| Thu 19 Jan 2012, 10:30 | | JDH - John Daniel Holdings Limited - Terms of a specific issue of shares for |
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JDH
JDH
JDH - John Daniel Holdings Limited - Terms of a specific issue of shares for
cash to related parties
JOHN DANIEL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: JDH - ISIN: ZAE000136677
("the Company" or "JDH" or "the Group")
TERMS OF A SPECIFIC ISSUE OF SHARES FOR CASH TO RELATED PARTIES
INTRODUCTION
Shareholders are advised that the board of directors of the Company propose a
specific issue of shares for cash to related parties.
REASON AND TERMS OF THE SPECIFIC ISSUE
During the last calendar year and financial year ended 30 September 2011 the
directors of the Company committed an enormous amount of time to examining and
improving the Group`s performance organically and structurally. The Group has
prioritised payments to suppliers and funding for working capital to turn the
group around as opposed to allocating cash flow to the directors. The
liabilities due to each director have been accrued in the books of JDH.
The table below reflects proposed payments in shares to each director in order
to eliminate amounts due to them. The proposed extinguishing of the
respective liabilities are not part of a share incentive scheme and do not
render the independent non-executive directors non independent.
Accordingly, the Company proposes a specific issue of shares at 7 (seven)
cents per share to the directors of the Company, who are related parties in
terms of the JSE Listings Requirements ("Listings Requirements"). The
Specific Issue and resultant extinguishing of the liability will further
strengthen the financial position of the company and demonstrates the
commitment of the board to the turnaround of the JDH group. Currently no
directors hold shares in JDH.
The details of the proposed Specific Issue are as follows:
Director Rand value as Number of % of total % of total
at 28 shares to issued issued
February 2012 be issued share share
capital capital
(Pre (Post
Specific Specific
Issue) Issue)
R Connellan (Chairman)# R80 000 1 142 857 0.31% 0.28%
K Rayner# R140 000 2 000 000 0.54% 0.50%
B Topham# R80 000 1 142 857 0.31% 0.28%
D van der Merwe (FD) R715 691.04 10 224 158 2.75% 2.54%
T Gregory (CEO) R1 146 666.01 16 380 943 4.40% 4.07%
Total R2 162 357.05 30 890 815 8.31% 7.67%
# Independent non-executive
Due to the Specific Issue being at a discount of approximately 21% to the 30
day volume weighted average price of JDH, an ordinary resolution will need to
be presented and approved by a minimum of 75% of JDH shareholders eligible to
vote in general meeting, being all shareholders excluding the related parties
and their associates. In terms of the Companies Act, 2008 a special resolution
will also be proposed as the issue is to directors. The two resolutions will
be inter conditional. A fairness opinion from an independent expert and a
fairness opinion from the directors on the Specific Issue in accordance with
the Listings Requirements will be included in the circular to qualifying
shareholders detailed below.
SALIENT COMPARISON
The following three transactions bear relevance to the proposed Specific
Issue;
- The loan agreement with Escalator Capital Limited ("Escalator") provides
for a conversion of debt to equity at 6 (six) cents per share.
- Lazaron Biotechnologies (SA) Limited ("Lazaron") shareholders have been
provided the opportunity to swap Lazaron shares for JDH shares at an
effective price of 5 (five) cents per share.
- Escalator, through the underwriting of the JDH rights offer converted its
loan to the Company at 7 (seven) cents per share.
PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects have been prepared to illustrate the
impact of the proposed Specific Issue on the reported financial information of
JDH for the 15 months ended 30 September 2011, had the proposed Specific Issue
occurred on 1 July 2010 for statement of comprehensive income purposes and on
30 September 2011 for statement of financial position purposes.
The pro forma financial effects have been prepared using accounting policies
that comply with IFRS and that are consistent with those applied in the
audited results of JDH for the 15 month period ended 31 September 2011.
The unaudited pro forma financial effects set out below are the responsibility
of JDH`s directors and have been prepared for illustrative purposes only and
because of their nature may not fairly present the financial position, changes
in equity, results of operations or cashflows of JDH after the Specific Issue.
Before After After After After
JDH Lazaron Lazaron Lazaron
Rights Assets Rights Rights
Offer acquisitio Offer "C" Offer and
"A" n "B" Pro Forma
Before "D"
Earnings per share 0.47 0.50 0.50 0.50
(cents)
0.50
Diluted earnings 0.47 0.50 0.50 0.50
per share (cents)
0.50
Headline earning 0.14 0.36 0.36 0.36
per share (cents)
0.36
Diluted headline 0.14 0.36 0.36 0.36
earnings per share
(cents)
0.36
Net asset value per 1.73 4.59 4.59 4.59
share (cents)
4.59
Tangible net asset 0.75 4.17 4.17 4.17
value per share
(cents)
4.17
Weighted average 150 971 150 971 150 971 150 971
number of shares in
issue (`000)
150 971
Number of shares in 157 652 371 938 371 938 371 938
issue (`000)
371 938
After Lazaron Adjustment Adjustment Change (%)
Rights Offer after after
and Pro Forma Specific Specific
Before "D" Issue to Issue post
year end "E" year end "F"
Earnings per share 0.50 0.47 0.46 2%
(cents)
Diluted earnings 0.50 0.47 0.46 (2%)
per share (cents)
Headline earning 0.36 0.34 0.33 136%
per share (cents)
Diluted headline 0.36 0.34 0.33 136%
earnings per share
(cents)
Net asset value per 4.59 4.68 4.70 172%
share (cents)
Tangible net asset 4.17 4.28 4.32 476%
value per share
(cents)
Weighted average 150 971 150 971 150 971 0%
number of shares in
issue (`000)
Number of shares in 371 938 395 349 402 829 156%
issue (`000)
Assumptions:
1. The "Before" column is extracted from the Company`s audited, published
results for the year ended 30 September 2011.
2. For Statement of Financial Position purposes, it has been assumed that
the transactions occurred on 30 September 2011 and for Statement of
Comprehensive Income Statement purposes the transaction has been assumed
to have occurred on 1 July 2010.
3. Column "A" reflects the post 30 September 2011 full subscription for the
JDH rights offer to the value of R15 million which was detailed in a
circular to shareholders dated 26 September 2011. The proceeds of the
rights offer were used to settle non-current liabilities and the balance
applied to current liabilities. Transaction costs of R654 000 were
treated as share issue expenses. For Statement of Comprehensive Income
purposes, the rights offer proceeds were assumed to have been received at
the beginning of the period which allowed JDH to avoid incurring the cost
of funding included under non-current liabilities comprising raising fees
of R821 000 and interest of R726 000. An income tax impact is calculated
at the 28% company marginal tax rate.
4. Column "B" reflects the post 30 September 2011 acquisition of Lazaron
Biotechnologies (SA) Limited ("Lazaron") assets for an acquisition
consideration of R1 million and the subsequent on selling of assets to
Cryo-Save SA, which established a 50/50 joint venture with JDH, at the
same value. There is no impact on the Group consolidated balance sheet as
the assets remain within the Group. Income tax impact is calculated at
the 28% company marginal tax rate.
5. Column "C" reflects the post 30 September 2011 Lazaron rights offer,
assuming that the rights offer will be fully subscribed for (since the
rights offer is only set to close on Friday, 20 January 2012) raising
R4.4 million. Cash proceeds generated from non-controlling shareholders
amounts to R3.2 million and the balance of R1.2 million raised from JDH
following rights. The R1.2 million raised from JDH has been assumed to be
utilised to partially repay the intercompany loan account owing to JDH by
Lazaron. Income tax impact is calculated at the 28% company marginal tax
rate.
6. Column "E" reflects the share issue to settle / capitalise outstanding
directors salaries of R1 638 757.05 included in accounts payable at 30
September 2011 at an issue price of 7 cents per share resulting in a
total of 23 410 815 new shares being issued.
7. Column "F" reflects the share issue to directors for cash based on the
projected cumulative unpaid salaries up until 28 February 2012 amounting
to R523 600. The shares are assumed to be issued at 7 cents per share
resulting in a total of 7 480 000 new shares being issued.
8. Transaction costs for "E" and "F" estimated to amount to R290 000 and
were proportionally allocated to "E" and "F" based on the shares issued.
Transaction costs have been treated as share issue expenses.
9. Notional taxation of 28% has been assumed on the transaction costs.
DOCUMENTATION AND SALIENT DATES
A circular to qualifying shareholders detailing the terms of the Specific
Issue and containing a notice of general meeting will be drafted and delivered
to relevant shareholders within 28 days of this announcement, failing which
approval will be sought from the JSE to deliver at a later date.
Salient dates of the general meeting to present and approve the inter
conditional ordinary and special resolutions shall be announced in due course.
Johannesburg
19 January 2012
Sponsor
Arcay Moela Sponsor (Proprietary) Limited
Date: 19/01/2012 10:30:01 Produced by the JSE SENS Department.
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