| Mon 19 Sep 2005, 15:06 | | HCI/ Fabvest/ FabGaming - Fabvest and FabGaming fi |
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HCI/ Fabvest/ FabGaming - Fabvest and FabGaming firm intention announcement
Hosken Consolidated Investments Limited
(Registration number 1973/007111/06)
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE000003257 Share Code: HCI
(`HCI`)
Fabvest Investment Holdings Limited
(Registration number 1997/013722/06)
(Incorporated in the Republic of South Africa)
(`Fabvest`)
Fabulous Gaming and Leisure Diversified Investments Limited
(Registration number 2005/010273/06)
(Incorporated in the Republic of South Africa)
(`FabGaming``)
FABVEST AND FABGAMING FIRM INTENTION ANNOUNCEMENT
1. Introduction
Fabvest, FabGaming and HCI shareholders are referred to the announcement by
HCI dated 23 May 2005 and the announcement by Fabvest dated 21 July 2005,
wherein shareholders were advised, inter alia, that HCI, FabGaming (a
recently acquired subsidiary of HCI), the trustees for the time being of
the Fabcos Trust (`the Fabcos Trust`) and Fabvest had entered into a new
agreement, dated 16 May 2005 (`New Transaction Agreement`). The New
Transaction Agreement contemplates a number of transactional steps recorded
in related written agreements (`Operative Agreements`) designed to
facilitate the acquisition (`Fabvest Acquisition`) by HCI of all the issued
shares in the capital of Fabvest, excluding its interests in Premier Foods
Limited held through Established Investments (Proprietary) Limited (`EI`)
and its subsidiaries (collectively the `Premier Group`). The transactional
steps contemplate a reverse takeover of FabGaming on the basis that
FabGaming will acquire all the shares in the issued share capital of
Fabvest (`Fabvest Shares`) in consideration for ordinary shares in the
issued share capital of FabGaming (`FabGaming Shares`), on a one-for-one
basis, pursuant to the offer described in paragraph 2 below. Thereafter
FabGaming will repurchase the FabGaming Shares held by the HCI group
(`FabGaming Share Buy-back`) with the result that the entire issued share
capital of FabGaming will be held by the Fabcos Trust and all the other
current shareholders of Fabvest. At the same time FabGaming will acquire
from Fabvest the entire issued share capital of and all claims Fabvest has
against EI (`EI Sale`). Finally, HCI will acquire the entire issued share
capital of Fabvest (`Fabvest Disposal`) as described in paragraph 3 below.
The end result will be that:
- the current shareholders of Fabvest will, through FabGaming and EI,
retain their interests in the Premier Group and FabGaming will receive
the consideration due by HCI for the shares in Fabvest pursuant to the
Fabvest Disposal; and
- HCI will acquire Fabvest with its interests in Fabcos Investment
Holding Company Limited (`FIH`), Tsogo Investment Holding Company
(Proprietary) Limited (`TIH`) and its subsidiaries (`collectively the
Tsogo Sun Group`).
In terms of the New Transaction Agreement, HCI may elect to have the
substantive effect of the Fabvest Acquisition implemented by way of a
scheme of arrangement in terms of the provisions of section 311 of the
Companies Act, 61 of 1973, as amended (`Companies Act`).
Fabvest, FabGaming and HCI shareholders are also referred to the
announcement by HCI dated 15 July 2005 in relation to the sale by Fabvest
to Johnnic Holdings Limited (`Johnnic`) of the second tranche of 25% of the
shares in FIH (`Johnnic Second Tranche Sale`) and the related dispute
regarding the fulfilment of the conditions to such sale.
2. FabGaming Offer
FabGaming intends to make an offer (`FabGaming Offer`) to all the
shareholders of Fabvest to acquire all or part of their Fabvest Shares in
consideration for the issue of one FabGaming Share for each Fabvest Share
held (`FabGaming Consideration Shares`).
As the FabGaming Offer is an `affected transaction` as defined in section
440A of the Companies Act, if the offer is accepted by the holders of not
less than nine-tenths of the issued share capital of Fabvest, FabGaming
intends to invoke section 440K of the Companies Act to compulsorily acquire
all the Fabvest Shares in respect of which acceptances are not received.
All Fabvest shareholders will be treated equally. The FabGaming
Consideration Shares shall rank pari passu with all the other shares in the
issued share capital of FabGaming.
3. Fabvest Disposal
Pursuant to the New Transaction Agreement, HCI, FabGaming, the Fabcos Trust
and Fabvest entered into a share sale agreement, dated 16 May 2005, setting
out the terms and conditions of the Fabvest Disposal. In terms of such
agreement, subject to the conditions precedent set out in paragraph 7
below, FabGaming agrees to sell and cede to HCI all the issued Fabvest
Shares and all claims FabGaming has against Fabvest (collectively the
`Fabvest Equity`) together with any dividends, distributions and rights
declared, paid, made or created on or after 16 May 2005.
The effective date of the Fabvest Disposal will be the date on which
FabGaming becomes the registered and beneficial owner of the entire issued
share capital of Fabvest pursuant to the FabGaming Offer and the subsequent
intended compulsory acquisition in terms of section 440K of the Companies
Act (`Effective Date`).
The consideration payable by HCI to FabGaming for the Fabvest Equity is:
15,5 million ordinary shares in the issued share capital of HCI (`HCI
Consideration Shares`) and a cash amount of R138 million (`Cash
Consideration`), if on the Effective Date Fabvest is the registered and
beneficial owner of 75% of all the shares in the issued share capital of
FIH; alternatively
the HCI Consideration Shares only (i.e. no Cash Consideration), if on the
Effective Date Fabvest is the registered and beneficial owner of 50% of all
the shares in the issued share capital of FIH.
The HCI Consideration Shares shall rank pari passu in all respects with the
existing ordinary issued shares in the capital of HCI and HCI will apply
for their listing on the JSE Limited (`JSE`).
In terms of the share sale agreement FabGaming and the Fabcos Trust
(jointly and severally) provide various warranties and indemnities relating
to the Fabvest Disposal, the Fabvest Equity and the business of Fabvest.
If the Johnnic Second Tranche Sale has not lapsed, then Johnnic will be
obliged to pay to Fabvest R147,5 million. In this eventuality the parties
have agreed that, immediately following receipt of that amount, Fabvest
shall subscribe for deferred shares in EI for a subscription consideration
of R138 million. HCI shall have no right to the amount of R138 million.
However, Fabvest shall retain the balance of the amount paid by Johnnic
(being R9,5 million) and that amount shall remain standing to Fabvest`s
credit on the Effective Date.
Currently R20 million is held in trust in terms of the sale agreement with
Johnnic in relation to the sale of the first tranche of 25% of FIH as
security for obligations owing by Fabvest to Johnnic. In terms of the EI
Sale the rights to such amount will be acquired by FabGaming and will be
excluded from the Fabvest Disposal.
It is further intended that FIH`s interests in Censor South Africa (a
company incorporated in accordance with the laws of Liberia) and certain
dormant companies related to Fabvest`s interests in the Premier Group will
be distributed by FIH to Fabvest and thereafter transferred or distributed
to FabGaming.
HCI has requested that written confirmation be provided to the Securities
Regulation Panel (`SRP`) by an appropriate third party confirming that HCI
has sufficient cash resources and / or facilities with which to meet its
obligation in respect of the Cash Consideration, which is expected to be
provided shortly.
4. Rationale
From HCI`s perspective the conclusion of the Fabvest Acquisition is a
continuation of its strategy to increase its stake in the Tsogo Sun Group.
From the Fabcos group`s perspective, the New Transaction Agreement is
essentially a continuation of its strategy of realising its investment in
the Tsogo Sun Group on favourable terms in order to focus on its core
investment in the Premier Group.
The Operative Agreements and the introduction of FabGaming are structured
to, inter alia, separate Fabvest`s interests in the Tsogo Sun Group from
its interest in the Premier Group. From a commercial perspective this
facilitates:
- the retention by the Fabcos group of its interests in the Premier
Group through the FabGaming Offer and the EI Sale; and
- the acquisition by HCI of 100% of Fabvest through the Fabvest
Disposal, which will only hold its interest in the Tsogo Sun Group,
having divested itself of all its other assets and liabilities
(including those in respect of the Premier Group).
5. Comparable Offer
It is contemplated that the Fabvest Acquisition is likely to also require a
comparable offer to Johnnic for its shares in FIH in terms of the
Securities Regulation Code and Rules of the SRP (`Code`).
6. Irrevocable Undertakings
The Fabcos Trust, which holds approximately 90.1% of the entire issued
share capital of Fabvest, has irrevocably undertaken to accept the
FabGaming Offer and vote in favour of the Fabvest Disposal and any other
shareholders resolutions which may be required or desirable in order to
give effect to the New Transaction Agreement and the Operational
Agreements.
7. Conditions Precedent
The FabGaming Offer and the Fabvest Disposal are subject to the fulfilment
or waiver of the following outstanding conditions precedent:
- approval from the relevant Gaming Boards;
- approval from the JSE and the SRP; and
- the passing of all shareholders resolutions required for the
implementation of the New Transaction Agreement and the Operative
Agreements,
- if and to the extent required and constituting either unconditional
approval, or approval subject to such conditions as HCI may in its
reasonable opinion accept.
8. Arrangements
In addition to the FabGaming Offer and the Fabvest Disposal, the Operative
Agreements include written agreements in terms of which the parties agree
to the FabGaming Share Buy-back and the EI Sale described in paragraph 1
above.
HCI has undertaken, in so far as it is able, after the implementation of
the Fabvest Disposal to take reasonable steps to procure the appointment of
a single nominee of FabGaming to the board of directors of HCI, provided
that such right shall lapse if:
- the board of directors of HCI determines in its sole discretion that
any of its subsidiaries, holding companies or business units may be
prejudiced because the existence of such right may result in non-
compliance with any regulatory requirements or with any obligations of
confidence, and if that prejudice cannot be avoided by the replacement
by FabGaming of its nominated directors; or
- FabGaming ceases to hold more than 10 million HCI shares.
- FabGaming has granted HCI a pre-emptive right in respect of the HCI
Consideration Shares, subject to certain exceptions.
9. Appointment of External Adviser
The directors of Fabvest and FabGaming intend appointing an appropriately
qualified independent adviser to advise the respective boards of Fabvest
and FabGaming as to how the FabGaming Offer and Fabvest Disposal affects
the shareholders of the respective companies.
10. Details of Existing Holdings of Securities in Fabvest and FabGaming
At the date of this announcement, FabGaming, HCI and any persons acting in
concert with them do not own or control, or hold options to purchase, any
securities in Fabvest.
At the date of this announcement, the HCI group holds 7 ordinary shares in
the issued share capital of FabGaming, being the entire issued share
capital of FabGaming.
At the date of this announcement, the Fabcos Trust holds 251 million
Fabvest Shares constituting approximately 90.1% of the entire issued share
capital of Fabvest.
11. SRP Rulings
Reference should be made to the rulings by the SRP in relation to the New
Transaction Agreement announced in the press by Fabvest on 30 August 2005.
12. General Meeting and Circular to Shareholders
It is noted that the SRP has ruled that the FabGaming Offer and Fabvest
Disposal may be dealt with in a single combined circular. It is intended
that a combined circular will be posted to the shareholders of Fabvest and
FabGaming in due course, setting out the information and advice required by
the Code in relation to the FabGaming Offer and the Fabvest Disposal.
Pursuant to this announcement, the cautionary announcement to the
shareholders of Fabvest in relation to the FabGaming Offer and Fabvest
Disposal is hereby withdrawn.
Company Secretary of Fabvest
Johannesburg
19 September 2005
Company Secretary of HCI
Durban
19 September 2005
Company Secretary of FabGaming
Durban
19 September 2005
Sponsor to HCI
Investec Bank
Corporate Advisor to HCI
HJS Advisory Services (Pty) Ltd
Legal advisors to HCI
Sonnenberg Hoffmann Galombik
Legal advisors to the Fabcos Trust and Fabvest
Lowndes & Associates
Date: 19/09/2005 02:03:10 PM
Produced by the JSE SENS Department
