| Mon 28 Jan 2002, 0:00 | | Glodina Holdings Limited - An Offer To Minority Sh |
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Glodina Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/004150/06)
Share code: GDA ISIN: ZAE000002937
("Glodina")
- An offer to minorities at 7 cents per Glodina share ("the offer")
- The merger of all the assets and liabilities of Glodina and Hellierwood
Investment Holdings (Proprietary) Limited ("the merger")
- An increase in the authorised share capital of Glodina
1. Introduction
Shareholders are referred to the announcement dated 7 November 2001 when it
was announced that Daun and Cie AG. and Paul Schouten ("the acquirors") had
purchased BJ Balladon & Sons' 49,3% shareholding in Glodina for 7 cents per
share. This acquisition, together with the acquirors existing shareholding
in Glodina, resulted in the acquirors controlling approximately 61,4% of the
issued shares in Glodina. The acquisition of a controlling stake in Glodina
classifies the acquisition as an affected transaction in terms of the
Securities Regulation Code on Take-overs and Mergers and, accordingly, the
acquirors are obliged to extend an offer to all the minority shareholders,
to acquire their shares at a price of 7 cents per share.
In an announcement dated 28 November 2001 shareholders were advised that the
directors had further resolved to merge the assets and liabilities of
Glodina with those of Hellierwood Investment Holdings (Proprietary) Limited
("Hellierwood").
Pursuant to the offer and merger ("the transaction") being completed, it is
the intention of the directors to recapitalise Glodina, which could entail,
inter alia, a rights issue in Glodina. With this in mind, it is required
that the authorised share capital of the company be increased.
2. Rationale for the transaction
Factors such as increasing input costs (utilities and labour), low
productivity, increased competition, a depressed retail sector, increased
borrowings, poor investment decisions in Zimbabwe and over-stocking of
inventories have resulted in Glodina sustaining losses since mid-1997. These
losses have significantly eroded the Group's reserves and cash resources
such that Glodina, without the merger, was facing a significant threat of
liquidation. Hellierwood, on the other hand, competes against other
producers by virtue of its low input costs (because of its location in
Ladysmith), relatively newer plant and lower borrowings. Hellierwood has
established an export record and is aggressively pursuing export growth.
Since establishment in 1983, Hellierwood has seen significant growth in
revenue and profits, with these profits having been re-invested in the
business to maintain the company's competitive position.
In light of the above, the acquirors have acquired control of Glodina and
propose to implement the merger of the businesses of Glodina and
Hellierwood. By merging the operations, the directors are looking to explore
all possible synergies between these businesses. However, in view of the
high gearing levels and the expenses involved in merging the operations of
Glodina and Hellierwood, the directors are not expecting a return to
profitability for Glodina in the near future.
3. The offer
An offer, which is subject to the approval by the Competition Commission, is
made by the acquirors to the minority shareholders of Glodina to purchase
their shares for 7 cents per share. Pursuant to the offer, the acquirors do
not intend to delist Glodina.
The offer opens on Tuesday 29 January 2002 and will close two weeks after
the Competition Commission has approved the offer, which is expected on
Wednesday 24 April 2002, being approximately twelve weeks after the
application is lodged. If Competition Commission approval is obtained before
or after Wednesday 24 April 2002, the closing date will be adjusted
accordingly.
No agreement, arrangement or undertaking exists between the acquirors and
the other directors of Glodina relating to the offer.
FNB Corporate Bank, a division of FirstRand Bank Limited, has confirmed that
the acquirors have sufficient cash resources available to ensure that they
can honour their commitments in terms of the offer and has furnished such
confirmation to the Securities Regulation Panel.
4. The merger
The directors have resolved to merge the assets and liabilities of Glodina
with those of Hellierwood by transferring all the assets and liabilities of
Glodina to Hellierwood, subscribing for R22 200 000,00 worth of equity in
Hellierwood, as well as advancing R7 800 000,00 on loan account to
Hellierwood, in exchange for 50% plus 1 share in the issued share capital of
Hellierwood. The funds required for the subscription, as well as the
advance, will be provided by Daun & Cie AG. as a loan to Glodina. Pursuant
to the transaction being completed, it is the intention of the directors to
recapitalise Glodina and repay the funds provided by Daun & Cie AG.
The relationship between Gandern Investments Limited (the current
controlling shareholder of Hellierwood) and Glodina will be governed by a
Hellierwood shareholders agreement. In terms of the shareholders agreement,
all shareholders resolutions will be unanimously approved and Gandern
Investments Limited will have management control of Hellierwood, which
control will be exercised in context of a comprehensive business plan and
budget agreed and approved jointly by Gandern Investments Limited and
Glodina. Management control by Gandern Investments Limited will continue for
as long as performance against the budget is satisfactory (as defined in the
shareholders agreement).
Although Glodina has the majority equity stake in Hellierwood, all
resolutions will be based on unanimous approval of the shareholders (Glodina
and Gandern Investments Limited), and hence joint control exists.
The merger is subject to the fulfilment of the following conditions
precedent:
- approval by shareholders of the resolution to effect the merger at the
general meeting of Glodina on 21 February 2002 ("the general meeting"); and
- approval by the Competition Commission.
5. Increase in the authorised share capital
Pursuant to the transacton being completed, it is the intention to
recapitalise Glodina, which could entail, inter alia, a rights issue in
Glodina. In light of this possible recapitalisation the directors propose
that the authorised share capital be increased by 1 000 000 000 shares, from
40 000 000 shares to
1 040 000 000 shares. Shareholders will be required to approve the
resolution to effect the increase in the authorised share capital, at the
general meeting.
6. Financial effects
The following table sets out the financial effects of the transaction on a
shareholder. The "After the offer" column assumes that the shareholder
accepts the offer, while the "After the merger" column assumes that the
shareholder rejects the offer and that the merger is implemented.
Before After Increase After Increase
the the the
trans- offer (decrease) merger (decrease)
action
Per share Notes (cents) (cents) (%) (cents) (%)
Market value 1 9,0 7,0 (22) n/a n/a
Market value 2 17,0 7,0 (59) n/a n/a
Net asset value 3 123,0 7,0 (94) 61,7 (50)
Attributable
(loss) 4 (14,5) 0,2 n/a (58,3) (302)
Headline (loss) 4 (14,7) 0,2 n/a (5,3) 64
Notes:
1. The market value per share in the "Before the transaction" column is
based on the closing price of a share on 30 October 2001, being the last
trading date prior to the publication of the cautionary announcement
referring to the transaction.
2. The market value per share in the "Before the transaction" column is
based on the closing price of a share on 24 January 2002, being the last
practicable trading date prior to publication of this announcement.
3. The net asset value per share in the "Before the transaction" column is
based on the published interim results of Glodina for the six months ended
30 June 2001. The pro-forma net asset value per share in the "After the
offer" column is based on the offer consideration. The pro-forma net asset
value per share in the "After the merger" column is based on the assumption
that the merger had been implemented on 30 June 2001.
4. The attributable loss and the headline loss per share in the "Before the
transaction" column is based on the published interim results of Glodina for
the six months ended 30 June 2001. The pro-forma attributable loss and the
headline loss per share in the "After the offer" column is based on the
assumption that the offer consideration had been invested at an after-tax
rate of 5% per annum for the six months ended 30 June 2001. The pro-forma
attributable loss and the headline loss per share in the "After the merger"
column is based on the assumption that the merger was implemented on 1
January 2001.
7. Salient dates
2002
Offer opens Tuesday 29 January
Last day to lodge form of proxy for the
general meeting by 10:00 on Tuesday 19 February
General meeting of shareholders to be
held at 10:00 on Thursday 21 February
Results of general meeting published on
SENS and in the press on Friday 22 February
Offer declared unconditional and announcement
specifying this published on or about. Thursday 25 April
Last day to trade to take up offer1 Friday 3 May
Offer closes and record date1 Friday 10 May
Offer consideration cheques posted to
certificated shareholders or STRATE payment of
offer consideration made on Monday 13 May
Notes:
1. These dates have been calculated on the assumption that Competition
Commission approval will be obtained on Wednesday 24 April 2002, being
approximately twelve weeks after the application is lodged. If Competition
Commission approval is obtained before or after Wednesday 24 April 2002, the
timetable will be adjusted accordingly
2. These dates and times may be changed at the instance of the company. Any
change will be published on SENS and in the press.
8. Opinions and recommendations
Deloitte & Touche Corporate Finance, a division of Deloitte & Touche,
independent adviser to the directors has considered the terms of the offer
and is of the opinion that they are fair and reasonable and has advised the
directors accordingly. Deloitte & Touche Corporate Finance has also
considered the terms of the merger and is of the opinion that they are fair
and reasonable and has advised the directors accordingly.
The directors have considered the terms and conditions of the offer and are
of the opinion that, considering Glodina as an independent going concern,
the offer is in the best interest of shareholders.
The directors have also considered the terms and conditions of the merger.
The directors are of the opinion that the merger is necessary to ensure the
ongoing viability of Glodina and that it is in the best interest of the
company and those shareholders who elect not to accept the offer and remain
invested in Glodina.
The directors do not intend to accept the offer, but do intend to vote in
favour of the resolutions necessary to effect the merger in respect of their
own shareholdings and recommend that shareholders who elect to retain their
shares do likewise.
Shareholders are reminded that the Glodina shares have consistently traded
on the JSE at above the offer price. Should shareholders consider accepting
the offer, they should ascertain for themselves the price at which the
Glodina shares trade on the JSE prior to accepting the offer.
9. Undertaking
Shareholders representing approximately 61,4% of the issued share capital of
the company have given written undertakings to vote in favour of the merger
and increase in the authorised share capital.
10. Documentation
A circular setting out full details of the transaction and increase in share
capital and convening a general meeting of shareholders will be posted to
shareholders on or about 29 January 2002.
Hammarsdale
28 January 2002
Independent adviser
Deloitte & Touche
Corporate Finance
Merchant Bank and transactional sponsor
Rand Merchant Bank
Corporate Finance
A division of FirstRand Bank Limited
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
