| Mon 15 Jul 2019, 7:05 | | enX GROUP LIMITED - Divestment By Enx Of Eqstra Fleet Management And Logistics and Withdrawal Cautionary Announcement |
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ENX 201907150003A
Divestment By Enx Of Eqstra Fleet Management And Logistics and Withdrawal Cautionary Announcement
ENX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2001/029771/06)
JSE share code: ENX
ISIN: ZAE000222253
(?enX? or ?the Company? or ?the Group?)
DIVESTMENT BY ENX OF EQSTRA FLEET MANAGEMENT AND LOGISTICS, AND WITHDRAWAL CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcement published on the Stock Exchange News
Service of the JSE Limited (?JSE?) on 22 October 2018 and subsequent renewals thereof, the last of
which took place on 24 May 2019, regarding the process which enX has commenced and which may
result in the divestment of Eqstra Fleet Management and Logistics business (?EFML?) in whole or in
part.
The enX board of directors (?the Board?) is pleased to announce that it has entered into a definitive
subscription agreement with Bidvest Bank Limited and the Bidvest Group Limited (collectively referred
to as ?Bidvest?) for the divestment of certain legal entities in which the EFML business is conducted
(?the Transaction?). The Transaction has been structured as a locked box transaction with effect from
31 August 2018 ("Locked Box Date"), being the date on which the economic benefit of EFML will be
deemed to have contractually passed to Bidvest. Where the conditions precedent, as detailed below,
are fulfilled or waived on or before the 20th day of a month, the closing of the Transaction will take
place on the first day of the month immediately succeeding that month, however if the conditions
precedent are fulfilled or waived after the 20th day of a month, then the closing of the transaction will
take place on the first day of the second month immediately succeeding that month (?Closing?).
The equity value of the Transaction is an amount equal to ZAR 1,295 million multiplied by an escalation
factor of 7% from the Locked Box Date until Closing, less inter alia certain other amounts categorised
as leakage under the subscription agreement. On Closing, Bidvest will also refinance EFML?s interest
bearing debt, which as at 31 August 2018 amounted to approximately ZAR 1,800 million, bringing the
enterprise value of the Transaction, determined at as 31 August 2018, to ZAR 3,095 million.
Bidvest Group Limited has provided a parent guarantee for the obligations of Bidvest Bank Limited
under the subscription and repurchase agreements and enX has provided a parent guarantee for the
repayment of the leasing business? external interest bearing debt, as part of the Transaction.
2. DESCRIPTION OF EFML BUSINESS
EFML provides a full fleet management solution for passenger and commercial vehicles, including
leasing, maintenance, vehicle tracking and insurance. The business has a footprint that spans South
Africa and Sub-Saharan Africa and is one of the largest players in the fleet management sector.
3. RATIONALE FOR THE DIVESTMENT AND USE OF PROCEEDS
As announced on 22 October 2018, the Board had completed a strategic review of its ownership
interest in EFML and concluded that EFML may be better suited under a different structure so as to
optimise its value proposition.
The Board believes that Bidvest is well positioned to provide EFML with value enhancing opportunities
via access to a larger pool of capital at a lower cost and to an existing national motor vehicle distribution
network.
The Board is in the process of considering the optimal application of the cash proceeds arising from the
Transaction.
4. FINANCIAL INFORMATION
In terms of the unaudited published financial information for the six month period ended
28 February 2019 , prepared under International Financial Reporting Standards, in respect of the
businesses being divested:
? the value of the net assets of EFML amounted to ZAR 630 million;
? leasing assets totalled ZAR 2,75 billion, representing 12 300 vehicles under lease; and
? the profit after tax attributable to EFML was ZAR 71,8 million, which excludes group charges that
will no longer be payable once the Transaction has become unconditional.
5. CONDITIONS PRECEDENT TO THE TRANSACTION
The implementation of the Transaction is subject to the fulfilment (or waiver) by no later than
31 March 2020 of the following key conditions precedent:
- approval of the Transaction by the enX shareholders as a Category 1 transaction in terms of the JSE
Listings Requirements;
- approval of the noteholders of the relevant series of outstanding notes of the amendments
necessary to provide for the early redemption of such notes;
- a funds flow agreement being concluded between, amongst others, Bidvest and enX, regulating
inter alia, the settlement of all outstanding notes, the refinancing of EFML?s interest bearing debt,
the settlement of all bank borrowings, payment of the subscription price and settlement of the
repurchase price;
- signed written financing agreement(s) being entered into whereby enX will borrow an amount at
least equal to the interest-bearing funding of the South African forklift and materials handling
business and such agreement(s) become unconditional in accordance with their terms;
- approval by South African competition authorities and other competition authorities in Botswana,
Namibia and Swaziland (as required);
- to the extent required, the consent from the counterparties to the material contracts for the
change of control that will occur as a result of the implementation of the Transaction;
- a warranty and indemnity insurance policy being issued to the satisfaction of Bidvest and enX; and
- approval by the Prudential Authority in terms of section 52 of the Banks Act No. 94 of 1990.
Notwithstanding the fulfilment of the conditions precedent, Bidvest will be entitled to cancel the
Transaction if the profit after tax in respect of the EFML business during the 12 month periods ending
either on (i) 31 August 2019 or (ii) 29 February 2020 falls below R90 million (adding back leakage and
any material once-off items).
6. WARRANTIES AND INDEMNITIES
The Transaction is subject to warranties and indemnities that are customary for transactions of this
nature. Bidvest is in the process of obtaining a warranty and indemnity insurance policy which will
provide for limited recourse to enX in respect of a majority of warranty claims. enX will be liable for a
pre-agreed set of uninsured warranties and indemnities for a period of 3 years after closing.
7. CATEGORISATION AND FURTHER DOCUMENTATION
The Transaction is classified as a Category 1 transaction in terms of Section 9 of the JSE Listings
Requirements. Accordingly, approval is required by enX shareholders for the requisite resolutions at a
general meeting of enX shareholders.
A circular, together with a notice of a general meeting setting out the full terms of the Transaction, will
be posted to enX shareholders within 60 days from the date of this announcement, in compliance with
Section 9.20 (b) of the JSE Listing Requirements and salient dates and times in relation to the
Transaction will be published on SENS and in the press by enX at or about the posting date of the
circular.
enX shareholders, representing approximately 40% of enX?s voting rights, have signed irrevocable
undertakings to vote in favour of the Transaction.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this announcement, shareholders are advised that caution is no longer
required when dealing in enX securities and the cautionary and renewal of cautionary announcements
released by enX are accordingly hereby withdrawn.
Johannesburg
15 July 2019
Financial Advisor to enX
Macquarie Advisory and Capital Markets South Africa
Sponsor to enX
The Standard Bank of South Africa Limited
Legal Advisor to enX
ENSafrica
Date: 15/07/2019 07:05:00
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