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GEN - General - Mandatory offer extended by concert parties to the remaining

Release Date: 12/03/2012 16:00
Code(s): JSE
Wrap Text

GEN - General - Mandatory offer extended by concert parties to the remaining shareholders of ConvergeNet Holdings Limited: revised offer consideration 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"): REVISED OFFER CONSIDERATION 1. INTRODUCTION Shareholders are referred to the announcement released on SENS and published in the press on 22 February 2012 and 23 February 2012, respectively (the "Announcement"), regarding the following: 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 TM 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, for purposes of voting on any resolutions to be proposed in future at a general meeting of the Company, 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. Accordingly, M Cubed are deemed by the Takeover Regulation Panel ("TRP") to be a concert party based on their aforementioned voting control only; however, M Cubed will not be taking up any shares in terms of the offer as defined in paragraph 2.1 below, and do therefore not form part of the Offeror. M Cubed have waived any entitlement to the offer shares, as defined in paragraph 1.6 below, to the Offeror, 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 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 (the "six month period") (the "highest price"). 1.7 Shareholders are advised that the highest price paid in respect of certain internal trades between the clients of one of the Concert Parties during the six month period was 26 cents per share. Accordingly, the offer consideration has been increased from 23 cents per share, as stated in the Announcement, to 26 cents per share (the "Revised Offer Consideration"), payable in cash on the terms and conditions of the offer detailed in paragraph 2 below. 1.8 The Offeror has notified the board of directors of ConvergeNet of its obligation to proceed with the proposed acquisition of the Offer Shares and of the Revised Offer Consideration. 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 Revised Offer Consideration of 26 cents per
Offer Share (the "Offer"), to be settled in cash. The Remaining Shareholders may elect to accept the Offer in whole or in part. 2.1.2 The Remaining Shareholders include key employees to whom shares were awarded in terms of a forfeiture share plan which had been approved by shareholders in general meeting on 18 January 2008. 2.1.3 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 26 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 TRP with a revised 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 R48 233 368, in respect of the Offer. 2.4 No set-off of Revised Offer Consideration Settlement of the Revised 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, M Cubed, Absa Bank Limited and the Lester Peteni Family Trust, who hold 132 338 037 (14.36%), 94 833 926 (10.29%), 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 12 March 2012 Corporate Advisor to the Offeror: AfrAsia Corporate Finance (Proprietary) Limited Date: 12/03/2012 16:00:02 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

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