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JSE
RAR
RAR - Rare - Private placing and listing of rare on the alternative exchange of
the jse limited
RARE HOLDINGS LIMITED
(formerly Sunshine Street Investments 63 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration Number 2002/025247/06)
Share code: RAR ISIN: ZAE000092714
("Rare" or "the company")
Private Placing and Listing Of Rare On The Alternative Exchange of the
JSE Limited
This abridged prospectus is not an invitation to the public to subscribe for
shares in Rare. It is issued in compliance with the Listings Requirements of
the JSE Limited ("JSE") for the purpose of providing information to the public
and investors with regard to Rare.
1. INTRODUCTION AND HISTORY
1.1 PSG Capital has been authorised to announce that, subject to the
achievement of the required spread of public shareholders, the JSE has
formally approved the listing of 88 750 000 ordinary shares in the
share capital of Rare on the Alternative Exchange ("Altx") of the JSE
from the commencement of trade on Friday, 23 February 2007. The
shares will trade under the abbreviated name "Rare", with share code
"RAR" and ISIN ZAE000092714.
1.2 An amount of R37,5 million will be raised by the private placing of 18
750 000 Rare shares at an issue price of 200 cents per share ("the
private placing"). Further details relating to the private placing
are contained in paragraph 9 below.
1.3 Van Leeuwen Buizen, the principal of Van Leeuwen South Africa, was
founded in 1924 in Zwijndrecht, the Netherlands. As the global leader
in the piping industry and during the course of its expansion
programme of the 1970`s, Van Leeuwen South Africa was created, opening
its doors in 1975. As a supplier of products and services to
companies in a wide range of sectors including petrochemical,
chemical, energy and infrastructure, Van Leeuwen South Africa rapidly
grew to become the leading player within this market.
1.4 In 1986 Van Leeuwen Buizen entered into negotiations with local
management, leading to a successful management buy-out in 1986. In
providing a sound platform for the continued success of the South
African business, Van Leeuwen Buizen ensured the continued profile of
the group`s business by positioning the South African entity as an
independent business, yet effectively retaining full subsidiary
status, a first within its globalisation programME. This recognition
of the faith and trust in the South African management provided a base
for Van Leeuwen South Africa to continue the growth of the local
business.
1.5 During the course of the company`s growth, and in recognising the need
for BEE transformation within the South African economy, Van Leeuwen
South Africa entered into negotiations with a BEE consortium under the
leadership of Don Ncube, a prominent black BEE entrepreneur and
founder of Real Africa Investments Limited. This resulted in the
creation of The Rare Group (Proprietary) Limited ("The Rare Group") in
2002 with two shareholders, namely Sunshine Street Investments 63
(Proprietary) Limited ("Sunshine Street") and VLPT Pipes (Proprietary)
Limited (which was restructured to VLPT Investments (Proprietary)
Limited ("VLPT Investments")), and established the platform for the
next phase in the development and growth of the company.
2. NATURE OF BUSINESS
2.1 Rare is one of the largest suppliers and installers of pipes and
fittings in South Africa. Rare provides cost effective and efficient
water conveying systems and solutions and has extensive experience in
the design, development and installation of plastic fluid conveyance
systems, covering the entire fluid conveyance cycle.
2.2 Rare has been organised into three divisions covering the entire fluid
conveyance cycle. This allows each division to focus on, be in sync
with and capitalise on the opportunities that its particular industry
brings, whilst being able to access the expertise, exposure and
capacities of other divisions. These divisions are summarised below.
2.3 Rare Energy
Rare Energy is the largest supplier of pipes and fittings to the
energy sector in South Africa. In addition, by responding actively to
the need for exploring a more competitive base within the market, Rare
Energy has developed its own branded service, namely Supply Chain
Management, allowing the Rare group to vertically integrate into its
customer base. Rare Energy has also recognised the need for alternate
sources of energy and has set itself a platform within this sector,
providing the infrastructure, skills and product in driving the
business forward.
2.4 Rare Water
Rare Water provides cost effective and efficient water conveying
systems solutions based on an intimate understanding of client`s
needs. Solutions are based on a seamless integration of product,
service and logistical and technical support, some of which Rare Water
designs, develops and manufactures. These innovative products and
services, many of which Rare Water has protected by patents and design
registrations, are market leaders in the fields in which they are
applied. In recognising the critical skills shortage in South Africa,
Rare Water provides formal and informal training programmes to assist
in the development of engineers and other role players throughout the
industry.
2.5 Rare Chemical
Rare Chemical boasts extensive experience in the design, development
and installation of plastic fluid conveyance systems. Rare Chemical
also operates some of the largest plastic engineering machinery in
South Africa. In addition, Rare Chemical has secured the exclusive
agency for leading global pipeline refurbishment technology, a
critical component of infrastructure development and maintenance.
This range of products and services allows it to specialise in the
complete design, fabrication, installation and commissioning of
Plastic Fluid Conveyance Solutions for the Process Plant Industry.
3. BEE PROFILE AND PROSPECTS
3.1 Rare reflects the successful transformation of a leading trading
entity into a thriving, diverse and dynamic empowerment company, with
BEE shareholding comprising on listing approximately 29% of Rare`s
issued share capital.
3.2 Rare has developed a very clear and focused strategy over the past few
years and will continue to pursue and expand on this. It has moved
its focus from exclusively supplying products to the energy sector to
supplying integrated solutions across the entire fluid conveyance
cycle, in the energy, water and chemical industries.
3.3 The continuous development of new and innovative products and services
are at the core of Rare`s existence. This has resulted in the Rare
group developing the market leading Aqualok brand, and the subsequent
development and introduction of four new products to its range under
the ProFlo, Rare-Tech and MaxiPro brand names. In addition, the
company has acquired the Simona agency and has partnered on technology
with Advantica from the UK for pipeline relining.
4. MAJOR SHAREHOLDERS
The following shareholders are interested in more than 5% of the issued
share capital of Rare on listing:
Name of shareholder Number of Percentage
shares held held
(%)
Lion Steel Trust(1) 16 172 471 18,2
Nkululeko Trust(1) 11 201 054 12,6
S Pather 5 091 388 5,7
D J J Vlok 5 091 388 5,7
K O Fordwor 4 950 756 5,6
Lizbrand Trust(1) 4 598 055 5,2
Markus Jooste Kindertrust 4 598 055 5,2
51 703 167 58,2
Note
Trusts set up by management of Rare.
5. DIRECTORS
The full names, ages, occupations and business address of the directors of
Rare are outlined below:
Full name Age Occupation Business Address
Donald Mzolisa 59 Non-executive 34 Fricker Road,
Jones Ncube Chairman Illovo 2196
David Etienne 50 Chief 35 Potgieter
Scheepers Executive Street, Alrode
Officer 1450
Pierre Johan 36 Financial 35 Potgieter
Willemse Director Street, Alrode
1450
Karin Charmaine 45 Executive 35 Potgieter
van Heerden Director Street, Alrode
1450
Kofi Oduro 44 Non-executive 34 Fricker Road,
Fordwor Director Illovo 2196
Saamsoodein 56 Non-executive 8 Gloucester
Pather Director Avenue, Bishops
Court 7708
Jan Jacobus van 61 Non-executive 8 Danie Theron
der Merwe Director Street, Alberante
1450
5.2 All directors are South African citizens.
5.3 The directors of Rare:
- have considered all statements of fact and opinion in the
prospectus;
- accept, collectively and individually, full responsibility for
the accuracy of such statements; and
- 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.
6. SHARE CAPITAL AND DIVIDENDS
Authorised and issued share capital
The authorised and issued share capital of Rare is set out below:
Number of Share
Shares Capital
R
Authorised
Redeemable preference shares 100 000 000 1 000 000
of 1 cent each
Ordinary shares of 1 cent 300 000 000 3 000 000
each
Issued before the private
placing
Ordinary shares of 1 cent 70 000 000 700 000
each
Issued after the private
placing
Ordinary shares of 1 cent 88 750 000 887 500
each
6.1.2 The share premium of Rare on listing will be R74 893 836.
6.2 Dividends
Given the growth profile and strategy of Rare, it is anticipated that
earnings generated by the group will be re-invested to fund future growth
and development. It is the intention of the company to periodically
consider this dividend policy and to take account of prevailing
circumstances and future cash requirements in determining whether it would
be appropriate to pay a dividend in respect of a particular financial
reporting period. It is intended that once a more predictable and
sustainable cash flow trend is evident, dividends will become payable. In
the interim, surplus cash may be applied by the company to repurchase
shares if appropriate.
7. PRE-LISTING RESTRUCTURING
In preparation for the listing of Rare, the following corporate actions
were effected:
7.1 on 15 January 2007, Sunshine Street issued to its then shareholders 41
000 shares at an issue price of 1 cent per share and acquired from the
shareholders of VLPT Investments their 100% interest in VLPT
Investments in exchange for the issue of 49 000 shares in Sunshine
Street at an issue price of 1 cent per share. Pursuant to the
deregistration of VLPT Investments, The Rare Group will become a
wholly-owned subsidiary of Sunshine Street (which changed its name to
Rare on 12 February 2007);
7.2 on 15 January 2007, The Rare Group acquired the minority interests in
Rare Pipe Specials (Proprietary) Limited (49%), Pipe Specials Aquarius
(Proprietary) Limited (49%), Rare BBE (Proprietary) Limited (30%) and
Rare Tech (Proprietary) Limited (25%) for an aggregate consideration
of R5,28 million, which was settled by the issue of 11 111 Rare shares
to such vendors; and
7.3 on 15 January 2007, Rare capitalised loan account claims of R32 469
632 held by shareholders of Sunshine Street and VLPT Investments, by
the issue of 17 157 700 ordinary shares to such shareholders at an
issue price of 189.24 cents per share,
(collectively "the restructuring").
8. EXTRACTS OF HISTORICAL, PRO FORMA AND FORECAST FINANCIAL INFORMATION
8.1 Historic and forecast income statements
Set out below is an extract from the historic income statement of Rare
for the financial year ended 30 June 2006 and the forecast income
statements for the financial periods ending 30 June 2007 and 2008, the
preparation of which is the responsibility of the directors.
Income statement for Audited Forecast Forecast
the 2006 2007 2008
year ended/ending R R R
30 June
Revenue 216 348 324 068 405 086
520 646 000
Operating income 17 969 23 488 32 918
581 868 000
Net profit before 14 835 22 731 33 923
taxation 709 672 000
Net profit after tax 10 673 16 139 24 085
633 487 330
Weighted average number 38 359 88 750
of shares in issue 654(1)(3) 000
Earnings per share 42.07(2)( 27.14
(cents) 3)
Headline earnings per 42.07(2)( 27.14
share (cents) 3)
Earnings yield at 200 21.04(3) 13.57
cents per share issue
price (%)
Price:Earnings ratio at 4.75(3) 7.37
200 cents per share
issue price (times)
Note
(1).Being the weighted average number of shares
currently envisaged to be in issue for the financial
year ending 30 June 2007.
(2).Based on the assumption that the restructuring had
been effective for the full financial year ending 30
June 2007 (i.e. that The Rare Group and its subsidiaries
were wholly-owned by Rare for such full financial year).
(3).Based on the assumption that the restructuring had
been effective for the full financial year ending 30
June 2007 and that, accordingly, 70 000 000 shares were
in issue for the whole year and that the private placing
shares were in issue from 23 February 2007 until 30 June
2007, these statistics would be as follows:
Weighted average number of shares in issue 76 250
000 Earnings per share (cents)
21.17
Headline earnings per share (cents)
21.17
Earnings yield at 200 cents per share
issue price (%)
10.58
Price:Earnings ratio at 200 cents per
share issue price (times)
9.45
8.2 Interim and pro forma balance sheets at 31 December 2006
Set out below is an extract from the historic interim balance sheet of
Rare and pro forma balance sheets of Rare which illustrate the effects
of the restructuring and the private placing on the financial position
of Rare as at 31 December 2006 (being Rare`s interim financial
reporting date), based on the assumptions that the restructuring and
the private placing had been effective at that date, the preparation
of which is the responsibility of the directors.
Reviewed Unaudited Unaudited
Pro forma Pro forma
After the After the
restructurin restructurin
g g and
private
placing
Balance sheet at 31 December 31 December 31 December
2006 2006 2006
R R R
Assets
Non-current assets 49 001 658 54 285 050 54 285 050
Current assets 95 383 617 95 383 617 129 851 117
Total assets 144 385 275 149 668 667 184 136 167
Equity and liabilities
Capital and reserves 33 908 000 71 661 000 106 661 000
Non-current liabilities 35 675 738 3 206 130 2 673 630
Current liabilities 74 801 537 74 801 537 74 801 537
Total equity and liabilities 144 385 275 149 668 667 184 136 167
Shares in issue 100 70 000 000 88 750 000
Net asset value per share 48.44(1) 102.37 120.18
(cents)
Net tangible asset value per 3.47(1) 49.86 78.76
share (cents)
Note
(1) Based on the pro forma number of shares in issue after the
restructuring, being 70 000 000 shares.
8.3 Historic and pro forma income statements
Set out below is an extract from the historic income statement of Rare
and a pro forma income statement of Rare which illustrates the effects
of the restructuring on the financial results of Rare for the
financial period ended 30 June 2006, based on the assumption that the
restructuring had been effective throughout the period then ended.
Income statement for Audited Pro forma
the 2006 Historic
year ended/ending R 2006
30 June R
Revenue 216 348 520 216 346 520
Operating income 17 969 581 17 969 581
Net profit before 14 835 709 17 270 931
taxation
Net profit after tax 10 673 633 12 402 641
Attributable to
Equity holders of 5 325 862 12 402 641
the parent
Minority 5 347 771 -
shareholders
Number of shares in 70 000 000
issue
Earnings per share 17.72
(cents)
Headline earnings 17.72
per share (cents)
Earnings yield at 8.86
200 cents per share
issue price (%)
Price:Earnings ratio 11.29
at 200 cents per
share issue price
(times)
9. THE PRIVATE PLACING
9.1 Salient features
9.1.1 The salient features of the private placing are as follows:
Offer price per share 200 cents
Number of ordinary shares offered in
terms of the private placing 18 750 000
Issue consideration R37,5 million
Opening date of the private
placing at 09:00 on Monday, 19 February 2007
Closing date of the private
placing at 12:00 on Monday, 19 February 2007
9.1.2 The purpose of the private placing is to:
- raise capital for purposes of expanding and growing the
business, both organically and, where appropriate, by
acquisition, with a significant portion of the proceeds of
the private placing to be applied to fund working capital
requirements of the business of Rare;
- afford specifically identified members of the public,
current shareholders, clients, select financial institutions
and business associates of Rare the opportunity to invest
directly and increase their investment in Rare; and
- broaden Rare`s shareholder base and obtain the spread of
shareholders required for the listing of Rare shares in
terms of Listings Requirements.
9.1.3 No offer will be made to the public in respect of the private
placing. The private placing is open to select applicants only.
9.2 Irrevocable commitments and underwriting
9.2.1 Rare holds written irrevocable commitments in respect of 17 700
000 shares to be issued in terms of the private placing.
9.2.2 The private placing has not been underwritten and no minimum
subscription is set.
10. LISTING ON ALTX
Subject to the achievement of the required spread of shareholders, the JSE
has formally approved the listing of 88 750 000 ordinary shares in the
share capital of Rare on Altx with effect from the commencement of trade on
Friday, 23 February 2007.
11. COPIES OF THE PROSPECTUS
11.1. 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 Rare on Altx. It contains the salient
features of the prospectus dated 19 February 2007, which should
be read in its entirety for a full appreciation thereof.
11.2. Copies of the full prospectus, in English, may be obtained during
office hours at the following addresses:
11.2.1. the registered office of the company: 35 Potgieter Street,
Alrode 1451; and
11.2.2. the office of the designated and corporate adviser of Rare, PSG
Capital: Building 8, Woodmead Estate, 1 Woodmead Drive, Woodmead
2198.
Johannesburg
16 February 2007
Designated and Corporate Legal Adviser
Adviser
- PSG Capital - - Deneys Reitz -
Auditors and Joint Reporting Joint Reporting Accountants
Accountants
- Greenwoods - - Deloitte & Touche -
Date: 16/02/2007 16:37:00 Produced by the JSE SENS Department.
