| Tue 30 Nov 2004, 16:43 | | Arch Equity - Abridged Prospectus announcement |
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Arch Equity - Abridged Prospectus announcement
ARCH EQUITY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2004/004019/06)
(Previously West Dunes Properties 22 (Proprietary) Limited)
Share code: ACH ISIN: ZAE000061073
(`Arch Equity` or `the company`)
ABRIDGED PROSPECTUS
PRIVATE PLACING AND LISTING OF ARCH EQUITY ON THE ALTERNATIVE EXCHANGE (`ALTX`)
OF THE JSE SECURITIES EXCHANGE SOUTH AFRICA (`the JSE`)
This abridged prospectus is not an invitation to the public to subscribe for
shares in Arch Equity. It is issued in compliance with the Listings
Requirements of the JSE (`the Listings Requirements`) for the purpose of
providing information to the public and investors with regard to Arch Equity.
1. INTRODUCTION AND HISTORY
1.1 PSG Capital Limited (`PSG Capital`) is authorised to announce that,
subject to the achievement of the required spread of public
shareholders, the JSE has formally approved the listing of 143 628 501
ordinary shares in the share capital of Arch Equity on ALTX from the
commencement of trading on Friday, 10 December 2004. The shares will
trade under the abbreviated name `Arch`, with share code `ACH` and
ISIN ZAE000061073.
1.2 An amount of R36 million will be raised by the private placing of 20
000 000 Arch Equity shares (`the private placing shares`) at an issue
price of 180 cents per share (`the private placing`). Further details
relating to the private placing are contained in paragraph 8 below.
1.3 The business of Arch Equity was officially launched on 17 May 2004,
following a successful initial private placing, in which management
raised R85,4 million in equity by the issue of 85,9 million ordinary
shares at an average issue price of 99 cents per share.
1.4 On 26 November 2004, Arch Equity completed a further private placing
in terms of which it raised an additional R45,6 million by way of the
issue of an additional 37,7 million ordinary shares at an average
issue price of 121 cents per share (`the recent capital raising`).
2. NATURE OF BUSINESS AND PROSPECTS
2.1 Arch Equity is a black owned and controlled investment company that
focuses on private equity investments and black economic empowerment
(`BEE`) transactions.
2.2 Arch Equity invests in listed and unlisted companies that are well
established, have good corporate governance in place, deliver solid
cash flows and have high growth prospects. It is the company`s
primary objective to increase the wealth of its shareholders through
high value, low risk equity investments.
2.3 In pursuance of its primary objective, Arch Equity is committed to
broad-based BEE and will use its substantial influence to ensure that
the companies in its portfolio contribute to the empowerment
objectives and the economic transformation process in South Africa.
2.4 Arch Equity`s current investments comprise:
Name %
shareholding
PSG Group Limited (`PSG Group`)(1) 22,2
Capitec Bank Holdings Limited(1) 15,3
Channel Life Limited 13,3
Big Box Containers (Proprietary) Limited 30,0
ComPress Publications Management 75,0
(Proprietary) Limited
Unitrans Limited(1)(2) 4,5
(1) Listed on the JSE
(2) Through Clidet No. 518 (Proprietary) Limited, a BEE investment vehicle
2.5 Historically disadvantaged South Africans (`HDSA`s`) and HDSA
companies, including (indirectly) Mr D Lockey, Arch Equity`s Chief
Executive Officer, own 60,9% of Arch Equity`s issued ordinary share
capital.
3. Major shareholders
3.1 The following shareholders are interested in more than 5% of the
issued ordinary share capital of Arch Equity:
Name of shareholder Number Percentage
(`000) held
(%)
Jasmyn Corporate Holdings 48 313 39,1
(Proprietary) Limited(1)
PSG Group 24 726 20,0
Sanlam Investment Management 11 560 9,4
Tokara Employees` Trust(2) 10 000 8,1
Mandisa Holdings (Proprietary) 8 333 6,7
Limited(1)
PSG BEE Trust(3) 8 333 6,7
Other 12 364 10,0
123 629 100,0
HDSA`s own and control 100% of the ordinary share
capital in these companies. Mr D Lockey is the main
shareholder, holding 86,9% of the share capital in each
of Jasmyn Corporate Holdings (Proprietary) Limited and
Mandisa Holdings (Proprietary) Limited. Mr Lockey thus
has an effective indirect interest in Arch Equity of
39,8%.
A trust created for the benefit of farm workers of which
the majority are HDSA`s. The farm is situated outside
Stellenbosch.
The only beneficiaries of the trust are HDSA employees
of PSG Group and its subsidiaries.
3.2 THE CONTROLLING SHAREHOLDER OF ARCH EQUITY, AS DEFINED IN THE LISTINGS
REQUIREMENTS AND AS INDICATED IN THE TABLE IN PARAGRAPH 3.1 ABOVE, IS
JASMYN CORPORATE HOLDINGS (PROPRIETARY) LIMITED.
4. DIRECTORS
The full names, ages, business address and occupations of the directors of
Arch Equity are outlined below:
Full name Age Occupation Business
Address
Desmond Lockey 42 Chief Executive 1st Floor
Officer Inanda
6 Dorp
Street
Stellenbosch
7600
Baekeng Lucas 49 Non-executive 1122 Burnett
Moropa Director - Arch Street
Equity 4th Floor
Executive Chairman - Hatfield
Securicor Plaza Office
Towers,
Hatfield
Pretoria
0028
Johannes 58 Non-executive 1st Floor
Fredericus Director - Arch Ou Kollege
Mouton Equity 35 Kerk
Executive Chairman - Street
PSG Group Stellenbosch
7600
Petrus 28 Financial Director 1st Floor
Johannes Inanda
Mouton 6 Dorp
Street
Stellenbosch
7600
Nomazizi 60 Non-executive Telkom
Mtshotshisa Chairman - Arch Towers North
Equity 24th Floor
Non-executive 152 Proes
Chairman - Telkom Street
Pretoria
0001
4.2 All directors are South African citizens.
4.3 Directors` responsibility statement
The directors of Arch Equity:
4.3.1 have considered all statements of fact and opinion in the prospectus;
4.3.2 accept, collectively and individually, full responsibility for the
accuracy of such statements; and
4.3.3 certify that, to the best of their knowledge and belief, there are no
omissions of material facts or considerations which would make any
statements of fact or opinion contained in the prospectus false or
misleading and that all reasonable enquiries to ascertain such facts
have been made and that the prospectus contains all information
required by law and the Listings Requirements of the JSE.
5. SHARE CAPITAL
Authorised and issued share capital
The authorised and issued share capital of Arch Equity, taking into account
the private placing and listing costs which are to be offset against share
premium, is set out below:
Shares Nomin Premiu
al m
Value R`000
R`000
Authorised
Ordinary shares of 1 cent 200 000 000 2 000
each (`ordinary shares`)
`A` cumulative 10 000 000 100
compulsorily redeemable
preference shares of 1
cent each (``A` preference
shares`)
Cumulative non-redeemable 100 000 000 1 000
non-participating
preference shares of 1
cent each
Issued before the private
placing
Ordinary shares 123 628 501 1 236 129
723
`A` preference shares 10 000 000 100 9 900
Issued after the private
placing
Ordinary shares 143 628 501 1 436 165
523
`A` preference shares 10 000 000 100 9 900
6. SUMMARY OF HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
6.1 After 30 September 2004, being the reporting date in respect of which
audited financial statements for Arch Equity have been prepared, Arch
Equity completed the recent capital raising and made certain
investments, namely, the subscription for cash for 4 675 000 ordinary
shares in the share capital of PSG Group at an issue price of R3,14
per share, the subscription for cash for 1 445 582 ordinary shares in
the share capital of Capitec Bank Holdings Limited at a subscription
price of R6,564 per share and the subscription, through Clidet No. 518
(Proprietary) Limited, a BEE investment vehicle, for an effective 4,5%
in the issued share capital of Unitrans Limited (`the recent
investments`).
6.2 The extracts from the pro forma balance sheets set out below
illustrate the effects of the recent capital raising, the recent
investments and the private placing on the financial position of Arch
Equity at 30 September 2004, based on the assumption that the recent
capital raising, the recent investments and the private placing were
all effected on 30 September 2004.
6.3 The unaudited pro forma balance sheets, which are the responsibility
of the directors of Arch Equity, have been prepared for illustrative
purposes only and, because of their nature, may not give a true
reflection of Arch Equity`s financial position.
6.4 Audited and Unaudited Pro Forma Balance Sheets at 30 September 2004
Audited Unaudited Unaudited
30 Pro forma Pro forma
September After the After the
2004 recent recent
R`000 capital capital
raising and raising,
the recent the recent
investments investments
30 and the
September private
2004 placing
R`000 30 September
2004
R`000
Assets
Non-current assets 181 445 213 983 213 983
Current assets 13 205 34 521 68 872
Total Assets 194 650 248 504 282 855
Shareholders` Funds
Share capital 860 1 237 1 437
Share premium 84 282 129 389 165 099
Retained earnings 49 512 56 627 55 068
Ordinary shareholders` funds 134 654 187 253 221 604
Outside shareholders` funds 384 384 384
Total Shareholders` Funds 135 038 187 637 221 988
Liabilities
Non-current liabilities 55 976 57 231 57 231
Current liabilities 3 636 3 636 3 636
Total Liabilities 59 612 60 867 60 867
Total Liabilities and 194 650 248 504 282 855
Shareholders` Funds
Shares in issue (`000) 85 975 123 629 143 629
Net asset value per share 156,6 151,5 154,3
(cents)
Net tangible asset value per 156,6 151,5 154,3
share (cents)
6.5 `See-through` net asset value per share at the last practicable date
Arch Equity`s `see-through` net asset value per share at 24 November 2004,
the last practicable date prior to finalisation of the prospectus (`the
last practicable date`), based on the market prices of Arch Equity`s listed
investments and a directors` valuation of unlisted investments, was 200
cents per share.
7. SUMMARY OF HISTORICAL AND FORECAST FINANCIAL INFORMATION
7.1 Set out below is the forecast financial information of Arch Equity for the
financial period ending 28 February 2005 and the financial year ending
2006, the preparation of which is the responsibility of the directors.
7.2 Extracts from Historical and Forecast Balance Sheets
Audited Forecast Forecast
30 28 28
September February February
2004 2005 2006
R`000 R`000 R`000
Assets
Non-current assets 181 445 278 332 323 039
Current assets 13 205 70 799 79 584
Total Assets 194 650 349 131 402 623
Shareholders` Funds
Share capital 860 1 436 1 436
Share premium 84 282 165 099 165 099
Retained earnings 49 512 109 928 151 716
Ordinary shareholders` 134 654 276 463 318 251
funds
Outside shareholders` 384 419 571
funds
Total Shareholders` Funds 135 038 276 882 318 822
Liabilities
Non-current liabilities 55 976 68 524 79 564
Current liabilities 3 636 3 725 4 237
Total Liabilities 59 612 72 249 83 801
Total Liabilities and
Shareholders` Funds 194 650 349 131 402 623
Shares in issue (`000) 85 975 143 629 143 629
Net asset value per share 156,6 192,5 221,6
(cents)
Net tangible asset value per 156,6 192,5 221,6
share (cents)
Assumptions made in respect of the forecast Balance Sheets are contained in
Annexure 3 of the prospectus.
7.3 Extracts from Historical and Forecast Income Statements
Audited Forecast Forecast
18 February Period Year
2004 to ending ending
30 28 28
September February February
2004 2005 2006
R`000 R`000 R`000
Revenue 5 417 13 342 27 708
Operating income 58 391 135 036 60 630
Net income before 56 505 127 733 53 159
taxation
Earnings attributable to
ordinary shareholders 49 512 109 929 46 607
Shares in issue (`000) 85 975 143 629 143 629
Weighted average shares 67 827 85 138 143 629
in issue (`000)
Earnings per share 73,0 129,1 32,4
(cents)
Headline earnings per 73,0 129,1 32,4
share (cents)
Dividend per share (cents) - - 3,4
Assumptions made in respect of the forecast Income Statements are contained in
Annexure 3 of the prospectus.
In terms of Arch Equity`s accounting policy in respect of revenue recognition,
`revenue` does not include `fair value gains` on investments. `Fair value
gains` on investments are included in `Investment Income` which is included
under `operating income` in the Income Statement extracts above.
8. THE PRIVATE PLACING
Salient features
8.1.1 The salient features of the private placing are as follows:
- Offer price per share (cents) 180
- Number of ordinary shares offered in 20 000 000
terms of the private placing
- Issue consideration (before expenses) R36
million
- Opening date of the private Wednesday, 1
placing at 09:00 on December
- Closing date of the private Tuesday, 7 December
placing at 12:00 on
No offer will be made to the general public in terms of the private placing.
The private placing will be made with selected applicants only.
8.2 Irrevocable commitments
As at the last practicable date, Arch Equity held written irrevocable
commitments to subscribe for 17 457 366 shares in terms of the private
placing, amounting to 87,3% of the private placing shares.
8.3 No minimum subscription
The private placing will not be subject to the achievement of a minimum
subscription.
8.4 The purpose of the private placing is to:
- afford specifically identified members of the investment community,
current shareholders, clients, selected financial institutions and
business associates of Arch Equity the opportunity to participate
directly or increase their participation in Arch Equity;
- broaden Arch Equity`s shareholder base and obtain the spread of
shareholders required for the listing of Arch Equity shares in terms
of the Listing Requirements; and
- raise further capital for purposes of making investments.
9. LISTING ON ALTX
Subject to the achievement of the required spread of public shareholders (as
defined in the Listings Requirements), the JSE has formally approved the listing
of 143 628 501 ordinary shares in the share capital of Arch Equity on ALTX with
effect from the commencement of trading on Friday, 10 December 2004. The shares
will trade under the abbreviated name `Arch`, with the code `ACH` and ISIN
ZAE000061073.
10. COPIES OF THE PROSPECTUS
10.1 This abridged prospectus is a summary of the full prospectus and has been
prepared and issued in relation to the private placing and the listing of
Arch Equity on ALTX. It contains the salient features of the prospectus
dated 1 December 2004, which should be read in its entirety for a full
appreciation thereof.
10.2 Copies of the full prospectus, in English, may be obtained during office
hours at the following addresses:
the registered office of the company: 1st Floor, Inanda, 6 Dorp Street,
Stellenbosch 7600;
10.2.2 the offices of the designated adviser of Arch Equity, PSG Capital: 1st
Floor, Ou Kollege, 35 Kerk Street, Stellenbosch 7600 and at Building
8, Woodmead Estate, 1 Woodmead Drive, Woodmead 2191; and
10.2.3 the offices of the transfer secretaries of Arch Equity, Ultra
Registrars: 5th Floor, 11 Diagonal Street, Johannesburg 2001.
11. COMPANY SECRETARY AND REGISTERED OFFICE
Anton Frederik Fuchs, BCom (Law), LLB1st Floor
Inanda
6 Dorp Street
Stellenbosch 7600
(PO Box 2292, Stellenbosch 7599)
Telephone: (021) 886 6578
Facsimile: (021) 882 8387
12. WARNING: NOTICE IN COMPLIANCE WITH THE LISTINGS REQUIREMENTS IN RELATION TO
ALTX
In compliance with the Listings Requirements, investors are advised of the
risks of investing in a company listed on ALTX. Investors are advised that
the JSE does not guarantee the viability or success of a company listed on
ALTX. In terms of the Listings Requirements, the company is obliged to
appoint and retain a Designated Adviser, which is required to, inter alia,
attend all board meetings held by the company to ensure that the Listings
Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a
Designated Adviser, it must make arrangements to appoint a new Designated
Advisor within 10 business days, failing which the company faces suspension
of trading of its securities. If a Designated Adviser is not appointed
within 30 days of its suspension, the company faces the termination of its
listing without the prospect of an appropriate offer to minority
shareholders.
Stellenbosch
30 November 2004
Designated Legal Advisers
and Auditors and Reporting
Corporate Accountants
Adviser
PRICEWATERHOUSECOOPERS WALKERS ATTORNEYS
PSG CAPITAL INC.
LIMITED
Date: 30/11/2004 04:39:38 PM
Produced by the JSE SENS Department
