| Tue 25 Nov 2003, 12:27 | | Pepkor gets nod to put its sale to the vote |
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Pepkor gets nod to put its sale to the vote
November 25, 2003
By Ronnie Morris
Cape Town - Pepkor, the holding company of Pep Stores, Ackermans and Best & Less, was given the go-ahead yesterday in the Cape high court to call a meeting of shareholders to consider Pepkor's acquisition by Castellina Investments for R2.1 billion.
The application was brought in terms of section 311 of the Companies Act, which gives the court sanction to order a meeting when any arrangement or takeover of a firm is proposed.
The court's go-ahead will allow shareholders to meet and vote on the proposed scheme of arrangement on December 11.
At this meeting, three-quarters of the shareholders present must agree to the proposed management buyout to make the decision binding on dissenting shareholders.
Gavin Woodland, senior counsel for Pepkor, said section 311 allowed the court to provide a mechanism to overcome the impossibility or impracticality of obtaining the individual consent of every shareholder, or to prevent a minority from frustrating a beneficial scheme.
Told by Judge Lee Bozalek that it appeared the Securities Regulatory Panel had given Pepkor an exemption in regard to the favourable treatment of the preferential shares, Woodland said the panel was concerned about a single majority vote and would determine who the disinterested shareholders were.
If shareholders approve the deal, they would receive either R10 cash for each Pepkor share or shares in Castellina.
Castellina has concluded a R420 million loan with Old Mutual Specialised Finance to have ready cash for shareholders who elect sell their shares.
The loan would be underwritten by South African Private Equity Fund III and South African Private Equity Fund III LP, a Cayman Islands partnership under the management of Brait South Africa and Old Mutual Life Assurance.
If implemented, Pepkor said, the scheme would allow it to restructure its capital base more efficiently and thereby enhance shareholder value; eliminate the current control structure; and give participants an opportunity to accept cash at an attractive and a substantial premium to the discounted market price before August 12, or to remain invested in the unlisted structure.
Between 7.5 percent and 10 percent of the issued share capital has been warehoused.
The scheme, if accepted, would facilitate the possible introduction of black economic empowerment partners, said Jakobus Pienaar, the company secretary of Pepkor.
Pepkor would also be able to grow its offshore operations and, through Brait, take advantage of acquisition and expansion opportunities.
Pepkor directors were of the opinion that the business could, in the current environment, be better structured as an unlisted company and that the interests of the group and its shareholders would be better served if they were given the opportunity to dispose of their shares at a reasonable price, Pienaar said.
The result of the December 11 shareholder meeting would be presented to the high court on January 13 next year.
Pepkor ended 5c lower at R10.
