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IFC - IFCA Technologies Limited - Mandatory Offer, disposal of IFCA Software
Limited acquisitions of third Wave Diving And Travel Limited and out & about
marketing and media limited and renewal of cautionary announcement
IFCA TECHNOLOGIES LIMITED
Incorporated in the Republic of South Africa
(Registration number 2006/030759/06)
Share code: IFC ISIN: ZAE000088555
("IFCA" or "the Company")
MANDATORY OFFER, DISPOSAL OF IFCA SOFTWARE (PROPRIETARY) LIMITED,
ACQUISITIONS OF THIRD WAVE DIVING AND TRAVEL (PROPRIETARY) LIMITED AND OUT &
ABOUT MARKETING AND MEDIA (PROPRIETARY) LIMITED AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
MANDATORY OFFER
1.1 Terms and conditions of the mandatory offer
Shareholders are referred to the subsequent events paragraph of the audited
results of the Company for the year ended 31 December 2010 released on the
Securities Exchange News Service ("SENS") of JSE Limited ("the JSE") on 29 April
2011 wherein it was mentioned that, as a result of Decaweb (Proprietary)
Limited`s ("Decaweb" or "the Offeror") shareholding in the issued share capital
of the Company surpassing 35%, a change in control of IFCA has been effected. As
a result of the change in control, in terms of section 123 of the Companies Act,
2008 (Act 71 of 2008) ("the Companies Act"), a mandatory offer ("mandatory
offer") must be extended to all IFCA shareholders. Under the terms of the
mandatory offer, IFCA shareholders will receive a cash consideration of 7.72
cents per share ("mandatory offer consideration") plus interest payable thereon
at a rate of 15.5% ("interest"). The interest is payable from the 30th business
day following the date on which the change in control was effected, being 3
March 2011.
1.2 Fair and reasonable opinion
The mandatory offer is classified as an "affected transaction" in terms of the
Companies Act and the Regulations published in terms of section 120 of the
Companies Act ("Takeover Regulations"). Accordingly, the independent directors
of IFCA ("independent board") will retain the services of Charles Orbach &
Company, as the independent professional expert, as required under regulation
90(1) of the Takeover Regulations, for the purposes of providing an opinion on
the mandatory offer.
The opinions of the independent professional expert and the independent board,
will be included in the circular to be distributed to IFCA shareholders.
1.3 Funding of the mandatory offer consideration
Carl Spingies Attorneys has provided the Takeover Regulation Panel ("Panel")
with an irrevocable unconditional confirmation that sufficient funds are
currently being held in trust on behalf of Decaweb, in favour of the minority
shareholders, for the sole purpose of fully satisfying the mandatory offer
consideration, plus interest payable thereon.
1.4 Beneficial holdings in IFCA
The Offeror, who is the beneficial owner of 23 246 104 IFCA shares, together
with a consortium of shareholders within Tetragona Nominees (Proprietary)
Limited ("Tetragona"), representing 46 547 223 IFCA shares (and with whom the
Offeror was acting in concert to effect the change in control), collectively
owned a 40.46% shareholding in the Company at the time of the change in control.
1.5 Posting of the mandatory offer circular
The anticipated distribution date of the mandatory offer circular is set out in
paragraph 7 below.
1.6 Responsibility statement
Decaweb and the independent board accept responsibility for the information
regarding the mandatory offer set out in this paragraph 1 and the final
paragraph of subsection 2.1 below insofar as it relates to Decaweb and IFCA,
respectively. To the best of their respective knowledge and belief, this
information is true and nothing has been omitted from this announcement which is
likely to affect the import thereof.
2 THE DISPOSAL
Further to the cautionary announcements released on SENS, the most recent of
which was dated 20 July 2011, the board of directors of IFCA ("the Board") is
pleased to advise shareholders that the Company has entered into a Memorandum of
Agreement of Sale of Shares ("Disposal Agreement") with Squirewood Investments
99 (Proprietary) Limited ("Squirewood") in terms of which, subject to the
fulfilment or waiver of the conditions precedent set out in paragraph 2.3 below,
Squirewood will acquire from IFCA 100% of the entire issued share capital in
IFCA Software (Proprietary) Limited ("IFCA sWare"), a wholly-owned subsidiary of
IFCA ("IFCA sWare Sale Shares"), and the shareholder loan of R4 897 037.00 owed
by IFCA sWare to the Company ("IFCA sWare Claims"), for a total consideration of
R1 000.00 ("Disposal of IFCA sWare").
Currently, IFCA sWare is the Company`s sole operating subsidiary.
2.1 Nature of sWare and rationale for the Disposal of IFCA sWare
IFCA sWare was originally formed for the sole purpose of marketing and
supporting the suite of software products of the Malaysian listed company, IFCA
MSC, under license in Africa.
IFCA sWare, an enterprise-wide integrated business solutions provider, offers
industry specific software solutions for four business segments, namely Property
Development and Management, Project Management, Engineering and Construction,
Hospitality and Finance & Leasing.
In terms of its license agreement, 50% of IFCA sWare`s software revenue was paid
to IFCA MSC. The business grew primarily through the use of Malaysian
consultants. However, this was at a very high cost to the South African
business.
It has been the intention of the Board to dispose of IFCA sWare and to transform
IFCA from a technology provider into a high growth business incubator, which it
will do by providing financial services and treasury functions to facilitate the
funding, re-engineering and development of companies in, inter alia, the mining
and resources, property, infrastructure, telecommunications, agriculture,
energy, marketing and media sectors.
It is the Board`s belief, which belief is supported by the Offeror, that the
Company`s new focus on "investment incubation" will provide growth to the
businesses in which IFCA invests, as well as to its shareholders. The Board aims
to invest in assets which will provide growth and higher than average returns.
The Company`s approach will be acquisitive and will focus on "entrepreneurial
operators" in order to achieve composite growth.
2.2 Consideration
The total consideration, payable by Squirewood to the Company for the IFCA sWare
Sale Shares and IFCA sWare Claims, is R1 000.00.
2.3 Effective date and conditions precedent
The effective date of the Disposal of IFCA sWare is 29 July 2011.
The Disposal of IFCA sWare is subject to the fulfilment of the following
conditions precedent:
- delivery of the share certificates relating to the IFCA sWare Sale Shares,
together with the share transfer form, to Squirewood;
- the Board passing a resolution to approve the Disposal of IFCA sWare;
- shareholders of IFCA in general meeting passing the resolutions necessary
to give effect to the Disposal of IFCA sWare in accordance and compliance
with the relevant requirements of the Companies Act, the Listings
Requirements of the JSE and the Takeover Regulations; and
- approval by the Panel.
3 THE ACQUISITION OF THIRD WAVE DIVING AND TRAVEL (PROPRIETARY) LIMITED
("THIRD WAVE")
The Board is pleased to advise shareholders that IFCA has entered into a Sale of
Shares and Claims Agreement ("Third Wave Acquisition Agreement") with the
Trustees of The Birdie Trust, ("the Seller") in terms of which, subject to the
fulfilment or waiver of the conditions precedent as set out in paragraph 3.3
below, IFCA will acquire 100% of the entire issued share capital in, and claims
against Third Wave ("Third Wave Sale Shares" and "Third Wave Sale Claims",
respectively) from the Seller, for a total purchase consideration of R107 460
273.70 ("Third Wave purchase price") ("the Third Wave Acquisition").
The total Third Wave purchase price is to be settled by way of issue of 30 066
706 IFCA shares and in cash as detailed in paragraph 3.4 below. The proposed
transaction constitutes a reverse take-over of IFCA by Third Wave in terms of
section 9.5(c) of the Listings Requirements of the JSE. Accordingly, IFCA will
be required to obtain approval from the JSE regarding whether the JSE will allow
the listing to continue following the proposed Acquisition of Third Wave.
3.1 Nature of Third Wave
Third Wave currently owns a 20% shareholding in the issued share capital of
Johannesburg Expo Centre (Proprietary) Limited ("Jhb Expo"). The remaining
shareholding is held by Fluxrab Investments No. 125 (Proprietary) Limited
("Fluxrab"), a private company incorporated in South Africa, which owns 37.5%,
and Montgomery Specialised Exhibitions Limited ("Montgomery"), a private limited
company incorporated in the United Kingdom, which owns 42.5%.
Pursuant to the Third Wave Acquisition Agreement, Third Wave has entered into a
Sale of Shares and Loan Account Agreement with each of Fluxrab ("Fluxrab Sale
Agreement") and Montgomery ("Montgomery Sale Agreement") whereby Third Wave will
acquire from each of Fluxrab and Montgomery, 30% and 7.5% of their current
shareholdings in Jhb Expo, respectively, for an amount of R80 000 000.00 and R20
000 000.00, respectively. IFCA has agreed, following the closing date, being the
fifth business day after the effective date as detailed in paragraph 3.3 below
("Third Wave closing date"), to lend and advance the necessary funds to Third
Wave so as to enable it to meet its payment obligations in respect of the
Fluxrab Sale and the Montgomery Sale Agreements. IFCA will procure the necessary
guarantees in favour of Fluxrab and Montgomery, and any amount which is paid in
terms of such guarantees will be credited as a loan account in favour of the
Company.
The principle business activities of Jhb Expo, which was established in 2002, is
the rental of company facilities at Nasrec, an exhibition centre located in the
south of Johannesburg, to various exhibition, conference and event organisers.
Jhb Expo holds, inter alia, the rights to host the Johannesburg International
Motor Show, more popularly referred to as the `Joburg Motor Show`, which is the
single largest international automotive event in Southern Africa.
3.2 Rationale for the Third Wave Acquisition
IFCA, which was registered and incorporated as a public company in South Africa
on 3 October 2006 to act as an investment holding company of IFCA sWare, listed
on the Alternative Exchange of the JSE on 8 December 2006.
To mark the beginning of a new era for the Company and, subject to shareholder
and JSE approval, IFCA intends to embark on a rebranding exercise, which will
include a change in name of the Company, and a transfer of the Company to the
Main Board of the JSE, which is part of the repositioning of the Company as an
investment entity.
The Board believes that the Third Wave Acquisition is in line with its stated
strategy of filling the equity gap in financing so as to provide choice in the
market for companies that require additional skills, infrastructure and capital
for their next growth phase.
IFCA`s involvement in Third Wave is in line with its intended core business
principles of acquiring and backing cash generative businesses in industries and
sectors poised for growth.
Currently, Third Wave boasts an impressive balance sheet supported by healthy
profits and cash flows. The current management has 25 years of combined
experience in the exhibition and events industry, and has identified some
innovative prospects which the Board believes will generate future value for
shareholders.
3.3 Conditions precedent and Third Wave effective date
The Third Wave Acquisition is subject to, inter alia, the fulfilment or waiver,
as the case may be, of the following conditions precedent on or before 31
October 2011:
- the Board passing a resolution approving or ratifying, as the case may
be, the entry by the Company into the Third Wave Agreement, and
shareholders of IFCA, in general meeting passing the resolutions
necessary to give effect to the Third Wave Acquisition, in accordance
and compliance with the relevant requirements of the Companies Act,
the Listings Requirements of the JSE and IFCA`s Memorandum of
Incorporation ("MOI");
- the board of directors of the Seller passing a resolution approving or
ratifying, as the case may be, the entry by the Seller into the Third
Wave Agreement, and shareholders of the Seller passing all such
resolutions as may be required to give effect to the provisions of the
Third Wave Agreement;
- the successful completion of a due diligence investigation on Third
Wave and Jhb Expo;
- the Fluxrab Sale Agreement and the Montgomery Sale Agreement becoming
unconditional, and IFCA being satisfied with any addenda thereto;
- the conclusion of a Shareholders` Agreement between Third Wave,
Fluxrab and Montgomery;
- the MOIs of Third Wave as well as Jhb Expo being amended to conform to
Schedule 10 of the Listings Requirements of the JSE;
- IFCA obtaining the relevant warranties and undertakings in relation to
Third Wave and Jhb Expo;
- nominations to the board of Jhb Expo, and the entry into service
contracts with specific individuals, being finalised;
- IFCA procuring, on or before 15 September 2011, bank or similar
guarantees and providing such to the Seller guaranteeing payment of
the monthly instalments referred to in paragraph 3.4 below; and
- the JSE approving the listing of the consideration shares detailed in
paragraph 3.4 below.
The effective date of the Third Wave Acquisition ("Third Wave effective date")
will be the first business day of the month following the date on which the last
of the conditions precedent is fulfilled or waived, as the case may be.
3.4 Third Wave purchase price
The total purchase price payable in respect of the Third Wave Acquisition, being
R107 460 273.70, will be settled as follows:
3.4.1 an amount of R18 040 024 will be settled on the Third Wave closing
date by way of allotment and issue of 15 033 353 consideration shares from
the authorised but unissued share capital of IFCA, at an issue price of
R1.20 per share, subject to paragraph 3.4.4 below;
3.4.2 an amount of R18 040 024 will be settled by way of allotment and issue
six months after the Third Wave effective date, of 15 033 353 consideration
shares from the authorised but unissued share capital of IFCA, at an issue
price of R1.20 per share, subject to paragraph 3.4.4 below;
3.4.3 the balance of the Third Wave purchase price, being R71 380 225.70
will be paid in cash in five equal instalments of R14 276 045.14 each
("Third Wave monthly instalment"). The first Third Wave monthly instalment
will be paid on the Third Wave closing date and the four remaining Third
Wave monthly instalments will be paid, respectively, on the first business
day of each of the four months following the Third Wave effective date.
3.4.4 In respect of the amounts due in terms of paragraphs 3.4.1 and 3.4.2
above, in the event that, on the date on which the amount in paragraph 3.4.2
becomes due ("due date") the 30-day volume weighted average price ("VWAP") of a
consideration share is less than R1.20 per share, the number of consideration
shares to be issued will be increased such that the aggregate consideration
shares issued to the Seller will aggregate 36 080 048 divided by the 30-day VWAP
on the due date on.
4 THE ACQUISITION OF OUT & ABOUT MARKETING AND MEDIA (PROPRIETARY) LIMITED
("OAMM")
The Board is also pleased to advise shareholders that IFCA has entered into a
Sale of Shares and Claims Agreement ("OAMM Acquisition Agreement") with the RHB
Holdings (Proprietary) Limited as Trustees for the time being of the RHB
Investment Trust ("RHB Trust"), Devoran Trustees Limited as Trustees for the
Jade Trust ("Jade Trust") and E&J Abbott (Proprietary) Limited as Trustees for
the E&J Abbott Family Trust ("AFT Trust"), collectively referred to herein after
as "the Seller of OAMM", in terms of which, subject to the fulfilment or waiver
of the conditions precedent as set out in paragraph 4.3 below, IFCA will acquire
45% of the entire issued share capital in, and claims against OAMM ("OAMM Sale
Shares" and "OAMM Sale Claims", respectively) from the Seller of OAMM, for a
total purchase consideration of A$11 175 033 ("OAMM purchase price") ("the OAMM
Acquisition").
4.1 Nature of OAMM
OAMM is a private company duly incorporated and registered in accordance with
the laws of Australia. OAMM is the largest provider of world-class light-
emitting diode ("LED") digital and rotational perimeter signage in Australia,
offering tailored, turnkey solutions in the national sports media arena, from
design through to production.
4.2 Rationale for the OAMM Acquisition
While the Board believes that OAMM`s entrepreneurial management team and annuity
income based model will benefit from the provision of the additional skills,
infrastructure and funding that IFCA offers, the OAMM Acquisition will provide
IFCA with diversification and a balanced portfolio of assets going forward.
4.3 Conditions precedent and OAMM effective date
The OAMM Acquisition is subject to, inter alia, the fulfilment or waiver, as the
case may be, of the following conditions precedent on or before 31 October 2011:
- the Board passing a resolution approving or ratifying, as the case may be,
the entry by the Company into the OAMM Agreement, and shareholders of IFCA,
in general meeting passing the resolutions necessary to give effect to the
OAMM Acquisition, in accordance and compliance with the relevant
requirements of the Companies Act, the Listings Requirements of the JSE and
IFCA`s MOI;
- the Seller of OAMM passing a resolution approving or ratifying, as the case
may be, its entry into the OAMM Agreement, and passing all such resolutions
as may be required to give effect to the provisions of the OAMM Agreement;
- the successful completion of a due diligence investigation on OAMM;
- the conclusion of a Shareholders` Agreement between OAMM, the Company and
the persons constituting the Seller of OAMM (to the extent they remain
shareholders);
- the constitution of OAMM, to the extent permissible, being amended to
conform to Schedule 10 of the Listings Requirements of the JSE;
- IFCA obtaining the relevant warranties and undertakings in relation to
OAMM;
- IFCA obtaining the necessary approvals for the OAMM Acquisition from the
South African Reserve Bank, and the Seller of OAMM and/or OAMM complying
with any Australian regulatory requirements as may be required;
- entry into service contracts with specific individuals;
- IFCA procuring, on or before 31 October 2011, bank or similar guarantees
and providing such to the Seller of OAMM guaranteeing payment of the
monthly instalments referred to in paragraph 4.4 below; and
- the JSE approving the listing of the consideration shares detailed in
paragraph 4.4 below.
The effective date of the OAMM Acquisition ("OAMM effective date") will be the
first business day of the month following the date on which the last of the
conditions precedent is fulfilled or waived, as the case may be.
4.4 OAMM purchase price
The total purchase price payable in respect of the OAMM Acquisition, being A$11
175 033.00 is to be settled 80% in cash and 20% by way of issue of IFCA shares
subject to any adjustment detailed in paragraph 4.4.6 below, and will be settled
as follows:
4.4.1 an amount of A$1 117 503.30 will be settled on the OAMM closing date
(being the fifth business day after the OAMM effective date) by way of
allotment and issue of such number of consideration shares from the
authorised but unissued share capital of IFCA calculated in terms of
paragraph 4.4.4 below, at an issue price of R1.20 per share, subject to
paragraph 4.4.5 below;
4.4.2 an amount of A$1 117 503.30 will be settled by way of allotment and
issue six months after the OAMM effective date, of such number of
consideration shares from the authorised but unissued share capital of IFCA
calculated in terms of paragraph 4.4.4 below, at an issue price of R1.20
per share, subject to paragraph 4.4.5 below;
4.4.3 the balance of the OAMM purchase price, being A$8 940 026.40 will be
paid in cash in three equal instalments of A$2 980 008.80 each ("OAMM
monthly instalment"). The first OAMM monthly instalment will be paid on the
OAMM closing date and the two remaining OAMM monthly instalments will be
paid, respectively, on the first business day of each of the two months
following the OAMM effective date.
4.4.4 The number of consideration shares to be issued in terms of paragraphs
4.4.1 and 4.4.2 above will be calculated by way of converting the
Australian Dollar into South African Rands using the spot rate quoted by
the Standard Bank of South Africa Limited on the date of payment and
dividing such number by R1.20, being the strike price of such consideration
shares.
4.4.5 In respect of the amounts due in terms of paragraphs 4.4.1 and 4.4.2
above, in the event that, on the date on which the amount in paragraph
4.4.2 above becomes due the 30-day VWAP of a consideration share is
less than R1.20 per share, the number of consideration shares to be
issued will be increased such that the aggregate consideration shares
issued to the Seller of OAMM will aggregate 15 823 847 divided by the
30-day VWAP on the date on which the amount in terms of paragraph
4.4.2 above becomes due.
4.4.6 In the event that earnings before interest, tax, depreciation and
allowances ("EBITDA") of OAMM for the 12-month period from the first
day of the month following the OAMM effective date is:
4.4.6.1 less than A$4 500 000.00, the OAMM purchase price will be
adjusted downwards by the same percentage as the percentage
shortfall, subject to a maximum of 20%, and the Seller of OAMM
will be obliged to repay such downward adjustment to IFCA by way
of the surrender and transfer of consideration shares; or
4.4.6.2 greater than A$4 500 000.00, the OAMM purchase price will be
adjusted upwards by the same percentage as the percentage excess,
subject to a maximum of 20%, and IFCA will be obliged to repay
such upward adjustment to the Seller of OAMM by way of issue and
allotment of consideration shares.
4.5 LOAN
The Seller of OAMM and IFCA have respectively undertaken to advance an amount of
A$5 000 000.00, following receipt of the OAMM purchase consideration, and to
make available a capital expenditure facility of A$10 000 000.00, to OAMM, the
terms of which loans will be governed by the Shareholders Agreement referred to
in paragraph 4.3 above.
5 FUNDING
In order to fund the Third Wave and the OAMM Acquisitions the Company intends to
make use of the three year US$100 million facility which it obtained by entering
into a Special Private Placement Agreement ("SPPA") in November 2010 with
Singapore based investment fund, Equity Partners Fund SPC ("Equity Partners").
6 PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Disposal of IFCA sWare, the Third Wave
Acquisition and the OAMM Acquisition, collectively hereinafter referred to as
the Transactions, on the reported financial information of IFCA will be
announced to shareholders in due course.
7 CATEGORISATION OF TRANSACTIONS AND FURTHER DOCUMENTATION
The Third Wave Acquisition constitutes a reverse take-over in terms of section
9.5(c) of the Listings Requirements of the JSE and an "affected transaction" in
terms of the Companies Act and the Takeover Regulations.
Accordingly, a circular containing full details of the proposed Transactions,
including, inter alia, the mandatory offer, as well as the Revised Listing
Particulars of IFCA and a notice to convene a general meeting of IFCA
shareholders in order to consider and, if deemed fit to pass, with or without
modification, the resolutions necessary to approve and implement, inter alia,
the Transactions, will be distributed to IFCA shareholders by no later than the
end of September 2011.
8 RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that as numerous negotiations are still in progress,
which if successfully concluded, may have a material effect on the price of the
Company`s securities, they are advised to exercise caution when dealing in the
Company`s securities until a further announcement is made.
5 August 2011
Designated Adviser
Merchantec Capital
Date: 05/08/2011 09:02:33 Supplied by www.sharenet.co.za
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