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UNI - Universal Industries Corporation - Announcement of a firm intention to
propose a scheme of arrangement and withdrawal of cautionary announcements
UNIVERSAL INDUSTRIES CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/004343/06)
JSE code: UNI ISIN: ZAE000110664
("Universal" or "the Company")
ANNOUNCEMENT OF A FIRM INTENTION TO PROPOSE A SCHEME OF ARRANGEMENT BETWEEN
THE COMPANY AND CERTAIN OF THE COMPANY`S SHAREHOLDERS AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENTS
INTRODUCTION
Further to the cautionary announcement published on the Securities Exchange
News Service ("SENS") of the JSE Limited ("JSE") on Monday, 11 July 2011
("Second Cautionary Announcement"), the independent board of directors of
Universal, comprising Gaff Khan, Colin Brayshaw and Danie Vlok, (the
"Independent Board") has now received a notice of firm intention from Ethos
Private Equity Fund V ("Ethos") and certain existing shareholders of the
Company (being those shareholders identified as the "Existing Shareholders
Consortium" in the table under the paragraph below headed "Shareholdings in
Universal" (the "Existing Shareholders Consortium") (collectively the
"Offeror") to propose a scheme of arrangement (the "Scheme"), in terms of
section 114 of the Companies Act, No. 71 of 2008, as amended from time to
time (the "Companies Act"), between Universal and the holders of 128 686 664
ordinary shares in the Company (being all the issued ordinary shares in the
Company other than the 329 232 462 ordinary shares held by the Existing
Shareholders Consortium, (the "Excluded Shares")). Pursuant to the Scheme,
all the issued ordinary shares in the Company other than the Excluded Shares
(being the "Scheme Shares") will be repurchased by the Company from the
holders of the Scheme Shares (the "Scheme Members") for a cash consideration
of R2.50 per ordinary share (the "Scheme Consideration"), (the "Offer").
SCHEME CONSIDERATION
The Scheme Consideration is calculated based on the assumption that the
aggregate number of issued ordinary shares in the Company as at the operative
date of the Scheme (the "Operative Date") will be 457 919 126 ordinary
shares.
The Scheme Consideration of R2.50 per Scheme Share represents a premium of:
37,3% to the closing price of Universal shares on the securities exchange
operated by the JSE as at 26 May 2011, being the last business day
immediately prior to the date of publication of the first cautionary
announcement wherein Universal announced it had entered into discussions
("First Cautionary Announcement");
37,4% to the volume weighted average price ("VWAP") of Universal shares on
the securities exchange operated by the JSE for the 30 trading days up to and
including 26 May 2011, being the last business day immediately prior to the
date of publication of the First Cautionary Announcement;
16,8% to the closing price of the Universal shares on the securities exchange
operated by the JSE as at 28 July 2011, being the last business day
immediately prior to the date of publication of this announcement; and
20,8% to the VWAP of the Universal shares on the securities exchange operated
by the JSE for the 30 trading days up to and including 28 July 2011, being
the last business day immediately prior to this announcement.
The Offer is made on the basis that no dividends or similar payments will be
declared or paid to Universal shareholders between the date of the firm
intention, being 29 July 2011, and the Operative Date. Should Universal
declare any such dividends or make any such payments, the Scheme
Consideration will be reduced by an amount equal to the amount of such
dividend payment, including any Secondary Tax on Companies payable by the
Company in respect thereof.
RATIONALE
The Scheme is being proposed by the Offeror -
as a mechanism to enable the Offeror to acquire all the shares in Universal
with the objective of ultimately acquiring effective ownership and control
over the group`s businesses and all its operating assets; and
to create an efficient platform for the introduction of a black economic
empowerment shareholder/s and to retain and attract further executive talent
in line with the Offeror`s strategic requirements.
The Scheme will afford Scheme Members an opportunity to receive a cash
consideration at an attractive premium to the market price of Universal
ordinary shares prior to the publication of the First Cautionary Announcement
and this announcement.
CONDITIONS PRECEDENT TO THE SCHEME
The Scheme will be subject to the fulfilment of the following conditions
precedent on or before 15 November 2011, provided that Ethos shall be
entitled on notice to the Company to extend the date for fulfilment of the
conditions precedent relating to the approval of the relevant Competition
Authorities and/or the issue of the compliance certificate in terms of
section 119(4) of the Companies Act referred to below to a date no later than
31 December 2011:
an independent expert appointed by the Independent Board under section 114(2)
of the Companies Act and the Fundamental Transactions and Takeover
Regulations published in terms of the Companies Act (the "Takeover
Regulations"), (the "Independent Expert"), confirming that the proposed
Scheme Consideration is fair and reasonable in terms of section 114(3) of the
Companies Act and the Takeover Regulations;
subject to the requirements of Regulation 110 of the Takeover Regulations and
based on the above confirmation from the Independent Expert, that the
Independent Board communicates to the shareholders of Universal its view that
the Offer is fair and reasonable and those members of the Independent Board
who hold Universal shares confirm to the shareholders of Universal that they
intend, in respect of their own Universal shares, to vote in favour of the
Scheme;
all regulatory approvals and consents necessary in respect of the Scheme
being obtained, including but not limited to approvals and consents from the
JSE, the Takeover Regulation Panel constituted by the Companies Act (the
"Panel") (including, without limitation, the issue of a compliance
certificate by the Panel in respect of the Scheme in terms of section 119(4)
of the Companies Act), and the unconditional approval of the relevant
Competition Authorities of the change of control of the Company that will
result from the implementation of the Scheme as well as the change of control
of the Company that will result from the transactions to be effected between
the Company, the Existing Shareholders Consortium and Ethos immediately after
the Operative Date. This condition precedent may be waived in part by the
Offeror to the extent that the relevant Competition Authorities grant such
approvals subject to conditions which are acceptable to the Offeror;
the Scheme is approved by a special resolution adopted by the requisite
number of persons in terms of section 115(2)(a) of the Companies Act (the
"Special Resolution") at a meeting of shareholders of the Company convened
for that purpose ("Scheme Meeting");
no person who voted against the Special Resolution
* requires the Company to seek court approval in terms of section
115(3)(a)
of the Companies Act within five business days after the vote; and
* no leave is granted by the court, on an application within 10 business
days after the vote, to any person in terms of section 115(3)(b) of the
Companies Act.
This condition precedent may be waived by the Offeror on condition that the
court approves the Special Resolution in terms of section 115(3)of the
Companies Act;
- within the period prescribed under section 164(7) of the Companies Act,
no valid demands have been received by the Company in terms of such
section in respect of ordinary shares representing more than 5% of the
total issued shares in the Company. This condition may be waived (in
whole or in part) by the Offeror;
- between the date of receipt by the Independent Board of the notice of
firm intention referred to above (being 29 July 2011) and the business
day immediately preceding the date of the Scheme Meeting, an adverse
effect, fact or circumstance which is or might reasonably be expected
(alone or together with any other such adverse effect, fact or
circumstance) to be material with regard to the operations, continued
existence, business, condition, assets or liabilities of Universal and
its subsidiaries (whether as a consequence of the Scheme or not) has not
occurred. For the purposes of this condition, to be material, the
adverse effect, fact or circumstances must:
* have (or be reasonably expected to have) an adverse effect upon
Universal`s annual profit after tax ("PAT"), of more than R12 million;
and/or
* constitute a change in the laws of the Republic of South Africa
(including, without limitation, laws relating to taxation) which has (or
may reasonably be expected to have) a material adverse effect upon the
Scheme or the transactions to be concluded between the Company, Ethos
and the Existing Shareholders Consortium after the Operative Date, such
that the effective direct or indirect cost of the Scheme or of such
transactions would increase by 10% or more (or an announced prospective
change which would have such an effect); and
- between the date of receipt by the Independent Board of the notice of
firm intention referred to above (being 29 July 2011) and the business
day immediately preceding the date of the Scheme Meeting, the Company
does not conclude any new debt facilities in an aggregate amount in
excess of R20 000 000 unless those new debt facilities are provided by
Nedbank Limited.
UNDERTAKINGS
The Offeror has received irrevocable undertakings from certain Universal
shareholders, set out in the table below, holding between them 117 115 815
Universal shares (representing in excess of 90% of the Scheme Shares) to
vote in favour of the Scheme and the resolutions to be proposed at the Scheme
Meeting.
These Universal shareholders are -
Shareholder Total shares held
Axonlane Investments (Pty) Ltd 18 663 248
Wyndmane Investments (Pty) Ltd 18 663 248
The Golden Hind Partnership 13 039 179
36One Asset Management (Pty) Ltd 27 970 539
Bateleuer Fund 1 Partnership 5 203 127
The Wilkes Trust 17 990 654
Dave Roberts 6 419 658
Gauteng Nominees (Proprietary) Limited 5 167 000
Keith Reeves 2 959 829
Edward Paynter 1 039 333
Total 117 115 815
GUARANTEES AND CONFIRMATIONS TO THE PANEL
FirstRand Bank Limited, acting through its Rand Merchant Bank division, has
provided an unconditional cash guarantee in conformity with Regulation 111(4)
and Regulation 111(5) of the Takeover Regulations securing the settlement of
the Scheme Consideration by the Company on the Operative Date.
SHAREHOLDINGS IN UNIVERSAL
Ethos does not hold or control directly or indirectly any shares in the
Company or any option to purchase any shares in the Company.
The Existing Shareholders Consortium collectively holds 329 232 462 ordinary
shares in the issued share capital of Universal which shares are excluded
from participation in the Scheme and will not be capable of being voted at
the Scheme Meeting.
The Existing Shareholders Consortium comprises those parties listed below
who/which as at the date of this announcement hold the Universal shares
indicated opposite their respective names:
Existing Direct Indirect Total % of issued
Shareholders holding holding shares held shares
Consortium
Bruce Armstrong 1 557 633 - 1 557 633 0.3
Jacob Levy Trust 72 632 324 - 72 632 324 15.9
LNP Trust 88 327 625 3 000 000 91 327 625 19.9
Mike Constable 6 419 658 - 6 419 658 1.4
MJM Trust 9 034 268 - 9 034 268 2.0
MK Trust 6 542 056 6 542 056 1.4
Shane McMeeking - 2 500 000 2 500 000 0.6
Wayne Brett
Primary Trust 77 398 784 - 77 398 784 16.9
Johan Burger 2 959 829 - 2 959 829 0.6
Graham Noonan 6 542 056 1 500 000 8 042 056 1.8
James Martin
Family Trust 29 272 290 2 500 000 31 772 290 6.9
Ian Harries 9 879 487 - 9 879 487 2.2
Ivor Morgan 6 419 658 - 6 419 658 1.4
Carl Lane - 16 000 16 000 -
Julian Heynes - 15 873 15 873 -
LFC Trust 1 000 000 1 000 000 0.2
Stuart Riley - 80 000 80 000 -
Michael Thurley - 634 921 634 921 0.1
Neil Wooding - 1 000 000 1 000 000 0.2
Total 317 985 668 11 246 794 329 232 462 71.9
All outstanding phantom share options to acquire 4 975 000 Universal shares
in terms of the Universal phantom share option scheme will be cash settled by
the Company and its subsidiaries on the Operative Date at the same time as
the implementation of the Scheme. 2 900 000 of the phantom share options are
held by certain members of the Existing Shareholders Consortium.
TERMINATION OF UNIVERSAL LISTING
Following implementation of the Scheme, application will be made to the JSE
to terminate the listing of Universal shares on the JSE.
THIRD PARTY APPROACHES
The Company has agreed that it will not actively solicit any competing offer
while the Offer remains open. If a competing offer is received by the Company
it will advise the Offeror of the existence and/or terms of any competing
offer forthwith after becoming aware thereof.
RECOMMENDATION AND FAIRNESS OPINION
The Independent Board has appointed Grant Thornton, an independent advisor
acceptable to the Panel, to provide it with external advice in relation to
the Scheme and to make appropriate recommendations to the Independent Board
for the benefit of Universal shareholders. The substance of the external
advice and the views of the Independent Board will be detailed in the
circular to be sent to Universal shareholders in relation to the Scheme.
DOCUMENTATION
Further details of the Scheme will be included in a circular to be sent to
Universal shareholders containing, inter alia, a notice of the Scheme
Meeting, a form of proxy and a form of acceptance and surrender. The circular
is expected to be posted to Universal shareholders on or about 30 August
2011. The salient dates in relation to the Scheme will be published prior to
the posting of the circular.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS
Following the release of this announcement, each of the First Cautionary
Announcement and the Second Cautionary Announcement is hereby withdrawn and
caution is no longer required to be exercised by Universal shareholders when
dealing in Universal shares.
RESPONSIBILITY STATEMENT
The Offeror and the Independent Board accept responsibility for the
information contained in this announcement. To the best of their respective
knowledge and belief the information contained in this announcement is true
and nothing has been omitted which is likely to effect the import of the
information.
Johannesburg
29 July 2011
Corporate advisor, legal advisor and sponsor to Universal and advisor to the
Existing Shareholders Consortium
Java Capital
Independent expert to Universal
Grant Thornton
Legal advisor to Ethos and competition advisor to the merging parties
Webber Wentzel
Date: 29/07/2011 16:00:01 Supplied by www.sharenet.co.za
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