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GEN - General - Firm Intention Announcement Of A Mandatory Offer Extended By
Concert Parties to the remaining Shareholders Of Convergenet Holdings Limited
FIRM INTENTION ANNOUNCEMENT OF A MANDATORY OFFER EXTENDED BY CONCERT PARTIES TO
THE REMAINING SHAREHOLDERS OF CONVERGENET HOLDINGS LIMITED, REGISTRATION NUMBER
1998/015580/06 ("ConvergeNet" or the "Company"), IN ACCORDANCE WITH THE
REQUIREMENTS OF SECTION 123 OF THE COMPANIES ACT NO. 71 OF 2008 ("the Companies
Act")
1. INTRODUCTION
1.1 Yellow Star Group (Proprietary) Limited, registration number 2005/004789/07
("Yellow Star"), has a shareholding of 27.57% in the ordinary issued share
capital of the Company. On or about 16 February 2012, the following
transactions were concluded:
1.1.1. Yellow Star entered into a subscription agreement with a special
purpose vehicle, namely Sheerprops 156 (Proprietary) Limited (the
"SPV") in terms of which the SPV subscribed for 97 ordinary shares in
the issued share capital of Yellow Star, representing 38.65% of the
ordinary issued share capital of Yellow Star, for a subscription price
of R24 million (the "Subscription"). The SPV is advised by AfrAsia
Corporate Finance (Proprietary) Limited ("ACF"). The proceeds from
the Subscription will be utilised to reduce the debts of Yellow Star.
1.1.2 AfrAsia Special Opportunities Fund (Proprietary) Limited ("ASOF")
entered into sale agreements with the following parties:
1.1.2.1 the B. Kekana Family Trust (the "Kekana Trust"), in terms of
which the Kekana Trust disposed of 20 ordinary shares held
by it in the issued share capital of Yellow Star, together
with claims, being any amount owed on loan account to the
Kekana Trust, for a total consideration of R5 560 720; and
1.1.2.2 Mr TM Modise, in terms of which Mr Modise disposed of 11
ordinary shares held by him in the issued share capital of
Yellow Star for a total consideration of R3 058 396.
The share transactions detailed in paragraph 1.1.2.1 and
1.1.2.2 above are hereinafter collectively referred to as
the "Share Sale".
1.1.3 Titantrade 306 (Proprietary) Limited ("Titantrade") entered into a
sale agreement with Mr Modise in terms of which Titantrade sold 11
ordinary shares held by it in the issued share capital of Yellow Star
to Mr Modise for a total consideration of R3 058 396.
1.2 Trinity Asset Management (Proprietary) Limited and Titan Nominees
(Proprietary) Limited (collectively the "Controlling Parties") currently
collectively hold 14.89% in the ordinary issued share capital of
ConvergeNet. The Controlling Parties are seeking to make this additional
investment into Yellow Star in order to gain greater exposure to
ConvergeNet and to strengthen the financial profile of Yellow Star.
1.3 The Subscription and the Share Sale are hereinafter collectively referred
to as "the Transactions".
1.4 The Transactions have resulted in an increase in the collective
shareholding controlled by the SPV, ASOF, Titantrade and the Controlling
Parties in ConvergeNet to approximately 42.71%, which shareholding is held
either beneficially or indirectly by virtue of their respective
shareholdings in Yellow Star. In terms of section 117(1)(b) of the
Companies Act, the aforementioned parties are deemed to be acting in
concert, and are collectively hereinafter referred to as the "Concert
Parties" or the "Offeror".
1.5 It is recorded that, if one combines the shares of M Cubed Holdings Limited
and its subsidiaries ("M Cubed") to those held by the Concert Parties, they
together amount to approximately 53% of the ordinary shares in ConvergeNet.
M Cubed are however not Concert Parties.
1.6 In terms of section 123 of the Companies Act, read with the Takeover
Regulations promulgated in terms of sections 120 and 223 of the Companies
Act (the "Takeover Regulations"), the Transactions represent a change in
control of ConvergeNet and constitute an affected transaction as defined in
section 117(1)(c) of the Companies Act. The Offeror, through Yellow Star,
is accordingly obligated to extend an offer to the remaining ConvergeNet
shareholders (excluding the shareholders detailed in paragraph 4 below and
shares held in treasury) (the "Remaining Shareholders") to acquire all of
the ordinary shares held by them (the "Offer Shares") at the highest price
paid by the Offeror or any person acting in concert with the Offeror within
the six month period before the commencement of the offer period, being 23
cents per share. The Offeror has notified the board of directors of
ConvergeNet of its obligation to proceed with the proposed acquisition of
the Offer Shares.
2. THE OFFER
2.1 Terms of the Offer
2.1.1 The Offeror shall offer to acquire all of the Offer Shares in exchange
for the offer consideration of 23 cents per Offer Share ("Offer
Consideration")(the "Offer"), to be settled in cash. The Remaining
Shareholders may elect to accept the Offer in whole or in part.
2.1.2 It is the intention of the Offeror to retain the listing of
ConvergeNet on the main board of the JSE Limited for the time being.
Remaining Shareholders who elect not to accept the Offer, or elect to
accept the Offer in part, will remain shareholders in ConvergeNet.
2.2 Mechanism for implementing the Offer
The Offer will be implemented by way of a cash offer of 23 cents per Offer
Share by the Offeror to the Remaining Shareholders in terms of section 123
of the Companies Act as a mandatory offer and will be proceeded with in
accordance with the prescribed requirements of the Companies Act and the
Takeover Regulations.
2.3 Cash Confirmation
In accordance with Takeover Regulations 111(4) and 111(5), Nedbank Limited
has provided the Takeover Regulation Panel ("TRP") with an irrevocable
unconditional bank guarantee that sufficient cash is held in escrow in
favour of the Remaining Shareholders for the sole purpose of fully
satisfying the cash commitment, amounting to R42 667 979, in respect of the
Offer.
2.4 No set-off of Offer Consideration
Settlement of the Offer Consideration pursuant to the Offer will be
implemented in accordance with the terms of the Offer without regard to any
lien, right of set-off, counterclaim or other analogous right to which the
Offeror may otherwise be, or claim to be, entitled against any Remaining
Shareholder.
2.5 Offer not made where unlawful
The Offer shall not constitute an offer to purchase or the solicitation of
an offer to sell any ConvergeNet shares in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration or
qualification under the laws of such jurisdiction.
3. CONDITIONS PRECEDENT
The Offer is not subject to any outstanding conditions precedent, other
than the receipt of the required approval of the TRP, including the
issuance by the TRP of the requisite compliance certificate.
4. IRREVOCABLE UNDERTAKINGS
The Offeror has obtained irrevocable undertakings from Greentree
Investments 301 (Proprietary) Limited, Absa Bank Limited and the Lester
Peteni Family Trust, who hold 132 338 037 (14.36%), 86 173 500 (9.35%) and
12 000 000 (1.30%) shares in ConvergeNet, respectively, not to accept the
Offer.
5. EXISTING SHAREHOLDING OF THE OFFEROR AND BENEFICIAL INTEREST IN CONVERGENET
Save as detailed herein, there are no beneficial interests in ConvergeNet:
5.1 held or controlled directly or indirectly by
(i) the Offeror; or
(ii) by any person acting in concert with the Offeror; or
(iii) by any other person in respect of which the Offeror has received
an irrevocable commitment to accept or vote in favour of the
Offer;
5.2 in respect of which the Offeror holds an offer to purchase; or
5.3 in respect of which any person acting in concert with the Offeror holds an
option to purchase.
6. CIRCULAR
A circular containing full details of the Offer, including a form of
acceptance, surrender and transfer, will be, subject to the approval of the
TRP, posted to ConvergeNet shareholders within 20 business days from the
date of publication of this announcement. The salient dates and times in
respect of the Offer will also be published in due course.
7. RESPONSIBILITY STATEMENT
The Offeror accepts responsibility for the information contained in this
announcement. To the best of its 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.
Johannesburg
22 February 2012
Corporate Advisor to the Offeror: AfrAsia Corporate Finance (Proprietary)
Limited
Date: 22/02/2012 07:35:02 Supplied by www.sharenet.co.za
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