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CPN - Capricorn Investment Holdings Limited - Detailed Cautionary Announcement
CAPRICORN INVESTMENT HOLDINGS LIMITED
(formerly Cenmag Holdings Limited)
(Registration Number 1987/004821/06)
("Capricorn" or "the company")
Share code: CPN ISIN: ZAE000149951
DETAILED CAUTIONARY ANNOUNCEMENT INCLUDING TERMS OF A PROPOSED ACQUISITION,
REVERSE LISTING, WAIVER OF A MANDATORY OFFER, PROPOSED SPECIFIC ISSUE OF SHARES,
APPLICATION TO LIST ON THE ALTERNATIVE EXCHANGE AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
INTRODUCTION
Shareholders are referred to the cautionary announcements dated 22 June 2011, 3
August 2011 and 12 September 2011 and are advised that a sale and purchase
agreement has been agreed between the Company, Water Utilities Limited and
Watermark Global PLC (together "Watermark") on 15 December 2011 regarding the
acquisition of 100% of the shares and claims in Western Utilities Corporation
(Proprietary) Limited ("WUC"), a wholly-owned subsidiary of Watermark for a
purchase consideration of GBP4.50 million.
Watermark, listed on the Alternative Investment Market ("AIM") in London,
through WUC, has procured a water treatment technology and commercialisation
entity which has developed a Long Term Self Sustainable Solution for Acid Mine
Drainage ("AMD") in South Africa. This is purpose-specific processing of AMD and
was developed in conjunction with the mines to meet legislated government
directive requirements. It is proposed that the water is treated, transported
and sold back into industry to reduce dependence on the expensive and limited
potable water reserves.
The development of the AMD project will lead to a number of opportunities,
including the management of significant water treatment facilities, the
development of waste water management strategies, as well as the project
management of upgrade projects from mines participating in the AMD project and
other industrial water users.
In addition, WUC has procured proprietary technology in respect of a coal
briquetting project ("Briquetting Project"). The Briquetting Project is
currently at the development stage but is expected to be in production within 12
months. Off take agreements are already in place in order to secure the income
streams of the Coal Briquetting project. The agreement is held with the mine
where the coal fines are generated.
Following receipt of all required approvals for the AMD project, it is also
envisaged that there will be off take agreements with the mines for the
Industrial Quality water and that Potable water will be incorporated into a Bulk
Water Distributor network. It has been proposed that revenue will be generated
for services rendered through the implementation of the technology, for the
water distribution, and through the sale of by-products generated from the AMD
Project.
TERMS
The Board is pleased to announce the terms of the proposed acquisition as
follows:
* The proposed acquisition of 100% of the issued ordinary shares and all loan
account claims against WUC, held by Watermark, by Capricorn resulting in
WUC becoming a wholly-owned subsidiary of Capricorn.
* The proposed acquisition is to be settled partly in cash and partly in
shares with the cash portion of the purchase consideration being raised by
way of a specific issue of Capricorn shares for cash.
* The purchase consideration of the WUC shares and claims equals to GBP4.50
million of which GBP1.81 million will be payable in cash with the balance
of GBP2.69 million to be settled through a fresh issue of ordinary shares
in the Company at an issue price of 19 cents per ordinary share.
* The cash portion of R23.41 million will be settled out of the capital
raised from the specific issue of approximately 210 526 316 ordinary shares
at an issue price of 19 cents totalling R40 million. This specific issue of
210 526 316 new ordinary shares will be underwritten by Trinity Asset
Management (Proprietary) Limited ("TAM"), a related party to Capricorn. The
underwriting agreement is in the process of being finalised, but will
incorporate an underwriting fee of 2%.
REVERSE TAKEOVER
Shareholders are cautioned that the implementation of the proposed acquisition
will result in the issue of more than 100% of the current issued share capital
of the Company, and accordingly will result in a reverse takeover of Capricorn
for the purposes of the Listings Requirements, which stipulate that the Company
can only retain its listing following the reverse take-over if the JSE ("the
JSE") is satisfied that the Company continues to qualify to be listed. The board
of directors is pleased to advise that the Alternative Exchange Advisory
Committee has approved the reverse listing of WUC on the condition that R35
million of new equity capital is raised prior to the listing. This condition
will be met with the underwriting agreement for R40 million as detailed earlier.
WAIVER OF A MANDATORY OFFER
On implementation of the acquisition of WUC by Capricorn, Watermark`s aggregate
shareholding in Capricorn will increase from 0% to 40%, which is considered an
"affected transaction" by the Takeover Regulation Panel ("TRP") which ordinarily
would require a mandatory offer to acquire the Capricorn shares owned by all
Capricorn shareholders at an offer price of 19 cents per share.
However, the Companies Act (71 of 2008) ("the Act") and the Regulations thereto,
specifically Regulation 86(4), allows for a waiver to be given to an offeror
from the obligation to make a mandatory offer, if such waiver is approved by
independent shareholders, in person or by proxy, holding more than 50% of the
general voting rights of all the issued shares of Capricorn in a general
meeting. The acquisition is subject to Capricorn shareholders approving the
waiver of a mandatory offer and accordingly a resolution requesting Capricorn
shareholders to waive their rights to a mandatory offer will be included in the
circular to shareholders.
In terms of Regulation 86(7) of the Act, a waiver of a mandatory offer requires
a fair and reasonable opinion and such opinion will also be included in the
circular to shareholders.
The TRP has advised that it is willing to consider the application to grant an
exemption to Watermark from the obligation to make a mandatory offer if the
absolute majority of independent shareholders of Capricorn waive their
entitlement to receive the mandatory offer from Watermark, in accordance with
this Regulation 86(4).
Any shareholder of Capricorn who wishes to make representations relating to the
exemption shall have 10 business days from the date of the posting of the
circular to shareholders, which circular will be posted in due course, to make
such representations to the TRP before the ruling is considered.
Representations should be made in writing and delivered by hand, posted or faxed
to and should reach the TRP by no later than 10 days after the date of posting
of the circular, in order to be considered.
If delivered by hand If posted: If faxed:
or courier:
The Executive The Executive The Executive
Director Director Director
Takeover Regulation Takeover Takeover
Panel Regulation Panel Regulation Panel
1st Floor, Building B PO Box 91833 +27 11 642 9284
Sunnyside Office Park Auckland Park
32 Princess of Wales 2006
Terrace
Parktown
2193
If any representations are made to the TRP within the permitted timeframe, the
TRP will consider the merits thereof before making a ruling. The Notice of
General Meeting which will form part of the circular to shareholders will
include a resolution for the waiver of Watermark making a mandatory offer for
shareholders to consider, and if deemed fit, to approve at the general meeting.
CONDITIONS PRECEDENT
1) The acquisition of WUC is subject to the following conditions precedent,
amongst others:
2) Regulatory approval by the JSE Limited, AIM, the TRP and the South African
Reserve Bank;
3) The receipt of all governmental and regulatory approvals required by law in
connection with, or required to permit, the completion of the acquisition
shall have been obtained or received in writing on terms which will not
cause a Material Adverse Effect and reasonably satisfactory evidence
thereof shall have been delivered to each Party; and
The approval of the transaction by the Senior Lenders to WUC, namely the
Development Bank of South Africa and the Industrial Development
Corporation.
The last day for fulfilment of the conditions precedent set out above is 31
March 2012, or such later date as may be agreed between Capricorn and Watermark
in writing.
PRO FORMA FINANCIAL EFFECTS
Shareholders are advised that the pro forma financial effects of the proposed
acquisition will be announced in due course.
DOCUMENTATION AND SALIENT DATES
The above-mentioned proposed acquisition will result in a reverse listing of WUC
into Capricorn, which, together with the specific issue of approximately 210 526
316 new shares will require shareholder approval and other related approvals
such as a proposed change in name of the Company.
A circular to shareholders detailing the terms of the acquisition, incorporating
revised listing particulars will be drafted and distributed to shareholders in
due course.
Salient dates will be published once the circular has been finalised.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Accordingly, shareholders are advised to continue to exercise caution when
dealing in the Company`s securities until a further announcement is made.
Johannesburg
15 December 2011
Sponsor
Arcay Moela Sponsors (Proprietary) Limited
(Registration number 2006/033725/07)
Date: 15/12/2011 17:30:05 Produced by the JSE SENS Department.
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