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Oceana Group Limited - Black Economic Empowerment Transaction
OCEANA GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1939/001730/06)
JSE share code: OCE
NSX share code: OCG
ISIN: ZAE000025284
("Oceana" or "the Company")
BLACK ECONOMIC EMPOWERMENT TRANSACTION
Introduction and rationale
Further to the cautionary announcements dated 20 April 2006 and 8 June 2006,
shareholders are advised that Oceana, Ocfish Holding Company Limited ("Ocfish"),
Tiger Brands Limited ("Tiger Brands") and Real Africa Holdings Limited ("RAH")
(collectively, "the Parties"), have entered into an agreement which, subject to
- the conditions precedent contained therein, will result in:
- the disposal by RAH of its entire interest in Ocfish to Tiger Brands;
- an offer by Tiger Brands to certain Ocfish minority shareholders to acquire
their Ocfish shares;
- the subsequent unbundling of Ocfish"s approximate 46% interest in Oceana to
the Ocfish shareholders;
- the sale by Tiger Brands of the relevant number of Oceana shares to a black
economic empowerment ("BEE") consortium, comprising an Oceana black
employee share trust ("OBEST") and a strategic black partner; and
- a new issue of Oceana ordinary shares by Oceana to the OBEST.
(collectively, "the BEE Transaction")
Oceana has entered into an agreement with Brimstone Investment Corporation
Limited ("Brimstone") as the strategic black partner, in terms of which
Brimstone will acquire, subject to the fulfilment of the conditions precedent to
the BEE Transaction, a shareholding of approximately 10% in Oceana.
In 1994 a BEE consortium led by RAH acquired joint control of Oceana through the
acquisition of all the Ocfish A ordinary shares. Over time the BEE shareholding
credentials of the consortium changed and hence the board of Oceana has been
seeking alternatives to secure long-term BEE shareholding credentials in the
Company. This is necessary to enable Oceana to continue to play a meaningful
role in the transformation and normalisation of the fishing industry in South
Africa. On implementation of the BEE Transaction, 25 977 220 Oceana ordinary
shares will collectively be acquired by the OBEST and Brimstone. The share
transactions contemplated in the BEE Transaction will take place at R15.21 per
Ocfish or Oceana share, thereby resulting in the BEE Transaction having a
transaction value of approximately R395 million, excluding transaction costs.
Collectively, the OBEST and Brimstone will between them own approximately 22.4%
of the Oceana issued ordinary share capital subsequent to the implementation of
the BEE Transaction.
The number of 25 977 220 Oceana shares is of historical significance as this
represents the total number of Ocfish A ordinary shares allocated for black
ownership in terms of the 1994 Ocfish shareholders agreement. This pioneering
empowerment initiative occurred long before BEE scorecards had been considered.
An objective of Oceana has been to ensure that the same number of shares is the
subject of the BEE Transaction in order to sustain the legacy of the 1994 BEE
initiative.
Details on the OBEST and Brimstone
It is proposed that the OBEST will operate for the benefit of current and future
black employees, who are South African citizens employed on a full-time basis by
Oceana and its operating subsidiaries. The methodology for allocating
beneficiary rights to qualifying black employees, and for determining the
vesting and lock-in periods and funding arrangements is still being finalised.
Further details will be provided in a subsequent announcement and in a circular
to Oceana shareholders. The Oceana board considers that it is important for
black employees to be key participants in the BEE Transaction for the following
reasons:
- Oceana is a major employer in the fishing and cold storage industries in
South Africa and the majority of its employees comprise black people;
- these employees play an important role in continuing and developing
Oceana"s current business; and
- it will assist Oceana in retaining existing black managers and attracting
new professionals to the Company.
Brimstone is a broad-based BEE investment holding company with a current market
capitalisation of approximately R1.3 billion. It has strategic investments in
the industrial, financial services and healthcare sectors. Brimstone is well
acquainted with the fishing industry as it was part of the initial empowerment
consortium that acquired an interest in Ocfish, the holding company of Oceana.
Brimstone also has a 21.5% interest in Sea Harvest Corporation Limited (a
subsidiary of Tiger Brands), a major fishing company focused primarily on the
white fish sector. Mustaq Brey, the chief executive officer of Brimstone,
joined the Oceana board in November 1995 and became the chairman of Oceana in
February 2006.
Brimstone was incorporated in 1995 as an investment vehicle for black South
Africans. It was listed on the JSE Limited in 1998 and is today a successful
and recognised BEE company. The directors of Brimstone include two of its
original founding members, Mustaq Brey, chief executive officer, and Fred
Robertson, executive deputy chairman, both of whom have extensive business
experience. Brimstone"s board is chaired by Professor Jakes Gerwel.
Structure of the BEE Transaction
The BEE Transaction is structured as a series of indivisible transactions
involving the Parties, the OBEST and Brimstone. In total 25 977 220 Oceana
ordinary shares will collectively be acquired by the OBEST and Brimstone. These
shares will be procured by the sale of RAH"s entire shareholding of Ocfish A
ordinary shares to Tiger Brands and the sale by the relevant Ocfish minority
shareholders of their Ocfish A ordinary shares to Tiger Brands, the subsequent
unbundling by Ocfish of its Oceana shares to the Ocfish shareholders, the sale
by Tiger Brands of the relevant number of Oceana shares to the OBEST and
indirectly to Brimstone, and a new issue of Oceana ordinary shares by Oceana to
the OBEST. Tiger Brands will not be disposing of any of its existing interest in
Oceana, but merely those Oceana shares procured from RAH and certain Ocfish
minority shareholders.
It is anticipated that the OBEST and Brimstone will obtain approximately a 12.4%
and 10% equity interest respectively in the issued ordinary share capital of
Oceana. Oceana and/or its subsidiaries will make available all the necessary
funding (approximately R219 million) to the OBEST for it to acquire Oceana
ordinary shares. A special purpose vehicle ("SPV"), to become a wholly-owned
subsidiary of Brimstone subsequent to the implementation of the BEE Transaction,
will procure the funding required (approximately R176 million) for it to acquire
Oceana ordinary shares through a combination of an equity contribution by
Brimstone, third party funding from a financial institution and vendor financing
from Oceana.
The shareholding structure of Oceana subsequent to the BEE Transaction will be
detailed in the corresponding press announcements to be released on 27 June
2006.
The implementation of the BEE Transaction is subject to the fulfilment of
various conditions precedent including, inter-alia, Oceana shareholder approval
and the Securities Regulation Panel granting a dispensation to Tiger Brands and
Brimstone from having to make a mandatory offer to Oceana minority shareholders.
This dispensation is required as it is the intention of Tiger Brands to
replicate, inter alia, certain aspects of the existing Ocfish shareholders
agreement in a new voting pool agreement between Tiger Brands and Brimstone,
notwithstanding that the effective number of Oceana ordinary shares owned by
Tiger Brands will not change pursuant to the implementation of the BEE
Transaction. The conditions precedent will be detailed in a further
announcement and circular to Oceana shareholders in due course.
Further documentation
An announcement containing full details of the BEE Transaction will be published
on the Securities Exchange News Service of the JSE Limited and in the press. In
this regard, Oceana shareholders are advised to continue to exercise caution
when dealing in the Company"s securities until a further announcement is made.
A circular containing full details of the BEE Transaction, including a notice of
general meeting, will also be posted to Oceana shareholders in due course.
Cape Town
26 June 2006
Investment bank and sponsor Corporate law adviser to Oceana and the
Standard Bank BEE Transaction
Edward Nathan (Pty) Ltd
Date: 26/06/2006 03:47:00 PM Supplied by www.sharenet.co.za
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