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CPN - Capricorn Investment Holdings Limited - JSE Limited approval, salient
dates and revised pro forma financial effects
CAPRICORN INVESTMENT HOLDINGS LIMITED
(formerly Cenmag Holdings Limited)
(Registration Number 1987/004821/06)
("Capricorn" or "the Company")
Share code: CPN ISIN: ZAE000149951
JSE LIMITED APPROVAL, SALIENT DATES AND REVISED PRO FORMA FINANCIAL EFFECTS
The board of directors of Capricorn ("the Board") is pleased to announce that
the circular ("the Circular") to shareholders detailing, inter alia, the
reverse-listing of Western Utilities Corporation (Proprietary) Limited
("WUC") into Capricorn has been approved by the JSE Limited ("the JSE") and
will be posted to Capricorn shareholders on Monday, 2 April 2012.
In addition to the proposed acquisition of WUC, the waiver for Watermark
Global PLC ("Watermark"), vendor of WUC, of the requirement to make a
mandatory offer to minority shareholders of Capricorn ("the Waiver") and the
specific issue of shares, announced on SENS on 15 December 2011, and the
change of control and the mandatory offer by Trinity Asset Management
(Proprietary) Limited ("TAM") ("the TAM Mandatory Offer"), announced on SENS
on 13 February 2012, the circular also contains the following:
* The conversion of the authorised and issued share capital of Capricorn
to ordinary shares with no par value;
* The change in name of the Company from Capricorn to Mine Restoration
Investments Limited ("Mine Restoration Investments"), subject to
Capricorn shareholder approval; and
* The specific issue of up to 1 535 540 and 1 447 368 new no par value
ordinary shares, ranking pari passu with the existing ordinary shares in
issue, for cash to the sponsor and corporate advisor respectively in
lieu of fees at an issue price of R0.19 per share.
REVISED PRO FORMA FINANCIAL EFFECTS
Following the SENS announcement published on 7 February 2012, the Company
provides shareholders with the revised and final pro forma financial effects
as is detailed in the circular to shareholders to be posted on 2 April 2012.
The table below sets out the unaudited pro forma financial effects of the
impact of the Acquisition of WUC ("the Acquisition"), on a "stand alone"
basis and as well as the combined effect of the Acquisition and the issue of
210 526 316 new Capricorn ordinary shares at an issue price of 19 cents per
share ("the Specific Share Issue"), including the shares that will be issued
to the advisors in lieu of fees that forms part of the transaction costs that
have been split between the Acquisition and the Specific Share Issue
("specific issue in lieu of fees") on Capricorn`s basic earnings per share,
headline earnings per share, net asset value per share and net tangible asset
value per share.
The unaudited pro forma financial effects have been prepared to illustrate
the impact of the Acquisition and the Specific Share Issue (including the
specific issue in lieu of fees) on the unaudited financial information of
Capricorn for the six months ended 31 August 2011, had the Acquisition and
the Specific Share Issue (including the specific issue in lieu of fees) taken
place on 1 March 2011 for statement of comprehensive income purposes and on
31 August 2011 for statement of financial position purposes.
The pro forma financial effects have been prepared using accounting policies
that comply with IFRS and that are consistent with those applied in the
audited, published financial statements of Capricorn for the year ended 28
February 2011. The unaudited pro forma financial effects set out below are
the responsibility of Capricorn`s board of directors and have been prepared
for illustrative purposes only, and because of their nature may not fairly
present the financial position, changes in equity, the results of operations
or cashflows of Capricorn after the Acquisition and the Specific Share Issue
(including the specific issue in lieu of fees).
The unaudited pro forma financial effects have been prepared in accordance
with the JSE`s Listings Requirements and the Guide on Pro Forma Financial
Information issued by The South African Institute of Chartered Accountants.
Before1 After the After the % change
Acquisition Acquisition
2,3 and the
Specific
Share
Issue4,5
Basic earnings per 0.07 (9.87) (5.28) (8043)
share (cents)
Headline earnings 0.05 (2.51) (1.34) (2678)
per share (cents)
Net asset value 9.48 (7.82) 4.40 (54)
per share (in
cents)
Net tangible
asset per share
(in cents) 9.48 (27.48) (6.12) (165)
Total number of 59 886 020 243 951 999 455 695 274 661
shares in issue
Weighted number 59 886 020 243 951 999 455 695 274 661
of shares in
issue
Notes:
1.) The basic earnings and headline earnings per share in the column
labelled "Before" have been extracted, without adjustment, from the
reviewed, published condensed results of Capricorn for the six
months ended 31 August 2011. The net asset value and net tangible
asset value per share in the column labelled "Before" have been
extracted from the financial information presented in the reviewed,
published condensed results of Capricorn for the six months ended
31 August 2011.
2.) The earnings and headline earnings per share in the "After the
Acquisition" column assumes:
a) The consolidation of WUC`s income and expenditure, as
extracted from the reviewed results of WUC for the six months
ended 30 June 2011, adjusted for:
i.) The impairment of the intangible asset of R44 835 682,
relating to the process technology which facilitates the
treatment of acid mine drainage;
ii.) The acquisition of the 51% interest in Octavovox
(Proprietary) Limited ("Octavovox"), in accordance with
the signed sale of shares agreement dated 15 December
2011:
- The financial information in respect of Octavovox
for the six months ended 30 September 2011 has been
obtained from the directors of Octavovox, who
confirmed that Octavovox was inactive for the six
month period ended 30 September 2011;
- Raising of the Anthracite Briquetting Project
intangible asset of R47 958 960 (per the valuation
performed by Mazars Corporate Finance (Proprietary)
Limited ("Mazars");
- Applying an amortisation charge of R2 158 153, net
of tax, to the Anthracite Briquetting Project
intangible asset; and
- Recognition of the gain on the bargain purchase of
Octavovox of R16 610 530, measured as the excess of
the fair-value of Octavovox`s assets and liabilities
over the purchase consideration of R1 000 000;
iii.)The acquisition of a 49% interest in WE Shelf Trading 270
(Proprietary) Limited (to be known as Prodiflex Coal)
("Prodiflex Coal"), as per the signed sale of shares
agreement dated 15 December 2011, recognised at cost in
terms of IAS 28: Investments in associates. The financial
information for Prodiflex Coal was obtained from the
directors of Prodiflex Coal, who confirmed that, as at
the acquisition date, Prodiflex Coal was a shelf-company
and was inactive for the six month period in question;
and
iv.) The adjustments that have been made to account for the
raising of the Anthracite Briquetting Project intangible
asset, which has recently been independently valued by
Mazars, set out in Annexure 13 to this Circular, would be
considered misleading if the adjustments were not made;
b) Raising of the gain on bargain purchase of R10 267 276 in
respect of the reverse-acquisition, measured as the excess of
the fair-value of Capricorn`s assets and liabilities over the
consideration effectively transferred of R34 785 938
(calculated in respect of the equity-settled portion of the
consideration plus the cash portion of the purchase
consideration). This will not have a continuing effect on
Capricorn`s financial results;
c) The payment of estimated transaction costs amounting to R1 610
126, which have been allocated to the Acquisition and expensed
in terms of IFRS 3: Business Combinations. This will not have
a continuing effect on Capricorn`s financial results;
d) The issue of 182 300 030 new Capricorn ordinary shares at 19
cents per share in part settlement of the purchase
consideration to Watermark ; and
e) The issue of 1 765 948 new Capricorn ordinary shares at 19
cents per share in part settlement of the fees due to the
sponsor and corporate adviser, in respect of the Acquisition.
3. The net asset value and net tangible asset value per share in the
"After the Acquisition" column assumes:
a) The consolidation of WUC`s income and expenditure, as
extracted from the reviewed results of WUC for the six months
ended 30 June 2011, adjusted for:
i) The impairment of the intangible asset of R44 835 682,
relating to the process technology which facilitates the
treatment of acid mine drainage;
ii) The acquisition of the 51% interest in Octavovox, per the
signed sale of shares agreement dated 15 December 2011:
(i) The financial information in respect of Octavovox
for the six-months ended 30 September 2011 has been
obtained from the directors of Octavovox, who
confirmed that Octavovox had no assets or
liabilities as at 30 September 2011;
(ii) Raising of the Anthracite Briquetting Project
intangible asset of R47 958 960 (per the valuation
performed by Mazars, set out in Annexure 13 to this
Circular);
(iii)Recognition of the gain on the bargain purchase of
Octavovox of R16 610 530, measured as the excess of
the fair-value of Octavovox`s assets and liabilities
over the purchase consideration of R1 000 000; and
(iv) Raising of the non-controlling interest in respect
of the non-controlling shareholders interest of the
Anthracite Briquetting Project intangible asset and
the deferred tax liability in respect of the
Anthracite Briquetting Project, amounting to R16 919
921;
iii) The acquisition of the 49% interest in Prodiflex Coal,
per the signed sale of shares agreement dated 15 December
2011, recognised at cost in terms of IAS 28: Investments
in associates. The financial information for Prodiflex
Coal was obtained from the directors of Prodiflex Coal,
who confirmed that as at the acquisition date Prodiflex
Coal was a shelf-company and was inactive for the six-
month period;
iv) The adjustments have been made to account for the raising
of the Anthracite Briquetting Project intangible asset,
which has recently been independently valued by Mazars,
which would be considered misleading if the adjustments
were not made.
b) the Acquisition is a reverse-acquisition in terms of IFRS 3:
Business Combinations. Accordingly, Capricorn is regarded as
the legal parent and accounting acquiree and WUC is regarded
as the legal subsidiary company and the accounting acquirer.
In accordance with this accounting treatment:
i) The identifiable assets and liabilities of Capricorn have
been measured at fair-value;
ii) From a legal point of view Capricorn has obtained a 100%
interest in WUC. However, from an accounting point of
view Watermark has obtained a 74.7% interest in Capricorn
(because Capricorn is issuing 182 300 030 new Capricorn
ordinary shares to Watermark in part-settlement of the
purchase consideration relating to the Acquisition), with
the remaining 25.3% interest in Capricorn being retained
by Capricorn`s shareholders. Because Watermark has, from
an accounting perspective, obtained a 74.7% interest in,
and gained control of, the legal acquirer, being
Capricorn, it is necessary to calculate the fair-value of
the consideration effectively transferred. The fair-value
of the consideration effectively transferred is
effectively the fair-value of Capricorn as an entity. If
the business combination had taken the form of WUC
issuing additional ordinary shares to Capricorn`s
shareholders in exchange for their ordinary shares in
Capricorn, WUC would have had to issue 34 new WUC
ordinary shares ((100/0.747)-100) to Capricorn`s
shareholders, for the ratio of ownership interest in the
combined entity to remain the same. Watermark would then
own 100 of the 134 issued shares in WUC, amounting to
74.7% of the combined entity. As a result, the fair-value
of the consideration effectively transferred by WUC to
Capricorn`s shareholders is the fair-value of the 34 new
WUC shares issued to Capricorn to give Capricorn
shareholders a 25.3% interest in the combined entity.
However, the fair-value of the consideration effectively
transferred is required to be based on the most reliable
measure, and has been calculated using the quoted market
price of Capricorn`s shares of 19 cents per share, as
this is considered to provide a more reliable basis for
measuring the fair-value of the consideration effectively
transferred than the estimated fair-value of WUC`s shares
and, therefore, the fair-value of the consideration
effectively transferred (in respect of the portion of the
purchase consideration settled through the issue of 182
300 030 Capricorn ordinary shares) is 59 886 020
Capricorn ordinary shares multiplied by 19 cents per
Capricorn ordinary share;
iii) Raising of the gain on the bargain purchase of R10 267
276 in respect of the reverse-acquisition, measured as
the excess of the fair-value of Capricorn`s assets and
liabilities over the consideration effectively
transferred of R34 785 938 (calculated in respect of the
equity-settled portion of the consideration plus the cash
portion of the purchase consideration); and
iv) Elimination of the loan acquired by Capricorn.
c) Raising of a current liability in respect of the cash portion
of the purchase consideration of R23 407 594;
d) Raising of a current liability in respect of transaction costs
of R1 274 596, directly relating to the Acquisition;
e) The issue of 182 300 030 new Capricorn ordinary shares at 19
cents per share in part-settlement of the purchase
consideration to Watermark; and
f) The issue of 1 765 948 new Capricorn ordinary shares at 19
cents per share in part-settlement of the fees due to the
sponsor and corporate adviser, in respect of the Acquisition.
4) The earnings and headline earnings per share in the "After the
Acquisition and Specific Share Issue" column assumes:
a) The adjustments as set out in 2(a) to (e) above;
b) The issue of 210 526 316 new Capricorn ordinary shares at 19
cents per share, in respect of the Specific Share Issue;
c) The issue of 1 216 960 new Capricorn ordinary shares at 19
cents per share in part-settlement of the fees due to the
sponsor and corporate adviser, in respect of the Specific
Share Issue; and
d) No income benefit has been attributed to the cash received in
respect of the Specific Share Issue, as the proceeds will be
used for the Acquisition, the cash portion of the transaction
costs and the remainder to fund working capital.
5. The net asset value and net tangible asset value per share in the
"After the Acquisition and Specific Share Issue" column assumes:
a) The adjustments as set out in 3(a) to (f) above;
b) Payment of the cash-portion of R23 407 594 in respect of the
Acquisition;
c) Payment of the transaction costs of R1 274 596, directly
relating to the Acquisition and R878 356, directly relating to
the Specific Share Issue;
d) The raising of R40 000 000 through the issue of 210 526 316
new Capricorn ordinary shares at 19 cents per share, in
respect of the Specific Share Issue;
e) The issue of 1 216 960 new Capricorn ordinary shares at 19
cents per share in part-settlement of the fees due to the
sponsor and corporate adviser, in respect of the Specific
Share Issue; and
6. The deduction from equity of the estimated transaction costs of R1
109 579, directly attributable to the Specific Share Issue,
accounted for in accordance with IAS 32: Financial Instruments.
The "After the Acquisition and Specific Share Issue" column is then measured
as a percentage of the "Before" column.
SALIENT DATES AND TIMES
The following salient dates and times are contained in the Circular to be
posted to shareholders of Capricorn on 2 April 2012:
TAM MANDATORY OFFER TIMETABLE 2012
Circular posted to shareholders on Monday, 2 April
Opening date of the TAM Mandatory Offer to Monday, 2 April
minority shareholders of Capricorn
Last day to trade in order to be eligible to Friday, 11 May
participate in the TAM Mandatory Offer
Shares trade "ex" the TAM Mandatory Offer Monday, 14 May
Closing date of the TAM Mandatory Offer to Friday, 18 May
minority shareholders at 12h00
Record date of the TAM Mandatory Offer Friday, 18 May
Dematerialised shareholders will have their Monday, 21 May
accounts at their CSDP or broker credited
within six business days of receipt of
acceptance by the transfer secretaries with
the last payment being made on
Cheques will be posted to certificated Monday, 21 May
shareholders within six business days of
receipt of acceptance by the transfer
secretaries with the last payment being made
on or about
Results of the offer to be released on SENS Monday, 21 May
on
Results of the offer to be published in the Tuesday, 22 May
press
SPECIFIC SHARE ISSUE TIMETABLE
Circular posted to shareholders on Monday, 2 April
Opening date of the Specific Share Issue to Monday, 2 April
existing Capricorn shareholders
Specific Share Issue becomes unconditional Monday, 30
April
Finalisation data in relation to the Specific Friday, 4 May
Share Issue announced on SENS by no later
than
Last date to trade shares in order to be Friday, 11 May
eligible to subscribe for the Specific Share
Issue
Ex the entitlement to apply in terms of the Monday, 14 May
Specific Share Issue
Record date and closing date at 12h00 of the Friday, 18 May
Specific Share Issue
Dematerialised shareholders will have their Monday, 21 May
accounts at their CSDP or broker updated on
Refund cheques to be posted to certificated Monday, 21 May
shareholders
Date of issue and posting of new Mine Monday, 4 June
Restoration Investments share certificates in
terms of the Specific Share Issue to
certificated shareholders on or about but not
before
REVERSE-LISTING AND GENERAL MEETING TIMETABLE
Circular posted to shareholders on Monday, 2 April
Opening of period in which Capricorn
shareholders can object to the proposed TRP
dispensation to Watermark releasing them from Monday, 2 April
the obligation to make a mandatory offer to
all Capricorn shareholders
Last day to trade in order to be eligible to Friday, 13 April
vote at the general meeting
Record date to vote at the general meeting Friday, 20 April
Monday, 23 April
Closing of period in which Capricorn
shareholders can object to the proposed TRP
dispensation to Watermark releasing them from
the obligation to make a mandatory offer to
all Capricorn shareholders
Forms of proxy to be received by no later Wednesday, 25
than 11h00 on April
General meeting to be held at 11h00 on Monday, 30 April
Results of the general meeting released on Monday, 30 April
SENS on
Results of the general meeting published in
the press and special resolutions submitted Tuesday, 1 May
to CIPC on
Special resolutions, new authorised share Thursday, 17 May
capital and name change certificate expected
to be registered by CIPC by no later than
close of business on
Finalisation data in relation to the name
change and conversion of shares to no par Friday, 18 May
value shares announced on SENS by no later
than
Finalisation announcement in the press by no Monday, 21 May
later than
Last date to trade share in the old name
Capricorn at a par value of R0.001 in order Friday, 25 May
to be recorded as a shareholder by the record
date on
Listing of, and trading in, new Mine
Restoration Investments ordinary shares Monday, 28 May
("Shares") with no par value under the new
JSE Code MRI and ISIN ZAE000164562 on the
Alternative Exchange
Listing of new Mine Restoration Investments
Shares with no par value in relation to the Monday, 28 May
Specific Share Issue and the Acquisition on
the JSE from the commencement of business on
or about
Record date for determining those
shareholders whose shares will be subject to Friday, 1 June
the change of name and conversion of share
capital on
Date of issue and posting of new Mine
Restoration Investments share certificates to
certificated shareholders, provided that the Monday, 4 June
old share certificates have been lodged by
12h00 on the record date (share certificates
received after this time will be posted
within 5 business days of receipt) on or
about
Dematerialised shareholders will have their Monday, 4 June
accounts at their CSDP or broker updated on
Notes
1. The abovementioned dates and times are South African dates and times and
are subject to amendment. Any such amendment will be announced on SENS
and in the press.
2. Should dematerialised shareholders of the Company wish to participate in
the above corporate actions or attend or vote at the general meeting,
they are required to advise their CSDP or broker by the cut-off time
stipulated above or in accordance with their agreements with their CSDP
or broker.
3. Share certificates in the name of Capricorn will not be able to be
dematerialised or rematerialised after Friday, 25 May 2012.
CONDITIONS PRECEDENT
The WUC Acquisition is still subject to the following conditions precedent
being fulfilled by no later than 31 May 2012 or such later date as the
parties may agree as detailed below:
* shareholder approval by Capricorn shareholders in general meeting, which
shareholder approval will comprise approval of the various ordinary and
special resolutions as detailed in the Notice of general meeting
contained in the Circular;
* approval by the Capricorn shareholders of the waiver of the mandatory
offer required to be made by Watermark ("the Watermark Mandatory
Offer");
* the JSE approving the lifting of the suspension of the Capricorn listing
and the successful transfer of the listing to the Alternative Exchange
of the JSE;
* regulatory approval, such as CIPC approval, where required;
* the issue of a compliance certificate by the TRP with respect to the
waiver of the Watermark Mandatory Offer as per Section 121 (b)(i) and
Regulation 102 (13) of the Act;
* the DBSA ("the DBSA") approving the sale of WUC to Capricorn in writing,
which approval is outstanding at the last practicable date; and
* WUC being released in writing unconditionally from all the subscription
obligations as detailed in the circular to Capricorn shareholders.
For and on behalf of the board
28 March 2012
Johannesburg
Sponsor Corporate Advisor
Arcay Moela Sponsors AfrAsia Corporate Finance
(Proprietary) Limited (Proprietary) Limited
Date: 28/03/2012 17:36:21 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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