| Thu 31 Oct 2019, 10:35 | | ROLFES HOLDINGS LIMITED - RLF : Joint FIA to acquire all issued share capital of Rolfes, delist from the JSE and withdrawal of cautionary |
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RLF : Joint FIA to acquire all issued share capital of Rolfes, delist from the JSE and withdrawal of cautionary:
Rolfes Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/002715/06)
Share Code: RLF
ISIN: ZAE000159836
("Rolfes" or "the Company")
Packaging Solutions Africa
(Incorporated in the Republic of Mauritius)
(Registration number 134938 C2/GBL)
(A wholly owned special purpose vehicle of
Phatisa Food Fund 2 LLC, which is managed by Phatisa)
("Offeror")
JOINT FIRM INTENTION ANNOUNCEMENT TO ACQUIRE ALL THE ISSUED SHARE CAPITAL OF ROLFES, DELIST
ROLFES FROM THE JSE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS
1. INTRODUCTION
1.1 The board of directors of Rolfes ("Board") advises Rolfes shareholders ("Rolfes Shareholders")
that it has received a firm intention ("Offer") from Packaging Solutions Africa ("Offeror"), a
wholly owned special purpose vehicle established by Phatisa Food Fund 2 LLC ("PFF 2"), managed
by Phatisa Fund Managers 2 Limited ("Phatisa"), to acquire the entire issued share capital of
Rolfes, other than the Excluded Shares (as defined in paragraph 5 of this announcement)
("Scheme Shares"), by way of a scheme of arrangement in terms of section 114(1)(c) of the
Companies Act, No. 71 of 2008, as amended (the "Companies Act"), to be proposed jointly by
the Offeror and the Board between Rolfes and the Rolfes Shareholders (the "Scheme") for R3.00
per Scheme Share ("Scheme Consideration") and a subsequent delisting of the Company from
the Main Board of the stock exchange operated by the JSE Limited ("JSE") in terms of paragraph
1.17(b) of the JSE Listings Requirements (the "Delisting"). The Scheme and the Delisting are
collectively referred to herein as the "Transaction".
1.2 The Scheme will provide Rolfes Shareholders with an option to (i) have their Scheme Shares
acquired by the Offeror ("Default Election") or (ii) elect to have their Scheme Shares repurchased
by Rolfes ("Repurchase Election") for a repurchase price equal to the Scheme Consideration.
Where the Repurchase Election is made, for each Scheme Share repurchased, the Offeror will
subscribe for one share in Rolfes for a subscription price equal to the Scheme Consideration
("Subscription Shares").
1.3 The contents hereof constitute a firm intention by the Offeror to make an offer to Rolfes
Shareholders as contemplated in Chapter 5 of the Companies Act and Chapter 5 of the
Companies Regulations, 2011, promulgated under the Companies Act (which includes the
Takeover Regulations issued pursuant to sections 120 and 223 of the Companies Act) (the
"Companies Regulations").
1.4 The Offer values Rolfes at a material premium to the traded price of its shares on the JSE.
Specifically, the Scheme Consideration would translate to a 33% premium to the 30-day volume
weighted average traded price (VWAP) of Rolfes shares on the JSE as at 25 July 2019 (being the
day before the publication of a cautionary announcement by Rolfes).
2. NATURE OF ROLFES AND THE OFFEROR
2.1 Rolfes is an industrial group listed on the JSE Main Board Specialty Chemicals sector. Rolfes
together with its subsidiaries (the "Group") is an innovative, solutions-driven chemical specialist
provider operating across 4 key segments being Agriculture, Food, Chemicals and Leather and
Water.
2.2 The Offeror is a special purpose private company being utilised for the purpose of this Offer and
has not conducted any business since incorporation. The Offeror is wholly owned by PFF 2 a
Mauritian domiciled private equity fund with extensive African Private Equity experience.
3. RATIONALE
3.1 Phatisa has extensive African private equity experience, with capital raised of over US$ 400
million and portfolio companies in over 20 African countries. Being a sector focused private
equity fund manager, Phatisa is a specialist investor within the African food value chain and is
well positioned to help Rolfes grow in the future.
3.2 Due to the small-cap and illiquid nature of the share the share price has achieved no real growth
in the last few years. The Transaction gives Rolfes Shareholders the ability to exit their investment
at an attractive premium and at a price considered fair and reasonable by the Independent
Expert appointed in terms of the Companies Act and JSE Listing requirements.
3.3 It is a condition of the Transaction that the two largest shareholders, Masimong Chemicals
Proprietary Limited ("Masimong") and Sabvest Finance and Guarantee Corporation Proprietary
Limited ("Sabvest") and certain identified management members of the Group continue as
shareholders. In addition, it is a condition that the Company is delisted so a partial offer was not
deemed practical.
4. MECHANICS OF THE OFFER
4.1 The Offer constitutes an "affected transaction" as defined in section 117(1)(c) of the Companies
Act. The Offer will be implemented by way of the Scheme.
4.2 In terms of the Scheme:
4.2.1 the Offeror will acquire the entire issued share capital of Rolfes, other than the Excluded
Shares, for the Scheme Consideration (the Default Election); or
4.2.2 Rolfes Shareholders can elect for their Scheme Shares to be repurchased by the Company
(the Repurchase Election) for a repurchase price equal to the Scheme Consideration, in
which case the Offeror will subscribe for one share for each Scheme Share repurchased at
the Scheme Consideration; and
4.2.3 the Vuwa Scheme Shares (as defined in paragraph 5 below) will be repurchased by Rolfes
for the Scheme Consideration.
4.3 The resultant shareholding of the Offeror pursuant to the Scheme becoming unconditional will
be 43.63%.
4.4 The repurchase of the Vuwa Scheme Shares representing 7.94% of the total issued Rolfes shares
will be funded from internal resources and the repurchase of any additional Scheme Shares
following the election of the Repurchase Election, will be funded from the proceeds of the issue
of the Subscription Shares.
4.5 The Scheme Consideration assumes that Rolfes will not declare, pay or make or propose to
recommend, declare, pay or make, any capitalisation issue, dividend or other distribution,
whether payable in cash or otherwise or propose or effect any repurchase of its shares up to and
including the finalisation date of the Scheme, and the Scheme Consideration shall be reduced on
a Rand for Rand basis for any dividend or distribution paid by Rolfes prior to the finalisation date
of the Scheme.
4.6 Accordingly, subject to the approval of the Scheme by the Rolfes Shareholders by special
resolution at the shareholder meeting called to approve the scheme of arrangement ("Scheme
Meeting"), and the fulfilment of the Scheme Conditions as defined and set out in paragraph 6
below:
4.6.1 each Rolfes Shareholder other than the holders of the Excluded Shares or any Rolfes
Shareholder who has made a Repurchase Election will be deemed to have sold each of
their Scheme Shares to the Offeror for the Scheme Consideration;
4.6.2 each Rolfes Shareholder who has made a Repurchase Election will be deemed to have sold
each of their Scheme Shares to Rolfes for a repurchase price equal to the Scheme
Consideration (the Offeror having subscribed for an equivalent number of Subscription
Shares);
4.6.3 Vuwa Industrial Proprietary Limited ("Vuwa") will be deemed to have sold each of the
Vuwa Scheme Shares to Rolfes for a repurchase price equal to the Scheme Consideration;
such that the Offeror will own all of the issued shares in Rolfes other than the Excluded Shares.
Rolfes will then be delisted from the Main Board of the JSE.
5 THE EXCLUDED SHAREHOLDERS
The Offeror will acquire all the Scheme Shares, which will exclude the following Rolfes shares
("Excluded Shares") with the percentage of the current issued shares indicated parenthetically:
5.1 the shares held by Sabvest (17.60%), Masimong (32.41%) and MS Teke (0.51%);
5.2 the shares held by Vuwa (the "Vuwa Scheme Shares") (7.94%);
5.3 the treasury shares held by the subsidiaries of Rolfes (0.40%); and
5.4 the shares held by executive directors and executives (1.15%), any shares required to be issued
to settle vested awards under the Rolfes Conditional Share Plan ("CSP") and any CSP awards that
will be accelerated pursuant to the Transaction.
5.5 With reference to the Excluded Shares defined in 5.1, the Offeror has required Sabvest to grant
it an option to acquire a further 10 932 608 shares representing 7.37% of the total issued Rolfes
shares so as to hold 51% of the aggregate shareholder voting rights in Rolfes, at any time between
6 months after the finalisation date of the Scheme and 31 December 2020. In terms of the option,
the shares will be acquired by the Offeror for the Scheme Consideration, adjusted for simple
interest at an annual rate of 9% in lieu of the time value of money.
6 SCHEME CONDITIONS
6.1 The implementation of the Scheme will be subject to the fulfilment or waiver (in whole or in
part) of the following conditions ("Scheme Conditions") by not later than 28 February 2020 (or
such later date as may be agreed between the Offeror and Rolfes in writing):
6.1.1 the independent board of Rolfes ("Independent Board") receiving a favourable fair and
reasonable opinion from an independent expert appointed in terms of section 114(3) of
the Companies Act, and recommending to the Rolfes shareholders that they vote in favour
of the Transaction;
6.1.2 the approval of the Scheme by the requisite majority of Rolfes Shareholders as
contemplated in section 115(2)(a) of the Companies Act (being not less than 75% of the
votes exercised by shareholders present or represented by proxy and entitled to vote) at
Scheme Meeting, and:
6.1.2.1 to the extent applicable, the approval of the implementation of such resolution
by a court in terms of section 115(2)(c) and/or section 115(3) of the Companies
Act; and
6.1.2.2 if applicable, Rolfes not treating the aforesaid resolution as a nullity, as
contemplated in section 115(5)(b) of the Companies Act;
6.1.3 within 30 business days following the approval of the Scheme, either no Rolfes
Shareholders validly exercise appraisal rights, by giving demands in terms of section 164(7)
of the Companies Act, or, if any such appraisal rights are exercised, they are exercised in
respect of no more than 3% of the issued ordinary shares of Rolfes, provided that, in the
event that Rolfes shareholders give notice objecting to the Scheme as contemplated in
section 164(3) of the Companies Act and vote against the resolution proposed at the
Scheme Meeting to approve the Scheme in respect of no more than 3% of the issued
shares of Rolfes, this condition shall be deemed to have been fulfilled at the conclusion of
the Scheme Meeting;
6.1.4 receipt by Rolfes of consents or waivers from the following counterparties of the Group to
the implementation of the Transaction to the extent required:
6.1.4.1 Rand Merchant Bank, a division of FirstRand Bank Limited ("RMB"), as lender to
the Group (including the waiver of any prepayment obligation under the relevant
facilities);
6.1.4.2 Nedbank Limited as lender to the Group; and
6.1.4.3 New Heights 275 CC as landlord to Bragan Chemicals Proprietary Limited in
respect of the premises situated at Giant Park 3, 27 Cochrane Avenue;
6.1.5 the unconditional approval of the Transaction having been obtained from the Financial
Surveillance Department of the South African Reserve Bank, the Takeover Regulation
Panel ("TRP") (in terms of a compliance certificate to be issued in terms of the Companies
Act), all relevant competition authorities, or, to the extent that any such approvals are
subject to conditions, and subject to paragraph 6.3, the party affected by such condition
confirming in writing to the other party that such condition is acceptable (acting
reasonably) or if such condition affects both parties, then each of the Offeror and Rolfes
confirming to the other in writing that such condition is acceptable (acting reasonably);
6.1.6 no Material Adverse Change having occurred on or before the business day immediately
preceding the implementation of the Scheme. For these purposes a "Material Adverse
Change" shall mean any circumstance, fact or event (including any change in law)
("Event"), actual or which may reasonably be expected to arise, which, alone or together
with any other Event, actual or which may reasonably be expected to arise, has or is
reasonably likely to have the effect of being materially adverse with regard to the
operations, continued existence, business, condition, assets and/or liabilities of the Group.
In this regard, to be materially adverse, the relevant Event/s, at the time of assessment
thereof, must have or must reasonably be likely to lead to:
6.1.6.1 the Group's consolidated earnings before interest, tax, depreciation and
amortisation ("EBITDA") declining to below 90% of the EBITDA of the Group as
set out in the audited consolidated annual financial statements of the Group in
respect of the financial year ended 30 June 2019 (the "2019 AFS"); or
6.1.6.2 the consolidated net asset value of the Group declining to below 90% of the
consolidated net asset value of the Group as set out in the 2019 AFS; or
6.1.6.3 Rolfes or a Group company which accounts for more than 5% of the Rolfes
EBITDA is (or takes any steps or has any steps taken against it, including the
convening of any meeting to pass resolutions or any application to court, for it
to be) dissolved or deregistered, liquidated, placed in business rescue or wound
up, or commits an act of insolvency, ceases to be able to pay its debts generally
as they fall due or proposes a compromise with its creditors.
6.2 The conditions in paragraphs 6.1.2 and 6.1.5 above are regulatory in nature and cannot be
waived.
6.3 The remainder of the conditions are for the benefit of the Offeror and may be waived by the
Offeror in its sole discretion by notice in writing to Rolfes, provided that any waiver of a Scheme
Condition or the acceptance by the Offeror and/or Rolfes of any conditional approval or
authorisation by any regulatory authority in relation to the fulfilment of any Scheme Condition,
that waiver or conditional approval or authorisation has been consented to by RMB (as issuer of
the bank guarantees) in writing.
6.4 An announcement will be published on SENS as soon as practicable after all the Scheme
Conditions have been fulfilled or waived, as the case may be.
7 SHAREHOLDING IN ROLFES, ACTING AS PRINCIPAL AND CONCERT PARTIES
7.1 As at the date of this announcement, the Offeror and its shareholders do not beneficially, directly or
indirectly, hold or control any shares in Rolfes nor does it or its shareholders have any options to
purchase any Rolfes shares or beneficial interest therein.
7.2 The Offeror is acting as principal and not as agent in respect of the Transaction and it is acting in
concert with the following parties ("Concert Parties") for purposes of the implementation of the
Transaction:
Party Direct Indirect Total Current4 %
Masimong 52 479 000 52,479,000 32.41%
MS Teke 325 000 500 000 825 000 0.51%
Sabvest 28 500 0001 28 500 000 17.60%
RM Buttle 413 090 1 000 0002 1 413 090 0.87%
AP Broodryk 350 000 100 0003 450 000 0.28%
Total 53 567 090 30 100 000 83 667 090 51.67%
1. Held through Sabvest Finance and Guarantee Corporation (Pty) Ltd, a 100% subsidiary of Sabvest Limited.
2. Held in the name of SP Buttle.
3. Held in the name of D Broodryk.
4. Based on an outstanding number of Rolfes shares in issue of 161 942 800 (including 641 332 treasury shares)
7.3 The Concert Parties will remain as Rolfes Shareholders after the Company has been delisted from
the JSE.
7.4 The Concert Parties will not be entitled to vote on the Transaction, nor will their shareholding be
taken into account for the purposes of establishing a quorum at the Scheme Meeting.
8 IRREVOCABLE UNDERTAKINGS
8.1 The Offeror approached the major Rolfes Shareholders to procure irrevocable undertakings from
Rolfes Shareholders holding at least 46% of the voting rights entitled to be exercised in respect of
any resolutions required to approve the Transaction and which undertakings the Offeror deemed
necessary to proceed with the Transaction.
8.2 Each of the below listed shareholders have given an irrevocable undertaking to vote their Rolfes
shares in favour of the Transaction, and accordingly the Offeror is confident that the Transaction will
receive the requisite shareholder support at the Scheme Meeting.
Shareholder Total number of % prior to the % voting on the
Rolfes Shares Offer (%)1 Scheme
held resolution2
Westbrooke Special Opportunities 13 302 393 8.21% 16.99%
SNN QI Hedgefund
Vuwa Industrial (Pty) Ltd 12 863 750 7.94% 16.43%
Steyn Capital SNN QI Hedge Fund 5 374 756 3.32% 6.87%
Eziko Investments (Pty) Ltd 3 333 333 2.06% 4.26%
Alpha Prime Small & Mid Cap Fund 1 380 000 0.85% 1.76%
Total 36 254 232 22.38% 46.31%
1. Based on an outstanding number of Rolfes Shares in issue of 161 942 800, which includes 641 332 treasury
shares
2. Based on the outstanding shares per (1) above less shares held by Concert Parties to the Offeror
9 CONFIRMATION OF FINANCIAL RESOURCES
9.1 The Offeror will fund the Scheme Consideration and/or the subscription payable for the Subscription
Shares ("Offeror Consideration") from its own available cash resources.
9.2 In accordance with Regulation 111(4) and Regulation 111(5) of the Companies Regulations, RMB has
provided an irrevocable bank guarantee to the Board and the TRP in respect of the Offeror
Consideration, totalling R194,311,884.00.
9.3 In addition, RMB has provided an irrevocable bank guarantee ("Rolfes Guarantee") to the Board and
to the TRP in respect of the repurchase of the Vuwa Scheme Shares, totalling of R38,591,250.00. The
Rolfes Guarantee has been secured with headroom in the existing banking facilities available to Rolfes.
9.4 The Board furthermore confirms that the Company has sufficient authorised shares as may be
required to give effect to the issue of the Subscription Shares to the extent required to facilitate the
Repurchase Election as described in paragraph 1.2.
10 INDEPENDENT EXPERT
10.1 The Independent Board has, in accordance with section 114(3) of the Companies Act and regulation
90(1) of the Companies Regulations and paragraph 1.14(d) of the Listings Requirements of the JSE,
appointed BDO Corporate Finance Proprietary Limited as the independent expert ("Independent
Expert") to provide it with an independent opinion in regard to the fairness and reasonableness of
the Offer and to make appropriate recommendations to the Board for the benefit of Rolfes
Shareholders.
10.2 The contents of the Independent Expert's advice and the final view and recommendation of the
Independent Board will be detailed in a circular, however, having considered the Offer and a number
of factors (including the empowerment requirements and operational requirements of the Rolfes
Group), the Independent Board is, subject to the advice it receives from the Independent Expert,
supportive of the Transaction, which it believes is in the interests of Rolfes and its stakeholders.
11 UNDERTAKINGS
11.1 The parties have agreed to provide undertakings usual for a transaction of this nature from the date
of acceptance of the firm intention offer letter by the Independent Board ("Signature Date") until
the date on which the Scheme becomes operative ("Operative Date").
11.2 The following Rolfes directors shall resign from the Board with effect from the Operative Date and
only once the Scheme has become unconditional: SS Mafoyane, MM Dyasi, DM Mncube, MG
Mokoka and JR Winer.
12 EXCLUSIVITY
12.1 Rolfes has granted the Offeror exclusivity from the Signature Date until the date of the Scheme
Meeting ("Exclusivity Period"). During the Exclusivity Period, Rolfes and its directors, executives,
employees, representatives and advisers will not solicit, initiate, facilitate or encourage the
submission or making of any proposal or offer for a takeover, scheme of arrangement, merger or
amalgamation, the repurchase of any Rolfes shares, the direct or indirect acquisition of any of the
businesses or material assets of the Group or the acquisition of more than 10% of the issued shares
in Rolfes (each a "Competing Proposal"), or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any material non-public information in relation to, a Competing
Proposal, or (iii) enter into any agreement regarding a Competing Proposal.
12.2 Should Rolfes receive an unsolicited Competing Proposal during the Exclusivity Period which the
Independent Board determines in good faith constitutes, or would reasonably be expected to result
in, a more favourable offer (from a financial perspective) to the Rolfes Shareholders, the Company
has undertaken to notify the Offeror thereof and afford the Offeror a period of not less than 10
business days to revise the terms of the Offer on terms which are at least as favourable (from a
financial perspective) as the terms of the Competing Proposal and provide the Offeror an
opportunity to match the Competing Proposal.
12.3 As of the date of publication of this Firm Intention Announcement, no Competing Proposal has been
received by the Company.
12.4 If Rolfes elects to implement a Competing Proposal or breaches any material obligation to the
Offeror, Rolfes has agreed to reimburse the Offeror (or its nominee), within 5 business days of
demand, for its costs and expenses incurred in connection with the Transaction, subject to a
maximum amount of 1% of the Offeror Consideration (exclusive of VAT).
13 RESPONSIBILITY STATEMENT
13.1 The Independent Board and the Board accept responsibility for the information contained in this
announcement. To the best of their knowledge and belief, such information contained in this
announcement is true and nothing has been omitted which is likely to affect the importance of such
information.
13.2 The Offeror accepts responsibility for the information contained in this announcement. To the best
of their knowledge and belief, such information contained in this announcement is true and nothing
has been omitted which is likely to affect the importance of such information.
14 DOCUMENTATION AND SALIENT DATES
Further details of the Scheme and Delisting will be included in a circular relating to the Transaction,
which will contain, inter alia, a notice of the Scheme Meeting, a form of proxy, a form of acceptance,
surrender and transfer and a form of election ("Circular"). The Circular is expected to be posted on or
about 18 November 2019. The salient dates in relation to the Scheme and the Delisting will be
published on SENS and in the press prior to the posting of the Circular.
15 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS
Shareholders are referred to the cautionary and renewal of cautionary announcements published on 26
July 2019, 5 September 2019 and 18 October 2019 relating to the possible Transaction ("Cautionary
SENS"). As the full terms of the Transaction to which the Cautionary SENS related have been published in
this announcement, the Cautionary SENS are accordingly withdrawn.
Johannesburg
31 October 2019
Legal Adviser to the Offeror
Webber Wentzel
Corporate Finance Advisor to Rolfes
Apex Partners Holdings Proprietary Limited
Rolfes Transaction Sponsor
Grindrod Bank Limited
Independent Expert to the Independent Board
BDO Corporate Finance Proprietary Limited
Date: 31/10/2019 10:35:00
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