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FWD - Freeworld Coatings Limited - Joint Announcement by Freeworld and Kansai in

Release Date: 17/10/2011 17:26
Code(s): FWD
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FWD - Freeworld Coatings Limited - Joint Announcement by Freeworld and Kansai in relation to the proposal to delist Freeworld from the JSE Freeworld Coatings Limited (Incorporated in the Republic of South Africa) (Registration number 2007/021624/06) Share code: FWD ISIN: ZAE000109450 ("Freeworld") KANSAI PAINT Co., Ltd. (Incorporated in Japan) (Registration number 1402-01-001093) TSE share code: 4613 ("Kansai") JOINT ANNOUNCEMENT BY FREEWORLD AND KANSAI IN RELATION TO THE PROPOSAL TO DELIST FREEWORLD FROM THE JSE, AND THE FIRM INTENTION BY KANSAI TO ACQUIRE ALL THE ISSUED SHARES OF FREEWORLD NOT ALREADY OWNED BY KANSAI, TO BE IMPLEMENTED BY WAY OF A SCHEME OF ARRANGEMENT 1 INTRODUCTION 1.1 The shareholders of Freeworld ("Shareholders") are advised that it is proposed that Freeworld delist ("Delisting") its ordinary shares ("Freeworld Shares") from the exchange operated by the JSE Limited ("JSE"). 1.2 Pursuant to the proposed Delisting, which will, amongst other things, be subject to an offer being made to Freeworld shareholders, on 14 October 2011 Kansai, Freeworld`s majority shareholder, delivered a letter to the board of directors of Freeworld ("Freeworld Board") stating that, pursuant to the JSE Listings Requirements, Kansai has a firm intention to acquire all the issued shares of Freeworld not already owned by Kansai, save for the Freeworld Shares in respect of which a Retained Investment Election (as defined in paragraph 3.1 below) has been made ("Scheme Shares"). 1.3 It is proposed that the acquisition referred to in paragraph 1.2 above will be effected by way of a scheme of arrangement ("Scheme") between Freeworld and its Shareholders in terms of section 114 of the Companies Act No. 71 of 2008 ("Companies Act") and in accordance with the Takeover Regulations as defined in the Companies Act ("Takeover Regulations"). 1.4 In accordance with the requirements of the Takeover Regulations, Freeworld has established an independent board to consider the Scheme and comply with the other obligations of an independent board in terms of the Takeover Regulations, comprising E Links and NDB Orleyn, who are independent directors on the Freeworld Board, and GK Everingham ("Independent Board"). The Independent Board is comprised in this manner because the Takeover Regulations require that an independent board must comprise a minimum of three independent directors. If, as is the case with the Freeworld Board, there are less than three independent directors, other persons must be appointed to the independent board by the existing board. Accordingly, GK Everingham has been appointed to the Independent Board to ensure that it is properly constituted in terms of the Takeover Regulations. 1.5 BDO Corporate Finance (Proprietary) Limited has been appointed by Freeworld as the independent expert ("Independent Expert") to prepare a report to the Freeworld Board and the Independent Board concerning the terms of the Scheme in accordance with the requirements of section 114(3) of the Companies Act, the Takeover Regulations and the JSE Listings Requirements. 2. INFORMATION ON KANSAI 2.1 Kansai, headquartered in Osaka, Japan, is one of the top ten coatings companies in the world. Listed on the Tokyo Stock Exchange, Kansai had a market capitalisation of JPY 195.7 billion / R19.1 billion as at 14 October 2011 (using a conversion rate of 10.23 Yen per Rand). Kansai operates and supplies coatings in Japan, South-East Asia, China, India and the Middle East. Kansai produces a broad cross-section of coatings for automotive, industrial, marine, protective and decorative applications and employs approximately 8,000 people at 44 factories across 18 countries. 2.2 As at the date of this announcement, Kansai holds 188,427,740 Freeworld Shares, which equates to approximately 92.42% of Freeworld`s issued share capital. 2.3 There are no arrangements, undertakings or agreements between Kansai or Freeworld, and any person acting in concert with these parties in relation to the Delisting or the Scheme. 3. MECHANISM AND TERMS OF THE SCHEME 3.1 In terms of the Scheme, Shareholders who are entitled to attend and vote at the general meeting ("General Meeting") to be convened in respect of the Delisting and the Scheme ("Scheme Members") may elect to retain all (and not some only) of their Freeworld Shares after the Delisting, which shares will consequently not be acquired by Kansai pursuant to the Scheme ("Retained Investment Election"). 3.2 Before making the Retained Investment Election, Scheme Members should consider their ability to dispose of their Freeworld Shares post-Delisting, as there will be no formal market by which Freeworld Shares will be traded if the Delisting is implemented. 3.3 Scheme Members that do not validly make the Retained Investment Election will have all of their Freeworld Shares acquired by Kansai in terms of the Scheme. The purpose of the Scheme is to allow Scheme Members that cannot or do not wish to hold all of their Freeworld Shares to dispose of such Freeworld Shares, if Freeworld is Delisted. 3.4 The consideration payable by Kansai in terms of the Scheme will be R12.00 per Scheme Share and will be paid in cash ("Scheme Consideration"). 4. RATIONALE FOR THE DELISTING In terms of and following its offer to Shareholders dated 15 December 2010, Kansai indicated it would consider the delisting of Freeworld under certain circumstances. In this context, the Freeworld Board has considered a number of factors regarding the continued listing of the Freeworld Shares on the JSE, including, amongst other things, the following: - the ongoing or continued cost of retaining Freeworld`s listing on the JSE; - the size and market capitalisation of Freeworld, relative to other companies in its sector that are listed on the JSE; - the proportion of Freeworld Shares held by Kansai relative to the minority Shareholders, and the likely trading liquidity of the Freeworld Shares on the JSE; - the possible future capital requirements of Freeworld and the potential dilution of Shareholders other than Kansai; and - the associated public reporting requirements for Freeworld as a listed - company. Having considered the above factors, the Freeworld Board formed the view that retaining Freeworld`s listing is not in the best interest of Freeworld and therefore resolved to pursue the Delisting of Freeworld. 5. IRREVOCABLE UNDERTAKING 5.1 Kansai and Freeworld have obtained an irrevocable undertaking ("Irrevocable Undertaking") from the Public Investment Corporation SOC Limited ("PIC") to, amongst other things, vote in favour of the Delisting and the Scheme and to make the Retained Investment Election. 5.2 As at the date of this announcement, the PIC holds 13,437,871 Freeworld Shares which equates to approximately 6.59% of Freeworld`s issued share capital. PIC`s holding of Freeworld Shares represents 87.01% of the Freeworld Shares held by Scheme Members. 6. CONDITIONS TO THE DELISTING AND THE SCHEME 6.1 It is proposed that the Scheme and the Delisting, both of which are inter- conditional, will be subject to fulfilment of the following conditions precedent (collectively, the "Conditions Precedent"): 6.1.1 the approval of the Scheme by the requisite majority of Shareholders at the General Meeting as contemplated in section 115(2)(a) of the Companies Act and, in the event of the provisions of section 115(2)(c) becoming applicable: 6.1.1.1 the approval of the Scheme by a South African court of competent jurisdiction; and 6.1.1.2 if applicable, Freeworld not treating the aforesaid resolution as a nullity as contemplated in section 115(5)(b) of the Companies Act; 6.1.2 the PIC making the Retained Investment Election in accordance with its Irrevocable Undertaking and in terms of the Scheme; 6.1.3 the ordinary resolution in terms of paragraph 1.14(a) of the JSE Listings Requirements to authorise the Delisting is approved by the requisite majority of Shareholders at the General Meeting; and 6.1.4 the receipt of unconditional approvals, consents or waivers from all applicable regulatory authorities as may be required in order to implement the Delisting and the Scheme (including, without limitation, the compliance certificate to be issued by the Takeover Regulation Panel, established in terms of section 196 of the Companies Act) for the purposes of giving effect to the Scheme, or, to the extent that any such approvals, consents or waivers are subject to conditions, such conditions being accepted by Freeworld and Kansai in writing, or being fulfilled, as the case may be. 6.2 The Condition(s) Precedent in: 6.2.1 paragraphs 6.1.1, 6.1.3 and 6.1.4 are not capable of being waived; and 6.2.2 paragraph 6.1.2 has been inserted for the benefit of Freeworld and Kansai and can be waived (in whole or in part, where applicable) by the written agreement of both of them. 7. CASH CONFIRMATION As required in terms of the Takeover Regulations, Citibank, N.A., South Africa Branch has provided a bank guarantee to the Takeover Regulation Panel, in favour of the offerees under the Scheme, confirming that Kansai has sufficient cash resources available to satisfy the full cash consideration payable in terms of the Scheme, as required by regulations 111(4)(a) and 111(5) of the Takeover Regulations. 8. TIMETABLE FOR THE DELISTING AND THE SCHEME The following timetable has been prepared on the basis that the circular relating to the Delisting and the Scheme ("Circular") is posted to shareholders on 21 October 2011 (as outlined in paragraph 10 below). To the extent that the Circular is posted to Shareholders on an alternative date, Shareholders will be advised of the revised timetable for the Delisting and Scheme at that time. 2011 Circular posted to Shareholders and notice convening Friday, 21 October General Meeting published on SENS on Last day to trade in Freeworld Shares on the Friday, 11 November Exchange in order to be recorded in the register on the Scheme Voting Record Date on Scheme Voting Record Date being 17:00 on Friday, 18 November Last day to lodge Forms of Proxy (white) in respect Monday,21 November of the General Meeting with the Transfer Secretaries by 10:00 on Latest time for Scheme Members to give notice to Wednesday, 23 November Freeworld objecting to the special resolution to approve the Scheme by 10:00 on General Meeting of Shareholders to be held at 10:00 Wednesday,23 November on Results of the General Meeting released on SENS on Wednesday, 23 November Results of the General Meeting published in the Thursday, 24 November press on Last date for Freeworld to send Dissenting Wednesday, 7 December Shareholders notices of adoption of the special resolution approving the scheme on Expected Finalisation Date announcement published on Wednesday, 7 December SENS on Expected Finalisation Date announcement published in Thursday, 8 December the press on Expected Scheme LDT on Thursday, 15 December Expected suspension of listing, from the open of the Monday, 19 December Exchange on
Expected Scheme Consideration Record Date for Friday, 23 December Shareholders to be recorded in the register in order for Shareholders to make the Retained Investment Election in respect of all of a Scheme Participant`s Freeworld Shares on Expected Operative Date of the Scheme and expected Tuesday, 27 December date of payment of the Scheme Consideration to be transferred electronically or posted to certificated Scheme Consideration Recipients (if Form of Election (blue) and Documents of Title are received by the Transfer Secretaries on or before 12:00 on the Scheme Consideration Record Date) on Expected termination of listing of Freeworld Shares Wednesday, 28 December on the Exchange at the commencement of trade on or about Notes: 1. These dates and times are subject to change. Any such change will be published on SENS and in the press. All times referred to in this announcement are to South African standard time. 2. No dematerialisation or re-materialisation of Freeworld Shares may take place from the business day following the Scheme LDT. 3. Shareholders who wish to exercise their appraisal rights in terms of section 164 of the Companies Act are referred to the Circular for purposes of determining the relevant timing for the exercise of their appraisal rights. 4. If the General Meeting is adjourned or postponed, forms of proxy must be received by no later than 48 hours prior to the time of the adjourned or postponed General Meeting, provided that, for the purpose of calculating the latest time by which forms of proxy must be received, Saturdays, Sundays and gazetted public holidays in South Africa will be excluded. 5. As the salient dates and times are subject to change, they may not be regarded as consent or dispensation for any time periods which may be required in terms of the Takeover Regulations where applicable, and any such consents or dispensations must be specifically applied for and granted. 9. RESPONSIBILITY STATEMENTS 9.1 The Independent Board accepts responsibility for the information contained in this announcement which relates to Freeworld and confirms that, to the best of their knowledge and belief, such information which relates to Freeworld is true and this announcement does not omit anything likely to affect the importance of such information. 9.2 Kansai accepts responsibility for the information contained in this announcement which relates to Kansai and confirms that, to the best of its knowledge and belief, such information which relates to Kansai is true and this announcement does not omit anything likely to affect the importance of such information. 10. POSTING OF THE CIRCULAR AND NOTICE OF GENERAL MEETING Shareholders are hereby advised that a circular containing, amongst other things, details of the Delisting and the Scheme, the Independent Expert`s report, a notice convening the General Meeting, a form of proxy and a form of election (collectively, the "Circular") will be posted to Shareholders on 21 October 2011. Shareholders are advised to review the Circular for the terms and conditions of the Delisting and the Scheme. 11. LINK TO THE CIRCULAR Shareholders will be able to access the Circular at http://www.freeworldcoatings.com/ and http://www.kansai.co.jp/global_site/index.html. Enquiries: Newman Lowther & Associates Ben Lowther, +27 (0)21 673 7000 Freeworld Eleanor Chamberlain, +27 (0)11 549 8009 Financial advisors to Freeworld and Kansai Newman Lowther & Associates (Pty) Ltd Attorneys to Freeworld and Kansai Bowman Gilfillan Inc. Independent Expert BDO Corporate Finance (Pty) Ltd JSE Sponsor RAND MERCHANT BANK (a division of FirstRand Bank Limited) Date: 17/10/2011 17:26:01 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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