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ADW - African Dawn Capital Limited - SPV Funding of Elite Group Two (Pty)

Release Date: 10/08/2011 12:00
Code(s): ADW
Wrap Text

ADW - African Dawn Capital Limited - SPV Funding of Elite Group Two (Pty) Limited ("Elite 2 SPV") by Sandown Capital (Pty) Limited ("Sandown Capital") AFRICAN DAWN CAPITAL LIMITED (Incorporated in the Republic of South Africa) (Registration number 1998/020520/06) JSE code: ADW ISIN: ZAE000060703 ("Afdawn" or "the company" or "the Group") SPV FUNDING OF ELITE GROUP TWO (PTY) LIMITED ("ELITE 2 SPV") BY SANDOWN CAPITAL (PTY) LIMITED ("SANDOWN CAPITAL") 1 Background The board of directors of Afdawn ("the board") have actively been seeking ways to raise capital so as to ensure the sustainable growth of the Group. Due to the time taken in order to arrive at a workable recapitalisation of the Group, the terms of which were released in SENS on 14 June 2011, the company sought additional capital for Elite Group (Pty) Limited ("Elite"), the Group`s wholly owned microfinance business. The board is pleased to announce that Sandown Capital has agreed to provide finance to be managed by Elite via a special purpose vehicle. Sandown Capital will finance Elite 2 SPV, a wholly owned subsidiary of Sandown Capital, with R10 million, to be managed by Elite. This SPV funding is in addition to the funding to be raised from Sandown Capital as part of the recapitalisation of Afdawn which was announced on 14 June 2011. 2 SPV Funding Sandown Capital, Afdawn and Elite have entered into the SPV agreement, classified as a material contract in the Group`s recapitalisation,in terms of which the parties will enter into an SPV arrangement as follows: 2.1 Elite 2 SPV terms and conditions 2.1.1 Sandown Capital will finance Elite 2 SPV, to a maximum of R10 million ("the Sandown Capital Loan"). 2.1.2 Elite shall manage Elite 2 SPV on behalf of Sandown Capital and shall source potential clients to provide short term salary deducted personal loans. 2.1.3 Elite will earn a monthly management fee, based on the income generated in the SPV, subject to an annual maximum. Thereafter Elite and Sandown Capital will share 50/50 in the profits of Elite 2 SPV, subject to certain loan recovery targets. This allows Elite access to funding lines at a time when the Group is in a period of stabilisation and recapitalisation. The Elite 2 SPV funding structure allows Elite to earn a management fee, to share in the returns of Elite 2 SPV and to continue to grow its business. 2.2 Option In terms of the SPV agreement and in consideration for the Sandown Capital loan, Sandown Capital has been granted an option ("the Sandown Capital option") as follows: 2.2.1 Sandown Capital will have the option, exercisable in July 2012, of selling 100% of the shares in Elite 2 SPV to Elite for a price based on the net asset value ("NAV") of both Elite and Elite 2 SPV ("the Selling Price") such that the value of Elite 2 SPV must equal 30% of the combined NAV of Elite and Elite 2 SPV as at 1 August 2012. Should Elite 2 SPV`s NAV be less than or greater than the 30%, as described, then Sandown Capital will either recapitalise Elite 2 SPV or will arrange for Elite 2 SPV to distribute capital so that the 30% target is met. Elite will settle the Selling Price of Elite 2 SPV by the issue of Elite shares, such that Sandown Capital will acquire 30% of the issued share capital of Elite, subject to the Selling Price not exceeding 49% of the market capitalization of Afdawn on the date of exercise of the Sandown Capital Option. 2.2.2 In the event that Sandown Capital exercises the Sandown Capital Option then it will be obligated to provide a two year funding line to Elite of R20 million, over and above the Sandown Capital loan of R 10 million provided to Elite 2 SPV. 2.2.3 In the event that Sandown Capital advises Elite and/or Afdawn of its intention to exercise the option then Elite and/or Afdawn will have 7 days in which to advise Sandown Capital of its intention to purchase Elite 2 SPV for a consideration equal to the NAV plus the outstanding Sandown Capital Loan ("the Consideration"). Elite and/or Afdawn will thereafter have 30 days in which to settle the Consideration. 2.2.4 In the event that Sandown Capital decides not to exercise the Sandown Capital Option then no new loans will be granted by Elite 2 SPV and Elite will be retained to manage the remaining loan book (on a reducing management fee) so as to repay the Sandown Capital Loan. 3. Categorisation The Sandown Capital Option is a category 2 transaction in terms of the JSE Limited ("JSE") Listings Requirements. 4 Financial effects In terms of the Listings Requirements of the JSE Limited, the Sandown Capital Option does not have any financial effect on Afdawn`s headline earnings and earnings per share and NAV for the year ended 28 February 2011. Johannesburg 10 August 2011 Designated advisor and corporate advisor: Sasfin Capital A division of Sasfin Bank Limited Date: 10/08/2011 12:00:01 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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