| Fri 7 Oct 2011, 15:37 | | CSP - ChemSpec - Proposed Rights Offer |
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CSP
CSP
CSP - ChemSpec - Proposed Rights Offer
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 RIGHTS OFFER
1. INTRODUCTION AND TERMS OF THE RIGHTS OFFER
In the announcements released on the Securities Exchange News Service
("SENS") of the JSE Limited ("JSE") on 15 August 2011 and 8 September 2011,
shareholders were advised that ChemSpec would be undertaking a capital
raising of approximately R214.3 million by way of a rights offer ("the
rights offer").
In terms of the rights offer, 535,630,824 new ChemSpec no par value
ordinary shares, in the authorised but unissued share capital of the
Company ("the rights offer shares"), will be offered for subscription to
ChemSpec shareholders recorded in the register at the close of trade on
Friday, 28 October 2011 who will receive rights to subscribe for the rights
offer shares on the basis of one rights offer share for every one ChemSpec
ordinary share held, at 40 cents per rights offer share.
2. RATIONALE FOR THE RIGHTS OFFER
ChemSpec embarked on a process of improving its financing structure, as
reported in the announcements to shareholders on 23 June 2011 and 15 August
2011.
In these announcements it was advised that as an interim measure Corvest
and Clark Investments made available an amount of R133 million as
shareholders` loans to the Company, on commercial terms.
In a circular to shareholders dated 16 September 2011 ("the circular"), a
general meeting ("the general meeting")of the Company has been convened for
17 October 2011, inter alia, to approve the specific issues of shares for
approximately R46,8 million to the Industrial Developmental Corporation of
South Africa Limited ("the IDC") and Clark Investments ("the specific
issues"), being the first phase of the financial restructure of the
Company.
In addition, Corvest and Clark Investments had agreed to the above
mentioned loans being converted to ordinary share capital in terms of the
specific issues and the rights offer.
The rights offer allows all shareholders registered as such on the record
date an equal opportunity to participate in the capital raising on a pari
passu basis.
3. IRREVOCABLE UNDERTAKINGS
On the assumption that the specific issues are approved at the general
meeting, the Company has received the following undertakings:
3.1 Clark Investments, representing Basfour 2052 CC and Basfour 3014 CC,
which collectively will have a holding of 15.02% in the Company`s
shares, has irrevocably committed to follow its rights, through the
conversion of its shareholder loan into shares, in an approximate
amount of R32.2 million.
3.2 Corvest 6 (Proprietary) Limited, which holds 27.37% of the issued
shares in ChemSpec, has irrevocably undertaken to follow its rights in
order to convert its shareholder loan into shares, in an approximate
amount of R83.6 million.
3.3 The IDC, which will have a holding of 14% in the Company`s shares, has
irrevocably committed to follow its rights in an amount of R30
million.
4. EXCESS APPLICATIONS
ChemSpec shareholders will be permitted to apply for new ChemSpec shares in
excess of their entitlement. Should there be excess rights offer shares
available for allocation, these will be allocated to applicants in a manner
viewed as equitable in terms of the Listing Requirements of the JSE.
Clark Investments intends to apply for shares in excess of its entitlement
up to an amount of R10 million.
5. IMPORTANT DATES AND TIMES
2011
The salient information announcement regarding the Friday, 7 October
rights offer released on SENS by close of business
(17:00)
Finalisation announcement released on SENS by Friday, 14 October
11:00
Last day to trade in ChemSpec ordinary shares in Friday, 21 October
order to participate in the rights offer (cum
entitlement)
Listing of and trading in the letters of Monday, 24 October
allocation in respect of new ChemSpec shares on
the JSE commences at 09:00
ChemSpec ordinary shares commence trading ex Monday, 24 October
entitlement on the JSE at 09:00
Record date for the rights offer Friday, 28 October
Rights offer opens at 09:00 and the rights offer Monday, 31 October
circular posted to shareholders
Certificated shareholders will have their letters Monday, 31 October
of allocation credited to an electronic account
held at the transfer secretaries
Dematerialised shareholders will have their Monday, 31 October
accounts at their CSDP or broker credited with
their entitlement
Last day for trading letters of allocation on the Friday, 11 November
JSE
Listing of maximum number of rights offer shares Monday, 14 November
and trading therein on the JSE commences at 09:00
Rights offer closes at 12:00. Payment to be made Friday, 18 November
and form of instruction lodged by certificated
shareholders at the transfer secretaries
Record date for the letters of allocation Friday, 18 November
Rights offer shares issued and posted to Monday, 21 November
shareholders in certificated form on or about
CSDP or broker accounts in respect of Monday, 21 November
dematerialised shareholders will be updated with
rights offer shares and debited with any payments
due
Results of rights offer announced on SENS Monday, 21 November
CSDP or broker accounts in respect of Wednesday, 23 November
dematerialised shareholders will be updated with
excess rights offer shares (where applicable) and
debited with any payments due on or about
Excess Rights offer shares issued (where Wednesday, 23 November
applicable) and posted to shareholders in
certificated form on or about
Adjustments to the number of rights offer shares Wednesday, 23 November
listed effected on the JSE on or about
Notes:
(1) Unless otherwise indicated, all times are South African times.
(2) The above dates and times are subject to amendment. Any variation of
the above dates and times will be approved by the JSE and announced on
SENS.
(3) CSDPs effect payment in respect of dematerialised shareholders on a
delivery versus payment method.
(4) ChemSpec shareholders may not dematerialise or rematerialise their
ChemSpec ordinary shares between Monday, 24 October 2011 and Friday,
28 October 2011, both dates inclusive.
6. REGULATORY APPROVALS
Application has been made to the Issuer Services Division of the JSE to
approve the listings of:
* 535,630,824 renounceable (nil paid) letters of allocation ("LAs"); and
* 535,630,824 rights offer shares to be issued pursuant to the rights
offer.
7. CONDITIONS PRECEDENT
7.1 The rights offer is subject to the ordinary and special resolutions,
as set out in the circular referred to in paragraph 2, being approved
at the general meeting.
7.2 In the event that the special resolutions pertaining to the conversion
of par value to no par value ordinary shares and the increase in the
authorised share capital of Chemspec are not registered with the
Companies and Intellectual Property Commission by Thursday, 20 October
2011, the relevant dates pertaining to the rights offer, as set out in
5 above, will change. Any such changes to these dates will be
announced on SENS.
8. PRO FORMA FINANCIAL EFFECTS
8.1 The preparation of the unaudited pro forma financial effects is the
responsibility of the directors of ChemSpec.
8.2 The table below sets out the unaudited pro forma financial effects of
the rights issue which followed the specific issue on ChemSpec. The
unaudited pro forma financial effects are prepared for illustrative
purposes only and may not fairly represent ChemSpec`s results,
financial position and changes in equity after the rights issue. For
the purposes of the pro forma financial effects, it has been assumed
that the specific issues and rights issue took place with effect from
1 April 2010 for the statement of comprehensive income and 31 March
2011 for the statement of financial position.
8.3 The reporting accountants` limited assurance report on the financial
effects is set out in Annexure 4 to the circular which will be posted
to shareholders on or about 31 October 2011.
Before the After the % Pro forma %
specific specific Change after the Change
issue (1) issue specific
Published (2)(3) issue and
(4)(5) rights offer
Pro forma (6)(7)
Basic and (29.12) (21.62) (25.75) (9.53) (55.92)
diluted loss
per share
(cents)
Basic and (27.99) (20.76) (25.83) (9.12) (56.07)
diluted
headline loss
per share
(cents)
Net asset 31.65 33.35 5.37 36.53 9.54
value (NAV)
per share
(cents)
Tangible net 21.35 25.31 18.55 32.50 28.41
asset value
(TNAV) per
share (cents)
Total shares 418,523,544 535,630,824 27.98 1,071,261,648 100.00
in issue
Weighted 378,384,699 495,491,979 30.95 1,031,122,803 108.10
average
shares
Notes:
1. The "Before the specific issue" financial information is based on
ChemSpec`s published audited annual financial information for the year
ended 31 March 2011.
2. The "After the specific issue" basic and diluted loss and headline
loss per share numbers have been adjusted to include the issue of the
117,107,280 ordinary shares. The net asset value per share and
tangible net asset value per share has been adjusted to include the
issue of 117,107,280 ordinary shares at 40 cents per ChemSpec share
and transaction costs of R1,609,566.
3. The specific issue is assumed to result in an after tax interest
saving of R3,857,766 (calculated using Prime plus 3% for the
shareholder loan of R16,842,912 repaid and an average rate of prime
for the bank overdraft facility of R29,650,302 repaid, with a tax rate
of 28%) .
4. The IFRS 2 option cost (being the effect of the 26,000,000 options to
be granted to employees after 17 October 2011) has been valued at
R5,586,074. This cost will be amortised over the vesting period. Based
on the assumption that the grant date is 1 April 2010, the resultant
expense through the statement of comprehensive income for the first
year is R1,148,248 with a consequential tax impact of R321,509 on a
pro forma basis.
5. Please note that, for every one cent that the IDC subscription price
per share is less than 40 cents, the pro forma financial effects would
change as follows:
* Basic and diluted loss per share (cents) will be reduced by 0.08
cents;
* Basic and diluted headline loss per share (cents) will be reduced
by 0.08 cents;
* Net asset value per share (cents) will be reduced by 0.12 cents;
and
* Tangible net asset value per share (cents) will be reduced by
0.09 cents.
6. The "After the specific issue and rights issue" basic and diluted loss
and headline loss per share numbers have been adjusted to include the
issue of the 535,630,824 ordinary shares. The net asset value per
share and tangible net asset value per share has been adjusted to
include the issue of 535,630,824 ordinary shares at 40 cents per
ChemSpec share and transaction costs of R1,609,566.
7. The rights issue is assumed to result in an after tax interest saving
of R8,890,249 (calculated using Prime plus 3% for the remaining
shareholder loan of R15,371,874 repaid, an average rate of prime for
the bank overdraft facility of R9,713,588 repaid and 5% for the excess
cash raised of R187,557,302, with a tax rate of 28%).
8. There are no continuing effects.
9. DOCUMENTATION
A circular to ChemSpec shareholders, incorporating listing particulars,
setting out full details of the rights offer, will be posted to
shareholders on or about Monday, 31 October 2011. A form of instruction in
respect of the LAs will be enclosed with the circular for use by ChemSpec
shareholders who have not dematerialised their ChemSpec shares.
10. RESTRICTIONS
The granting of the right to subscribe for rights offer shares in certain
jurisdictions other than South Africa may be restricted by law and a
failure to comply with any of those restrictions may constitute a violation
of the securities laws of any such jurisdiction.
The shares have not been and will not be registered for the purposes of the
rights offer under the securities laws of the United Kingdom, Canada,
United States of America or any other country outside South Africa and
accordingly, are not being offered, sold, taken up, re-sold or delivered
directly or indirectly to rights recipients with registered addresses
outside South Africa.
The rights offer does not constitute an offer in any area of jurisdiction
in which it is illegal to make such an offer.
Verulam
7 October 2011
Corporate and Designated Advisor
Grindrod Bank Limited
Reporting Accountants and Auditors
KPMG Inc.
Date: 07/10/2011 15:37:01 Produced by the JSE SENS Department.
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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.
