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IVT - Invicta - Announcement regarding aloeCap Transaction

Release Date: 22/06/2011 16:48
Code(s): IVT
Wrap Text

IVT - Invicta - Announcement regarding aloeCap Transaction Invicta Holdings Limited (Incorporated in the Republic of South Africa) Registration number 1966/002182/06 Share code: IVT SIN code: ZAE000029773 ("Invicta" or "the Company") ANNOUNCEMENT REGARDING: - THE FUNDING OF THERAMANZI INVESTMENTS (PROPRIETARY) LIMITED ("THEREMANZI") (A COMPANY THAT WILL BE 100% HELD BY A TRUST TO BE ESTABLISHED ("HUMULANI EMPOWERMENT TRUST") AND RELATED SECURITIES; - THE DISPOSAL BY ALOECAP PRIVATE EQUITY INVESTMENTS 1 (PROPRIETARY) LIMITED ("aloeCap") OF ITS 20% ORDINARY SHARES IN HUMULANI INVESTMENTS (PROPRIETARY) LIMITED ("HUMULANI"), AN INVICTA SUBSIDIARY, TO THERAMANZI; AND - WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION, BACKGROUND AND RATIONALE Holders of the ordinary shares in Invicta ("Invicta Shareholders") are referred to the cautionary announcement released on SENS on Wednesday, 13 April 2011 and in the press on Thursday, 14 April 2011 and renewed on 1 June 2011, wherein Invicta shareholders were advised that Invicta has entered into negotiations with their BEE partner, aloeCap in respect of the possible restructuring of aloeCap`s 20% ordinary shareholding in Humulani ("Humulani Shares"), which, if successfully concluded, may have a material effect on the price of Invicta`s securities. As part of the Invicta group`s commitment to Black Economic Empowerment ("BEE") and to increase the participation of black women, black broad based groups and black designated groups in its operations, Invicta has agreed to facilitate the transaction in terms of which aloeCap would sell the Humulani Shares to Theramanzi, prior to the expiry of the initial lock-in period, being 17 March 2012 ("the Sale Transaction") and to provide funding to Theramanzi for the Sale Transaction. The funding will be provided to Theramanzi by a company to be named Invicta Investments (Pty) Ltd ("Investments"). Investments, a wholly owned Invicta subsidiary, will subscribe for cumulative, non-convertible, redeemable preference shares to be issued by Theramanzi ("Theramanzi Preference Shares"). Investments has agreed to provide a put option ("Put Option") over the Humulani shares to Theramanzi. The Put Option will provide liquidity to Theramanzi for the Humulani Shares and enable Theramanzi to redeem the Theramanzi Preference Shares at their redemption date. Theramanzi has agreed to provide Investments with a call option ("Call Option") over the Humulani Shares whereby Investments will have the right to buy the Humulani Shares from Theramanzi. The Call Option will enable the Invicta group to buy back minorities in Humulani at the redemption date of the Theramanzi Preference Shares. The Humulani Empowerment Trust will be established to hold 100% of the ordinary shares in Theramanzi. The entering into of the Sale Transaction, Theramanzi Preference Shares transaction, the Call Option, the Put Option and the Trust Formation are collectively referred to as the "Transactions". The Transactions are subject to the fulfillment of the conditions precedent set out in section 3 below. 2. TERMS OF THE TRANSACTIONS 2.1 Sale Transaction - aloeCap will sell the Humulani Shares to Theramanzi on 1 June 2011 for an amount equal to R176,035,562 plus an amount equal to R176,035,562 multiplied by 0.000191781 multiplied by the number of days from 1 August 2011 until the purchase consideration is settled ("Acquisition Price"). The Acquisition Price is based on a 1.16 historical earnings before interest, taxation, depreciation, amortisation and exceptional items ("EBITDA") multiple. 2.2 Theramanzi Preference Shares - Investments will subscribe for cumulative, non-convertible, redeemable preference shares to be issued by Theramanzi. The subscription price will be equal to the Acquisition Price plus transaction costs. The Theramanzi Preference Shares will carry a dividend rate of 16% nacs. Theramanzi will be obliged to redeem the Preference Shares on 30 November 2017 or on the occurrence of certain early redemption events ("Redemption Date"). 2.3 The Put Option - Investments will grant Theramanzi the Put Option whereby Theramanzi will have the right to sell the Humulani Shares to Investments on the Redemption Date at a strike price determined as follows: - the lower of: - 1.16 multiplied by the EBITDA of Humulani, calculated with reference to the average of the most recent completed financial year and prior financial year audited financial statements of Humulani ("the Humulani EBITDA"); and
- the Invicta EBITDA multiple (calculated with reference to the most recent audited financial statements of Invicta) multiplied by the Humulani EBITDA, - subject to a minimum value equal to the aggregate of the outstanding redemption amount of the Theramanzi Preference Shares plus any taxes arising on the disposal of the Humulani Shares and arising on the redemption of the Theramanzi Preference Shares.
2.4 The Call Option - Theramanzi will grant Investments the Call Option whereby Investments will have the right to buy the Humulani Shares on the Redemption Date at a strike price determined as follows: - the lower of: - 1.16 multiplied by the Humulani EBITDA; and - the Invicta EBITDA multiple (calculated with reference to the most recent audited financial statements of Invicta) multiplied by the Humulani EBITDA,
- subject to a minimum value equal to the aggregate of the outstanding redemption amount of the Theramanzi Preference Shares plus any taxes arising on the disposal of the Preference Shares and arising on the redemption of the Theramanzi Preference Shares. 2.5 The Trust Formation - the Humulani Empowerment Trust will constitute a broad-based trust, with its beneficiaries including Invicta employees, Invicta employees` immediate families, communities and other broad- based initiatives as determined by the trustees. It is the intention that the Humulani Empowerment Trust will facilitate and enhance the participation of black women, black broad based groups and black designated groups of Invicta and Humulani in terms of the Broad-Based BEE Codes of Good Practice. 2.6 Change in legislation - The Draft Taxation Laws Amendment Bill, 2011 ("the Bill") was issued for public comment on 2 June 2011. The Bill contains certain provisions which may have a material impact on the Transactions. Should tax legislation be introduced which may have an impact on the Transactions, Invicta will have the right to restructure the Transactions to cater for such consequences. 3. CONDITIONS PRECEDENT The Sale Transaction is subject to the following conditions precedent, to be fulfilled no later than 30 September 2011 or such later date as agreed between the parties: - Invicta shareholder approval to: - approve the Sale Transaction, the Theramanzi Preference Shares, the Put Option and the Call Option; and - authorise the directors of Invicta to restructure the Transactions due to changes in tax legislation. - Regulatory approvals to the extent necessary. - In respect of the shareholder approvals required, irrevocable undertakings from 62.14% of Invicta shareholders have been obtained. 4. PRO-FORMA FINANCIAL EFFECTS The table below sets out the unaudited pro-forma financial effects of the Transactions. These pro forma financial effects are the responsibility of the Company`s directors and are presented for illustrative purposes only to provide information regarding how the Transactions may have impacted on Invicta`s financial position had the Transactions been implemented on 31 March 2011 and impacted on Invicta`s financial results had the Transactions been implemented on 1 April 2010. The unaudited pro forma financial effects are based on the audited financial information of Invicta for the twelve months ended 31 March 2011 as announced on SENS on 1 June 2011 and has been prepared in accordance with the accounting policies of Invicta at that date. Due to the nature of the pro forma financial information, it may not fairly present the Group`s financial position or financial results after the Transactions. UNAUDITED PRO FORMA FINANCIAL EFFECTS Before the After the % Transactions Transactions Change
Earnings per share (cents) 504 532 6% Headline earnings per share 496 568 15% (cents) Diluted headline earnings 473 541 14% per share (cents) Net asset value per share 2 303 2 341 2% (cents) Tangible net asset value 1 785 1 823 2% per share (cents) Number of shares in issue 69 954 69 954 0% net of treasury shares (`000) Weighted average shares in 70 211 70 211 0% issue (`000) Notes and assumptions: a. The "Before the Transactions" column has been extracted from the published audited financial statements of Invicta for the year ended 31 March 2011 as released on SENS on 1 June 2011; b. For the purpose of calculating earnings per share, headline earnings per share and diluted headline earnings per share in the "After the Transactions" column, it was assumed that the Transactions were implemented on 1 April 2010; c. For the purpose of calculating net asset value per share and net tangible asset value per share in the "After the Transactions" column, it was assumed that the Transactions were implemented on 31 March 2011; d. Invicta will consolidate the Humulani Empowerment Trust, Theramanzi and 100% of Humulani in terms of SIC12; e. Earnings are reduced by the loss of interest on working capital balances at a rate of 5.5% naca; and f. Estimated once off Transaction costs amount to R3.76 million. 5. CATEGORY The Sale Transaction, the Theramanzi Preference Shares, the Put Option and the Call Option are collectively classified as a related party transaction as defined in section 10.1(b) of the JSE Listings Requirements, as aloeCap is a material shareholder holding 20% of the issued share capital of Humulani before the Transactions. The fairness opinion on the Sale Transaction, Theramanzi Preference Shares transaction, the Call Option transaction and the Put Option transaction, by an independent expert, as required by the JSE Listings Requirements, will be included in the circular referred to below. 6. CIRCULAR A circular, containing details of the Transactions and including a notice of general meeting and a form of proxy will be posted to Invicta shareholders in due course. 7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT As details of the Transactions have been provided in this announcement, Invicta`s shareholders are advised that they no longer need to exercise caution when dealing in their Invicta securities. 22 June 2011 Cape Town Corporate advisor Bravura Equity Services (Pty) Limited Sponsor Deloitte & Touche Sponsor Services (Pty) Limited Reporting accountants Deloitte & Touche Attorneys for the Humulani Empowerment Trust Bernadt Vukic Potash & Getz Attorneys for Invicta Robyn Hey and Associates Corporate advisor to aloeCap Private Equity Investments 1 (Proprietary) Limited aloeCap (Proprietary) Limited Date: 22/06/2011 16:48:01 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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