To view the PDF file, sign up for a MySharenet subscription.

PNC - Pinnacle - Pinnacle Repurchase from Amabubesi Technology Holdings (Pty)

Release Date: 27/10/2011 17:17
Code(s): PNC
Wrap Text

PNC - Pinnacle - Pinnacle Repurchase from Amabubesi Technology Holdings (Pty) Ltd and Withdrawal of Cautionary Announcement PINNACLE TECHNOLOGY HOLDINGS LIMITED Registration number 1986/000334/06 Share Code: PNC ISIN: ZAE000022570 ("Pinnacle" or "the Company") ANNOUNCEMENT REGARDING THE REPURCHASE BY THE COMPANY AND ITS SUBSIDIARY OF PINNACLE SHARES FROM AMABUBESI TECHNOLOGY HOLDINGS (PROPRIETARY) LIMITED ("AMABUBESI") TO BE IMPLEMENTED IN TERMS OF A SCHEME OF ARRANGEMENT, AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Further to the cautionary announcement released on SENS on Friday, 14 October 2011 and in the press on Monday, 17 October 2011, shareholders are advised that Pinnacle was notified by Amabubesi on 12 October 2011 of its intention to dispose of its entire shareholding in Pinnacle, comprising 17 281 647 ordinary shares, which represents 10.4% of the issued shares in Pinnacle (net of treasury shares). In accordance with the provisions of the subscription agreement concluded between Amabubesi and Pinnacle on 3 March 2006 (in terms of which Amabubesi originally acquired its Pinnacle shares), (the "subscription agreement"). Amabubesi is required first to offer any such shares to Pinnacle under the pre-emptive rights that Pinnacle has under that agreement. Amabubesi has accordingly offered these shares to Pinnacle at a minimum price of R7.50 per share (the "Offer"). The Board of the Company has resolved that Pinnacle will accept this offer and will repurchase 11 482 801 of its own ordinary shares at R7.50 per share out of its available share premium and Pinnacle Holdings Limited, a subsidiary of Pinnacle will acquire 5 798 846 ordinary shares in Pinnacle at R7.50 per share, both from Amabubesi, amounting to a total of 17 281 647 ordinary shares purchased for and on behalf of the Pinnacle Group of Companies ("the Group") (the "Repurchase") by means of a scheme of arrangement in terms of Section 114 of the Companies Act (Act 71 of 2008 as amended) ("the Act") as read with Section 115 of the Act ("the Scheme"). The effective date of the Repurchase will be the third business day after the fulfilment of all the conditions precedent in paragraph 4 below. The special resolution needed for the Scheme is expected to be tabled at a shareholders` meeting to be held on or about 6 January 2012. 2. RATIONALE FOR THE REPURCHASE Amabubesi is desirous of selling its entire holdings of 17 281 647 ordinary shares in Pinnacle due to the fund in which these shares were owned having reached its investment horizon. As detailed above Pinnacle holds a pre-emptive right over these shares giving it an effective right of first refusal should Amabubesi decide to sell these shares. Amabubesi has offered a price of R7.50 per share which is 18.4% below its average traded price over the 30 business days prior to Pinnacle accepting the Offer. If the Group were to have completed the Repurchase on 1 July 2010 the resultant reduction in issued shares (net of treasury shares) would have had the effect of increasing the pro-forma earnings per share by 6.0% for the year ended 30 June 2011. The Board decided to accept the Offer subject to shareholder approval, and to repurchase the full 17 281 647 shares offered, after reviewing the statement of financial position, income statement and cash flow forecasts prepared for the period ending 12 months after the Repurchase date for this purpose, and after ensuring that the solvency and liquidity tests specified in Section 4 of the Act are met by the Company after the Repurchase. The Board also decided to retain so much of the shares as treasury shares as will increase the quantity of shares in Pinnacle that the Group will own to 10% of Pinnacle`s issued share capital after the Repurchase and to cancel the remainder out of share premium. The treasury shares so acquired will be retained for strategic purposes. 3. TERMS OF THE REPURCHASE The purchase consideration for the Repurchase amounts to R129 612 352.50. A repurchase price offered of R7.50 per ordinary share has been accepted by Pinnacle, which represents a discount of 18.4% to the 30 business day volume weighted average price of 919.1 cents per share up to and including 24 October 2011, being the last business day prior to the acceptance of the Offer. It is intended that the Repurchase will be funded out of a financing structure to be developed specifically for the Repurchase with the Company`s bankers. Details of the structure will be provided in the circular that will be distributed to all shareholders together with the notice of meeting of shareholders to approve the Repurchase. Following the conclusion of the Repurchase, application will be made to the JSE Limited ("the JSE") for the cancellation and delisting of the 11 482 801 shares repurchased by Pinnacle. Pinnacle Holdings Limited and the Group-controlled Pinnacle Share Purchase Scheme Trust will hold a total of 16 987 365 shares in Pinnacle as treasury shares after the Repurchase. At that point in time this will represent 10% of the reduced number of issued shares in Pinnacle, after the Repurchase and cancellation of the 11 482 801 shares repurchased by Pinnacle. 4. CONDITIONS PRECEDENT TO THE SCHEME The Scheme will be subject to the fulfillment of the following conditions precedent by not later than 8 January 2012, which date is 75 calendar days from the date of acceptance of the Offer as specified in the subscription agreement: 4.1 The approval of the Scheme by the requisite majority of Shareholders, as contemplated in section 115(2) of the Act; 4.2 To the extent required, the approval of the implementation of such resolution by the court; and if applicable, Pinnacle not treating the aforesaid resolution as a nullity, as contemplated in section 115(5)(b) of the Act; 4.3 The unconditional written approval of the Scheme as set out in the circular (or if such approval is conditional, such conditions being satisfactory to Pinnacle) having been obtained from the Takeover Regulation Panel ("TRP") (in terms of a compliance certificate to be issued in terms of the Act) and the JSE; and 4.4 The independent expert appointed by the Pinnacle Board, ("Independent Expert") as required in terms of section 114(3) of the Companies Act and the Takeover Regulations, confirming in its report that the Repurchase is fair and reasonable. 5. PRO-FORMA FINANCIAL EFFECTS The table below sets out the unaudited pro forma financial effects of the Repurchase on Pinnacle. These pro-forma financial effects are the responsibility of the Company`s directors and are presented for illustrative purposes only to show how the Repurchase may have affected Pinnacle`s financial performance and position for the year ended 30 June 2011. The accounting policies of Pinnacle have been used in calculating the pro-forma financial effects. The pro-forma financial effects which, due to their nature, may not provide a fair reflection of Pinnacle`s financial performance or position after the Repurchase, are based on the assumptions that: - For the purpose of calculating earnings per share and headline earnings per share the Repurchase was implemented at start of business on 1 July 2010; and - For the purpose of calculating net asset value per share and net tangible asset value per share, the Repurchase was implemented on 30 June 2011. Before the After the % Change Repurchase Repurchase Earnings per share (cents) 121.0 128.3 6.0 Headline earnings per share 117.7 124.6 5.9. (cents) Net asset value per share 380.2 330.9 (13.0) (cents) Net tangible asset value per 343.6 290.0 (15.6) share (cents) Number of shares in issue net 165 528 148 246 (10.4) of treasury shares (`000) Weighted average shares in 181 965 164 684 (9.5) issue (`000) Notes and assumptions: a. The "Before" information has been extracted, without adjustment, from Pinnacle`s published audited results for the year ended 30 June 2011. b. The Repurchase is expected to be funded to the extent of the full purchase price of R129 612 352 out of a financing structure to be developed with the Company`s bankers. A cost of funding has been assumed to be 7.0% per annum plus a once off transaction cost of 1% which will be amortised over the proposed loan tenure of 3 years. c. Dividends payable on the 5 798 846 shares purchased by Pinnacle Holdings Limited as treasury shares will be retained in the Group and which means that on a consolidated basis effectively no dividend will have been paid on these shares. d. R661 000 has been provided as estimated transaction costs in respect of the shares that Pinnacle will repurchase, cancel and delist. Transaction costs estimated at R334 000 in respect of the shares to be purchased by Pinnacle Holdings Limited and retained as treasury shares will be capitalised as costs of the acquisition of those shares. Both are once off by nature and exclude the costs of funding referred to in paragraph (b) above. 6. CATEGORY The Repurchase is classified as a specific repurchase of securities in terms of Section 5.67 of the JSE Listings Requirements from a related party as defined in Section 10.1(b) of the JSE Listings Requirements, as Amabubesi is a material shareholder holding 10.4% of the issued share capital of the Company (net of treasury shares) before the Repurchase. As the price at which the securities are purchased is not at a premium to the average traded price over the 30 days prior to accepting the Offer, a fairness opinion is not required in terms of the JSE Listings Requirements. A fair and reasonable opinion is however required in terms of the Takeover Regulations and Section 114 (3) of the Act. Accordingly, the Board will appoint an Independent Expert acceptable to the TRP, to provide it with a fair and reasonable opinion relating to the Scheme. The substance of the external advice received from the Independent Expert and the views of the Board will be detailed in the circular to shareholders. 7. CIRCULAR A circular, providing further information on the Repurchase, the Scheme and containing a notice of general meeting and a form of proxy, subject to approval by the JSE and the TRP, will be posted to shareholders on or about 5 December 2011. 8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT As details of the Repurchase have been provided in this announcement, shareholders are advised that they no longer need to exercise caution when dealing in their Pinnacle securities. 9. RESPONSIBILITY STATEMENT Pinnacle`s Board accepts responsibility for the information contained in this announcement. To the best of their knowledge and belief, the information contained in this announcement is true and nothing has been omitted which is likely to affect the import of the information. Midrand 27 October 2011 Sponsor Deloitte & Touche Sponsor Services (Pty) Limited Attorneys for the Group Tugendhaft Wapnick Banchetti and Partners Reporting Accountants BDO South Africa Inc. Date: 27/10/2011 17:17:04 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.

Share This Story