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Declaration announcement in respect of The Afdawn Rights Offer and specific issue and withdrawal of Cautionary
African Dawn Capital Limited
Incorporated in the Republic of South Africa
(Registration Number: 1998/020520/06)
JSE share code: ADW
ISIN: ZAE000060703
(“Afdawn” or the “Company")
DECLARATION ANNOUNCEMENT IN RESPECT OF THE AFDAWN RIGHTS
OFFER AND SPECIFIC ISSUE AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. RIGHTS OFFER
Shareholders were referred to the announcements released on
SENS on 13 December 2013, 17 January 2014 and 18 February
2014 advising shareholders that Afdawn intends to raise up
to R40 654 732.40 from its shareholders by way of a
partially underwritten renounceable rights offer (“the
Rights Offer”) in terms of which 508 184 155 shares
(“Rights Offer Shares”) will be offered to shareholders
recorded in the Afdawn share register on Thursday, 20 March
2014 (“the Record Date”), at a subscription price of 8
cents per Rights Offer Share, in the ratio of 1 Rights
Offer Share for every 1 Afdawn ordinary share held at the
close of trade on the Record Date.
2. IRREVOCABLE UNDERTAKINGS AND UNDERWRITING
Afdawn has received irrevocable undertakings from VaalMac
Investments Proprietary Limited, Bayhill Investments
Proprietary Limited, Flowerdew 182 CC, Shock Proof
Investments 20 Proprietary Limited, Flagship IP Flexible
Value Fund, Mr NRO Brown, T-Tow Investments CC and the L&C
Trust, in terms of which they undertake to follow their
respective rights to subscribe for Rights Offer Shares in
terms of the Rights Offer, being 137 500 000 Rights Offer
Shares in aggregate.
Afdawn has further received an irrevocable undertaking from
Vaalmac Investments Proprietary Limited (“the Underwriter”)
to underwrite 50 000 000 of the Rights Offer Shares for an
underwriting fee of 2% of the amount underwritten.
3. THE SPECIFIC ISSUE
In order to ensure that the Underwriter obtains a
meaningful stake in Afdawn if insufficient shares are
obtained as part of the underwriting, Afdawn has agreed to
propose the specific issue of shares to the Underwriter
(“the Specific Issue”). In the event that the Specific
Issue is approved by shareholders at the general meeting to
be held on Tuesday, 15 April 2014, then the Company will
issue up to a maximum of 50 000 000 Afdawn shares to the
Underwriter, provided that the maximum number of shares
issued to the Underwriter in terms of the Specific Issue
shall be decreased by each share acquired by the
Underwriter by virtue of being an underwriter of the Rights
Offer.
4. RATIONALE FOR THE RIGHTS OFFER AND SPECIFIC ISSUE
As announced on SENS on 10 April 2013 and 15 October 2013,
the Afdawn board of directors decided to change the
strategic vision of the Company to become an active
investment holding company, acquiring shareholdings in
entrepreneurial companies with a strong innovation drive.
In terms of the new strategy the Company will seek to
acquire interests in companies which are in proven growth
phases and will assist these companies to enhance their
capabilities in order to accelerate their long term
sustainable growth.
In order to successfully implement its new strategic
vision, Afdawn would either have to develop or acquire a
range of capabilities in order to turn investment
opportunities into successful investments. In pursuit of
this new strategy and in order to acquire the necessary
capabilities required to implement the strategy, the
Company entered into an agreement for the acquisition of
Knife Capital Proprietary Limited (“Knife Capital
Acquisition”). Full details of the Knife Capital
Acquisition are set out in the SENS announcements dated
13 December 2013 and 18 February 2014.
The purpose of the Rights Offer and the Specific Issue is
to provide Afdawn with additional capital in order to
further pursue its new strategic vision.
5. SALIENT TERMS OF THE RIGHTS OFFER
In terms of the Rights Offer Afdawn shareholders are
offered a total of 508 184 155 Rights Offer Shares at a
subscription price of 8 cents per Rights Offer Share and in
the ratio of 1 Rights Offer Share for every 1 Afdawn Share
held.
The subscription price represents the 30 day volume
weighted average traded price of Afdawn as at Friday,
13 December 2013, the day of the release of the initial
Rights Offer declaration announcement on SENS and a 12.5%
premium to the 30 day volume weighted average traded price
of Afdawn as at 26 November 2013, the day the Rights Offer
was approved by the Board. Afdawn will raise a maximum
amount of R40 654 732.40 in terms of the Rights Offer.
The record date for purposes of determining which
shareholders are entitled to participate in the Rights
Offer is Thursday, 20 March 2014.
Excess applications for Rights Offer Shares will not be
allowed and any Rights Offer Shares that are not accepted,
renounced or sold shall revert back to the Underwriter. The
Rights Offer is not conditional upon any minimum
subscription being obtained.
Upon their issue, the Rights Offer Shares will rank pari
passu in all respects with the existing ordinary Shares of
Afdawn.
The letters of allocation in respect of the Rights Offer
are negotiable and will be listed on the JSE on Friday,
14 March 2014 under the JSE code ADWN and ISIN
ZAE000188124. The Rights Offer Shares cannot be traded
before such Shares are listed on the JSE on Monday,
31 March 2014.
6. PRO FORMA FINANCIAL EFFECTS OF THE RIGHTS OFFER,
SPECIFIC ISSUE AND KNIFE CAPITAL ACQUISITION
The pro forma financial information of Afdawn for the 6
months ended 31 August 2013 is set out below. The pro forma
financial information has been prepared for illustrative
purposes only to provide information on how the Knife
Capital Acquisition, the Rights Offer and the Specific
Issue might have impacted on the financial position of
Afdawn. The pro forma financial information is presented in
accordance with the Listings Requirements, the Guide on Pro
Forma Financial Information issued by SAICA and the
measurement and recognition requirements of International
Financial Reporting Standards (IFRS).
The pro forma financial effects have been presented for
illustrative purposes only and, because of their nature may
not fairly present Afdawn’s financial position or results
of operations after the Knife Capital Acquisition, the
Rights Offer and the Specific Issue. The pro forma
adjustments to the statement of financial position have
been calculated on the assumption that the Rights Offer,
the Specific Issue and the Knife Capital Acquisition were
implemented on 31 August 2013. The pro forma adjustments to
the statement of comprehensive income have been calculated
on the assumption that the Rights Offer, the Specific Issue
and the Knife Capital Acquisition were implemented on 1
March 2013.
The pro forma financial information is presented in a
manner that is consistent with the accounting policies of
Afdawn.
The pro forma statements have been prepared for 2 possible
scenarios.
Scenario 1 - the Rights Offer is assumed to be fully
subscribed and the Underwriter receiving 50,000,000 shares
in the Specific Issue. This scenario reflects the maximum
capital that can be raised in terms of the Rights Offer and
the Specific Issue.
Scenario 2 – Capital of R15 million is raised in the Rights
Offer with the Underwriter receiving 50,000,000 shares as
part of the Rights Offer and no additional shares in terms
of the Specific Issue is required. This scenario reflects
the minimum capital expected to be raised in terms of the
Rights Offer and the Specific Issue.
A) Scenario 1 pro forma financial effects -
Before the Pro forma Percentage
Knife Capital after the change
Acquisition, Knife
Rights Offer Capital
and Specific Acquisition,
Issue Rights Offer
and Specific
Issue
Net asset value per share 11.7 9.6 (17.9%)
(cents)
Net tangible asset value 11.2 8.6 (23.2%)
per share (cents)
Basic loss per share (0.81) (0.33) 59.3%
(cents)
Diluted loss per share (0.56) (0.25) 55.4%
(cents)
Basic headline loss per (0.75) (0.30) 60.0%
share (cents)
Diluted headline loss per (0.52) (0.22) 57.7%
share (cents)
Number of shares issued
(‘000)
Basic 508 184 1 166 368 130%
Diluted 601 613 1 259 797 109%
Weighted average number
of shares issued (‘000)
Basic 508 184 1 166 368 130%
Diluted 601 613 1 259 797 109%
Notes and assumptions:
1) The Before the Rights Offer, Specific Issue and Knife
Capital Acquisition column has been extracted from the
unaudited published interim financial information of
Afdawn for the six months ended 31 August 2013.
2) Cash received from the Rights Offer of R40.655 million
is based on the Rights Offer being fully subscribed
through the issue of 508,184,155 Afdawn shares at 8
cents per Rights Offer Share.
3) Transaction costs of R1.500 million have been allocated
to the share premium in accordance with IAS 32.
4) Cash received from the Specific Issue of R4 million, in
terms of which 50,000,000 Afdawn shares are issued to
the Underwriter at 8 cents per share.
5) The results for Knife Capital have been extracted from
Knife Capital’s statement of financial position and
statement of comprehensive income in its reviewed
financial statements for the 6 month period ended 30
June 2013, without adjustment. The financial statements
were reviewed by Mazars in accordance with International
Standards on Review Engagements 2400.
6) The Knife Capital Acquisition by Afdawn of 100% of the
share capital of Knife Capital is assumed to be settled
through the issue of 100 000 000 Afdawn shares issued at
10 cents per share. The Group accounts for business
combinations using the acquisition method of accounting
in accordance with IFRS 3. The cost of the business
combination is measured as the aggregate of the fair
values of assets given, liabilities incurred or assumed
and equity instruments issued.
7) Afdawn management have undertaken a preliminary purchase
price allocation to determine the recognition and
classification of the excess of the purchase price paid
in the Knife Capital Acquisition over the identifiable
net assets acquired. As a result of the preliminary
purchase price allocation management has recognised
intangible assets arising as a result of the Knife
Capital Acquisition and it was determined that no
goodwill was included. Afdawn’s accounting policy in
respect of intangible assets is to account for all
business combinations by applying the acquisition method
in accordance with IFRS 3. The preliminary allocation of
the purchase price was based upon a preliminary
valuation and the estimates and assumptions are subject
to change within the purchase price allocation period
(being one year from the acquisition date). These
changes may affect the intangible assets recorded. It is
currently assumed that no amount will be allocated to
goodwill as part of the preliminary purchase price
allocation exercise. The amortisation of intangible
assets arising as a result of the Knife Capital
Acquisition has been calculated after assessing the
useful life of the intangible assets based on a
preliminary valuation and estimate. The significant
judgments used related to the write-off period of the
intangible assets. Amortisation is provided on a
straight-line basis over their useful life. The
amortisation period and the amortisation method for
intangible assets are reviewed every period end. Afdawn
will undertake a final purchase price allocation
relating to such intangible assets and goodwill at Knife
Capital’s next year-end, which will be 28 February 2015.
8) Management intend to utilise the Rights Offer and the
Specific Issue proceeds for investment opportunities,
however as no investment opportunities in this regard
have been identified, it is assumed that the proceeds
from the Rights Offer and the Specific Issue have been
invested in a short term call account for the 6 month
period of the pro forma accounts earning interest at
3.5% per annum, being the interest rate currently
achieved on excess funding.
9) All adjustments are expected to have a continuing effect
other than interest received on the proceeds of the
Rights Offer and the Specific Issue.
10) The diluted earnings per share and diluted headline
earnings per share figures are calculated based on the
diluted weighted average number of shares in issue of
Afdawn at 31 August 2013 and assume that 508 184 155
Afdawn shares issued in terms of the Rights Offer,
50 000 000 Afdawn shares issued to the Underwriter in
terms of the Specific Issue and 100 000 000 Afdawn
shares are issued in terms of the Knife Capital
Acquisition. The Rights Offer, Specific Issue and the
Knife Capital Acquisition have no further dilutionary
effects on Afdawn.
B) Scenario 2 pro forma financial effects -
Before the Pro forma Percentage
Knife Capital after the change
Acquisition, Knife
Rights Offer Capital
and Specific Acquisition,
Issue Rights Offer
and Specific
Issue
Net asset value per share 11.7 10.4 (11%)
(cents)
Net tangible asset value 11.2 8.9 (21%)
per share (cents)
Basic loss per share (0.81) (0.54) 33.3%
(cents)
Diluted loss per share (0.56) (0.41) 26.8%
(cents)
Basic headline loss per (0.75) (0.51) 32.0%
share (cents)
Diluted headline loss per (0.52) (0.37) 28.8%
share (cents)
Number of shares issued
(‘000)
Basic 508 184 795 684 56.6%
Diluted 601 613 889 113 47.8%
Weighted average number
of shares issued (‘000)
Basic 508 184 795 684 56.6%
Diluted 601 613 889 113 47.8%
Notes and assumptions:
1) The Before the Rights Offer, Specific Issue and Knife
Capital Acquisition column has been extracted from the
unaudited published interim financial information of
Afdawn for the six months ended 31 August 2013.
2) Cash received from the Rights Offer of R15 million is
based on 187,500,000 Afdawn shares being issued through
the Rights Offer at 8 cents per Rights Offer Share.
3) Transaction costs of R1.500 million have been allocated
to the share premium in accordance with IAS 32.
4) No cash is assumed to be received from the Specific
Issue, as the Underwriter will receive its shares as
part of the Rights Offer.
5) The results for Knife Capital have been extracted from
Knife Capital’s statement of financial position and
statement of comprehensive income in its reviewed
financial statements for the 6 month period ended 30
June 2013, without adjustment. The financial statements
were reviewed by Mazars in accordance with International
Standard on Review Engagements 2400.
6) The Knife Capital Acquisition by Afdawn of 100% of the
share capital of Knife Capital is assumed to be settled
through the issue of 100 000 000 Afdawn shares issued at
10 cents per share. The group accounts for business
combinations using the acquisition method of accounting
in accordance with IFRS 3. The cost of the business
combination is measured as the aggregate of the fair
values of assets given, liabilities incurred or assumed
and equity instruments issued.
7) Afdawn management have undertaken a preliminary purchase
price allocation to determine the recognition and
classification of the excess of the purchase price paid
in the Knife Capital Acquisition over the identifiable
net assets acquired. As a result of the preliminary
purchase price allocation management has recognised
intangible assets arising as a result of the Knife
Capital Acquisition and it was determined that no
goodwill was included. Afdawn’s accounting policy in
respect of intangible assets is to account for all
business combinations by applying the acquisition method
in accordance with IFRS 3. The preliminary allocation of
the purchase price was based upon a preliminary
valuation and the estimates and assumptions are subject
to change within the purchase price allocation period
(being one year from the acquisition date). These
changes may affect the intangible assets recorded. It is
currently assumed that no amount will be allocated to
goodwill as part of the preliminary purchase price
allocation exercise. The amortisation of intangible
assets arising as a result of the Knife Capital
Acquisition has been calculated after assessing the
useful life of the intangible assets based on a
preliminary valuation and estimate. The significant
judgments used related to the write-off period of the
intangible assets. Amortisation is provided on a
straight-line basis over their useful life. The
amortisation period and the amortisation method for
intangible assets are reviewed every period end. Afdawn
will undertake a final purchase price allocation
relating to such intangible assets and goodwill at Knife
Capital’s next year-end, which will be 28 February 2015.
8) Management intend to utilise the Rights Offer and
Specific Issue proceeds for investment opportunities,
however as no investment opportunities in this regard
have been identified, it is assumed that the proceeds
from the Rights Offer and the Specific Issue have been
invested in a short term call account for the 6 month
period of the pro forma accounts earning interest at
3.5% per annum, being the interest rate currently
achieved on excess funding.
9) All adjustments are expected to have a continuing effect
other than interest received on the proceeds of the
Rights Offer and Specific Issue.
10) The diluted earnings per share and diluted headline
earnings per share figures are calculated based on the
diluted weighted average number of shares in issue of
Afdawn at 31 August 2013 and assume that 187 500 000
Afdawn shares issued in terms of the Rights Offer, no
shares issued to the Underwriter in terms of the
Specific Issue and 100 000 000 Afdawn shares are issued
in terms of the Knife Capital Acquisition. The Rights
Offer, Specific Issue and the Knife Capital Acquisition
have no further dilutionary effects on Afdawn.
7. SALIENT DATES AND TIMES
The salient dates and times for the Rights Offer and
Specific Issue are set out below:
Rights Offer finalisation announcement Monday, 10
published on SENS March 2014
Last day to trade in Afdawn shares in Thursday,
order to settle trades by the record 13 March 2014
date for the rights offer and to
qualify to participate in the Rights
Offer (cum entitlement) on
Listing of and trading in the letters Friday,
of allocation on the JSE under the JSE 14 March 2014
code ADWN and ISIN ZAE000188124
commences at 09:00 on
Afdawn shares commence trading ex- Friday,
rights on the JSE at 09:00 on 14 March 2014
Circular, form of instruction, notice Monday,
of general meeting and form of proxy 17 March 2014
posted to shareholders on
Record date for purposes of Thursday,
determining the Afdawn shareholders 20 March 2014
entitled to participate in the Rights
Offer at the close of business on
Rights Offer opens at 09:00 on Monday,
24 March 2014
Holders of dematerialised Afdawn Monday,
shares will have their accounts at 24 March 2014
their CSDP or broker automatically
credited with their letters of
allocation on
Holders of certificated Afdawn shares Monday,
will have their letters of allocation 24 March 2014
credited to an electronic register at
the transfer secretaries on
Last day to trade in Afdawn shares in Friday,
order to be eligible to vote at the 28 March 2014
general meeting
Last day to trade in letters of Friday,
allocation in order to settle trades 28 March 2014
by the Record Date for the Rights
Offer and participate in the Rights
Offer at the close of business on
Last day for form of instruction to be Friday,
lodged with the transfer secretaries 28 March 2014
by holders of certificated Afdawn
shares wishing to sell all or part of
their Rights Offer entitlement by
12:00 on
Listing and trading of Rights Offer Monday,
Shares commences on the JSE at 09:00 31 March 2014
on
Record date to vote at general meeting Friday,
4 April 2014
Last day for form of instruction to be Friday,
lodged with the transfer secretaries 4 April 2014
by holders of certificated Afdawn
shares wishing to subscribe for or
renounce all or part of their Rights
Offer entitlement by 12:00 on (see
note 2)
Rights Offer closes at 12:00 and Friday,
payment to be made on 4 April 2014
Record Date for letters of allocation Friday,
on 4 April 2014
CSDP/Broker accounts credited with Monday,
Rights Offer Shares and debited with 7 April 2014
any payments due in respect of holders
of dematerialised Rights Offer Shares
on
Rights Offer Shares certificates in Monday,
terms of the Rights Offer posted to 7 April 2014
holders of certificated Rights Offer
Shares on or about
Results of the Rights Offer announced Monday,
on SENS on 7 April 2014
Form of proxy to be lodged by 10h00 on Friday,
11 April 2014
General meeting to be held at 10:00 to Tuesday,
approve Specific Issue 15 April 2014
Results of general meeting published Tuesday,
on SENS 15 April 2014
Issue of Specific Issue shares (if Tuesday,
applicable) 22 April 2014
Notes:
1) All times referred to in the announcement are local times
in South Africa.
2) Holders of dematerialised Afdawn shares are required to
notify their CSDP or broker of the action they wish to
take in respect of the Rights Offer in the manner and by
the time stipulated in the agreement governing the
relationship between the Afdawn shareholder and his CSDP
or broker.
3) Afdawn share certificates may not be dematerialised or
rematerialised between, Friday, 14 March 2014, and
Thursday, 20 March 2014, both days inclusive.
4) CSDPs effect payment in respect of holders of
Dematerialised Rights Offer Shares on a delivery versus
payment basis.
5) To the extent that the rights are accepted,
dematerialised shareholders will have their accounts at
their CSDP automatically credited with their rights and
certificated shareholders will have their rights credited
to an account at Computershare Investor Services.
6) Rights Offer share certificates to be issued in terms of
the Rights Offer will be posted to persons entitled
thereto, by registered post, at the risk of the
certificated shareholders concerned.
8. FOREIGN SHAREHOLDERS
Any shareholder resident outside the common monetary area
who receives the Rights Offer circular and form of
instruction, should obtain advice as to whether any
governmental and/or any other legal consent is required
and/or any other formality must be observed to enable such
a subscription to be made in terms of such form of
instruction.
The Rights Offer does not constitute an offer in any
jurisdiction in which it is illegal to make such an offer
and the Rights Offer circular and form of instruction
should not be forwarded or transmitted by recipients
thereof to any person in any territory other than where it
is lawful to make such an offer.
The Rights Offer Shares have not been and will not be
registered under the Securities Act of the United States of
America. Accordingly, the Rights Offer Shares may not be
offered, sold, resold, delivered or transferred, directly
or indirectly, in or into the United States or to, or for
the account or benefit of, United States persons, except
pursuant to exemptions from the Securities Act. The Rights
Offer circular and the accompanying documents are not
being, and must not be, mailed or otherwise distributed or
sent in, into or from the United States. The Rights Offer
circular does not constitute an offer of any securities for
sale in the United States or to United States persons.
The Rights Offer contained in the Rights Offer circular
does not constitute an offer in the District of Colombia,
the United States, the Dominion of Canada, the Commonwealth
of Australia, Japan or in any other jurisdiction in which,
or to any person to whom, it would not be lawful to make
such an offer. Non-qualifying shareholders should consult
their professional advisers to determine whether any
governmental or other consents are required or other
formalities need to be observed to allow them to take up
the Rights Offer, or trade their entitlement. Shareholders
holding Afdawn shares on behalf of persons who are non-
qualifying shareholders are responsible for ensuring that
taking up the Rights Offer, or trading in their
entitlements under that offer, do not breach regulations in
the relevant overseas jurisdictions.
9. RIGHTS OFFER AND SPECIFIC ISSUE CIRCULAR
A circular containing full details of the terms of the
Rights Offer, Specific Issue, incorporating a form of
instruction in respect of a letter of allocation, a notice
of general meeting and a proxy form in respect of the
general meeting will be distributed to all shareholders
recorded in the share register as such on the record date,
being Friday, 7 March 2014.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement
included in the SENS announcement dated 18 February 2014
and are advised that since the pro forma financial effects
relating to the Knife Capital Acquisition, the Rights Offer
and the Specific Issue have been disclosed in this
announcement, caution is no longer required to be exercised
by shareholders when dealing in the Company’s securities.
Johannesburg
6 March 2014
Transaction Adviser and Transaction Designated Adviser:
PSG Capital
Independent Reporting Accountant: Grant Thornton
Date: 06/03/2014 12:00:00 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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