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Elite Group Proprietary Limited Transaction
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")
ELITE GROUP PROPRIETARY LIMITED TRANSACTION
1. THE TRANSACTION
Shareholders are hereby advised that Afdawn, Elite Group
Proprietary Limited, being a wholly-owned subsidiary of
Afdawn (“Elite”), Dzothe Investments Proprietary Limited
(“Dzothe Investments”) and Nemaforce Proprietary Limited
(in the process of changing its name to “Dzothe Finance
Solutions” (“Dzothe Finance Solutions”) have entered into
an agreement dated 4 December 2015 (“the Agreement”), in
terms of which:
1.1. Afdawn will subscribe for one additional share in Elite
at the subscription price of R20 003 998 (“Elite
Subscription Price”), which will be discharged by setting
off an amount equal to the Elite Subscription Price
against the existing Afdawn shareholder loan to Elite
(“Existing Afdawn Shareholder Loan”), with the
consequence that the net asset value of Elite as at 31
October 2015, is equal to an amount of R7 500 000 (“Elite
Subscription”);
1.2. Afdawn shall sell and cede to Dzothe Investments all its
right, title and interest in and to 51% of the Existing
Afdawn Shareholder Loan after to Elite Subscription
(“Reduced Afdawn Shareholder Loan”) in consideration for
a cash payment of R1 378 870, being 51% of the face value
of the Reduced Afdawn Shareholder Loan;
1.3. Afdawn sells 100 000 001 ordinary shares in Elite,
consisting of 100% of the Elite ordinary shares in issue
for a purchase consideration of R10 million to Dzothe
Finance Solutions in consideration for the issue of 980
ordinary shares in Dzothe Finance Solutions (“Afdawn
Consideration Shares”), which Afdawn Consideration Shares
will post the issue of the Dzothe Subscription detailed
in paragraph 1.5 below, constitute 49% of the ordinary
shares in issue of Dzothe finance solutions, and the
crediting of Afdawn shareholder loan account with Dzothe
Finance Solutions in the amount of R5 000 000;
1.4. The Afdawn Consideration Shares will be retained by
Afdawn post the Transaction;
1.5. Dzothe Investments subscribes for 1 020 ordinary shares
in Dzothe Finance Solutions, constituting 51% of the
issued shares in Dzothe Finance Solutions after the issue
of the Afdawn Consideration Shares for a subscription
amount of R10 000 000 (“Dzothe Subscription”); and
1.6. Dzothe Investments shall advance an amount of R5 000 000
to Dzothe Finance Solutions against the crediting of
Dzothe Investments’ shareholder loan (“Dzothe
Subscription Loan”) account to the Dzothe Finance
Solutions,
collectively referred to as “the Transaction”.
1.7. Elite will be able to utilise the proceeds of the Dzothe
Subscription and the Dzothe Subscription Loan for growth
of debtors book of Elite.
1.8. Further to the Transaction, Dzothe Investments or its
nominee shall enter into a funding loan agreement with
Elite in terms whereof, inter alia, Dzothe Investments or
its nominee shall provide Elite with an additional
funding facility of R15 000 000 on a draw down basis for
the period of 5 years to be utilised by Elite for growth
of debtors book of Elite and not for optional expenses of
the Company.
2. THE BUSINESS OF ELITE
Elite is a credit provider company in South Africa, which
has been in operation for over 20 years with offices in
Gauteng, North-West Province, Free State and Kwa-Zulu
Natal.
The established business units of Elite Group consist of:
- Micro and personnel finance through 12 front-offices
and pay-roll loans through it’s call-centre; and
- Collections in support of its loan book. Elite Group
runs a collection department which deals with
recoveries, tracing, collections and all related
legal work.
3. THE RATIONALE FOR THE TRANSACTION
The Transaction will establish a new black empowered
financial services business, Dzothe Finance Solutions,
with Elite’s technology forming the basis of it’s lending
platform. The Transaction capitalises Elite for future
growth and position Afdawn to participate in the growth
of this newly established black-empowered financial
services business.
Accordingly, the Company believes that the Transaction
will greatly assist the Company in the implementation of
the Company’s strategy.
4. EFFECTIVE DATE
In terms of the Agreement, the effective date of the
Transaction will be the 5th business day following the
date upon which the last of the conditions precedent, as
set out in paragraph 5 below, are fulfilled.
5. CONDITIONS PRECEDENT
The Agreement is subject to the fulfilment of the
following outstanding conditions precedent by not later
than 17h00 on 15 January 2016, that:
5.1. the parties receive written confirmation from Sandown
Capital and National Housing Finance Corporation that the
current funding facilities provided by them to Elite will
remain in place post the Transaction, to the satisfaction
of Dzothe Investments and Afdawn;
5.2. the shareholders and the board of directors of Dzothe
Investments approve entering into the Agreement and the
other arrangements contemplated in the Transaction;
5.3. the shareholders and the board of directors of Afdawn
approve entering into the Agreement and the other
arrangements contemplated in the Transaction; and
5.4. Dzothe Investments provides Afdawn with a letter of
comfort, to the satisfaction of Afdawn that Dzothe
Investments can finance their obligations contemplated by
the Transaction.
6. FINANCIAL INFORMATION
The total value of the net liabilities of Elite, which is
the subject of the Transaction, is R14 111 544 as at 28
February 2015.
The total value of the Afdawn shareholders loan to Elite,
which is the subject to the Transaction, R21 870 814 as
at 28 February 2015.
The loss attributable to the net assets of Elite, which
is the subject of the Transaction was R18 914 026 for the
year ended 28 February 2015.
7. OTHER RELEVANT INFORMATION
Save for set out in this announcement, the parties have
provided warranties to each other that are standard to a
transaction of this nature.
8. CATEGORISATION
The Categorisation of this transaction is still being
determined by the Company in consultation with the JSE.
Shareholders will be advised of the categorisation in due
course.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to note 25 of the SENS
announcement dated 20 November 2015, relating to the
recapitalisation of Elite and the cautionary announcement
in this regard.
Shareholders are hereby advised that the full particulars
relating to the recapitalisation of Elite are included in
this announcement. Accordingly, caution is no longer
required to be exercised by shareholders when dealing in
the Company's securities.
Cape Town
7 December 2015
Corporate Adviser and Transaction Designated Adviser
PSG Capital
Date: 07/12/2015 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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