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AET - Alert Steel Holdings Limited - Declaration announcement and terms of the
partially underwritten alert renounceable rights offer
ALERT STEEL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
JSE code: AET ISIN: ZAE000092847
("Alert" or "the company")
DECLARATION ANNOUNCEMENT AND TERMS OF THE PARTIALLY UNDERWRITTEN ALERT
RENOUNCEABLE RIGHTS OFFER
1. Introduction and terms of the rights offer
Shareholders are referred to the announcements dated 15 October 2010 and 31
March 2011 and are advised that the company has finalised terms in order to
raise up to R50 million by way of a partially underwritten rights offer of
1 515 151 515 new no par value ordinary shares ("rights offer shares") to
Alert shareholders recorded in the register at the close of business on
Friday, 9 September 2011.
The subscription price is 3.3 cents per rights offer share ("rights offer
price"). The ratio of the rights offer is 591.79 rights offer shares for
every 100 Alert shares held ("rights offer"). The rights offer price
represents a discount of 80.59% to the 30 day volume weighted average price
of Alert ordinary shares of 17 cents as at 19 April 2011 being the date
that the Underwriting Agreement was entered into by the company. The
rights offer shares, once subscribed for and issued, will rank pari passu
in all respects with the existing issued Alert shares ("the Alert shares").
2. Underwriting agreement
An agreement has been entered into between the company, the WF and JC
Family Trust, Capital Africa Steel (Pty) Limited ("CAS"), Carlmac Steel
(Pty) Limited, Cannistraro Investments 219 (Pty) Limited, Gayatri Paper
(Pty) Limited, Andrew Charles Brookstein, Richard Maynard and Owen Vernon
Jevon (collectively "the underwriters"), in terms of which the underwriters
have agreed to partially underwrite the rights offer shares at the rights
offer price ("the Underwriting Agreement"), subject to the conditions
precedent set out in 3 below.
The underwriters will underwrite up to a maximum of R36.3 million being
72.60 % of the rights offer.
CAS and the WF & JC Family Trust have provided Alert with irrevocable
commitments to follow their rights, to the value of R28.3 million, which
amount is included in the underwritten amount referred to above.
Due to the financial constraints under which the company and its
subsidiaries ("the Group") were operating at the time that the company
entered into the Underwriting Agreement, it was agreed with the
underwriters that they would make their respective underwritten amounts
available to the company on loan account.
3. Specific issue of shares for cash
In terms of the Underwriting Agreement, it was agreed that, to the extent
that certain of the underwriters, namely Cannistraro Investments 219 (Pty)
Limited, Gayatri Paper (Pty) Limited, Andrew Charles Brookstein and Richard
Maynard ("the subject underwriters"), by virtue of their underwriting, were
not allocated at least 151 515 152 rights offer shares at the rights offer
price in terms of the rights offer, Alert shall be required to allot and
issue to the subject underwriters, in terms of a specific issue of shares
for cash ("the specific issue"), such number of shares in Alert, at the
rights offer price, as would result in the subject underwriters
collectively between them holding 151 515 152 shares in Alert pursuant to
the implementation of both the rights offer and the specific issue.
4. Conditions precedent
The Underwriting Agreement is subject inter alia to the fulfilment of the
following suspensive conditions:
- to the extent required, all necessary regulatory approvals having been
obtained from all relevant regulatory authorities; and
- the JSE Limited having granted a listing in respect of the rights
offer shares.
5. Purpose of the rights offer and use of the proceeds
The purpose of the rights offer is to provide Alert with capital to
refinance the business of the group.
In order to return Alert to long-term stability and sustainable
profitability, the company is in the process of returning to its original
core business of selling and supplying steel and steel related products and
services, and to restructure the company`s balance sheet as the company is
presently operating under constrained financial circumstances.
6. Financial effects of the rights offer and the specific issue
The unaudited pro forma financial effects of the rights offer and the
specific issue, for which the directors are responsible, are provided, for
illustrative purposes only, to show the effect thereof on loss per share,
fully diluted loss per share, headline loss per share and fully diluted
headline loss per share as if the rights offer and the specific issue had
taken effect on 1 July 2010, and to show the effect thereof on net asset
value per share and net tangible asset value per share as if the rights
offer and the specific issue had taken effect on 31 December 2010. Because
of their nature, the unaudited pro forma financial effects may not fairly
present the company`s financial position and performance. The unaudited pro
forma financial effects have been compiled from the published reviewed
results for the six months ended 31 December 2010 and are presented in a
manner consistent with the format and accounting policies adopted by Alert
and have been adjusted as described in the notes below:
Column i ii iii iv
number
Before After the % After %
rights change the change
offer specific
issue
Loss per 86 87
share (cents) (33.90) (4.78) (4.40)
Headline 86 87
loss per (26.69) (3.76) (3.46)
share (cents)
Fully 86 87
diluted loss (32.90) (4.76) (4.38)
per share
(cents)
Diluted 86 87
headline loss (25.90) (3.74) (3.45)
per share
(cents)
Net asset (3) (3)
value per 3.34 3.23 3.23
share (cents)
Net tangible (3) (3)
asset value 3.34 3.23 3.23
per share
(cents)
Weighted 1 763 1 915
average 248 429 581 096
number of
shares in
issue (000)
Fully 1 771 1 922
diluted 256 029 181 696
weighted
average
number of
shares in
issue (000)*
Shares in 1 763 1 915
issue at 248 429 581 096
period end
(000)
*Includes 7 600 000 treasury shares
Notes:
1. The pro forma calculations have been based on the assumptions that:
- the rights offer was fully subscribed for; and
- the rights offer and the specific issue was implemented on 1 July
2010 for income statement purposes.
2. The pro forma calculations have been based on the assumption that the
Underwriting Agreement (and the related loan agreements) was effective
on 1 July 2010 for income statement purposes.
3. The information as reflected in column (i) has been extracted from the
company`s reviewed consolidated interim results for the year ended 31
December 2010.
4. The information reflected in column (ii) is calculated based on the
assumption that R50 000 000 was received as consideration for the 1
515 151 515 rights offer shares.
5. The information in column (ii) has been calculated assuming that
transaction costs of R1 400 000 (exclusive of VAT) have been incurred
and written off to stated capital.
6. The information in column (iii) has been calculated assuming that a
specific issue of 151 515 152 shares were issued pursuant to the
specific issue. The percentage change has been calculated as the
cumulative change since before the rights offer.
7. Further announcements and circular
Further announcements will be made in due course relating to the fulfilment
of the conditions precedent and in respect of the salient dates of the
rights offer.
A circular to shareholders, giving full details of the rights offer, will
be posted to shareholders on or about 19 September 2011.
Pretoria
26 August 2011
Corporate Adviser and Designated Advisor
Vunani Corporate Finance
Date: 26/08/2011 13:49:01 Supplied by www.sharenet.co.za
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