below and the IDC
intends to follow its rights for an additional R30 million in the
proposed rights offer set out in 2 below.
Furthermore, Corvest 6(Pty ) Limited ("Corvest") and Basfour 2052 CC,
trading as Clark Investments("Clark Investments") have agreed to
convert a significant proportion of their loan accounts of
approximately R133 million for shares.
Chemspec will convene a general meeting of shareholders to consider
and, if deemed appropriate, pass the following proposals:
1.1 approval of a specific issue of 75,000,000 ordinary shares for
cash to the IDC at a price equivalent to the lower of 40 cents
per share or the 30 day volume weighted average trading price, to
be determined at the date of issue, which is expected to be on or
about 28 October 2011;
1.2 approval of a specific issue of 42,107,280 ordinary shares for
cash to Clark Investments in order to capitalise a portion of
their loan account of R16,842,912 at 40 cents per share;
1.3 conversion of the share capital of the company from ordinary
shares of par value to ordinary shares of no par value and an
increase in the authorised share capital from 1 billion shares to
1,5 billion shares of no par value; and
1.4 the adoption of an Employee Share Option Scheme.
A circular and notice of meeting is in the course of being prepared
and will be posted to shareholders as soon as possible. A further
announcement, including the financial effects of the specific issues,
will be made in due course.
2 RIGHTS OFFER
In order to afford other shareholders the opportunity to participate
in the capital raising and to convert to shares a substantial portion
of the remaining loan account of Clark Investments and a substantial
portion of the loan account of Corvest, as soon as is practicable
after the specific issues of shares for cash, Chemspec intends to
proceed with a rights offer to shareholders to raise approximately
R214 million in the ratio of 1 new Chemspec ordinary share for every 1
Chemspec ordinary share held, at a rights offer price of 40 cents per
share. The IDC, Clark Investments and Corvest intend following their
rights in the rights offer and shareholders will be entitled to apply
for excess shares to their entitlements. The IDC intends to follow its
rights for an additional R30 million cash and Clark Investments and
Corvest will capitalise a remaining portion of their loan accounts of
approximately R32 million and R84 million, respectively.
A circular is being prepared and will be posted to shareholders in due
course. A further announcement, including the financial effects of the
rights offer, will be made in this regard.
3 CONCLUSION
The specific issues and rights offer referred to in 1 and 2 above,
will strengthen the permanent equity of the Company by between R193
million and R261 million, depending on the success of the rights offer
and will see an injection of new cash of between R60 million and R128
million, net of the capitalisation of the shareholder loan accounts.
The Board believes that the Company will then be adequately
capitalised and have sufficient cash to rebuild the business, both to
recover lost ground and to take advantage of the growth opportunities
expected to ensue from the strategic and operational initiatives
currently being developed and implemented by the board of directors
and the new management team.
Durban
15 August 2011
Designated advisor
Grindrod Bank Limited
(Registration number 1994/007994/06)
Date: 15/08/2011 16:56:30 Produced by the JSE SENS Department.
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