| Mon 17 Oct 2011, 17:26 | | FWD - Freeworld Coatings Limited - Joint Announcement by Freeworld and Kansai in |
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FWD
FWD
FWD - Freeworld Coatings Limited - Joint Announcement by Freeworld and Kansai in
relation to the proposal to delist Freeworld from the JSE
Freeworld Coatings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2007/021624/06)
Share code: FWD
ISIN: ZAE000109450
("Freeworld")
KANSAI PAINT Co., Ltd.
(Incorporated in Japan)
(Registration number 1402-01-001093)
TSE share code: 4613
("Kansai")
JOINT ANNOUNCEMENT BY FREEWORLD AND KANSAI IN RELATION TO THE PROPOSAL TO DELIST
FREEWORLD FROM THE JSE, AND THE FIRM INTENTION BY KANSAI TO ACQUIRE ALL THE
ISSUED SHARES OF FREEWORLD NOT ALREADY OWNED BY KANSAI, TO BE IMPLEMENTED BY WAY
OF A SCHEME OF ARRANGEMENT
1 INTRODUCTION
1.1 The shareholders of Freeworld ("Shareholders") are advised that it is
proposed that Freeworld delist ("Delisting") its ordinary shares
("Freeworld Shares") from the exchange operated by the JSE Limited ("JSE").
1.2 Pursuant to the proposed Delisting, which will, amongst other things, be
subject to an offer being made to Freeworld shareholders, on 14 October
2011 Kansai, Freeworld`s majority shareholder, delivered a letter to the
board of directors of Freeworld ("Freeworld Board") stating that, pursuant
to the JSE Listings Requirements, Kansai has a firm intention to acquire
all the issued shares of Freeworld not already owned by Kansai, save for
the Freeworld Shares in respect of which a Retained Investment Election (as
defined in paragraph 3.1 below) has been made ("Scheme Shares").
1.3 It is proposed that the acquisition referred to in paragraph 1.2 above will
be effected by way of a scheme of arrangement ("Scheme") between Freeworld
and its Shareholders in terms of section 114 of the Companies Act No. 71 of
2008 ("Companies Act") and in accordance with the Takeover Regulations as
defined in the Companies Act ("Takeover Regulations").
1.4 In accordance with the requirements of the Takeover Regulations, Freeworld
has established an independent board to consider the Scheme and comply with
the other obligations of an independent board in terms of the Takeover
Regulations, comprising E Links and NDB Orleyn, who are independent
directors on the Freeworld Board, and GK Everingham ("Independent Board").
The Independent Board is comprised in this manner because the Takeover
Regulations require that an independent board must comprise a minimum of
three independent directors. If, as is the case with the Freeworld Board,
there are less than three independent directors, other persons must be
appointed to the independent board by the existing board. Accordingly, GK
Everingham has been appointed to the Independent Board to ensure that it is
properly constituted in terms of the Takeover Regulations.
1.5 BDO Corporate Finance (Proprietary) Limited has been appointed by Freeworld
as the independent expert ("Independent Expert") to prepare a report to the
Freeworld Board and the Independent Board concerning the terms of the
Scheme in accordance with the requirements of section 114(3) of the
Companies Act, the Takeover Regulations and the JSE Listings Requirements.
2. INFORMATION ON KANSAI
2.1 Kansai, headquartered in Osaka, Japan, is one of the top ten coatings
companies in the world. Listed on the Tokyo Stock Exchange, Kansai had a
market capitalisation of JPY 195.7 billion / R19.1 billion as at 14 October
2011 (using a conversion rate of 10.23 Yen per Rand). Kansai operates and
supplies coatings in Japan, South-East Asia, China, India and the Middle
East. Kansai produces a broad cross-section of coatings for automotive,
industrial, marine, protective and decorative applications and employs
approximately 8,000 people at 44 factories across 18 countries.
2.2 As at the date of this announcement, Kansai holds 188,427,740 Freeworld
Shares, which equates to approximately 92.42% of Freeworld`s issued share
capital.
2.3 There are no arrangements, undertakings or agreements between Kansai or
Freeworld, and any person acting in concert with these parties in relation
to the Delisting or the Scheme.
3. MECHANISM AND TERMS OF THE SCHEME
3.1 In terms of the Scheme, Shareholders who are entitled to attend and vote at
the general meeting ("General Meeting") to be convened in respect of the
Delisting and the Scheme ("Scheme Members") may elect to retain all (and
not some only) of their Freeworld Shares after the Delisting, which shares
will consequently not be acquired by Kansai pursuant to the Scheme
("Retained Investment Election").
3.2 Before making the Retained Investment Election, Scheme Members should
consider their ability to dispose of their Freeworld Shares post-Delisting,
as there will be no formal market by which Freeworld Shares will be traded
if the Delisting is implemented.
3.3 Scheme Members that do not validly make the Retained Investment Election
will have all of their Freeworld Shares acquired by Kansai in terms of the
Scheme. The purpose of the Scheme is to allow Scheme Members that cannot
or do not wish to hold all of their Freeworld Shares to dispose of such
Freeworld Shares, if Freeworld is Delisted.
3.4 The consideration payable by Kansai in terms of the Scheme will be R12.00
per Scheme Share and will be paid in cash ("Scheme Consideration").
4. RATIONALE FOR THE DELISTING
In terms of and following its offer to Shareholders dated 15 December 2010,
Kansai indicated it would consider the delisting of Freeworld under certain
circumstances. In this context, the Freeworld Board has considered a number of
factors regarding the continued listing of the Freeworld Shares on the JSE,
including, amongst other things, the following:
- the ongoing or continued cost of retaining Freeworld`s listing on the JSE;
- the size and market capitalisation of Freeworld, relative to other companies
in its sector that are listed on the JSE;
- the proportion of Freeworld Shares held by Kansai relative to the minority
Shareholders, and the likely trading liquidity of the Freeworld Shares on
the JSE;
- the possible future capital requirements of Freeworld and the potential
dilution of Shareholders other than Kansai; and
- the associated public reporting requirements for Freeworld as a listed
- company.
Having considered the above factors, the Freeworld Board formed the view that
retaining Freeworld`s listing is not in the best interest of Freeworld and
therefore resolved to pursue the Delisting of Freeworld.
5. IRREVOCABLE UNDERTAKING
5.1 Kansai and Freeworld have obtained an irrevocable undertaking ("Irrevocable
Undertaking") from the Public Investment Corporation SOC Limited ("PIC")
to, amongst other things, vote in favour of the Delisting and the Scheme
and to make the Retained Investment Election.
5.2 As at the date of this announcement, the PIC holds 13,437,871 Freeworld
Shares which equates to approximately 6.59% of Freeworld`s issued share
capital. PIC`s holding of Freeworld Shares represents 87.01% of the
Freeworld Shares held by Scheme Members.
6. CONDITIONS TO THE DELISTING AND THE SCHEME
6.1 It is proposed that the Scheme and the Delisting, both of which are inter-
conditional, will be subject to fulfilment of the following conditions
precedent (collectively, the "Conditions Precedent"):
6.1.1 the approval of the Scheme by the requisite majority of Shareholders at
the General Meeting as contemplated in section 115(2)(a) of the Companies
Act and, in the event of the provisions of section 115(2)(c) becoming
applicable:
6.1.1.1 the approval of the Scheme by a South African court of competent
jurisdiction; and
6.1.1.2 if applicable, Freeworld not treating the aforesaid resolution as a
nullity as contemplated in section 115(5)(b) of the Companies Act;
6.1.2 the PIC making the Retained Investment Election in accordance with its
Irrevocable Undertaking and in terms of the Scheme;
6.1.3 the ordinary resolution in terms of paragraph 1.14(a) of the JSE Listings
Requirements to authorise the Delisting is approved by the requisite
majority of Shareholders at the General Meeting; and
6.1.4 the receipt of unconditional approvals, consents or waivers from all
applicable regulatory authorities as may be required in order to implement
the Delisting and the Scheme (including, without limitation, the compliance
certificate to be issued by the Takeover Regulation Panel, established in
terms of section 196 of the Companies Act) for the purposes of giving
effect to the Scheme, or, to the extent that any such approvals, consents
or waivers are subject to conditions, such conditions being accepted by
Freeworld and Kansai in writing, or being fulfilled, as the case may be.
6.2 The Condition(s) Precedent in:
6.2.1 paragraphs 6.1.1, 6.1.3 and 6.1.4 are not capable of being waived; and
6.2.2 paragraph 6.1.2 has been inserted for the benefit of Freeworld and Kansai
and can be waived (in whole or in part, where applicable) by the written
agreement of both of them.
7. CASH CONFIRMATION
As required in terms of the Takeover Regulations, Citibank, N.A., South Africa
Branch has provided a bank guarantee to the Takeover Regulation Panel, in favour
of the offerees under the Scheme, confirming that Kansai has sufficient cash
resources available to satisfy the full cash consideration payable in terms of
the Scheme, as required by regulations 111(4)(a) and 111(5) of the Takeover
Regulations.
8. TIMETABLE FOR THE DELISTING AND THE SCHEME
The following timetable has been prepared on the basis that the circular
relating to the Delisting and the Scheme ("Circular") is posted to shareholders
on 21 October 2011 (as outlined in paragraph 10 below). To the extent that the
Circular is posted to Shareholders on an alternative date, Shareholders will be
advised of the revised timetable for the Delisting and Scheme at that time.
2011
Circular posted to Shareholders and notice convening Friday, 21 October
General Meeting published on SENS on
Last day to trade in Freeworld Shares on the Friday, 11 November
Exchange in order to be recorded in the register on
the Scheme Voting Record Date on
Scheme Voting Record Date being 17:00 on Friday, 18 November
Last day to lodge Forms of Proxy (white) in respect Monday,21 November
of the General Meeting with the Transfer Secretaries
by 10:00 on
Latest time for Scheme Members to give notice to Wednesday, 23 November
Freeworld objecting to the special resolution to
approve the Scheme by 10:00 on
General Meeting of Shareholders to be held at 10:00 Wednesday,23 November
on
Results of the General Meeting released on SENS on Wednesday, 23 November
Results of the General Meeting published in the Thursday, 24 November
press on
Last date for Freeworld to send Dissenting Wednesday, 7 December
Shareholders notices of adoption of the special
resolution approving the scheme on
Expected Finalisation Date announcement published on Wednesday, 7 December
SENS on
Expected Finalisation Date announcement published in Thursday, 8 December
the press on
Expected Scheme LDT on Thursday, 15 December
Expected suspension of listing, from the open of the Monday, 19 December
Exchange on
Expected Scheme Consideration Record Date for Friday, 23 December
Shareholders to be recorded in the register in order
for Shareholders to make the Retained Investment
Election in respect of all of a Scheme Participant`s
Freeworld Shares on
Expected Operative Date of the Scheme and expected Tuesday, 27 December
date of payment of the Scheme Consideration to be
transferred electronically or posted to certificated
Scheme Consideration Recipients (if Form of Election
(blue) and Documents of Title are received by the
Transfer Secretaries on or before 12:00 on the
Scheme Consideration Record Date) on
Expected termination of listing of Freeworld Shares Wednesday, 28 December
on the Exchange at the commencement of trade on or
about
Notes:
1. These dates and times are subject to change. Any such change will be
published on SENS and in the press. All times referred to in this
announcement are to South African standard time.
2. No dematerialisation or re-materialisation of Freeworld Shares may take place
from the business day following the Scheme LDT.
3. Shareholders who wish to exercise their appraisal rights in terms of section
164 of the Companies Act are referred to the Circular for purposes of
determining the relevant timing for the exercise of their appraisal rights.
4. If the General Meeting is adjourned or postponed, forms of proxy must be
received by no later than 48 hours prior to the time of the adjourned or
postponed General Meeting, provided that, for the purpose of calculating
the latest time by which forms of proxy must be received, Saturdays,
Sundays and gazetted public holidays in South Africa will be excluded.
5. As the salient dates and times are subject to change, they may not be
regarded as consent or dispensation for any time periods which may be
required in terms of the Takeover Regulations where applicable, and any
such consents or dispensations must be specifically applied for and
granted.
9. RESPONSIBILITY STATEMENTS
9.1 The Independent Board accepts responsibility for the information contained
in this announcement which relates to Freeworld and confirms that, to the
best of their knowledge and belief, such information which relates to
Freeworld is true and this announcement does not omit anything likely to
affect the importance of such information.
9.2 Kansai accepts responsibility for the information contained in this
announcement which relates to Kansai and confirms that, to the best of its
knowledge and belief, such information which relates to Kansai is true and
this announcement does not omit anything likely to affect the importance of
such information.
10. POSTING OF THE CIRCULAR AND NOTICE OF GENERAL MEETING
Shareholders are hereby advised that a circular containing, amongst other
things, details of the Delisting and the Scheme, the Independent Expert`s
report, a notice convening the General Meeting, a form of proxy and a form of
election (collectively, the "Circular") will be posted to Shareholders on 21
October 2011. Shareholders are advised to review the Circular for the terms and
conditions of the Delisting and the Scheme.
11. LINK TO THE CIRCULAR
Shareholders will be able to access the Circular at
http://www.freeworldcoatings.com/ and
http://www.kansai.co.jp/global_site/index.html.
Enquiries:
Newman Lowther & Associates
Ben Lowther, +27 (0)21 673 7000
Freeworld
Eleanor Chamberlain, +27 (0)11 549 8009
Financial advisors to Freeworld and Kansai
Newman Lowther & Associates (Pty) Ltd
Attorneys to Freeworld and Kansai
Bowman Gilfillan Inc.
Independent Expert
BDO Corporate Finance (Pty) Ltd
JSE Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 17/10/2011 17:26:01 Produced by the JSE SENS Department.
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