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Announcement of the conclusion of loan and rights offer agreement
Erbacon Investment Holdings Limited
(Registration number 2007/014490/06)
(Incorporated in the Republic of South Africa)
Share Code: ERB ISIN: ZAE000111571
(“Erbacon” or “the Company”)
ANNOUNCEMENT OF THE CONCLUSION OF LOAN AND RIGHTS OFFER
AGREEMENT
1. INTRODUCTION
Shareholders are referred to the announcement dated 7
February 2013 whereby shareholders were advised that the
Company has finalised agreements with certain providers of
financial facilities in order to strengthen the position
of the Company’s operating subsidiary, Civcon Construction
(Pty) Limited.
Subsequent to the aforementioned announcement,
shareholders are hereby advised that the Company has since
entered into a Loan and Rights Offer Agreement (“the L&R
Agreement”) with Medu Capital Fund II (Pty) Limited
(“Medu”) in order to procure additional capital.
2. RATIONALE
Erbacon entered into the L&R Agreement in order to
strengthen the Company’s balance sheet and to ensure that
it can continue to grow going forward.
3. SALIENT FEATURES OF THE LOAN AND RIGHTS OFFER AGREEMENT
3.1 In terms of the L&R Agreement concluded it was inter alia
agreed that:
3.1.1 the Company will propose a rights offer (“the Rights
Offer”) to raise no less than R55 million at an issue
price of 2 cents per Rights Offer share (“the Issue
Price”); and
3.1.2 Medu will provide an interim Loan facility of R26.8
million to be repaid upon the successful implementation
of the Rights Offer.
3.1.3 The Company’s major guarantee provider has agreed to
extend the repayment terms in respect of loan
facilities provided to 31 March 2015. The loan, which
has a current balance R33,8 million, is primarily
secured over the shares in the Company’s subsidiaries.
3.2 The Issue Price represents a discount of approximately 90%
to the 30 day volume weighted average share price of 19.3
cents Erbacon as at 22 March 2013, being the date upon
which the L&R Agreement was concluded.
3.3 All shareholders will be given the right to participate in
the Rights Offer whereby they will be able to subscribe
for shares, pro rata to their shareholding as at the
record date.
4. SUSPENSIVE CONDITIONS RELATING TO THE L&R AGREEMENT
All suspensive conditions have been fulfilled and the L&R
Agreement is therefore unconditional. Shareholders having
more than 75% of voting rights have provided irrevocable
consents to indicate that they will pass any required
resolutions to implement the Rights Offer.
5. FURTHER CORRESPONDENCE
Full details of the proposed Rights Offer will be included
in a circular to be sent to shareholders as well as an
announcement to be released in due course.
6. CAUTIONARY ANNOUNCEMENT
As the proposed Rights Offer may have a material effect on
the share price of Erbacon, shareholders are accordingly
advised to exercise caution when dealing in the securities
of the Company until a further detailed announcement
setting out the full terms of the Rights Offer as well as
the detailed pro forma financial effects of the Rights
Offer is made.
Johannesburg
28 March 2013
Designated Adviser: PSG Capital Proprietary Limited
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