| Thu 8 Dec 2011, 17:01 | | BCK - Blackstar Group SE - Blackstar rationale for the offer to acquire the |
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BCK
BCK
BCK - Blackstar Group SE - Blackstar rationale for the offer to acquire the
entire issued share capital of Mvela Group by way of a scheme of
arrangement
Blackstar Group SE
Previously Blackstar Group PLC
(Incorporated in England and Wales)
(Company number SE 000030)
(registered as an external company with limited liability in the Republic
of South Africa under registration number 2011/008274/10)
Share code: BCK
ISIN: GB00B0W3NL87
("Blackstar")
BLACKSTAR RATIONALE FOR THE OFFER TO ACQUIRE THE ENTIRE ISSUED SHARE
CAPITAL OF MVELA GROUP BY WAY OF A SCHEME OF ARRANGEMENT ("Scheme")
Introduction and Highlights
* Blackstar has made an offer to acquire the entire issued ordinary
share capital of Mvelaphanda Group Limited ("Mvela Group"),
excluding treasury shares and the shares already held by
Blackstar, by way of a scheme of arrangement in terms of section
114 of the Companies Act 71 of 2008, as published in the joint
announcement with Mvela Group on 8 December 2011 ("Scheme
Announcement").
* Mvela Group shareholders shall be able to elect to sell their
shares in exchange for Blackstar shares, a cash alternative, or a
combination of both, subject to a ZAR 800 million (GBP63.5
million) maximum aggregate cash consideration.
* The Scheme consideration shall be calculated on a tangible NAV to
tangible NAV basis as detailed in the Scheme Announcement.
* The Blackstar board believes that Mvela Group`s assets represent
an attractive investment portfolio to which it can add
significant value in the medium term and provides an excellent
fit as part of Blackstar`s growth strategy.
* Blackstar also believes that the Scheme will be positive for
shareholders of both companies as:
- the Scheme provides optionality to Mvela Group shareholders
who may wish to receive some cash through an accelerated
return of capital or remain invested in the enlarged group
post completion of the Scheme; and
- the enlarged group will benefit from improved economies of
scale and will be an appropriate size for listing on the
main market of the London Stock Exchange ("LSE"), which, if
listed, should increase liquidity, which is something the
Blackstar board is currently exploring.
* Blackstar has received an irrevocable undertaking to vote in
favour of the Scheme from Mvelaphanda Holdings (Pty) Limited,
representing approximately 20 per cent. of the issued share
capital of Mvela Group (excluding treasury shares) and has
received informal indications of support in favour of the Scheme
from certain of its major shareholders.
1. Blackstar rationale for the Scheme
1.1 Blackstar is aware that the Mvela Group is currently focussed on
executing a value unlocking strategy on behalf of its shareholders,
through which its main investments are being gradually unbundled with
a key focus on realising value and generating a satisfactory return on
capital for shareholders. Blackstar believes it can deliver improved
returns for both sets of shareholders by using its technical expertise
and exit experience to add value to the Mvela Group`s realisation
strategy, with the proceeds being used in terms of Blackstar`s
investment strategy where it believes it can generate an appropriate
return. However, Blackstar realises that any change of the current
strategy comes with its own risks and the results of any realisation
strategy can be difficult to predict, especially in regard to timing
and the ultimate valuations achieved. Consequently Blackstar`s
proposed part cash part share offer provides Mvela Group shareholders
with the option to be able to take cash now through an accelerated
return of capital or elect to participate in what Blackstar aims to be
significant value creation in respect of the enlarged group`s
portfolio over the medium term, thereby managing to balance the
interests of all shareholders.
1.2 In addition, Blackstar believes the Scheme will be positive for both
companies in that it expects that it will:
1.2.1 allow the enlarged group to benefit from improved economies of
scale. Blackstar believes it has the capacity to manage the
enlarged group without the need for additional resources;
1.2.2 result in a reduction of administration costs, listing costs,
audit costs and other overheads, through the one larger single
entity;
1.2.3 result in the creation of a larger black empowered investment
holding company with the ability to invest in Africa and with the
appropriate scale for a listing on the main market of both the
LSE and Johannesburg Stock Exchange ("JSE"), which the directors
of Blackstar are currently exploring;
1.2.4 the enlarged group will appeal to a wider shareholder base, which
should result in increased trading volumes on both the LSE and
JSE; and
1.2.5 the enlarged group will have a dedicated investment management
team with a strong track record and an attractive portfolio of
assets with which to work.
2. Overview of Blackstar
2.1 Blackstar is an investment holding company listed on the AIM market of
the LSE and the AltX market of the JSE. Blackstar is currently
incorporated in the United Kingdom and has its tax residence and
principal establishment in Luxembourg. Blackstar recently began the
process of transferring its registered office and tax establishment to
Malta because the directors believe it is a more efficient
jurisdiction for tax purposes and provides cost savings, both for the
benefit of Blackstar shareholders. The transfer of the registered
office and tax establishment to Malta is subject to Blackstar
shareholder approval at a general meeting which is expected to take
place on or around 10 February 2012.
2.2 Blackstar`s strategy involves exploring investment opportunities, from
its South African base, in listed and unlisted companies in Africa,
with the underlying themes of strategic market position, strong cash
flows and the ability to exploit the wider African market from its
South African base. It pursues listed and unlisted investment
opportunities through its network of business associates and its
ability to leverage off its strong relationships within the business
community. Blackstar has funded several black economic empowerment
transactions and has a successful track record of identifying unusual
investment opportunities and using its ability and entrepreneurial
flair to create and enhance value for the benefit of its stakeholders.
2.3 Blackstar has a track record of positive returns and as at 30 June
2011, Blackstar had invested GBP113.7 million in South Africa. Since
inception, Blackstar has exited several of these investments and has
generated an IRR of 35% (thirty five per cent) in Pounds Sterling on
these investments.
2.4 Full details of Blackstar and its management will be contained in the
circular that will be sent to Mvela Group shareholders in relation to
the Scheme.
London 8 December 2011
Media enquiries contact: Andrew Bonamour +27 (0) 82 389 9850
Transaction advisor and sponsor to Blackstar: PSG Capital (Pty) Limited
Transaction advisor to Blackstar: Masazane Capital Holdings (Pty) Limited
Nomad to Blackstar: Liberum Capital Limited
Legal advisors to Blackstar: Edward Nathan Sonnenbergs Inc. and Werksmans
Inc.
Banker to Blackstar: Investec Bank Limited
For further information, please contact:
Blackstar Group SE John Kleynhans +352 402 505 427
Liberum Capital Limited Chris Bowman / +44 (0) 20 3100
Christopher 2222
Britton
PSG Capital (Pty) David Tosi +27(0) 21 887 9602
Limited
Date: 08/12/2011 17:01:07 Produced by the JSE SENS Department.
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