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MONTAUK HOLDINGS LIMITED - Announcement of a Mandatory Offer

Release Date: 04/03/2015 17:50:00      Code(s): MNK     
(Incorporated in the Republic of South Africa)
(Registration number: 2010/17811/06)
(Previously HCI International Holdings Limited and Elgabrite Proprietary Limited)
Share code: MNK
ISIN: ZAE000197455



     Montauk hereby advises shareholders that a consortium comprising certain directors and senior
     managers of Hosken Consolidated Investments Limited (?HCI?) and/or their associates, which are
     set out in paragraph 5 below (?the Consortium?), has increased its shareholding in Montauk such
     that its aggregate direct and indirect shareholding has increased to 44.1% (net of treasury shares).

     As previously disclosed in the Montauk Pre-listing Statement, dated 19 November 2014, the
     Southern African Clothing and Textile Workers? Union (?SACTWU?) and the Consortium, who
     became shareholders of Montauk Holdings following the unbundling of Montauk by HCI, by virtue
     of their shareholdings in HCI, have entered into an agreement to regulate the manner in which they
     will conduct themselves in relation to their Montauk shareholdings. The agreement established a
     voting pool amongst the parties to the agreement and the parties furthermore granted one another
     pre-emptive rights in respect of the parties? Montauk ordinary shares (?Montauk Shares?).

     The Consortium has acquired 41,372,115 Montauk Shares from SACTWU at a price of 320 cents
     per share which has increased its combined shareholding to 44.1%. Consequently, in terms of
     Section 123 of the Companies Act, No. 71 of 2008, as amended, (the "Companies Act") read with
     the Takeover Regulations promulgated in terms of sections 120 and 223 of the Companies Act (the
     ?Takeover Regulations?) the Consortium, through its nominated entity, HCI Invest17 Holdco
     Proprietary Limited (the ?Offeror?), is obligated to make an offer to all Montauk shareholders to
     acquire all of the ordinary shares of Montauk, other than those that it already owns (the ?Offer
     Shares?), on the terms set out in paragraph 3.1 below (the ?Offer?).

     The Offeror has notified the board of directors of Montauk of its obligation to proceed with the
     proposed acquisition of the Offer Shares. The Offer is an affected transaction as defined in section
     117(1)(c) of the Companies Act and, accordingly, will be regulated by the Companies Act, the
     Takeover Regulations and the Takeover Regulation Panel ("TRP").


     On 1 December 2014, it was announced that the Consortium had entered into an option agreement
     (?Option Agreement?), comprising a put and call option, with SACTWU in respect of SACTWU?s
     shares in Montauk. SACTWU had previously indicated that it may divest from its investment in
     Montauk as the investment does not fit its investment mandate of supporting businesses that
     operate in South Africa and, as such, the option agreement provided SACTWU with the opportunity
     to exit its 30.6% shareholding in Montauk in an orderly manner which doesn?t adversely impact
     Montauk or its shareholders.

     The call option provided that the Montauk Shares held by SACTWU can be acquired by the
     Consortium for an aggregate consideration of R142 645 000 (plus an amount of R3.44 per
     additional Montauk Share acquired by SACTWU prior to the exercise of the call option) during the
     call option period of 180 days commencing on the date of listing of the Montauk Shares on the Main
     Board of the JSE (?Listing?)

     The put option (?Put Option?) allowed SACTWU to sell the Montauk Shares to the Consortium at
     the lesser of the 20 business-day volume weighted average price (?VWAP?) prior to the date on
     which the put option is exercised and the aggregate amount of R142 645 000 (plus R3.44 per
     additional Montauk Share acquired by SACTWU prior to exercise of the put option). The Put Option
     could be exercised during the Put Option period which commences when the call option period
     ends and lasts for 20 business days thereafter (?Put Option Period?).

     Following the conclusion of the Option Agreement, there have been dramatic changes to the global
     energy sector including declines in natural gas prices in the United States. Furthermore, SACTWU
     indicated to the Consortium that it wished to exercise the Put Option prior to the Put Option Period.
     Following negotiations with SACTWU the Consortium has agreed to SACTWU?s request in terms of
     an addendum to the Option Agreement (?Option Agreement Addendum?) on the proviso that the
     consideration per Montauk Share is agreed at 320 cents.

     Following the conclusion of the Option Agreement Addendum, the Consortium has acquired
     SACTWU?s Montauk Shares. As a result, the Consortium?s aggregate, direct and indirect,
     shareholding in Montauk has increased to more than 35%, and the Consortium is therefore
     required, in terms of the Takeover Regulations, to make a mandatory offer to Montauk
     shareholders for the Offer Shares at the highest price paid by the Offeror or concert parties in the
     past six months.

     There is limited liquidity in Montauk shares and the Offer provides Montauk shareholders with an
     opportunity to realise their investment at a premium to the volume weighted average price of
     Montauk since the Listing of 293 cents.


     3.1. Terms of the Offer

          The Consortium, via the Offeror, shall offer to acquire all of the Offer Shares in exchange for
          the Offer consideration of 320 cents per Offer Share (?Offer Consideration?) in cash.
          Montauk shareholders may elect to accept the Offer in whole or in part.

          In the event that the Montauk shareholders holding at least 90% of the Offer Shares accept
          the Offer within 4 months after the date of the Offer, the Offeror reserves the right to invoke
          the provisions of Section 124 of the Companies Act to compulsorily acquire all of the Offer
          Shares in respect of which the Offer was not accepted.

     3.2. The Offer period

          The Offer is expected to be open for acceptance on Thursday, 26 March 2015 with the initial
          closing date being on Friday, 15 May 2015 ("Closing Date"). The Consortium reserves the
          right to change the Closing Date to a later date.

     3.3. Payment of the Offer Consideration and cash confirmation

          Nedbank Limited, acting through the Nedbank Corporate division, has furnished the TRP with
          a cash confirmation that the Offeror has sufficient cash resources and/or facilities to conclude
          the Offer.

          The payment of the Offer Consideration will be made to Montauk shareholders on the basis
          set out in paragraph 7 below.

      3.4. No set-off of Offer consideration

           Settlement of the Offer Consideration pursuant to the Offer will be implemented in accordance
           with the terms of the Offer without regard to any lien, right of set-off, counterclaim, deduction,
           withholding or other analogous right to which the Consortium may otherwise be, or claim to be,
           entitled against any shareholder.

      3.5. Offer not made where unlawful

           The Offer shall not constitute an offer to purchase or the solicitation of an offer to sell any
           Montauk Shares in any jurisdiction in which such offer, solicitation or sale would be unlawful
           prior to the registration or qualification under the laws of such jurisdiction.


      The Consortium has obtained Competition Commission approval for the acquisition of control of
      Montauk during 2014 and, accordingly the Offer is not subject to any conditions precedent, other
      than the receipt of the required approval of the TRP, including the issuance by the TRP of the
      requisite compliance certificate.


      Subsequent to the acquisition of SACTWU?s 41,372,115 Montauk Shares in terms of the Option
      Agreement Addendum on 2 March 2015, the Consortium owns a direct and indirect beneficial
      interest of 44.1% in Montauk Shares (net of treasury shares), as indicated below:

                                                       Before 1               %        After 2            %
 JA Copelyn and his nominated entities               6,705,348             4.96      6,705,348         4.96
 A van der Veen and his nominated entities             813,272             0.60      6,366,510         4.71
 JR Nicolella and his nominated entities                85,363             0.06        665,433         0.49
 MA Jacobson and his nominated entities                 65,299             0.05      3,255,689         2.41
 Y Shaik and his nominated entities                                           -        580,070         0.43
 The Corjo Trust                                     1,356,577             1.00      1,356,577         1.00
 Majorshelf 183 Pty Ltd                              1,625,555             1.20     12,731,899         9.41
 Rivetprops 47 Pty Ltd                               4,900,372             3.62     25,262,375        18.68
 Chearsley Investments Pty Ltd                       1,197,275             0.89      1,197,275         0.89
 Circumference Investments Pty Ltd                   1,484,968             1.10      1,484,968         1.10
                                                    18,234,029            13.48     59,606,144        44.07
         Before the acquisition of SACTWU?s Montauk Shares.
         After the acquisition of SACTWU?s Montauk Shares.


     A sub-committee of the Montauk board of directors comprising 3 independent directors of Montauk
     (the ?Independent Board?) was formed for the purposes of considering the Offer in accordance
     with the requirements of the Takeover Regulations. The Independent Board is comprised of the
     following directors:

           -       M H Ahmed
           -       N B Jappie
           -       B S Raynor

     The Independent Board has appointed BDO Corporate Finance Proprietary Limited, an
     independent advisor acceptable to the TRP, to provide it with external advice in relation to the Offer
     and to make appropriate recommendations to the Independent Board for the benefit of Montauk
     shareholders. The substance of the external advice and the views of the Independent Board will be
     detailed in the joint Offer circular to be sent to Montauk shareholders in relation to the Offer.


     The salient dates and times of the Offer are set out below:

         Posting date for the combined Offeror and offeree                                 Wednesday, 25 March
         circular to Montauk shareholders
         Opening date of Offer                                                             Thursday, 26 March 
         Last date to trade in order to participate in the Offer                           Friday, 8 May
         Record date on which Montauk shareholders must                                    Friday, 15 May
         be recorded in the register in order to participate in
         the Offer
         Closing date of the Offer                                                         Friday, 15 May
         Results of the Offer released on SENS                                             Monday, 18 May
         Offer Consideration posted to Offer participants                    Offer Consideration settlement dates, being
         (once documents of title have been received)                        within six business days after acceptance
                                                                             of the Offer until the sixth business day
                                                                             after the closing date of the Offer
      1)     The above dates and times are subject to amendment by the Offeror. Any such change will be released on SENS
             and/or published in the press.
      2)     All times indicated above are South African times.


     A circular containing full detail of the Offer, and including, inter alia, a form of acceptance,
     surrender and transfer, will be posted to Montauk shareholders on or about Wednesday, 25 March


     The Consortium accepts responsibility for the information contained in this announcement. To the
     best of their respective knowledge and belief, the information contained in this announcement is
     true and nothing has been omitted which is likely to affect the import of the information.

     Cape Town
     4 March 2015

     Investment Bank:
     Investec Bank Limited

     Investec Bank Limited

     Legal Advisers:
     Edward Nathan Sonnenbergs Inc.

     Independent Expert:
     BDO Corporate Finance Proprietary Limited

Date: 04/03/2015 05:50:00 Supplied by www.sharenet.co.za                     
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