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RAR - Rare Holdings Limited - Announcement of proposed claw-back offer,
withdrawal of potential specific issue of shares for cash and potential
mandatory offer and waiver thereof
RARE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 2002/025247/06
Share Code: RAR ISIN:ZAE000092714
("the Company" or "RARE")
ANNOUNCEMENT OF PROPOSED CLAW-BACK OFFER, WITHDRAWAL OF POTENTIAL SPECIFIC ISSUE
OF SHARES FOR CASH AND POTENTIAL MANDATORY OFFER AND WAIVER THEREOF
1 INTRODUCTION AND WITHDRAWAL OF SPECIFIC ISSUE
1.1. Shareholders are referred to the announcement released on SENS on 20
December 2010 and published in the press on 22 December 2010, in terms
of which shareholders were advised that RARE had entered into a
subscription agreement ("the First Subscription Agreement").
1.2 In terms of the First Subscription Agreement, the Company were to
allot and issue 100 000 000 new ordinary shares to Stafric Investments
and Management Services (Proprietary) Limited ("Stafric") at an issue
price of 40 cents per share as a specific issue of shares for cash on
the terms and conditions contained in the First Subscription Agreement
and at a total subscription consideration of R40 000 000 ("the
Specific Issue").
1.3 However, shareholders are advised that Stafric had decided not to
exercise its rights in terms of the First Subscription Agreement, due
to the delayed conclusion of income producing contracts and resistance
from certain major shareholders to effect the Specific Issue.
1.4 As the Company still requires re-capitalisation, it is proposed that,
subject to the fulfillment of certain conditions, including the
approval by shareholders of the Waiver (as defined hereunder) and the
placement of 200 000 000 authorised, but unissued shares of the
Company under the control of the directors in terms of section 221 of
the Companies Act No. 61 of 1973, as amended, such re-capitalisation
be effected through the mechanism of a renounceable claw-back offer
("the claw-back offer").
1.5 The Company and Stafric have subsequently agreed in principle to enter
into a new subscription agreement with Stafric in terms of which
Stafric will subscribe for 200 000 000 new ordinary shares of R0.01
each in the ordinary share capital of RARE at a subscription price of
20 cents per share ("the claw-back shares") for the total amount of
R40 million ("the Second Subscription"), which subscription is subject
to the claw-back offer and the Waiver (as defined hereunder) and which
subscription amount will be advanced to the Company by Stafric ("the
Second Subscription Agreement").
2. SALIENT FEATURES OF THE CLAW-BACK OFFER
2.1 In terms of the claw-back offer and in order to re-capitalise the
Company, the claw-back shares will be issued to Stafric, following
which all shareholders will be given the right to acquire the claw-
back shares from Stafric pro rata to their current shareholding and on
the same terms on which Stafric acquired the claw-back shares.
2.2 The issue price at which the claw-back offer shares will be issued
represents a discount of approximately 10% to the 30 day volume
weighted average share price of RARE as at 8 April 2011.
2.3 A circular has been distributed to shareholders on 14 April 2011 ("the
First Circular"), which circular provides shareholders with:
2.3.1 the relevant information regarding the Waiver (as defined
hereunder);
2.3.2 the placement of 200 000 000 authorised, but unissued shares
of the Company under the control of the directors (both of
which are required to proceed with the Second Subscription
and the claw-back offer); and
2.3.3 the notice to convene a general meeting of shareholders at
the offices of the Company at 22 Old Vereeniging Road,
Kliprivier, Midvaal at 11:00 on Friday, 29 April 2011 in
order to propose such resolutions as are necessary to
approve the aforementioned ("the General Meeting").
2.4 Further details of the claw-back offer will be included in a further
circular to be distributed to shareholders in due course and will also
be announced on SENS following the conclusion of the Second
Subscription Agreement.
3. POTENTIAL MANDATORY OFFER AND WAIVER THEREOF
3.1 The Securities Regulation Panel (the "Panel") would view the Second
Subscription by Stafric as an affected transaction in terms of the
Securities Regulation Code on Takeovers and Mergers (the "Code") as
Stafric could, following the extent to which shareholders will follow
their rights under the claw-back offer, control 35% or more of the
votes attaching to the issued shares of the Company.
3.2 Accordingly, the Second Subscription could trigger a mandatory offer
in terms of Rule 8 of the Code to be made by Stafric (the "Mandatory
Offer").
3.3 The Mandatory Offer would therefore ordinarily be extended to the
shareholders of the Company at the offer price of 20 cents per share
(the "Offer Price"), which offer price is the same price at which the
Second Subscription and the claw-back offer are being made.
3.4 Shareholders are advised that the Company has obtained an opinion from
an independent expert as to whether the Offer Price is fair ("the
Fairness Opinion"), which opinion is included in the First Circular.
3.5 However, in terms of Rule 8.7 of the Code, the requirement for such a
Mandatory Offer will normally be dispensed with by the Panel ("the
Rule 8.7 Exemption") provided that a majority of independent votes at
a properly constituted meeting of the holders of relevant securities
of the Company are cast in favour of a resolution waiving the
requirement for such a Mandatory Offer (the "Waiver").
3.6 RARE shareholders representing approximately 51% of the shares in
issue have irrevocably undertaken to vote in favour of the Waiver
required to implement the Second Subscription and/or the claw-back
offer.
3.7 The SRP has subsequently confirmed that it is willing to grant
dispensation of the obligation to make the Mandatory Offer in
accordance with Rule 8.7 of the SRP Code subject to the conditions
that:
3.7.1 the Waiver is voted in favour of by the majority of the
independent RARE shareholders at the General Meeting; and
3.7.2 the Second Subscription Agreement is entered into between
RARE and Stafric before the General Meeting, including the
announcement thereof on SENS to shareholders.
4 Cautionary announcement and further detailed announcement
4.1 The proposed Second Subscription and claw-back offer may have a
material effect on the price of RARE`s shares.
4.2 Shareholders are accordingly advised to exercise caution when dealing
in the Company`s shares until a further detailed announcement setting
out the salient dates and times as well as the detailed pro forma
financial effects of the claw-back offer is made.
4.3 The further detailed announcement will be made in due course.
Johannesburg
14 April 2011
Designated Adviser: PSG Capital (Proprietary) Limited
Date: 14/04/2011 12:33:01 Supplied by www.sharenet.co.za
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