| Mon 30 Jan 2006, 13:11 | | Heritage/Metmar - Joint terms announcement |
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HCL
HCL
Heritage/Metmar - Joint terms announcement
Heritage Collection Holdings Limited
Incorporated in the Republic of South Africa
Registration Number 1998/07269/06
ISIN Code: ZAE000023594
SHARE Code: HCL
("Heritage" or "the company")
Metmar Trading (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1982/005211/07)
("Metmar" or the "Metmar Group")
Joint terms announcement regarding
* the acquisition by Heritage of all of the issued shares in
Metmar
* which will result in the reverse take-over of the company
* and the placing of a portion of the shares to be issued in terms of the
reverse take-over
1. Introduction
BDO Corporate Finance is authorised to announce that an agreement in
principle has been reached between Messrs Boshoff, Ellwood, Forsdyke and
Lotis ("the Metmar shareholders") and Heritage, in terms of which Heritage
will acquire from the Metmar shareholders all of the issued shares and loan
accounts in Metmar (jointly referred to as "the Metmar shares") in exchange
for the issue of shares in Heritage. This will result in the reverse
take-over of Heritage ("the reverse take-over").
2. Details and terms of the reverse take-over
2.1 The vendors
The vendors are the Metmar shareholders, each of which has a 25% interest
in the issued shares of Metmar.
2.2 The effective date
The effective date of the reverse take-over is seven days after the date of
fulfillment of the conditions precedent contained in paragraph 9 below ("the
effective date").
2.3 The purchase consideration
The purchase consideration in respect of the acquisition of the Metmar
shares is based on the Metmar consolidated net asset value as at the
effective date. The Metmar consolidated net asset value as at
31 December 2004 amounted to R60.5 million.
The purchase consideration is to be settled by way of the issue of 88 912 885
new consolidated Heritage shares, which will have been consolidated on
a one-for-100 basis as described in paragraph 5 below ("the Metmar consideration
shares"). As a result, after the implementation of the reverse take-over,
existing Heritage shareholders will have a 1% interest in the company and the
Metmar shareholders will jointly have a 99% interest in the company. 15% of the
Metmar consideration shares are to be disposed of by the Metmar shareholders in
terms of a placing described in paragraph 8 below ("the placing") in order to
create more liquidity in the share.
Adjustment accounts to determine the consolidated net asset value of Metmar will
be prepared for the financial period ending on the last date of the month
preceding the effective date. The adjustment accounts will be used to determine
the issue price of the Metmar consideration shares.
3. Background and rationale for the reverse take-over
Metmar commenced international trading operations in 1985 concentrating
primarily on resource-based bulk commodities. The Metmar Group trades in
metals, minerals, carbon products, plastics and chemicals in the global market.
The Metmar Group has some production investments and is actively looking to grow
the diversity of its asset base.
The Metmar Group has a vast network of agents and associates worldwide and is
represented in approximately 30 countries. Metmar is actively involved in both
the export of Southern African production and the import of strategic and
essential products to the region. Metmar has the flexibility to provide total
financing and logistical solutions for all suppliers and consumers
internationally. The Metmar Group continues to grow in both product diversity
and turnover. The management of Metmar has nearly 140 years joint international
trading, logistical and trade finance experience. The Metmar Group"s gross
turnover and profit before taxation for the year ended 28 February 2005 amounted
to over R1 billion and R40.6 million, respectively.
The Metmar Group comprises the business operations known as Metmar Trading,
Samtem (a specialised trading division), SNF division (plastics), a 10%
shareholding in Kalahari Resources (Pty) Ltd (a manganese ore and alloy
project), a 50% interest in Owen Plastics (a plastics recycling plant),
approximately 75% of Lead Processing (Pty) Ltd (a secondary lead alloy and anode
production plant) and a number of properties housed in vehicles known as Metmar
Properties, Hornet Properties and 24 Sloane Street Property.
The global commodities and resources markets have experienced significant
consumption and pricing growth over the last few years. Metmar envisages
continued strength in the commodities market and sees enormous opportunity for
sub-Saharan Africa in future resources growth.
Through its marketing, financing and logistical networks, Metmar has the
opportunity of participating in new and existing projects via equity and
exclusive off-take agreements. A listed structure offers an ideal vehicle to
realise these opportunities.
4. Disposal of all of the assets and liabilities held by Heritage and a
dividend in specie
Immediately prior to the implementation of the reverse take-over, all of the
assets and liabilities held by Heritage will be disposed of at book value to one
of its subsidiaries and Heritage will be a shell company. All of the shares in
that subsidiary as well as the shares in all of the other subsidiaries of
Heritage are to be distributed to Heritage shareholders by way of a dividend in
specie ("the dividend in specie"). The salient dates announcement for the
dividend in specie will be made in due course with a last date to trade and a
record date prior to the date of issue of the Metmar consideration shares.
5. Restructuring of the share capital of the company
In order to reduce the number of shares which must be issued in respect of the
reverse take-over, the company is proposing to consolidate its authorised and
issued share capital by the consolidation of every 100 shares with a par value
of 0,1 cent each into 1 share with a par value of 10 cents each ("consolidated
shares") ("the consolidation").
In addition, Heritage currently has and will have, after the consolidation,
insufficient unissued authorised consolidated shares to settle the consideration
for the reverse take-over. The company is therefore also proposing that the
authorised share capital of Heritage be increased from 250 000 000 shares (prior
to the consolidation) to 500 000 000 consolidated shares.
6. Change of name of the company and reconstitution of the board
To better reflect the changed nature and profile of the company"s business and
corporate identity after the implementation of the reverse take-over, the
company is proposing to change its name to "Metmar Limited" or such other name
as the Companies and Intellectual Property Registration Office of South Africa
("CIPRO") may approve.
It is proposed that, upon fulfillment of the conditions precedent contained in
paragraph 9 below, the board will be reconstituted to reflect the changed nature
of the business and new controlling shareholder.
7. Change of control
As a consequence of the issue of the Metmar consideration shares, Metmar will
acquire control of Heritage for the purposes of the Securities Regulation Code
of the Securities Regulation Panel ("the SRP" and "the SRP Code"). Accordingly,
the reverse take-over will constitute an affected transaction in terms of the
SRP Code, which would normally oblige Metmar to make a mandatory offer in terms
of Rule 8 of the SRP Code to the Heritage shareholders.
Application will be made to the SRP to dispense with the requirement to make a
mandatory offer in terms of Rule 8.1 of the SRP Code should a majority of the
independent shareholders present and voting at the general meeting of Heritage
shareholders waive such requirement in accordance with Rule 8.7 of the SRP Code.
8. The placing
In order to improve shareholder spread and increase liquidity in the company"s
shares, the Metmar shareholders will be undertaking the placing in terms of
which they will be disposing of 15% of the Metmar consideration shares prior to
the Metmar consideration shares being listed on the JSE Limited ("JSE"). One
third of such shares will be offered to existing Heritage shareholders and the
balance will be placed with public shareholders (as defined in the JSE Listings
Requirements).
9. Conditions precedent to the reverse take-over
The implementation of the reverse take-over is conditional upon, inter alia:
* the completion of a due diligence on the Heritage group to the satisfaction
of the Metmar shareholders;
* the conclusion of a detailed agreement between Heritage and the Metmar
shareholders containing normal warranties and guarantees for a transaction
of this nature plus any special matters that may arise out of the
implementation of the reverse take-over;
* the disposal of all of the assets and liabilities held by Heritage to one
of its subsidiaries resulting in Heritage being a shell company with no
assets, liabilities or contingent liabilities;
* the approvals of the relevant regulatory authorities including the JSE and
the SRP; and
* shareholder approval of all resolutions relating to the implementation of
the reverse take-over including the amendments to the company"s share
capital, the dividend in specie, the waiver of the mandatory offer and the
change in the company"s name and, where necessary, the registration of
these resolutions by CIPRO.
10. Pro forma financial effects
The pro forma financial effects presented below are the responsibility of the
board of Heritage and are presented for illustrative purposes only to provide
information on how the consolidation and the reverse take-over might have
impacted on the reported financial information of Heritage if they had been
implemented in the 6-month period ended 30 June 2005. Because of their nature,
the pro forma financial effects may not give a fair reflection of Heritage"s
financial position at 30 June 2005.
Before the After the After the
consolidation, the consolidation consolidation, the
dividend in specie and the dividend in specie
and the reverse dividend in and the reverse
take-over1 specie and take-over3,4
before the
reverse take-
over2
(Loss) / (9.4) -
earnings per 35.3
share (cents)
Headline (9.4) -
(loss) / 35.3
earnings per
share (cents)
Net asset 7.9 - 68.0
value per
share at 30
June 2005
(cents)
Net tangible 4.7 - 68.0
asset value
per share per
share at 30
June 2005
(cents)
Weighted 88,912,885 889,129 88,912,885
average shares
in issue for
the period
Shares in 88,912,885 88,912,885
issue at the 889,129
end of the
period
Notes:
1. The figures in this column are extracted from the unaudited consolidated
interim results of Heritage for the 6-month period ended 30 June 2005.
2. The figures in this column are based on the figures set out in the previous
column after the implementation of the consolidation and the dividend in
specie and on the assumption that all assets and liabilities of Heritage
had been disposed of to a Heritage subsidiary and all interests held in
Heritage subsidiaries distributed as the dividend in specie. The income
statement, balance sheet, loss and headline loss, net asset value and net
tangible asset value per share have accordingly been adjusted to reflect
the discontinuance of the business operations of Heritage.
3. The figures in this column have been compiled from the figures set out in
the previous column and from the audited consolidated financial statements
of the Metmar Group for the year ended 28 February 2005 ("the financial
statements"). The financial statements were prepared in accordance with
South African Statements of Generally Accepted Accounting Practice. For
purposes of the earnings and headline earnings per share it was assumed
that the reverse take-over had been in effect for the 12 months ended 30
June 2005 and, for purposes of net asset value and net tangible asset value
per share, that it had been implemented on 30 June 2005.
4. The accounting standard for business combinations IFRS 3 (AC140) was
applied to both the income statement and the balance sheet. The fair
values assigned to the identifiable assets, liabilities and contingent
liabilities were determined using provisional values and no goodwill or
negative goodwill arose on acquisition of the business combinations.
11. General meeting and opinions and recommendation
A general meeting of Heritage shareholders will be convened for the purposes of
considering and, if deemed fit, passing the necessary ordinary and special
resolutions relating to the implementation of the reverse take-over.
The board is recommending that shareholders should vote in favour of all
resolutions relating to the implementation of the reverse take-over and all the
members of the board will be voting in favour of all such resolutions in respect
of their shareholdings in Heritage.
Shareholders holding 75% of the issued shares in Heritage have provided
irrevocable undertakings to vote in favour of all resolutions relating to the
implementation of the reverse take-over.
12. Documentation and related JSE and SRP matters
In terms of the reverse take-over requirements set out in the JSE Listings
Requirements, Heritage is required to prepare a Category 1 circular and listing
particulars as though Heritage was a new applicant ("the circular").
Shareholders should therefore exercise caution until the JSE approves the new
listing. The circular, which is subject to the approval of the JSE and SRP and
will contain full details of the reverse take-over, will be posted to
shareholders as soon as possible.
The articles of association of Metmar will be amended to comply with Schedule 10
of the JSE Listings Requirements.
13. Expressions of interest in participating in the placing
Members of the public who are interested in receiving a copy of the circular and
in participating in the placing can email their contact details to
shares@metmar.co.za. Please note that this announcement is not a prospectus and
that whether you receive a copy of the circular rests solely within the
discretion of the Metmar shareholders.
30 January 2006
Johannesburg
Deal originator and corporate advisor to Metmar
BDO Spencer Steward Capital (Pty) Ltd
Sponsor to Heritage
Sasfin Capital
(A division of Sasfin Bank Limited)
Transactional sponsor to Heritage
QuestCo (Pty) Ltd
Date: 30/01/2006 01:11:50 PM Produced by the JSE SENS Department
