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FWD - Freeworld Coatings Limited - Application by Kansai Paint Co., Ltd
("Kansai") for consent to depart from the requirements of rule 28.7 of the
securities regulation code on takeovers and mergers ("Code")
FREEWORLD COATINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2007/021624/06
Share code: FWD ISIN: ZAE000109450
("Freeworld" or the "Company")
APPLICATION BY KANSAI PAINT CO., LTD ("KANSAI") FOR CONSENT TO DEPART FROM THE
REQUIREMENTS OF RULE 28.7 OF THE SECURITIES REGULATION CODE ON TAKEOVERS AND
MERGERS ("CODE")
As anticipated in the announcement by the Company dated 17 February 2011,
Freeworld shareholders are advised that Kansai applied to the Securities
Regulation Panel ("SRP") on 25 February 2011 for consent to depart from the
requirements of Rule 28.7 of the Code so that the offer to Freeworld
shareholders set out in the Kansai circular dated 15 December 2010 ("Kansai
offer") shall not lapse within 21 days of the first closing date (namely, 18
February 2011). In terms of Rule 28.7 of the Code, except with the consent of
the SRP, the Kansai offer must become unconditional within 21 days of the
first closing date, failing which it will lapse. The Competition Commission of
South Africa ("Commission") is expected to decide on the proposed merger
contemplated by the Kansai offer after 11 March 2011, and must do so at latest
by 18 April 2011. Kansai has motivated for the Kansai offer to subsist beyond
the current long-stop date (the current deadline for fulfilment of the
conditions) of 30 April and until 16 May 2011. In effect, therefore, Kansai
has motivated to the SRP for two dispensations, namely (1) an extension of the
long-stop date to 16 May 2011 and (2) consent for a deviation from Rule 28.7
of the Code until 16 May 2011(together "Kansai`s application").
The board of directors of Freeworld ("Freeworld board") notes that Kansai has
acknowledged that the published timetable of the Kansai offer would result in
a contravention of Rule 28.7 of the Code and that the Kansai offer will, in
the absence of consent from the SRP, lapse on 11 March 2011. The Freeworld
board is satisfied that it has at all times acted in the best interests of
Freeworld shareholders in bringing this issue to the attention of Freeworld
shareholders and the SRP.
The Freeworld board has advised the SRP that it has no objection to consent
being granted to depart from Rule 28.7 of the Code up until 30 April 2011.
Freeworld believes that this is an appropriate date for, amongst others, the
following reasons -
Freeworld shareholders who have accepted the Kansai offer will have done
so, inter alia, taking into account the opinion of Deutsche Securities SA
(Proprietary) Limited and the recommendation of the Freeworld board,
which were both given on the assumption that, should Kansai wish to
extend the long-stop date beyond 30 April 2011, Freeworld shareholders
would be sufficiently compensated for such extension; and
Kansai itself, in its unsuccessful application for Rule 28.7 consent at
the hearing before the Appeal Committee of the SRP on 3 February 2011,
requested a ruling providing for such consent only until 30 April 2011.
The Freeworld board is of the view that, if required, any extension beyond 30
April 2011 can and should be motivated by Kansai once the decision of the
Commission regarding the proposed merger is available (this decision is
expected on or before 18 April 2011) and that, if the SRP gives a further
extension at that time, such extension should not be indefinite and should, in
light of the prejudice to Freeworld shareholders arising from any delay in
payment, be accompanied by an undertaking by Kansai to include compensatory
interest on the offer price.
Freeworld shareholders are entitled, should they choose to do so, to make
written representations to the SRP regarding Kansai`s application. Such
representations (marked for the attention of the Acting Executive Director,
SRP, 1st Floor, Block B, Sunnyside Office Park, 32 Princess of Wales Terrace,
Parktown; e-mail: lucky@srpanel.co.za; fax: 011 642 9284) must reach the SRP
by no later than 16h00 on 4 March 2011.
The independent committee of the Freeworld board, having considered all
information contained in this announcement, accepts full responsibility for
the accuracy of such information and certifies that, to the best of its
knowledge and belief (having taken all reasonable care to ensure that this is
the case), the information contained in this announcement is in accordance
with the facts and that nothing that is likely to affect the import of this
information has been omitted.
Johannesburg
2 March 2011
Merchant bank and sponsor to Freeworld
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Attorneys to Freeworld
Read Hope Phillips Thomas & Cadman Incorporated
Date: 02/03/2011 17:17:02 Supplied by www.sharenet.co.za
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