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Apportionment of tax cost for SA income tax purposes and cash payment in respect of fractional entitlements
PSG GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1970/008484/06)
JSE Limited (“JSE”) share code: PSG
ISIN code: ZAE000013017
LEI code: 378900CD0BEE79F35A34
(“PSG Group” or “the Company”)
PSG GROUP RESTRUCTURING: APPORTIONMENT OF TAX COST FOR SOUTH AFRICAN
INCOME TAX PURPOSES AND CASH PAYMENT IN RESPECT OF FRACTIONAL
ENTITLEMENTS
1. INTRODUCTION
1.1 Shareholders are referred to the various announcements released by PSG Group on the
JSE’s Stock Exchange News Service (“SENS”) and the circular distributed to Shareholders
on Friday, 8 July 2022 (“Circular”), advising that, subject to the fulfilment (or where
applicable, waiver) of the PSG Group Restructuring Conditions, PSG Group will, as one
indivisible arrangement, implement the PSG Group Restructuring (comprising the PSG
Group Unbundling, the PSG Group Scheme and the Delisting) on the terms set out in the
Circular.
1.2 All capitalised terms used but not defined in this announcement shall bear the meanings
ascribed to them in the Circular.
1.3 The purpose of this announcement is to notify PSG Group Shareholders of:
1.3.1 the respective closing prices at which PSG Group Shares, PSG Konsult Unbundled
Shares, Curro Unbundled Shares, Kaap Agri Unbundled Shares, CA&S Unbundled
Shares and Stadio Unbundled Shares traded on the last day to trade to participate in the
PSG Group Unbundling (“LDT”) plus one Business Day, being Wednesday,
7 September 2022 (“Closing Share Price on LDT+1”), as well as the apportionment
ratios calculated with reference thereto (“Apportionment Ratios”) that PSG Group
Shareholders need to apply for South African tax purposes to allocate the cost of their
existing PSG Group shareholding to: i) the PSG Group Shares retained by PSG Group
Shareholders following the PSG Group Unbundling; and ii) each of the Unbundled Shares
being distributed to PSG Group Shareholders; and
1.3.2 the amounts which will be used to determine the cash payment in respect of fractional
entitlements which may be due to PSG Group Shareholders pursuant to the PSG Group
Unbundling (“Fractional Entitlements”).
1.4 The summary of the tax consequences of the PSG Group Unbundling as set out below
represents general comments and does not constitute a complete analysis of the tax
consequences to PSG Group Shareholders pursuant to the PSG Group Unbundling or the
payment of Fractional Entitlements. It is not intended to be, nor should it be interpreted to be
legal or tax advice. Neither PSG Group, the Unbundled Companies nor its advisors, directors
or employees can be held responsible for the tax consequences of the PSG Group
Unbundling. PSG Group Shareholders are advised to consult their own professional tax
advisors in this regard. The tax consequences of the PSG Group Unbundling may also be
different for non-resident Shareholders based on their country of residence. This includes
the calculation of the costs of the PSG Group Shares and the Unbundled Shares for tax
purposes going forward. The Circular contains further information about the tax
consequences of the PSG Group Unbundling in Annexure 4 thereto.
2. APPORTIONMENT TAX PRINCIPLES
2.1 The PSG Group Unbundling constitutes an unbundling transaction for South African tax
purposes as set out in section 46 of the Income Tax Act. In particular, the South African
Revenue Service (“SARS”) indicated in a binding class ruling obtained by PSG Group
(“Ruling”) that the PSG Group Unbundling will be governed by section 46 of the Income Tax
Act notwithstanding that the PSG Group Unbundling involves the simultaneous unbundling
of shares in multiple JSE-listed companies.
2.2 Even though the methodology to determine the cost of the various share counters is the
same, the tax consequences differ depending on whether the PSG Group Shares are held
on capital account or as trading stock.
2.3 PSG Group Shares held as trading stock:
2.3.1 Should the PSG Group Shares be held as trading stock, both the PSG Group Shares and
the Unbundled Shares will be held as trading stock going forward.
2.3.2 Following the PSG Group Unbundling, the combined expenditure of the PSG Group
Shares and the Unbundled Shares will be the original expenditure of the PSG Group
Shares in terms of section 11(a), section 22(1) or section 22(2) of the Income Tax Act.
2.4 PSG Group Shares held on capital account:
2.4.1 Should the PSG Group Shares be held on capital account, both the PSG Group Shares
and the Unbundled Shares will be held on capital account going forward.
2.4.2 Following the PSG Group Unbundling, the combined base cost of the PSG Group Shares
and the Unbundled Shares will be the original expenditure of the PSG Group Shares in
terms of paragraph 20 of the Eight Schedule to the Income Tax Act. Should PSG Group
Shares have been acquired before 1 October 2001, a similar principle applies with
reference to the valuation date value that applied at that stage in terms of paragraph 29
of the Eight Schedule to the Income Tax Act.
2.4.3 The Ruling confirmed that pursuant to the simultaneous unbundling of the Unbundled
Shares, for purposes of determining the expenditure and market values of the shares of PSG
Group and the Unbundled Companies in terms of section 46(3)(a) of the Income Tax Act,
the proportionate amount of the expenditure and market value to be allocated to the
Unbundled Shares must be determined in accordance with the ratio that the closing market
value of all the Unbundled Shares in a specific Unbundled Company, as at LDT plus one
Business Day, bears to the sum of the closing market value on that day, of the PSG Group
Shares and the Unbundled Shares in all the other Unbundled Companies plus the closing
market value of the Unbundled Shares in the specific Unbundled Company on that day.
2.5 Accordingly, irrespective of whether the PSG Group Shares and the Unbundled Shares are
held as trading stock or on capital account, the portion of the expenditure (should the shares
be held as trading stock) or the base cost (should the shares be held on capital account)
should be determined by applying the ratio that the closing market value of the respective
Unbundled Shares bears to the sum of the closing market values of the PSG Group Shares
and that of all the Unbundled Shares on the LDT plus one Business Day, being Wednesday,
7 September 2022 (i.e. the first trading day ex entitlement to participate in the PSG Group
Unbundling).
3. APPORTIONMENT RATIOS
3.1 In accordance with the Ruling, the Apportionment Ratios were calculated as follows –
Closing
Share
Price on Unbundling
LDT+1 Distribution value 1) Apportionment
R Ratio R Ratio 2)
Company
PSG Group 22.50 22.50000 23.42575%
PSG Konsult 10.60 3.86921 41.01363 42.70111%
Curro 10.11 1.81597 18.35946 19.11485%
Kaap Agri 35.85 0.12364 4.43249 4.61486%
CA&S 5.80 1.03650 6.01170 6.25905%
Stadio 3.65 1.02216 3.73088 3.88438%
96.04816 100.00000%
In the case of PSG Group, its Closing Share Price on LDT+1, and in the case of an
1) Unbundled Company, its respective Closing Share Price on LDT+1 multiplied by the
relevant Distribution Ratio.
2) Calculated as the unbundling value for each Unbundled Company divided by the total
unbundling value of R96.04816.
3.2 PSG Group Shareholders are thus advised that the expenditure or base cost of a PSG Group
Share must be apportioned in the ratio of 23.42575% to each PSG Group Share retained,
42.70111% to each PSG Konsult Unbundled Share received, 19.11485% to each Curro
Unbundled Share received, 4.61486% to each Kaap Agri Unbundled Share received,
6.25905% to each CA&S Unbundled Share received and 3.88438% to each Stadio
Unbundled Share received.
3.3 PSG Group Shareholders are advised that their expenditure or base cost of certain
Unbundled Shares may be increased for South African tax purposes depending on the extent
to which PSG Group has to pay tax on Unbundled Shares that are transferred to disqualified
person Shareholders as indicated in Annexure 4 to the Circular. However, PSG Group will
only be able to establish the exact amount of tax payable on the disqualified person
shareholding in due course, subject to, inter alia, the determination of the extent and nature
of disqualified person shareholding as at the PSG Group Unbundling Record Date. PSG
Group Shareholders will accordingly in due course be advised of the related tax payable and
the allocation principles thereof based on the Ruling that was obtained from SARS.
4. IMPLEMENTATION OF THE PSG GROUP UNBUNDLING
4.1 Under the PSG Group Unbundling, PSG Group Shareholders will receive the Unbundled
Shares in Dematerialised form only.
4.2 Accordingly, all Certificated Shareholders wishing to receive their Unbundled Shares must
appoint a CSDP under the terms of the Financial Markets Act, directly or through a Broker,
to receive the Unbundled Shares on their behalf.
4.3 Should a Certificated Shareholder not appoint a CSDP under the terms of the Financial
Markets Act, directly or through a Broker, to receive the Unbundled Shares on its behalf,
such PSG Group Shareholder will be issued by the Transfer Secretaries with a statement of
allocation reflecting its Unbundled Shares. Such PSG Group Shareholder can thereafter
instruct the Transfer Secretaries to transfer its Unbundled Shares, represented by the
statement of allocation, to its appointed CSDP or can instruct the Transfer Secretaries to
issue such PSG Group Shareholder, at its own risk, with a share certificate(s) at any time
following the PSG Group Unbundling.
4.4 If a PSG Group Shareholder is in any doubt as to what action to take in respect of the PSG
Group Unbundling, such PSG Group Shareholder should consult its Broker, CSDP, banker,
attorney or other professional advisor.
5. FRACTIONAL ENTITLEMENTS
5.1 Where a PSG Group Shareholder’s entitlement to the Unbundled Shares in terms of the PSG
Group Unbundling, calculated in accordance with the respective Distribution Ratios, gives
rise to a fraction of any Unbundled Shares, such fraction must be rounded down to the
nearest whole number, resulting in allocations of whole Unbundled Shares and a cash
payment in respect of the fraction to such PSG Group Shareholder. The remaining fractions
of Unbundled Shares will not be transferred to Shareholders but will rather be bundled
together and will be sold on the market to fund the aforementioned cash payment. The
Company will temporarily fund the Fractional Entitlement cash payment amount referred to
above.
5.2 As detailed in paragraph 3.4 of the Circular and in accordance with the JSE Listings
Requirements, Fractional Entitlement payments to PSG Group Shareholders will be
calculated based on the volume weighted average traded price of the respective Unbundled
Shares on the LDT plus one Business Day, being Wednesday, 7 September 2022 (“VWAP
on LDT+1”), less 10% to cover costs, as detailed below –
Amount that will be used to
determine the cash
payment for the Fractional
Entitlements
VWAP on (i.e. VWAP on LDT+1
LDT+1 less 10%)
R R
Unbundled Company
PSG Konsult 10.43898 9.39508
Curro 9.82702 8.84432
Kaap Agri 35.89504 32.30554
CA&S 5.83595 5.25236
Stadio 3.51466 3.16319
5.3 Cash payment of the Fractional Entitlements will be made on Monday, 12 September 2022
to the CSDP or Broker accounts of Dematerialised Shareholders or to the bank accounts of
Certificated Shareholders.
5.4 Certificated Shareholders whose bank account details are not held by the Transfer
Secretaries, were requested in the Circular to provide such details to the Transfer Secretaries
to enable payment of the cash amount due. Should no details be on record, the funds will be
held by the Company in trust in terms of the provisions of the MOI of PSG Group until such
time as the details have been provided, whereafter the cash entitlement will be paid to the
PSG Group Shareholder upon its request without interest, subject to the applicable laws of
prescription.
5.5 Shareholders are informed that, as far as the tax implications of the cash payment of the
Fractional Entitlements is concerned, the receipt of the cash payment by Shareholders will
be subject to capital gains tax for Shareholders holding PSG Group Shares as capital assets
or to income tax for Shareholders holding PSG Group Shares as trading stock, as the case
may be.
6. DISQUALIFIED PERSON SHAREHOLDERS
As indicated in paragraph 3.14 of the Circular, the Scheme Consideration of R23.00 per
Scheme Share may be reduced should there be an increase in PSG Group’s disqualified person
shareholding (as defined in Annexure 4 of the Circular) between the Last Practicable Date
(amounting to approximately 12.9% at that date) and the PSG Group Unbundling Record Date,
being Friday, 9 September 2022. The Company will release an announcement on SENS on
Friday, 16 September 2022 to confirm the final Scheme Consideration, based on the extent of
PSG Group’s disqualified person shareholding as at the PSG Group Unbundling Record Date.
7. RESPONSIBILITY STATEMENT
7.1 The Independent Board individually and collectively accepts full responsibility for the
accuracy of the information contained in this announcement. In addition, the Independent
Board certifies that, to the best of its knowledge and belief, the information contained in this
announcement solely pertaining to the Company is true and, where appropriate, does not
omit anything that is likely to affect the importance of the information contained herein or
which would make any statement false or misleading, and that all reasonable enquiries to
ascertain such information have been made and the announcement contains all information
required by law and the JSE Listings Requirements.
7.2 The PSG Group Board (excluding the members of the Independent Board) (“Board”)
individually and collectively accepts full responsibility for the accuracy of the information
contained in this announcement. In addition, the Board certifies that, to the best of its
knowledge and belief, the information contained in this announcement solely pertaining to
the Company is true and, where appropriate, does not omit anything that is likely to affect
the importance of the information contained herein or which would make any statement false
or misleading, and that all reasonable enquiries to ascertain such information have been
made and the announcement contains all information required by law and the JSE Listings
Requirements.
Stellenbosch
8 September 2022
Transaction Advisor and Sponsor – PSG Capital
Independent Joint Sponsor – Tamela Holdings Proprietary Limited
Legal Advisor as to South African law – Cliffe Dekker Hofmeyr Incorporated
Disclaimers
The release, publication or distribution of this announcement in jurisdictions other than South Africa
may be restricted by law. The distribution of the Unbundled Shares to Foreign Shareholders in terms
of the PSG Group Unbundling or the transfer of PSG Group Shares in terms of the PSG Group
Scheme may be affected by the laws of the relevant Foreign Shareholders’ jurisdictions. In this regard,
Foreign Shareholders are referred to the further details set out below.
Foreign Shareholders: General
No action has been taken by PSG Group to obtain any approval, authorisation or exemption to permit
the distribution of the Unbundled Shares or the PSG Group Scheme or the possession or distribution
of this announcement (or any other publicity material relating to the Unbundled Shares or the PSG
Group Shares in terms of the PSG Group Scheme) in any jurisdictions other than South Africa.
The PSG Group Restructuring is being conducted under the procedural requirements and disclosure
standards of South Africa which may be different from those applicable in other jurisdictions. The legal
implications of the PSG Group Restructuring on persons resident or located in jurisdictions outside of
South Africa may be affected by the laws of the relevant jurisdiction. Such persons should consult
their professional advisors and inform themselves about any applicable legal requirements, which
they are obligated to observe. It is the responsibility of any such persons participating in the PSG
Group Restructuring to satisfy themselves as to the full observance of the laws of the relevant
jurisdiction in connection therewith.
Foreign Shareholders should refer to and take into account the disclaimers set out in this
announcement and contained in the Circular in relation to those jurisdictions.
Foreign Shareholders should nevertheless consult their own professional advisors and satisfy
themselves as to the applicable legal requirements in their jurisdictions.
Notice to Foreign Shareholders located in the United States of America (“US”)
This announcement is not an offer of securities for sale in the US. The Unbundled Shares and the
PSG Group Shares have not been and will not be registered under the US Securities Act of 1933, as
amended (the “US Securities Act”), or with any regulatory authority of any state or other jurisdiction
in the US and may not be offered, sold, exercised, transferred or delivered, directly or indirectly, in or
into the US at any time except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the US Securities Act and applicable state and other securities laws of
the US.
The Unbundled Shares and the PSG Group Shares have not been and will not be listed on a US
securities exchange or quoted on any inter-dealer quotation system in the US. The Company does
not intend to take any action to facilitate a market in the Unbundled Shares or the PSG Group Shares
in the US. Consequently, it is unlikely that an active trading market in the US will develop for the
Unbundled Shares or the PSG Group Shares.
The Unbundled Shares and the PSG Group Shares have not been approved or disapproved by the
US Securities and Exchange Commission, any state securities commission in the US or any other
regulatory authority in the US, nor have any of the foregoing authorities passed comment on, or
endorsed the merit of, the PSG Group Restructuring or the accuracy or the adequacy of this
announcement or the information contained herein. Any representation to the contrary is a criminal
offence in the US.
Notice to Foreign Shareholders located in the European Economic Area (“EEA”) and the
United Kingdom ("UK")
This announcement is not a prospectus, for the purposes of the Prospectus Regulation (EU)
2017/1129 or Regulation (EU) No 2017/1129 as amended by The Prospectus (Amendment etc.) (EU
Exit) Regulations 2019, which is part of UK law by virtue of the European Union (Withdrawal) Act
2018 as amended, on the basis that the Unbundled Shares and the PSG Group Shares are not being
admitted to trading on a regulated market situated or operating within the EEA or the UK, nor is there
an offer to the public in respect of the Unbundled Shares or the PSG Group Shares in any member
state of the EEA or in the UK. Accordingly, any person making or intending to make any offer for the
Unbundled Shares or the PSG Group Shares should only do so in circumstances in which no
obligation arises for PSG Group or the issuers of the Unbundled Shares to produce a prospectus for
such offer. The Company has not authorised the making of any offer for the Unbundled Shares or the
PSG Group Shares through any financial intermediary.
Date: 08-09-2022 10:30:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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