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ILV - Illovo Sugar Limited - Rights offer declaration announcement
Illovo Sugar Limited
(Incorporated in the Republic of South Africa)
Registration number 1906/000622/06
Share Code: ILV
ISIN: ZAE000083846
("Illovo" or "the Company" or "the Group")
RIGHTS OFFER DECLARATION ANNOUNCEMENT
1. Introduction
In its Profit and Dividend Announcement released on the Securities Exchange News
Service ("SENS") of the JSE Limited ("JSE") on 26 May 2009, Illovo announced
that in order to meet the ongoing financing requirements of the Group, a rights
offer would be undertaken to raise new equity capital for Illovo`s current and
longer term growth plans ("the Rights Offer").
2. Rationale for the Rights Offer
The Group is consolidating its business in South Africa and continuing to pursue
major investments outside South Africa in areas that have positive and stable
social, political and economic fundamentals, adequate water and land resources,
favourable climatic and agronomic conditions, strong local sugar markets and
good export potential.
In line with this philosophy, investments and initiatives in the following
countries have either been completed or are underway: Malawi, Zambia, Swaziland,
Tanzania, Mozambique, and Mali. In this respect, an amount of R2.3 billion had
been committed by 31 March 2009, projects involving capital expenditure of R1.7
billion have since been approved and further projects involving capital
expenditure of approximately R2.8 billion are pending future approval.
In addition to the aforementioned expansion projects, other investment
opportunities are anticipated to become available in the near future and this
capital raising exercise will place the Group in a position to take advantage of
such opportunities if and when they arise.
Illovo`s ability to raise debt funding for the financing of these expansion
projects has been affected by the ongoing global financial crisis. In
particular, the cost of debt funding has increased and the conditions and
covenants imposed by debt funders have become more onerous. Accordingly, in
order to ensure that the Group`s growth plans are not affected and that future
debt:equity ratios remain at acceptable levels, an equity capital raising
exercise is considered appropriate.
It is the intention of Illovo to use part of the Rights Offer proceeds to
finance certain of the above mentioned expansion projects. The balance of the
proceeds will be used to repay certain Group loans.
3. Terms of the Rights Offer
The Rights Offer will be for a total of 108 342 362 Illovo shares (the "Rights
Offer Shares") and will be made by way of renounceable rights, at a subscription
price of 2 769 cents per Illovo share on the basis of 30.83459 Rights Offer
Shares for every 100 Illovo shares held on the record date for the Rights Offer,
being Friday, 21 August 2009 ("the Record Date"). Qualifying shareholders
recorded in the register of Illovo at the close of business on the Record Date
will be entitled to participate in the Rights Offer. The Rights Offer is
expected to raise R3.0 billion.
No excess applications will be permitted.
The Rights Offer is underwritten as detailed in paragraph 4 below.
4. Underwriting and undertaking to follow rights
Associated British Foods plc, through its wholly owned subsidiary ABF Overseas
Limited ("ABFOL"), holds 51.3% interest in Illovo. ABFOL has irrevocably
undertaken to follow its rights pursuant to the Rights Offer in respect of its
entire interest in Illovo.
Allan Gray Limited ("Allan Gray"), acting on behalf of its clients and subject
to such clients` continued investment, has irrevocably undertaken to procure
that its clients follow their rights in terms of the Rights Offer. Allan Gray`s
clients are the beneficial owners of 23.4% of Illovo.
ABFOL has further agreed to underwrite the balance of the Rights Offer, subject
to its interest in Illovo not exceeding 60% of the total issued share capital of
Illovo after the Rights Offer.
The effect of the above undertakings and underwriting is that the Rights Offer
is expected to be fully subscribed.
5. Circular to shareholders
The rights offer circular, incorporating revised listing particulars and a form
of instruction in respect of a letter of allocation, where applicable ("the
Rights Offer Circular"), will be posted to Illovo shareholders on Monday, 24
August 2009.
6. Conditions precedent
The Rights Offer is conditional upon:
- approval being obtained from the JSE for the Rights Offer Circular and the
application for the listings of the letters of allocation and the Rights Offer
Shares; and
- the necessary approvals and registrations being obtained from the Companies
and Intellectual Property Registration Office.
It is anticipated that the above conditions will be met on or before the
finalisation date for the Rights Offer, being Thursday, 6 August 2009.
7. Pro forma financial effects
The unaudited pro forma financial effects set out below have been prepared to
assist Illovo shareholders to assess the impact of the Rights Offer on the
Earnings Per Share ("EPS"), Headline Earnings Per Share ("HEPS"), Net Asset
Value ("NAV") Per Share and Tangible Net Asset Value (TNAV") Per Share of
Illovo. Due to the nature of these pro forma financial effects, they are
presented for illustrative purposes only and may not fairly present the Group`s
financial position or the results of its operations after the Rights Offer.
The unaudited pro forma financial effects have been prepared in accordance with
the Listings Requirements of the JSE and the Guide on Pro Forma Financial
Information issued by The South African Institute of Chartered Accountants.
These unaudited pro forma financial effects are the responsibility of the board
of Illovo and are provided for illustrative purposes only. The material
assumptions on which the pro forma financial effects are based are set out in
the notes following the table.
Pro forma financial effects for the year ended 31 March 2009
Audited Pro forma Unaudited Percentag
financial adjustment pro forma e change
informatio s financial
n informatio
n
EPS (cents) 210.9 10.1 221.0 4.8%
Diluted EPS 209.8 10.4 220.2 4.9%
(cents)
HEPS (cents) 211.6 10.0 221.6 4.7%
Diluted HEPS 210.6 9.9 220.5 4.7%
(cents)
NAV per share 981.7 412.0 1 393.7 42.0%
(cents)
TNAV per share 964.1 416.1 1 380.2 43.2%
(cents)
Ordinary shares 350 924 108 342 459 266 30.9%
in issue (`000)
Weighted average 350 514 108 342 458 856 30.9%
number of
ordinary shares
in issue (`000)
Notes and assumptions:
(a) The audited financial information has been extracted from the published
audited annual financial statements of Illovo for the year ended 31 March
2009.
(b) The pro forma adjustments to the income statement have been calculated on
the assumption that the proceeds from the rights issue were received on 1
April 2008 and that the proceeds were used to repay debt.
(c) The pro forma adjustments to the balance sheet have been calculated on the
assumption that the proceeds were received on 31 March 2009.
(d) A share issue price of 2 769 cents per share has been used for the pro
forma adjustments with 108 342 362 shares being issued for a total quantum
of R3.0 billion.
(e) Estimated transaction costs of R44.3 million, relating to the Rights Offer,
have been taken into account in determining the pro forma financial
effects.
(f) The interest impact on the income statement has been calculated by
analysing the Group borrowings balance on a monthly basis. Interest rates
used for calculating the impact are an average rate of 11.1% on cash
balances and 12.8% on borrowings. These rates have been applied to the cash
and borrowings balances as applicable during the year.
(g) A tax rate of 28% has been used on the interest impact.
(h) The cash flows for the year have been adjusted to take into account an
increased dividend that would have been payable as a result of the
decreased financing costs for the year. This dividend is calculated
according to Illovo policy of two times cover.
8. Salient dates and times
The salient dates and times in respect of the Rights Offer are set out below.
2009
Last day to trade in Illovo shares in order Friday, 14 August
to participate in the Rights Offer (cum
entitlement)
Illovo shares commence trading ex-rights on Monday, 17 August
the JSE at 09:00 on
Listing of and trading in the letters of Monday, 17 August
allocation on the JSE commences at 09:00 on
Record date for the Rights Offer Friday, 21 August
Rights Offer Circular and form of Monday, 24 August
instruction, where applicable, posted to
shareholders
Rights Offer opens at 09:00 on Monday, 24 August
Last day for trading letters of allocation on Friday, 4
the JSE September
Listing of Rights Offer Shares and trading Monday, 7
therein on the JSE commences September
Rights Offer closes at 12:00 on Friday, 11
September
Record date for the letters of allocation Friday, 11
September
CSDP or broker accounts in respect of holders Monday, 14
of dematerialised shares are debited and September
updated with Rights Offer Shares on or about
Share certificates are posted to certificated Monday, 14
shareholders by registered post: on or about September
Results of Rights Offer announced on SENS Monday, 14
September
Results of Rights Offer published in the Tuesday, 15
press September
Notes:
(a) Share certificates in respect of Illovo shares may not be dematerialised or
re-materialised between Monday, 17 August 2009 and Friday, 21 August 2009,
both days inclusive.
(b) CSDPs effect payment on a delivery versus payment method in respect of
qualifying shareholders holding dematerialised shares.
(c) If you are a qualifying shareholder holding dematerialised shares you are
required to notify your duly appointed CSDP or broker of your acceptance of
the Rights Offer in the manner and time stipulated in the custody agreement
governing the relationship between yourself and your CSDP or broker.
Dematerialised shareholders are advised to contact their CSDP or broker as
early as possible to establish what the cut off times are for the
acceptances of the rights offer, as set out in the custody agreement, as
this may be earlier than the rights offer closing date.
(d) Unless otherwise indicated, all times are South African times.
(e) The above dates and times are subject to amendment. Any amendments to the
dates and times will be released on SENS and published in the South African
Press.
9. Further announcement
It is anticipated that the finalisation announcement for the Rights Offer will
be released on SENS on Thursday, 6 August 2009 and in the South African press on
Friday, 7 August 2009.
Mount Edgecombe
24 July 2009
Investment Bank and transaction sponsor
Standard Bank
Sponsor
JP Morgan
Legal adviser
Garlicke & Bousfield Inc.
Independent reporting accountants
Deloitte & Touche
Underwriter
ABF Overseas Limited
Corporate adviser to the underwriter
N M Rothschild & Sons (South Africa) (Proprietary) Limited
Legal adviser to the underwriter
Bowman Gilfillan Inc.
This announcement is not for distribution in the United States of America
("U.S."), Australia, Canada, Japan or in any jurisdiction other than where it is
lawful to do so.
This announcement does not constitute or form part of any offer or solicitation
to purchase or subscribe for securities in the U.S. or in any jurisdiction in
which it is illegal to make such an offer. The rights offer described herein has
not been and will not be registered under the U.S. Securities Act of 1933, as
amended ("U.S. Securities Act"), or under any relevant securities laws of any
state or other jurisdiction of the U.S. The securities described herein (the
"Securities") may not be offered, sold, taken up, resold, renounced, exercised,
pledged, transferred or delivered, directly or indirectly, in or into the U.S.
at any time except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the U.S. Securities Act and
applicable state and other securities laws of the U.S. The Securities may be
offered, sold, taken up, resold, renounced, exercised, pledged, transferred or
delivered, by persons outside the U.S. in accordance with Regulation S under the
U.S. Securities Act.
Date: 24/07/2009 09:05:03 Supplied by www.sharenet.co.za
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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