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MZR - Mazor Group Limited - Company announcement

Release Date: 16/08/2010 17:02
Code(s): MZR
Wrap Text

MZR - Mazor Group Limited - Company announcement Mazor Group Limited (Incorporated in the Republic of South Africa) (Registration number 2007/017221/06) Share code: MZR ISIN: ZAE000109823 ("Mazor" or "the Company") THE PROPOSED PROVISION OF FINANCIAL ASSISTANCE TO CLOUDBERRY INVESTMENTS 18 (PTY) LIMITED IN ORDER TO MAINTAIN ITS BLACK ECONOMIC EMPOWERMENT ("BEE") CREDENTIALS 1. Introduction On 22 November 2007, Doba Judith Mazor and Shlomo Mazor, the founding shareholders of Mazor, entered into an agreement with a BEE investor, Cloudberry Investments 18 (Pty) Limited ("Cloudberry Investments") in terms of which Cloudberry Investments acquired 18 million Mazor ordinary shares at R3.23 per share being a total consideration of R58.14 million ("the acquisition consideration"). The acquisition consideration was partly funded by Nedbank Limited ("Nedbank"). Cloudberry Investments has since entered into a new funding arrangement with FirstRand Bank Limited ("FNB") to settle the outstanding loan with Nedbank. 2. The transaction In light of the current market volatility and its effect on the market value of securities, and in order for Mazor to retain its BEE credentials, the Mazor board agreed, subject to statutory and regulatory requirements, to the provision of a suretyship and cession to FNB in respect of a maximum amount of R20 million ("the transaction"). 3. Salient terms of the transaction FNB has granted a loan facility to Cloudberry Investments of R42 million for a period of 2 years from the disbursement date at an interest rate of prime less 50 basis points. FNB requires security from the shareholders of Cloudberry Investments in the form of suretyships to the value of R42 million as well as the cession and pledge of 18 million Mazor shares held by Cloudberry Investments as well as a suretyship and cession of R20 million from Mazor. Furthermore, should the Mazor share price on the JSE close below R2 for five consecutive days, FNB may require Cloudberry Investments to provide additional security to FNB`s reasonable satisfaction. If the additional security is not provided FNB is entitled to demand that Cloudberry Investments shareholders purchase the pledged Mazor shares from Cloudberry Investments to settle the outstanding balance on the loan. In the event of default, FNB has agreed to first offer the pledged shares to Mazor for an amount equal to the then outstanding balance of the loan. 4. Rationale for the transaction The directors believe that the transaction is in the best interest of Mazor as this will allow the Company to maintain its BEE credentials. As a significant player in the construction sector, the BEE credentials are prudent in the future growth and success of the Company. 5. Conditions precedent The implementation of the transaction is subject to approval by the JSE and Mazor shareholders at a general meeting. 6. Pro forma financial effects of the transaction The pro forma financial effects of the transaction on Mazor earnings, headline earnings, net asset value and net tangible asset value per share are, in terms of IAS39 Financial Instruments: Recognition and Measurement, less than 3% and therefore have not been presented. 7. Regulatory approvals In terms of section 226 of the Companies Act, the transaction requires Mazor shareholder approval of a special resolution necessary to give effect to the provision of financial assistance. Given that Cloudberry Investments currently holds more than 10% of the vote and has a director, Abubaker Varachhia, serving on the Mazor board, Cloudberry Investments is classified as a related party in terms of the Listings Requirements, accordingly will not be entitled to vote at the general meeting. In compliance with the Listings Requirements, the board of Mazor will appoint an Independent Professional Expert to provide a fairness opinion on the transaction. 8. Circular to shareholders A circular to shareholders setting out full details of the transaction and incorporating the notice of the general meeting and form of proxy will be distributed to shareholders within 28 days from the date of this announcement. Cape Town 16 August 2010 Sponsor: Bridge Capital Advisors (Pty) Limited Date: 16/08/2010 17:02:03 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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