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MPT - Mpact Limited - Abridged pre-listing statement
Mpact Limited
(the proposed new name for Mondi Packaging South Africa Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2004/025229/06)
JSE share code: MPT ISIN: ZAE000156501
("Mpact" or the "Company")
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR
INTO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES.
THE CONTENTS OF THIS ABRIDGED PRE-LISTING STATEMENT HAVE BEEN PREPARED BY AND
ARE THE SOLE RESPONSIBILITY OF MPACT.
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of all of Mpact
Limited`s issued ordinary shares of no par value ("Ordinary Shares") by way
of introduction (the "Listing"), on the main board of the securities exchange
operated by the JSE Limited ("JSE") with effect from the commencement of
business on Monday, 11 July 2011 (the "Date of Listing").
The Company issued a pre-listing statement on Tuesday, 31 May 2011, relating
to the listing of the Ordinary Shares under the "Containers & Packaging" sub-
sector of the main board of the JSE (the "Pre-listing Statement"). The
information in this abridged pre-listing statement has been extracted from
the Pre-listing Statement.
This abridged pre-listing statement is not an invitation to subscribe for or
purchase shares in Mpact, but is issued in compliance with the Listings
Requirements of the JSE for the purposes of providing information to the
public with regard to the business and affairs of Mpact and its subsidiaries
(the "Group") as at the Date of Listing.
1. Introduction, reasons for the demerger and demerger conditions precedent
On Thursday, 7 April 2011, the Mondi Group ("Mondi") announced its intention
to demerge the Group (the "Demerger") and separately list the Company. The
Demerger will be implemented by way of a dividend in specie from Mondi
Limited to Mondi Limited ordinary shareholders ("Mondi Limited Shareholders")
on Monday, 18 July 2011 on the basis of one Mpact ordinary share ("Demerged
Share") for every one Mondi Limited Ordinary Share held by each such Mondi
Limited Shareholder.
Mondi plc Shareholders will not be entitled to the Demerged Shares; rather,
they will receive the benefit of an appropriate adjustment, a "matching
action" (for the purpose of the Dual Listed Companies ("DLC") Agreements), to
reflect the value distributed by Mondi Limited to Mondi Limited Shareholders.
The Mondi Limited board and Mondi plc board (the "Mondi Boards") have
determined that a consolidation of the Mondi Limited Ordinary Shares ("Mondi
Limited Share Consolidation") is the most appropriate form of adjustment in
the circumstances. The effect of the Mondi Limited Share Consolidation will
be that Mondi plc Shareholders will, collectively, hold an increased interest
in Mondi. After the Demerger and the Mondi Limited Share Consolidation, Mondi
Limited Shareholders will hold consolidated Mondi Limited Ordinary Shares
("New Mondi Limited Shares") as well as the newly listed Demerged Shares.
Following the Listing and Demerger, Mondi and the Group will operate
independently of each other as separately listed and publicly traded groups.
The Group will operate under a new name, Mpact Limited.
Mpact is essentially southern Africa focused with most of its operations
located throughout South Africa and with single plants located in Namibia,
Mozambique and Zimbabwe. It is an integrated producer of corrugated products,
has a growing rigid plastics packaging business and is also involved in the
production of cartonboard.
Mpact is unique within Mondi as no other part of Mondi produces rigid
plastics or cartonboard. Mpact`s primary growth opportunities going forward
are expected to be in expanding the rigid plastics business, thereby
diverging further from Mondi`s core strategic focus. The primary rationale
for seeking a separate JSE listing for Mpact is that it will allow it to
pursue its own growth strategy without the constraint of a shareholder that
has differing strategic priorities. It is considered that a separate listing
for Mpact, with the ability to independently access capital in support of its
strategic objectives, is in the best interests of Mpact, Mondi and related
stakeholders, including employees. The Demerger thereby endorses Mpact`s own
strategy and provides a clear benefit as both Mondi and Mpact will be able to
take better advantage of their respective growth opportunities.
The Demerger is conditional (amongst other things) on the approval of the
resolutions set out below ("Demerger Conditions Precedent"). It should be
noted that, although it is currently Mondi`s intention that the Demerger
should be concluded, Mondi shall be entitled to decide not to proceed with
the Demerger at any time prior to Thursday, 30 June 2011 ("Finalisation
Date").
The Demerger needs to be approved by the shareholders of each of Mondi
Limited and Mondi plc, respectively.
The resolutions set out in the circulars from each of Mondi Limited and Mondi
plc, inter alia:
a) authorise the Mondi Boards to pay the dividend in specie to effect the
Demerger and authorise the Mondi Boards to do any other acts as may be
necessary to effect the Demerger; and
b) approve the Mondi Limited Share Consolidation and authorise the Mondi
Boards to do any other act necessary to effect the Mondi Limited Share
Consolidation.
If any of the Demerger Conditions Precedent are not fulfilled, the Demerger
and the Listing will not proceed. Furthermore, if the Demerger Conditions
Precedent are fulfilled but the Demerger is not implemented, the Listing will
not proceed.
2. Overview of the business of the Group
The Group is one of the largest South African packaging businesses, involved
in the manufacture and supply of paper and plastic packaging products, with
total revenues of R6,259 million in 2010, R5,774 million in 2009 and R5,711
million in 2008 and EBITDA of R805 million in 2010, R714 million in 2009 and
R631 million in 2008. The Group`s operations comprise its paper business and
its plastics business. The paper business is integrated across the recycled
paper-based corrugated packaging value chain and comprises three divisions:
recycling, packaging and industrial paper and corrugated, while its plastics
business manufactures rigid plastic packaging. The Group has 22 manufacturing
operations and 29 operating sites in South Africa, Namibia, Mozambique and
Zimbabwe. Approximately 91% of the Group`s sales in 2010 were achieved in
South Africa. As at 31 December 2010, the Group`s workforce amounted to
approximately 3,500 employees in total.
The Group is the leading producer of recycled-based cartonboard and
containerboard, the leading collector of recovered paper and the leading
producer of corrugated packaging in South Africa. The paper recycling
division undertakes the collection of recovered paper for use in the
production of cartonboard and containerboard. The packaging and industrial
paper division produces cartonboard and containerboard products. The
corrugated division undertakes the production of corrugated boxes and other
corrugated packaging products. The Group`s main paper production facilities
are in Springs (Gauteng), Felixton (KwaZulu-Natal) and Piet Retief
(Mpumalanga) in South Africa. In addition, the Group has nine corrugated box
plants and two corrugated sheet plants.
In 2010, the Group collected approximately 448,000 tonnes of recovered paper
as part of its recycling operations and produced approximately 399,000 tonnes
of packaging and industrial papers and 387 million square metres of
corrugated packaging products. The Group`s paper business had external
revenues of R4,407 million representing 77% of the Group`s revenue (excluding
Paperlink revenue) and EBITDA of R686 million in 2010 (excluding corporate
services costs).
In addition, the Group is a leading producer of rigid plastic packaging in
South Africa and is the largest South African producer of PET pre-forms,
styrene trays and plastic jumbo bins. In 2010 the Group`s plastics business
produced over one billion pre-forms and PET bottles. The Group has eight
plastics production facilities in the Western Cape, Gauteng and KwaZulu-Natal
in South Africa, as well as one plant in Zimbabwe. The Group`s plastics
business had external revenues of R1,310 million, representing 23% of the
Group`s revenue (excluding Paperlink revenue) and EBITDA of R190 million in
2010 (excluding corporate services costs).
The Group has developed centres of excellence for its human resources,
safety, health and environmental policy functions. In addition, the Group
enjoys the benefits of shared services across its businesses for its finance,
human resources administration and IS&T and has an R&D facility located in
Stellenbosch.
Immediately prior to the Demerger and the Listing, the Group will be 89.55%
owned by Mondi, a global integrated paper and packaging group, and 10.45%
owned by Shanduka, a broad-based black economic empowerment ("BBBEE")
investment concern. The Listing positions the Group to pursue optimisation
and growth initiatives in line with its strategic vision without the
constraints of being part of Mondi, with its different strategic priorities
which exclude the rigid plastics business. The Demerger will enable the Group
to pursue attractive investment opportunities in its paper and plastics
businesses and provides more potential to expand the Group`s geographic
footprint into African markets. As part of the re-organisation of the Group
prior to the Listing, the Group sold its Paperlink business (paper merchant
business), which had sales of R541 million in 2010, to Mondi Limited with
effect from 1 April 2011 for R93 million. Furthermore the Group has agreed to
sell 25% of its recycling division to Mondi Limited with effect from 1 July
2011.
Shanduka has undertaken that it will not sell any of its shares in the
Company for a period of 180 days following the Demerger. The Group remains
committed to the enhancement of BBBEE in South African society.
3. Competitive Strengths
The Group believes its key strengths include the following:
- leading market positions in South Africa;
- a customer-focused operating structure;
- an integrated corrugated packaging value chain; and
- a track record of profitable growth delivered by an experienced management
team.
4. Strategies for growth
The Group`s overall business strategy is to optimise its current operations
and selectively grow its operations in each of its businesses. The Group
intends to:
- develop and selectively grow its leading market positions in rigid plastic
packaging, paper-based packaging and packaging paper in sub-Saharan Africa,
where the Group is able to extract value through business, operational and
management expertise as well as from product application, design and market
knowledge;
- further develop its manufacturing and service footprint to deliver superior
solutions to its customers underpinned by: a decentralised structure
reflecting management depth and experience at all levels; an innovative
customer-focused product offering; and leading market positions that enable
the Group to achieve sustainable cost effectiveness through economies of
scale; and
- focus on performance through business excellence programmes and sound asset
management enabling the Group to: provide its customers with quality products
and services; retain a motivated and skilled workforce and deliver good
returns to its shareholders.
As part of its overall optimisation strategy, the Group has established
business excellence programmes aimed at reducing costs and improving
profitability. These programmes specifically focus on operational performance
and prudent asset management and target continuous improvement of
productivity, efficiency and reliability of operations, cost reduction
programmes and profit improvement initiatives. These programmes also
encompass sustainability, human resources development, customer focus and
product innovation. Management believes that business excellence and rigorous
cost control programmes are key in improving its cost position. Management
will continue to focus on these initiatives and believes they will continue
to deliver future benefits to the Group.
Management also believes operational excellence can only be achieved by
empowering the Group`s operational management and employees. Remuneration of
management and supervisors is linked to performance against key performance
indicators. To this end, the Group has a well-established decentralised
structure and has initiated several skills and development programmes for
employees. Finally, the Group`s commitment to sustainable development in each
of its businesses, by adopting leading industry health and safety standards,
obtaining raw materials from accredited sources and ensuring its businesses
are constantly seeking to reduce their environmental impact, has enhanced the
Group`s reputation throughout the markets in which it operates.
5. Directors
The names, ages, nationalities, business addresses and functions of the
directors of Mpact are set out below:
On the Date of Listing, the board of Mpact will comprise:
Name Business Address Occupation/Function
Executive directors
Bruce William Strong (42) 4th Floor Chief Executive
Officer
South African and United 3 Melrose Boulevard
Kingdom
Melrose Arch 2196
Gauteng, South
Africa
Egar Leslie Leong (61) 4th Floor Chief Financial
Officer
South African 3 Melrose Boulevard
Melrose Arch 2196
Gauteng, South
Africa
Non-executive directors
Anthony John Phillips* (65)
South African and United 4th Floor Chairman
Kingdom
3 Melrose Boulevard
Melrose Arch 2196
Gauteng, South
Africa
Neo Phakama Dongwana* (39) 4th Floor Non-Executive
Director
South African 3 Melrose Boulevard
Melrose Arch 2196
Gauteng, South
Africa
Nomalizo Beryl Langa-Royds* 4th Floor Non-Executive
(49) Director
South African 3 Melrose Boulevard
Melrose Arch 2196
Gauteng, South
Africa
Timothy Dacre Aird Ross* 4th Floor Non-Executive
(66) Director
South African 3 Melrose Boulevard
Melrose Arch 2196
Gauteng, South
Africa
Andrew Murray Thompson* (54) 4th Floor Non-Executive
Director
South African 3 Melrose Boulevard
Melrose Arch 2196
Gauteng, South
Africa
Notes:
* Independent director
6. Salient dates and times
2011
Issue of notices for the Mondi Limited general Tuesday, 31 May
meeting and Mondi plc general meeting
Publication of the Pre-listing Statement Tuesday, 31 May
Last date for lodging of proxy forms for the Tuesday, 28 June
Mondi Limited general meeting and Mondi plc
general meeting by 12:00
Mondi Limited general meeting (at 12:00) and Thursday, 30 June
Mondi plc general meeting (at 11:00 UK time)
Results of Mondi Limited general meeting and Thursday, 30 June
Mondi plc general meeting released on SENS
Results of Mondi Limited general meeting Friday, 1 July
published in the (South African) press
Last Day to trade in Mondi Limited Ordinary Friday, 8 July
Shares on the JSE in order to be recorded in
Mondi Limited`s register of members on the
Demerger Record Date
Mondi Limited Ordinary Shares trade ex the Monday, 11 July
entitlement to the Demerged Shares from the
commencement of business
Date of Listing on the JSE Monday, 11 July
Demerger Record Date Friday, 15 July
Demerger effected Monday, 18 July
Share certificates in respect of Demerged Monday, 18 July
Shares posted to Mondi Limited Shareholders who
hold Mondi Limited Ordinary Shares in
certificated form on or about
Mondi Limited Shareholders who hold Mondi Monday, 18 July
Limited accounts at their CSDP or broker
updated with Demerged Shares on
Any material change to the timetable will be released on SENS and published
in South African press.
7. Share capital
At the Date of Listing, the (a) authorised share capital of the Company will
be comprised of 217,500,000 Ordinary Shares, and (b) issued share capital of
the Company will be comprised of 164,046,476 Ordinary Shares. All the issued
Ordinary Shares of the Company are expected to be listed on the main board of
the stock exchange operated by the JSE. All Ordinary Shares rank pari passu
in all respects, there being no conversion or exchange rights attaching
thereto, and have equal rights to participate in capital, dividend and profit
distributions by the Company. There will be no other class of shares in issue
by the Company as at the Date of Listing. As at the Date of Listing no shares
will be held by the Company or its subsidiaries as treasury shares.
8. Copies of the Pre-listing Statement
The Pre-listing Statement is available in English only and copies thereof may
be obtained during normal business hours from Tuesday, 31 May 2011 until
Thursday, 30 June 2011 from Mpact, Rand Merchant Bank (a division of
FirstRand Bank Limited) and Link Market Services South Africa (Proprietary)
Limited, at their respective physical addresses which appear below:
The registered office of Mpact: The office of Rand Merchant Bank:
4th Floor 1 Merchant Place
3 Melrose Boulevard Cnr Rivonia Road and Fredman Drive
Melrose Arch 2196 Sandton
Gauteng, South Africa Johannesburg
2196
South Africa
The office of Link Market Services
South Africa (Proprietary) Limited
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein 2001
(PO Box 4844, Johannesburg 2000)
South Africa
9. Holders of Mondi Limited Ordinary Shares in the United States and the
Restricted Shareholders
Mondi Limited Shareholders with registered addresses in any of Australia,
Canada or Japan (each an "Excluded Territory") or who are located or resident
in an Excluded Territory ("Restricted Shareholders") and, subject to certain
exceptions, Mondi Limited Shareholders with registered addresses in the
United States or located or resident in the United States ("US Mondi Limited
Shareholders") will not receive any Demerged Shares pursuant to the Demerger.
A mechanism will be put in place so that the Demerged Shares due to such
Restricted Mondi Limited Shareholders and, subject to certain exceptions, the
US Mondi Limited Shareholders will not be delivered to such shareholders
personally, but rather will be delivered, following the Demerger, to a third
party in South Africa nominated by Mondi, which will hold such Demerged
Shares on behalf of such Restricted Mondi Limited Shareholders and US Mondi
Limited Shareholders. Mondi Limited or the third party shall co-ordinate the
disposal of the Demerged Shares due to such Restricted Mondi Limited
Shareholders and US Mondi Limited Shareholders for cash in South Africa and
distribute the cash proceeds therefrom (translated into the relevant local
currency or US dollars (as the case may be) from South African rand at the
ruling exchange rate at the relevant time net of applicable fees, expenses,
taxes and charges) to such Restricted Mondi Limited Shareholders and US Mondi
Limited Shareholders, in proportion to such shareholders` entitlement to
Demerged Shares. There can be no assurance as to what price such Restricted
Mondi Limited Shareholders or US Mondi Limited Shareholders will receive from
the disposal of such Demerged Shares or the timing of such receipt or the
exchange rate that is achieved in converting the proceeds of the disposal of
such Demerged Shares from South African rand into the relevant Restricted
Mondi Limited Shareholders` or US Mondi Limited Shareholders` local currency.
The disposal of Demerged Shares due to such Restricted Mondi Limited
Shareholders and US Mondi Limited Shareholders will be pursuant to Regulation
S under the US Securities Act.
Johannesburg
31 May 2011
Financial adviser and sponsor to the Group
Rand Merchant Bank (a division of FirstRand Bank Limited)
Financial advisers and transaction sponsor to Mondi
NM Rothschild & Sons Limited
And
NM Rothschild & Sons (South Africa) (Proprietary) Limited
Attorneys
Webber Wentzel, Legal adviser to Mpact and Mondi as to South African law
Linklaters LLP, Legal adviser to Mondi as to English and US law
White & Case LLP, Legal adviser to Mpact as to English law
Reporting accountants and auditors
Deloitte & Touche
The release, publication or distribution of this abridged pre-listing
statement in certain jurisdictions may be restricted by law and therefore
persons in any such jurisdictions into which this abridged pre-listing
statement is released, published or distributed should inform themselves
about and observe such restrictions. Any failure to comply with the
applicable restrictions may constitute a violation of the laws of any such
jurisdiction.
This abridged pre-listing statement does not constitute an offer to purchase
or to subscribe for shares or other securities or a solicitation of any vote
or approval in any jurisdiction.
This abridged pre-listing statement does not constitute an offer to sell nor
a solicitation to buy securities as such terms are defined under the US
Securities Act of 1933 (the "US Securities Act").
The Demerged Shares have not been and will not be registered under the US
Securities Act or under any securities laws of any state or other
jurisdiction of the United States and may not be offered, sold or taken up,
directly or indirectly, within the United States, except pursuant to an
applicable exemption from, or in a transaction not subject to, the
registration requirements of the US Securities Act and in compliance with any
applicable securities laws of any state or other jurisdiction of the United
States. There will be no public offer of the Demerged Shares in the United
States.
TO NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATION STATEMENT OR
AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW
HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT
A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF
NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW
HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION
IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF
STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS
UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
The Demerged Shares have not been and will not be registered under the
securities laws of any of Australia, Canada and Japan and may not be offered,
sold or taken up, directly or indirectly, by any Restricted Mondi Limited
Shareholder, except pursuant to an applicable exemption from and in
compliance with any applicable securities laws.
Date: 31/05/2011 08:43:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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