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HSP - Holdsport Limited - Abridged pre-listing statement
Holdsport Limited
(incorporated in the Republic of South Africa)
(Registration number 2006/022562/06)
JSE share code: HSP
ISIN: ZAE000157046
("Holdsport" or the "Company" or the "Issuer")
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA.
THIS ABRIDGED PRE-LISTING STATEMENT HAS BEEN PREPARED AND ISSUED BY AND IS THE
SOLE RESPONSIBILITY OF HOLDSPORT.
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of Holdsport on the Main
Board of the securities exchange operated by the JSE Limited ("JSE") with effect
from the commencement of business on Monday, 18 July 2011.
The information in this abridged pre-listing statement has been extracted from
the detailed pre-listing statement issued by Holdsport, on Monday, 27 June 2011
("`Pre-Listing Statement").
This abridged pre-listing statement is not an invitation to the public to
subscribe for shares in Holdsport, but is issued in compliance with the Listings
Requirements of the JSE ("Listings Requirements") for providing information to
the public with regards to Holdsport.
1. Offer particulars
On 7 June 2011 resolutions were passed by the board of directors of Holdsport
(the "board") in respect of an offer for sale, subject to certain conditions, by
certain of the Company`s shareholders ("Selling Shareholders"), to (i) selected
institutional and other investors in South Africa and selected institutional
investors in other jurisdictions to whom such offer will specifically be
addressed, and (ii) Moresport (Proprietary) Limited (the "FSP Agent") to enable
the FSP Agent to make awards to employees and management under the Holdsport
Limited Forfeitable Share Plan (collectively, the "Applicants"), of 26,086,957
ordinary shares (excluding the shares forming part of the Over-allotment Option
(as defined below) and assuming no adjustment to the number of Conversion Shares
(as defined below)) in the share capital of the Company held by the Selling
Shareholders (the "Offer Shares"), or such higher or lower number as may be
determined by agreement between the bookrunner for the Offer ("Bookrunner") and
the Selling Shareholders (the "Offer"). Certain of the Selling Shareholders
intend to grant the stabilisation manager for the Offer an option exercisable
for a period of up to 30 days after the date of listing on the JSE ("Listing
Date") to purchase from them up to 3,913,043 additional ordinary shares
(assuming an Offer Price at the midpoint of the Offer Price Range (as defined
below)) on the same terms and conditions as those applicable to the Offer,
solely to cover over-allotments made by the Bookrunner in connection with the
Offer (the "Over-allotment Option").
This abridged pre-listing statement is not an invitation to the general public
to purchase the Offer Shares, but is issued in compliance with the Listings
Requirements, for the purpose of providing information about the Issuer and its
operations.
The price at which the Offer Shares will be offered for sale pursuant to the
Offer will be between R31.00 and R39.00 per Offer Share (the "Offer Price
Range"). However, the price at which the Offer Shares will be sold pursuant to
the Offer (the "Offer Price") may be outside the Offer Price Range. The Offer
Price will be determined by the Issuer after the completion of the bookbuild
process that will be undertaken in connection with the Offer.
The Selling Shareholders and the Bookrunner have granted the FSP Agent, Cobus
Loubser and Ryan O`Mahoney preferential rights to purchase 1,008,557 Offer
Shares at the Offer Price (assuming an Offer Price at the midpoint of the Offer
Price Range).
All of the Offer Shares are offered by the Selling Shareholders for sale and the
Issuer will therefore not receive any proceeds from the Offer. The Offer Shares
rank pari passu with the existing ordinary shares of the Issuer in all respects.
The Offer Shares will be delivered in dematerialised form only and accordingly
no physical documents of title will be issued to successful Applicants.
At the Listing Date, the authorised share capital of the Issuer will comprise
130,000,000 ordinary shares. Prior to the date of issue of the Pre-Listing
Statement, and to facilitate the Offer and the Listing, all existing
shareholders` loans were converted into ordinary shares at the midpoint of the
Offer Price Range (the "Conversion Shares"). The conversion of one of these
shareholder loans is subject to an upward or downwards adjustment in the number
of Conversion Shares issued in respect of the conversion of such shareholder
loan if the Offer Price differs from the midpoint of the Offer Price Range.
Assuming no adjustment to the Conversion Shares, the issued share capital of the
Issuer will, as at the Listing Date, comprise 42,857,143 fully paid ordinary
shares. The ordinary shares are no par value shares and the Issuer has no share
premium. All shares (including the Offer Shares) that are in issue as at the
Listing Date will rank parri passu in all respects. Following closing of the
Offer and subject to the spread requirements of the JSE being achieved, all the
issued ordinary shares of the Issuer will be listed on the JSE. As at the
Listing Date, save for the Offer Shares that may be held by the FSP Agent, no
shares in the Issuer will be held by the Issuer or its subsidiaries as treasury
shares.
The Offer is an offer to Eligible Investors only and is not an invitation to the
general public to purchase the Offer Shares. The following groups of investors
are Eligible Investors and are allowed to participate in the Offer:
- selected institutional and other investors in South Africa to whom the -
Offer is specifically addressed; and
- selected institutional investors in other jurisdictions to whom the Offer
is specifically addressed.
The minimum total acquisition cost of the Offer Shares acquired by any single
addressee under the Offer, acting as a principal, will be R1,000,000.
The JSE has granted the Issuer a listing in respect of 42,857,143 ordinary
shares (the "Listing") in the "Apparel retail" sector on the Main Board of the
JSE under the abbreviated name "Holdsport", symbol "HSP" and ISIN ZAE000157046,
subject only to the JSE`s spread requirements having been met.
2. Overview of the business
Holdsport is a leading South African cash retailer selling sport, leisure and
recreational merchandise. The Company has a national store network operating the
Sportsmans Warehouse and Outdoor Warehouse retail chains. These chains operate
large stores mostly located in value centres in recognised retail nodes
throughout South Africa. Holdsport also owns First Ascent.
- Sportsmans Warehouse operates 32 stores across South Africa (as at February
2011) including one store in Windhoek, Namibia. The chain offers a broad
range of sports equipment, footwear and apparel. It offers all the major
brands and a number of its own private label products. Sportsmans Warehouse
caters for all of the major South African team and individual sports.
- Outdoor Warehouse sells a wide range of outdoor and camping equipment,
apparel and related merchandise for adventure activities. The chain is
focussed on camping, hiking, off-road and general open-air recreation.
Outdoor Warehouse has 17 stores throughout South Africa (as at February
2011).
- First Ascent imports, manufactures and distributes technical apparel. The
products are designed for the active outdoor enthusiast and are distributed
nationally through independent outlets as well as Holdsport owned stores.
Holdsport has a national store footprint with both retail chains operating
across nine provinces, in prime retail locations which management believe is
difficult to replicate.
As at 28 February 2011, Holdsport operated a total of 49 stores, including 32
Sportsmans Warehouse stores, and 17 Outdoor Warehouse stores. As at the last
practicable date for the Pre-Listing Statement, being 8 June 2011, Holdsport has
opened Outdoor Warehouse store in Vanderbijlpark (April 2011) as well as a
further Sportsmans Warehouse store in Pietermaritzburg (May 2011).
Holdsport has maintained strong margins and top line growth has not been
achieved at the expense of profit growth. For the five year period ending 28
February 2011, revenues, Core EBITDA and Core operating income from continuing
operations have grown at a compounded annual growth rate of 12.6%, 13.7% and
13.5%, respectively. Furthermore, Holdsport delivered these figures during a
severe recession magnified by unprecedented global uncertainty. During the same
time period, the business` Core EBITDA margins have increased from 19.8% in 2007
to 20.6% in 2011, whilst its Core operating margins have increased from 18.0% in
2007 to 18.6% in 2011.
For the three year period ending 28 February 2011, the average return on net
assets for the Company increased from 84% in 2009 to 108% in 2011 and trading
density increased from R14,018 per m2 in 2009 to R16,367 per m2 in 2011.
Holdsport is a highly cash generative business with strong working capital and
capital expenditure controls. Cash conversion after capex for the most recent
financial year was 81.2%.
Holdsport has been able to achieve and maintain attractive margins due to a
combination of factors including a culture of rigorous cost management, its
direct sourcing model, private label ranges, economies of scale, diverse product
offering, and purchasing expertise combined with a track record of profitable
new store openings.
3. Competitive strengths
Holdsport`s key competitive strengths include:
- strong market position in an attractive segment;
- differentiated merchandising and value for money proposition;
- distinctive retail experience;
- attractive customer base and product mix;
- compelling store economics;
- proven track record of delivering profitable growth and operational
excellence; and
- experienced management team with a significant shareholding in the
business.
4. Growth initiatives
There are a number of organic and in-organic initiatives to drive future growth.
Holdsport plans to continue to strengthen its position as South Africa`s leading
dedicated sporting and outdoor retailer through:
- Increasing turnover from existing stores - Holdsport has consistently
improved its store productivity;
- Continuing to expand exclusive offerings - Holdsport has invested in
development and procurement staff who continually source performance-based
products targeted at the sporting and outdoor enthusiast;
- Leveraging Holdsport`s supply chain excellence - capacity to leverage the
Company`s merchandising expertise to enhance the business` growth, product
lines and sales points;
- Expanding distribution - there are a number of areas that management is
exploring in delivering product to its customers outside of the store
environment, such as the internet;
- Expanding its store base using its proven store model - Management believes
that in the medium term there is scope for Holdsport to open a further 3 to
5 stores per annum;
- Geographic expansion - the Company is well positioned to leverage its
platform in South Africa and Namibia for expansion into sub-Saharan Africa
as these markets develop; and
- Inorganic growth - Holdsport is well positioned to take advantage of
selected potential complementary acquisition opportunities.
5. Prospects
Holdsport is well positioned to leverage its competitive strengths and business
platform to facilitate growth and profitability in the business by growing its
store base, increasing product volumes, improving the product mix, increasing
efficiencies and seeking value-enhancing acquisitions.
Holdsport is a seasonal business with the majority of earnings coming through in
the second half of the financial year. December and January are Holdsport`s most
important trading months. Whilst the impact of the World Cup in the first half
of the 2011 financial year is difficult to fully quantify, management believe
this event has had a number of benefits to the business such as enhanced support
for national teams, further raising the profile of sport and stimulating sport
merchandising. Holidays are important trading periods for Holdsport, and whilst
the World Cup year had the same number of holidays, the timing of those holidays
is very different to the current financial year, accordingly like for like
trading in the first half and second half of the 2012 financial year will be
less comparable.
The trading outlook for the full 2012 financial year continues to be attractive
in line with the recovering South African economy and continued business
enhancement initiatives.
6. Directors
The names, ages and business addresses of the directors of Holdsport as at the
date of Listing are set out below:
Name, Age and Business Address Function /
Nationality Occupation
Syd Muller (62)1,2 Second Floor, Non-Executive
Warehouse Building, Chairman
South African Black River Park,
Fir Street,
Observatory, 7925
Kevin Hodgson (41)3 The Mill House, Chief Executive
1 Canterbury Street, Officer
South African Cape Town,
8001
Cobus Loubser (35) 3,4 The Mill House, Chief Financial
1 Canterbury Street, Officer
South African Cape Town,
8001 Company
Secretary4
Toni Haarburger (56) 3 The Mill House, Executive
1 Canterbury Street, Director
South African Cape Town,
8001
Mary Vilakazi (33) 1,2 11 Hillrise road, Non-Executive
Pinelands, Director
South African 7405
Bryan Hopkins (64) 1,2 33 Muir Road, Non-Executive
Rondebosch, Director
South African 7700
Ngalaah Chuphi (49)1 35 Fricker Road, Non-Executive
Illovo, Director
Kenyan 2196
Crispin Sonn (43)1,2 Jan Smuts Drive, Non-Executive
Pinelands, Director
South African 7405
1. Non-executive directors.
2. Independent non-executive directors within the meaning of the Listings
Requirements.
3 Executive directors.
4. A permanent Company Secretary will be appointed by the Company within
six months of the listing date.
7. Salient dates and times
The following table provides the expected dates of certain important events
relating to the Offer.
Publication of abridged pre-listing on Monday, 27 June 2011
statement on SENS
Publication of the Pre-Listing on Monday, 27 June 2011
Statement
Opening date of the Offer 09:00 on Monday, 27 June
2011
Publication of abridged pre-listing on Tuesday, 28 June 2011
statement in the press
Last date for indication of interest 16:00 on Tuesday, 12
for the purpose of the bookbuild July 2011
Expected closing date of the Offer 16:00 on Tuesday, 12
July 2011
Offer price released on SENS Wednesday, 13 July 2011
Applicants will be advised of their Wednesday, 13 July 2011
allocations
Offer price published in the press Thursday, 14 July 2011
Proposed Listing Date on the JSE and Monday, 18 July 2011
delivery of Offer Shares
Expected Settlement Date Monday, 25 July 2011
Any material change will be released on SENS.
8. Copies of the pre-listing statement
The pre-listing statement is only available in English and copies thereof may be
obtained electronically from the Holdsport website (www.holdsport.co.za) and in
printed form during business hours from Monday, 27 June 2011 until Tuesday, 12
July 2011 from Holdsport and UBS South Africa (Proprietary) Limited, at their
respective physical addresses which are set out below:
The office of UBS South Africa:
64 Wierda Road East
Wierda Valley
Sandton
2196
Registered office of Holdsport Limited:
The Mill House
1 Canterbury Street
Cape Town
Western Cape
South Africa
Bookrunner, Placement Agent, Stabilisation Manager and JSE Sponsor
UBS South Africa (Proprietary) Limited
Attorneys
Cliffe Dekker Hofmeyr Inc., legal adviser to the Company
Werksmans Inc., legal adviser to the Bookrunner
Reporting accountants and auditors
KPMG Inc.
Financial communications adviser
Brunswick South Africa Limited
Nothing in this abridged pre-listing statement constitutes an offer to sell, or
a solicitation of an offer to purchase, any securities in any jurisdiction where
it is unlawful to do so. The securities offered hereby have not been registered
under the Securities act of 1933, as amended (the "Securities Act"), or the
securities law of any states and, where offered or sold in the United States,
are being offered and sold in reliance on exemptions from the registration
requirements of the Securities Act and from exemption from registration under
applicable state securities laws. This abridged pre-listing statement will not
be distributed to, nor will an offer, solicitation or sale be made to, any
persons in the United States unless the Company has reasonable grounds to
believe, and does believe, immediately prior to making the offer, solicitation
or sale, that the offer or sale is exempt from the applicable registration
provisions, including offers or sales to persons who are Accredited Investors
(as defined in Rule 501 promulgated under the Securities Act) and that either
alone or together with one or more of their professional advisors (if any) have
such knowledge and experience in financial and business matters that such
persons are capable of evaluating the risks and merits of purchasing the
securities, and that such persons are able to bear the entire economic risk of
that investment. The securities may not be sold, transferred or otherwise
disposed of for value in the United States except pursuant to registration,
exemption there from or operation of law. The securities have not been approved
or disapproved by the United States Securities and Exchange Commission, any
state securities commission or other regulatory authority, nor have any of the
foregoing authorities passed upon or endorsed the merits of this offering or the
accuracy or adequacy or this abridged pre-listing statement. Any representation
to the contrary is unlawful. This abridged pre-listing statement does not
constitute an offer or solicitation to anyone in any jurisdiction in which such
an offer or solicitation is not authorised by law.
This abridged pre-listing statement does not constitute an offer of securities
to the public in the United Kingdom. In the United Kingdom, this abridged pre-
listing statement is being distributed only to and directed only at Qualified
Investors (i) who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 ("Order") (investment professionals)
or (ii) who fall within Article 49(2)(a) to (d) of the Order (high net worth
companies, unincorporated associations etc) or (iii) fall within another
exemption to the Order or are a person to whom this abridged pre-listing
statement may otherwise be lawfully communicated, (all such persons referred to
above being "Relevant Persons"). Any investment or investment activity to which
this abridged pre-listing statement relates is available only to Relevant
Persons and will be engaged in only with Relevant Persons. By accepting receipt
of this abridged pre-listing statement, each recipient is deemed to confirm,
represent and warrant that they are a Relevant Person.
To the extent that the Offer is made in any member state of the European
Economic Area (a "Member State") that has implemented Directive 2003/71/EC
(together with any applicable implementing measures in any Member State, the
"Prospectus Directive"), any offer pursuant to this abridged pre-listing
statement is only addressed to qualified investors in that Member State within
the meaning of the Prospectus Directive ("Qualified Investors") or has been or
will be made otherwise in circumstances that do not require the publication of a
prospectus pursuant to, and as defined in, the Prospectus Directive. The Company
does not intend to publish a prospectus in relation to the Offer to be approved
by a competent authority in any Member State as it is defined in and in
accordance with the Prospectus Directive nor, where appropriate, publish it in
accordance with the Prospectus Directive and notify it to a competent authority
in any Member State in accordance with the Prospectus Directive and no such
publication, notification or approval has been made or obtained in any Member
State.
This abridged pre-listing statement has been prepared on the basis that all
offers of the Company`s shares will be made pursuant to an exemption under the
Prospectus Directive, as implemented in Member States of the European Economic
Area ("EEA"), from the requirement to produce a prospectus for offers of shares.
Accordingly any person making or intending to make, within the EEA, any offer of
the shares which are the subject of the Offer contemplated in this abridged pre-
listing statement should only do so in circumstances in which no obligation
arises to produce a prospectus for such offer.
This abridged pre-listing statement is not being distributed in the context of a
public offer of securities in Germany within the meaning of Section 2 no. 4 of
the German Securities Prospectus Act (Wertpapierprospektgesetz, "WpPG"). This
abridged pre-listing statement is not a Securities Prospectus
(Wertpapierprospekt) with the meaning of the WpPG and has neither been and will
not be filed with or approved by the Federal Financial Services Supervisory
Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht). This abridged pre-
listing statement or any other documents relating to the shares in the Company
may not be distributed, and the shares in the Company may neither directly or
indirectly be offered or sold in Germany other than either (i) to qualified
investors as defined in section 2(6) of the WpPG and, (ii) to other investors if
they are required to purchase shares in the Company for a total amount of at
least EUR 50,000; or (iii) otherwise to a limited group of investors as provided
under Section 3(2) no. 2 of the WpPG.
This Offer does not constitute a public offering of financial instruments in
France ("offre au public d`instruments financiers"), as defined in article L.
411-1 of the French Code Monetaire et Financier. Only providers of investment
services relating to portfolio management for the account of third parties or
qualified investors ("investisseurs qualifies") acting for their own account,
all as defined in Articles L.411-1, L.411-2 and D.411.1 to D. 411-4 of the
French Code Monetaire et Financier, are eligible to participate in the Offer.
As required by article 211-4 of the General Regulations of the Autorite des
Marches Financiers, such providers of investment services relating to portfolio
management for the account of third parties and/or qualified investors are
informed that: (i) this abridged pre-listing statement has not been submitted
and will not be submitted to the clearance procedures of the Autorite des
Marches Financiers in France ; (ii) with respect only to qualified investors,
they must participate in the Offer on their own account, in the conditions set
out in articles D. 411-1, D. 411-2, D.734-1, D. 744-1, D. 754-1 and D.764-1 of
the French Code Monetaire et Financier.
This pre-listing statement is being distributed only by or with the approval of
an authorised person and is directed at and is for distribution only to Italian
qualified investors ("investitori qualificati"), as defined pursuant to: (i)
Article 100 of the Italian Legislative Decree no. 58 of 1998 (the "Consolidated
Law on Finance"), as amended and supplemented from time to time; and (ii)
Article 34-ter, paragraph 1, letter b) of Regulation No. 11197 issued by CONSOB
(the Italian Securities Exchange Commission) on 14 May 1999, as amended and
supplemented (the "Regulation 11971/1999"). In particular, all qualified
investors receiving this pre-listing statement have expressly requested to
receive it on an unsolicited basis. In addition, it remains understood that
neither this pre-listing statement nor any copy or part thereof may be
distributed, directly or indirectly, in Italy to other third persons different
from such qualified investors who have expressly requested to receive it on an
unsolicited basis.
The Offer Shares may not be publicly offered, distributed or redistributed on a
professional basis in or from Switzerland, and neither this abridged pre-listing
statement nor any other solicitation for investments in the Offer Shares may be
communicated or distributed in Switzerland in any way that could constitute a
public offering within the meaning of articles 652a or 1156 of the Swiss Code of
Obligations ("CO"). This abridged pre-listing statement may not be copied,
reproduced, distributed or passed on to others without the Company`s prior
written consent. This abridged pre-listing statement is not a prospectus within
the meaning of articles 652a and 1156 CO or a listing prospectus according to
article 27 et seq. of the Listing Rules of the SIX Swiss Exchange and may not
comply with the information standards required hereunder. There will be no
application for a listing of the Offer Shares on any Swiss stock exchange. Each
copy of this abridged pre-listing statement is addressed to a specifically named
recipient and shall not be passed to a third party.
This communication does not contain or constitute an invitation, inducement or
solicitation to invest. Except with respect to Eligible Investors (as defined in
paragraph 1 above) in jurisdictions where such offer is permitted by law,
nothing in this electronic transmission constitutes an offer or an invitation by
or on behalf of either the Issuer, the Selling Shareholders or the Bookrunner to
subscribe for or purchase any of the securities described in this abridged pre-
listing statement and/or the Pre-Listing Statement, and access has been limited
so that it shall not constitute a general advertisement or solicitation in the
United States or elsewhere. If a jurisdiction requires that the Offer be made by
a licensed broker or dealer and the Bookrunner or any affiliate of any of them
is a licensed broker or dealer in that jurisdiction, the Offer shall be deemed
to be made by them or their affiliates on behalf of the Bookrunner in such
jurisdiction.
Date: 27/06/2011 07:21:40 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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