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Joint Firm Intention Ann: Repurchase of shares; Propose delist; Mandatory Offer by ARC to SHold; Withdraw Cautionary
GLOBAL ASSET MANAGEMENT LIMITED UBI GENERAL PARTNER PROPRIETARY LIMITED
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number: 2002/003192/06) (Registration number: 2016/224437/07)
Share Code: GAM ISIN: ZAE000173498 on behalf of the ARC Fund
("Global" or “the Company” or “the Group”) (“ARC”)
JOINT FIRM INTENTION ANNOUNCEMENT REGARDING:
• AN OFFER BY GLOBAL TO REPURCHASE GLOBAL SHARES;
• THE PROPOSED DELISTING OF GLOBAL BY WAY OF A SCHEME OF ARRANGEMENT;
• A MANDATORY OFFER BY ARC TO GLOBAL SHAREHOLDERS; AND
• WITHDRAWAL OF CAUTIONARY.
1. INTRODUCTION
1.1 Further to the first cautionary announcement relating to the proposed delisting of the
Company, as published on 14 August 2018, and the last renewal of which was published on
19 February 2019 (“Cautionary Announcement”), the board of directors of Global (“Board”)
advises shareholders that the Company proposes making a cash offer to all Global
shareholders (“Eligible Shareholders”), except the remaining shareholders and the voting
pool shareholders (“Excluded Shareholders” as defined in paragraph 4.1.3 below), to
acquire all of their ordinary shares in the Company in terms of section 48 of the Companies
Act, No. 71 of 2008, as amended (“Companies Act”). The offer (“Scheme Offer”) will be
implemented by way of a scheme of arrangement (“Scheme”) in terms of section 114(1)(e)
of the Companies Act, to be proposed by the Board between Global and its shareholders,
and will be followed by the delisting of the Company from the Alternative Exchange (“AltX”)
of the JSE Limited (“JSE”) in terms of paragraph 1.17(b) of the JSE Listings Requirements
(“Delisting”).
1.2 Shareholders are also referred to the announcement released on SENS on 22 February 2019
advising that Global had entered into a subscription agreement with ARC in terms of which
ARC would subscribe for, and the Company would issue, 27 322 404 Global shares for cash
at a subscription price of R1.83 per share for an aggregate amount of R50 million (“Specific
Issue”). As announced on SENS on 7 March 2019, the ordinary resolution (which required a
75% vote in accordance with the JSE Listings Requirements) for the approval of the Specific
Issue was passed by the requisite majority of Shareholders by written consent in terms of
section 60 of the Companies Act (“Notice”). The Notice was included in the Specific Issue
circular dated 7 March 2019. Following the implementation of the Specific Issue, ARC holds
in excess of 35% of the issued share capital of Global. As a result, ARC has triggered the
requirement to make a mandatory offer to all remaining shareholders of Global at a price
of R1.83 per share, being the highest price at which ARC acquired Global shares within the
six month period prior to the date of this announcement. (“Mandatory Offer”).
1.3 The contents of this announcement constitute a firm intention (i) by the Company to make
the Scheme Offer; and (ii) by ARC to make the Mandatory Offer, as contemplated in
Chapter 5 of the Companies Act and Chapter 5 of the Companies Regulations, 2011,
promulgated under the Companies Act (which includes the Takeover Regulations issued
pursuant to sections 120 and 223 of the Companies Act) (“Companies Act Regulations”).
2. THE SCHEME
2.1 Salient terms of the Scheme
2.1.1 The consideration payable by the Company to Eligible Shareholders, if the Scheme
becomes operative, will be R2.10 per Scheme Share (as defined in paragraph 4.1.4
below) (“Scheme Consideration”), payable in cash on the date on which the
Scheme becomes operative.
2.1.2 The Scheme Consideration represents a 176% premium to the 30-day volume
weighted average traded price (“VWAP”) of 76 cents at which Global Shares traded
on the JSE up to 13 August 2018, being the last date of trade prior to the date of the
first cautionary announcement, and a 180% premium to the 30-day VWAP of 75 cents
at which Global Shares traded on the JSE up to 8 March 2019, being the last
practicable date prior to the date of this announcement.
2.1.3 The Company is acting as principal and not as agent in respect of the Scheme and
it is not acting in concert with any parties, other than its shareholders, for purposes of
the implementation of the Scheme.
2.2 Rationale for the Scheme
2.2.1 At the time of listing of the Company, the Group had short, medium and long-term
objectives, with the main business being long term industrial asset finance which
generated the profits and cash flows for the Group to invest in the development of
various waste to energy projects using proprietary technologies. During the past six
years, the Group secured two large institutional investors who bought into the vision
of the energy initiatives. To this end, the Group has already established two pyrolysis
plants to convert waste rubber into oil and has run a successful pilot project to
convert waste plastic into oil. The proceeds from the Specific Issue will be used for
the completion of the construction of the first fully fledged waste plastic to oil plant.
2.2.2 On a roadshow in the second half of 2018 by management to raise the additional
equity, it has become clear that there is significant interest from potential investors to
invest in the energy business. However, the reasons for being listed were questioned
and represented a serious obstacle to any investment decision.
2.2.3 Additionally, the Board is of the opinion the listing of the Company no longer benefits
the Company due to:
2.2.3.1 the lack of liquidity of the Company’s shares;
2.2.3.2 the high costs of maintaining a listing; and
2.2.3.3 significant time and energy of Global’s executives spent on listing related
regulatory requirements.
2.2.4 The Board has taken note of the feedback from potential investors and, in view of
the long-term strategy of the Group, has taken the decision to propose the Delisting.
2.2.5 The Scheme will afford shareholders an opportunity to monetise their investment in
the Company without incurring trading costs, rather than to continue holding shares
in the Company post the Delisting.
2.2.6 The business of Global and its subsidiaries will continue after the Scheme becomes
operative, as currently conducted. However, shareholders are referred to the
announcement published on SENS on 19 February 2019 regarding the reduction by
Global of its effective shareholding in its asset finance business, namely LFS Assets
Proprietary Limited, to Main Street 1236 Proprietary Limited with effect
1 February 2019 (“LFS Transaction”), which transaction is in line with the Group’s long-
term strategy to focus on its renewable energy business, as referred to in paragraph
2.2.1 above. A separate circular containing details of the LFS Transaction will be
distributed to shareholders within the applicable regulatory timeframes.
2.3 Mechanics of the Scheme
2.3.1 The Scheme constitutes an "affected transaction" as defined in section 117(1)(c) of
the Companies Act and accordingly will be regulated by the Companies Act, the
Companies Act Regulations and the Takeover Regulation Panel (“TRP”).
2.3.2 The Scheme Offer will be effected by way of a scheme of arrangement in terms of
section 114(1)(e) of the Companies Act, proposed by the Independent Board, as
defined in paragraph 6.1 below, between the Company and its shareholders in
terms of which, if implemented, the Company will acquire shares held by
shareholders (except the Excluded Shareholders) for the Scheme Consideration of
R2.10.
2.3.3 Shareholders may elect to either (i) reject the Scheme Offer and remain invested in
the Company, or (ii) accept the Scheme Offer, in whole or in part, and receive the
Scheme Consideration in accordance with their acceptance of the Scheme Offer.
If no election is made by a shareholder on or before the Scheme Consideration
record date, which date will be announced on SENS and published in the press in
due course, then such shareholder shall be deemed to have elected to accept the
Scheme Offer immediately prior to the expiry of such Scheme Consideration record
date and shall, subject to the Scheme becoming unconditional, receive the Scheme
Consideration.
2.3.4 The Scheme is subject to the fulfilment or waiver (as the case may be) of the
conditions set out in paragraph 2.5 below.
2.3.5 In the event that the Scheme becomes operative, the listing of Global’s shares on
the AltX will be terminated and Eligible Shareholders, other than those shareholders
who specifically elect to retain their shares as detailed in paragraph 2.3.3 above,
will be deemed to have sold all of their Global shares for the Scheme Consideration.
2.4 Conditions to posting of the circular
The posting of the circular in respect of, inter alia, the Scheme (“Circular”), to Global
shareholders is subject to the fulfilment or waiver (in whole or in part) of the following
suspensive conditions by 31 March 2019, or such later date as may be determined by the
Company:
2.4.1 the Independent Board unanimously recommending to Global shareholders,
without qualification, that they vote in favour of the Scheme;
2.4.2 the requisite approvals being received from the JSE, the TRP and the Financial
Surveillance Department of the South African Reserve Bank (in each case to the
extent necessary);
2.4.3 as of the date of the fulfilment or waiver of the last of the conditions in paragraphs
2.4.1 and 2.4.2:
2.4.3.1 none of the irrevocable undertakings received from Global shareholders
as referred to in paragraph 4 ceasing for any reason to be enforceable by
the Company; and
2.4.3.2 the Independent Expert, as defined in the Cautionary Announcement,
having issued its report in terms of section 114(3) of the Companies Act
(read with the Companies Act Regulations) confirming that the Scheme
Consideration is fair and reasonable and such opinion not being
withdrawn or adversely amended.
2.5 Conditions to the Scheme
2.5.1 The implementation of the Scheme is subject to the fulfilment of the following
conditions precedent by no later than 30 June 2019, or such later date as may be
determined by the Company:
2.5.1.1 all regulatory approvals and/or consents as may be necessary to give
effect to the Scheme have been obtained (either unconditionally or
subject to conditions acceptable to the Company), including, without
limitation, the JSE and the TRP;
2.5.1.2 approval of the Scheme by the requisite majority of eligible Global
shareholders, as contemplated in section 114, read with section 115, of the
Companies Act (“Scheme Resolution”);
2.5.1.3 the Scheme Resolution has been passed and, to the extent required in
terms of section 115(3)(a) of the Companies Act, the implementation of
the Scheme Resolution is approved by the Court and, if applicable, the
Company has not elected to treat the Scheme Resolution as a nullity in
terms of section 115(5) of the Companies Act;
2.5.1.4 if the Scheme Resolution has been passed and any person who voted
against the Scheme Resolution applies to the Court within 10 (ten) business
days after the vote for a review of the Scheme in accordance with the
requirements of section 115(3)(b) of the Companies Act, (i) no leave is
granted by the Court to such person to apply to court for a review of the
Scheme in accordance with the requirements of section 115(6) of the
Companies Act or (ii) if leave is granted by the Court to apply to Court for
a review of the Scheme in accordance with the requirements of section
115(6) of the Companies Act, the Court has not set aside the Scheme
Resolution in terms of section 115(7) of the Companies Act; and
2.5.1.5 the TRP has issued a compliance certificate in respect of the Scheme in
terms of section 119(4)(b) of the Companies Act.
2.5.2 The conditions precedent stipulated in paragraph 2.5.1 are regulatory in nature and
may not be waived.
2.5.3 An announcement will be published on SENS and in the press as soon as practicable
after all the conditions to the Scheme have been fulfilled or waived, as the case
may be.
2.6 Termination of Global’s listing
Should the Scheme become operative, an application will be made to the JSE to terminate
the listing of Global’s shares on the AltX with effect from the operative date of the Scheme
in terms of section 1.17(b) of the JSE Listings Requirements.
3. MANDATORY OFFER
3.1 Introduction
3.1.1 The Mandatory Offer constitutes an “affected transaction” as defined in section
117(c) of the Companies Act and accordingly will be regulated by the Companies
Act, the Companies Act Regulations and the TRP.
3.1.2 As at the date of this announcement, ARC holds 46 646 075 Global shares,
constituting 45.30% of the total issued share capital of Global.
3.2 Rationale for the Mandatory Offer
ARC’s shareholding in Global has increased to more than 35%, and ARC is therefore
required in terms of the Companies Act Regulations to make a mandatory offer to Global
shareholders to acquire their shares at the highest price paid by ARC in the past six months.
3.3 Mechanics of the Mandatory Offer
3.3.1 In terms of the Mandatory Offer, ARC will offer to acquire all of the ordinary Global
shares not already held by ARC in exchange for the Mandatory Offer
consideration of R1.83 per share ("Mandatory Offer Consideration"). Global
shareholders may elect to accept the Mandatory Offer in whole or in part, but
attention is drawn to the fact that the Scheme Consideration is higher at R2.10 per
share and the Mandatory Offer is only made to ensure compliance with the
Companies Act by ARC.
3.3.2 As stated in paragraph 1.2 above, the Mandatory Offer has been triggered
following the subscription by ARC of additional Global shares at a subscription
price of R1.83 per share, resulting in an increase in ARC’s total shareholding in
Global from 25.54% to 45.30%. ARC originally subscribed for shares in Global at
R2.07 per share in May 2017.
3.3.3 The Mandatory Offer Consideration will be payable in cash.
3.3.4 Shareholders who wish to accept the Mandatory Offer will be settled in cash after
rounding the number of their surrendered shares to the nearest cent. Fractions of
cents of 0.5 or greater will be rounded up and less than 0.5 will be rounded down
to the nearest cent.
3.3.5 The Mandatory Offer will not be subject to any conditions precedent.
3.3.6 ARC is acting as principal and not as agent in respect of the Mandatory Offer and
it is not acting in concert with any parties for purposes of the implementation of
the Mandatory Offer.
3.4 Nature of the business of ARC
ARC is a South African black-owned and controlled investment fund. The fund is an en
commandite partnership which is managed by UBI General Partner Proprietary Limited as
the general partner.
3.5 Amendment or variation of the Mandatory Offer
No amendment or variation of the Mandatory Offer shall be valid unless it is agreed to by
ARC in writing and approved by the TRP, provided that ARC shall not agree to any
amendment or variation that has the effect of reducing the Mandatory Offer Consideration.
3.6 No set-off of Mandatory Offer Consideration
Settlement of the Mandatory Offer Consideration will be implemented in full in accordance
with the terms of the Mandatory Offer without regard to any lien, right of set-off,
counterclaim, deduction, withholding or other analogous right to which the ARC may
otherwise be, or claim to be, entitled against any Global shareholder.
3.7 Mandatory Offer not made where unlawful
The Mandatory Offer does not constitute an offer to purchase or the solicitation of an offer
to sell any Global shares in any jurisdiction in which such Mandatory Offer, solicitation or sale
would be unlawful prior to the registration or qualification under the laws of such jurisdiction.
3.8 Governing law
The Mandatory Offer will be governed by and construed in accordance with the laws of
South Africa and shall be subject to the exclusive jurisdiction of the South African courts.
4. IRREVOCABLE UNDERTAKINGS
4.1 The Scheme
4.1.1 The Company has procured irrevocable undertakings from Eligible Shareholders
holding 68.95% of the voting rights entitled to be exercised in respect of all the
resolutions required to approve the Scheme.
4.1.2 Each of the shareholders set out in the table below have, in respect of their entire
shareholding in Global, undertaken to vote in favour of all the resolutions required
to implement the Scheme, where such Global shareholder is so permitted, as well
as to accept the Scheme Offer:
Shareholder No. of shares % of total % of voting
issued share rights entitled
capital * to be exercised
n respect of
the resolution
required to
approve the
Scheme #
Inshare Proprietary Limited 959 983 0.93% 28.80%
Peter Perinchief 657 000 0.64% 19.71%
Midpoint Trust 476 190 0.46% 14.29%
Brett Nicholas Jordaan 130 063 0.13% 3.90%
Tessa Cunliffe 75 000 0.07% 2.25%
TOTAL 2 298 236 2.23% 68.95%
* Based on 102 981 473 shares in issue as at the last practicable date prior to the
date of this announcement.
#Based on the number of Scheme Shares, as defined in paragraph 4.1.4 below.
4.1.3 Each of the shareholders set out in the table below (“Excluded Shareholders”)
have, in respect of their entire shareholding in Global, undertaken to not accept
the Scheme Offer and will retain their investment in Global post the Delisting. In
accordance with the Companies Act Regulations, the Excluded Shareholders are
precluded from voting on the Scheme:
Shareholder No. of Shares % of total issued
share capital*
UBI General Partner Proprietary Limited on 46 646 075 45.30%
behalf of the ARC Fund
Insure Group Managers Limited 22 660 571 22.00%
Oakleaf Insurance Company Limited 8 695 652 8.44%
Conceptual Technologies Africa Proprietary 5 706 051 5.54%
Limited
Earthwize Recycling Proprietary Limited 4 880 852 4.74%
The Altena Investments Trust 4 344 924 4.22%
Proprocess Engineering Proprietary Limited 2 592 443 2.52%
Die Loerie Trust 1 069 752 1.04%
Estate Late Norbert Bruhin 936 124 0.91%
Cornelis Tertius van Dijk 573 750 0.56%
JSRI Trust 476 679 0.46%
Charles Keith Wilkes 304 348 0.30%
Cassiem Solomon 258 339 0.25%
Balalaika Trust 172 226 0.17%
Marthinus Louwrens Strydom 152 150 0.15%
Joshua Cunliffe 75 000 0.07%
Stefan Wolfgang Pfeffer 59 834 0.06%
Jacobus Parsons Capital Proprietary Limited 26 087 0.03%
David John Venter 10 000 0.01%
Karl Anton Pfeffer 7 500 0.01%
TOTAL 99 648 357 96.76%
* Based on 102 981 473 shares in issue as at the last practicable date prior to the
date of this announcement.
4.1.4 Based on the irrevocable undertakings detailed in paragraph 4.1.2 above, the
maximum aggregate number of shares which may be repurchased by the Company
under the Scheme Offer for the Scheme Consideration will be 3 333 116 Global shares
(“Scheme Shares”), amounting to a maximum aggregate cash consideration
payable by the Company of R6 999 545.
4.2 The Mandatory Offer
4.2.1 Shareholders holding 55 300 518 shares, representing approximately 98.17% of the
shares not owned by ARC, have irrevocably undertaken in favour of ARC not to
accept the Mandatory Offer. Such irrevocable undertakings have been furnished
by the following shareholders:
Shareholder No. of Shares % of total issued
shares*
Insure Group Managers Limited 22 660 571 40.22%
Oakleaf Insurance Company Limited 8 695 652 15.44%
Conceptual Technologies Africa Proprietary Limited 5 706 051 10.13%
Earthwize Recycling Proprietary Limited 4 880 852 8.66%
The Altena Investments Trust 4 344 924 7.71%
Proprocess Engineering Proprietary Limited 2 592 443 4.60%
Die Loerie Trust 1 069 752 1.90%
Inshare Proprietary Limited 959 983 1.70%
Estate Late Norbert Bruhin 936 124 1.66%
Peter Perinchief 657 000 1.17%
Cornelis Tertius van Dijk 573 750 1.02%
Midpoint Trust 476 190 0.85%
JSRI Trust 476 679 0.85%
Charles Keith Wilkes 304 348 0.54%
Cassiem Solomon 258 339 0.46%
Balalaika Trust 172 226 0.31%
Marthinus Louwrens Strydom 152 150 0.27%
Brett Nicholas Jordaan 130 063 0.23%
Tessa Cunliffe 75 000 0.13%
Joshua Cunliffe 75 000 0.13%
Stefan Wolfgang Pfeffer 59 834 0.11%
Jacobus Parsons Capital Proprietary Limited 26 087 0.05%
David John Venter 10 000 0.02%
Karl Anton Pfeffer 7 500 0.01%
TOTAL 55 300 518 98.17%
* Based on 56 335 398 eligible shares (i.e. excluding shares held by ARC) in issue as at
the last practicable date prior to the date of this announcement.
5. CONFIRMATION OF FINANCIAL RESOURCES
It should be noted that the Circular will include two offers, one being the Scheme
Consideration at R2.10, and the Mandatory Offer Consideration at R1.83, which is lower than
the Scheme Consideration.
In accordance with Regulation 111(4) and Regulation 111(5) of the Companies Act
Regulations, the TRP has been provided with an unconditional cash guarantee from Absa
Bank Limited, having their head office at Absa Towers North, 180 Commissioner Street,
Johannesburg, 2001, that ARC has sufficient cash resources specifically allocated to secure
the settlement of the maximum possible consideration payable in terms of either of the
Scheme or the Mandatory Offer, totalling R7 million, on behalf of Global, after taking into
consideration the irrevocable undertakings received from the Excluded Shareholders not to
accept the Scheme Offer or the Mandatory Offer, as detailed in paragraph 4 above.
In the event that the Scheme does not become operative, the Mandatory Offer will remain
in place.
6. INDEPENDENT BOARD, INDEPENDENT EXPERT REPORT AND RECOMMENDATIONS
6.1 The Board has established an independent board ("Independent Board”), comprising Messrs
A Naidoo, G Cunliffe and W Basson to consider the terms and conditions of the Scheme
and the Mandatory Offer.
6.2 The Independent Board has, in accordance with section 114(3) of the Companies Act and
regulation 90 of the Companies Act Regulations, appointed Nexia SAB&T as the
independent expert (“Independent Expert”) acceptable to the TRP to provide it with
independent advice in regard to the fairness and reasonableness of the Scheme Offer and
the Mandatory Offer, and to make appropriate recommendations to the Independent
Board, for the benefit of Global shareholders.
6.3 The Independent Expert has issued a report in terms of section 114(3) of the Companies Act
on the Scheme Consideration and the Mandatory Offer Consideration, and the fairness and
reasonableness thereof in which it opines that:
6.3.1 the terms and conditions of the Scheme Offer and the Scheme Consideration are
fair and reasonable to Global shareholders; and
6.3.2 the terms and conditions of the Mandatory Offer and the Mandatory Offer
Consideration are unfair to Global shareholders.
6.4 The Independent Board has reviewed the opinion received from the Independent Expert
and is unanimously in agreement with the views and opinions expressed therein.
Accordingly, the Independent Board recommends that shareholders:
6.4.1 vote in favour of the Scheme;
6.4.2 do not accept the Mandatory Offer, but instead accept the Scheme Offer, which,
at R2.10 per share, falls within the fair value range of the shares of between R2.00
and R2.20 per share, as determined by the Independent Expert.
6.5 The contents of the Independent Expert's advice and the final view and recommendation
of the Independent Board will be detailed in the Circular.
6.6 The Independent Board confirms that no other offers were received by Global in the period
of six months prior to the date of this announcement.
7. INTENTIONS REGARDING THE CONTINUATION OF THE BUSINESS AND THE BOARD
It is the intention of the Company and ARC that, pursuant to the implementation of the
Scheme and the Mandatory Offer:
7.1 Global shall continue with its business. However, shareholders are referred to paragraph
2.2.6 above regarding the reduction by Global of its effective shareholding in LFS Assets with
effect 1 February 2019;
7.2 the directors of Global shall continue in office, with the exception of Mr MCC van Ettinger
pursuant to the LFS Transaction; and
7.3 the remuneration of the directors of Global will not be affected by the Scheme or the
Mandatory Offer.
8. DOCUMENTATION AND SALIENT DATES
Further details of the Scheme, the Delisting and the Mandatory Offer will be included in a
combined circular to Global shareholders, which will contain, inter alia, a notice of the
Scheme Meeting, a form of proxy, a form of surrender and transfer in respect of the Scheme,
and a form of acceptance in relation to the Mandatory Offer. The Circular is expected to
be posted on or about 22 March 2019, subject to all the requisite approvals being received
as contemplated in paragraph 2.4 above. The salient dates in relation to the Scheme, the
Delisting and the Mandatory Offer will be published on SENS and in the press at the time of
posting of the Circular.
9. RESPONSIBILITY STATEMENTS
9.1 The Board and the Independent Board each accepts responsibility for the information
contained in this announcement to the extent that it relates to Company. To the best of
their knowledge and belief, the information contained in this announcement is true and
nothing has been omitted which is likely to affect the importance of the information.
9.2 The board of directors of ARC, as the offeror in respect of the Mandatory Offer, accepts
responsibility for the information contained in this announcement to the extent that it relates
to ARC. To the best of their knowledge and belief, the information contained in this
announcement is true and nothing has been omitted which is likely to affect the importance
of the information.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that, following publication of this announcement, the Cautionary
Announcement is hereby withdrawn and accordingly shareholders are no longer required
to exercise caution when dealing in the Company’s securities.
Johannesburg
11 March 2019
Designated Advisor Independent Expert
Arbor Capital Sponsors Proprietary Limited Nexia SAB&T Accountants
Date: 11/03/2019 04:46:00 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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