| Mon 28 May 2012, 8:30 | | CRM - Ceramic Industries Limited - Cautionary announcement regarding a |
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CRM
CRM
CRM - Ceramic Industries Limited - Cautionary announcement regarding a
possible offer to Ceramic shareholders and the subsequent delisting of the
Company
CERAMIC INDUSTRIES LIMITED
(Registration number 1982/008520/06)
(Incorporated in the Republic of South Africa)
Share code: CRM
ISIN: ZAE000008538
("Ceramic" or "the Company")
Cautionary announcement regarding a possible offer to Ceramic shareholders
and the subsequent delisting of the Company
1. Introduction
Ceramic shareholders ("Shareholders") are advised that the board of
Ceramic has received a letter from Italtile Limited ("Italtile")
expressing an interest in acquiring a strategic stake in Ceramic.
Italtile`s rationale for this proposal is to support its growth
strategy by strengthening its relationship with Ceramic, a key supplier
of ceramic tiles, sanitaryware and baths to Italtile.
2. Italtile`s conditional offer
Italtile hasindicated its intention to make an offer to Shareholders,
subject to certain conditions precedent, to acquire between 15% and 20%
in the issued share capital of Ceramic. Any such offer will be for a
consideration of R130 per share, payable in cash.
The conditions that must be satisfied before Italtile will make an
offer are:
* the successful outcome of a due diligence exercise on Ceramic;
* the support of the Ceramic board;
* assurance that Ceramic would be able to support Italtile`s growth
strategies;
* assurance regarding the continued involvement of Ceramic`s
management in its business; and
* the necessary regulatory and legislative approvals.
3. Ceramic`s continued listing on the JSE Limited ("JSE")
The listing of Ceramic on the JSE has served little purpose. Ceramic`s
shares are tightly held, minimal capital has been raised from the
market and trade in the shares is thin. If an offer is made by
Italtile, and succeeds, Ceramic will have a materially reduced free
float. Italtile has recognised that under these circumstances
Ceramic`s continued listing makes little sense.
In terms of theJSE Listing Requirements, a company wishing to delist
from the JSE requires a resolution to be passed by a simple majority of
disinterested shareholders and an offer, which must be fair (and the
board must have obtained an independent fairness opinion confirming
this), to be made to all shareholders.
Italtile has procured an undertaking from Rallen (Proprietary) Limited
("Rallen"), the holding company of both Italtile and Ceramic, to join
Italtile in extending such an offer to all of Ceramic`s shareholders
other than Rallen and its associates, as required by the JSE.
4. Meeting of the directors of Ceramic
The directors of Ceramic, other than those directors who have an
interest in Rallen ("the Independent Board Members"), have met to
consider the implications of the conditional offer, and have resolved
to:
* appoint an independent advisor to provide advice to the
Independent Board Members on the valuation of Ceramic shares and
the fairness of the conditional offer;
* engage with Italtile regarding the conditions to its offer and, in
particular, on the scope and timing of the required due diligence
investigation;
* investigate the ability of and mechanisms for Ceramic to support
Italtile`s growth, noting that any such mechanisms would be
available to all of Ceramic`s customers;
* investigate mechanisms to secure thecontinued involvement of
Ceramic`s management if an offer is made to all Shareholders;
* engage with the Black Economic Empowerment partners of Ceramic
("BEE Partners") to ensure that an arrangement that is fair to
both Ceramic and the BEE Partners is reached if an offer is made
to all Shareholders; and
* propose to Ceramic shareholders that the Company be delisted if
Italtile makes an offer on the terms set out in its letter.
5. Impact of an offer by Italtile on Ceramic`s business
Although Italtile is Ceramic`s most significant customer, Ceramic does
serve many other wholesalers and retailers in the South African market.
Ceramic notes that Italtile has undertaken not to require any board
representative on Ceramic or any preferential arrangements that would
not be available to other Ceramic customers.
The Independent Board Members believe that, given the above
undertakings, Ceramic`s business should not be affected if Italtile`s
conditional offer is implemented and the Company delisted.
6. Cautionary announcement
Shareholders are advised to exercise caution in their dealings in
Ceramic shares until a further announcement is made, which is expected
to be before the end of June 2012.
Vereeniging
28 May 2012
Sponsor
One Capital
Date: 28/05/2012 08:30:01 Produced by the JSE SENS Department.
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