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MCU - M Cubed Holdings Limited - Updated Category 1 Acquisitions announcement
and cautionary announcement
M Cubed Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1998/014568/06
Share code: MCU
ISIN: ZAE000033353
("m Cubed" or "the Company")
UPDATED CATEGORY 1 ACQUISITIONS ANNOUNCEMENT AND CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
1.1 Shareholders are referred to the announcement released on SENS on 21
December 2011 relating to, inter alia, the acquisition of viable
assets by MCubed and the intention to make application to the JSE to
lift the suspension of MCubed ("Original Announcement"). Shareholders
should note that as MCubed has been classified as a cash shell, the
acquisition of viable assets will be a reverse listing in terms of the
listings requirements of the JSE Limited ("JSE")("Listings
Requirements") and the application for the lifting of the suspension
will be dependent on the successful reverse listing.
1.2 As advised in the Original Announcement, following the acquisition by
Trinity Asset Management (Pty) Limited ("Trinity") of 32.96% of MCubed
during January 2011 and the subsequent appointment of a new management
team, MCubed changed its strategy to become an investment holding
company.
1.3 Shareholders were advised in the Original Announcement, inter alia,
that MCubed had:
1.3.1 concluded an acquisition of shares in Convergenet Holdings
Limited ("Convergenet")("Convergenet Acquisition"); and
1.3 2. entered into an agreement to acquire shares in Bauba
Platinum Limited ("Bauba Acquisition") and Goliath Gold
Mining Limited ("Goliath Acquisition").
1.4 In addition to the acquisitions referred to in 1.3 above, shareholders
are also advised that MCubed has:
1.4.1 acquired and disposed of futures contracts in Metorex
Limited ("Metorex"), as more fully disclosed in 2.2 below
("Metorex Acquisition");
1.4.2 acquired convertible notes which were converted into shares
in Mintails SA (Proprietary) Limited ("MSA"), which
transaction was subsequently cancelled, as more fully
disclosed in 2.3 below ("Mintails Acquisition"); and
1.4.3 entered into an agreement to acquire shares in Yellow Star
Group (Proprietary) Limited ("Yellow Star")("Yellow Star
Acquisition").
1.5 The acquisitions referred to in 1.3 and 1.4 above ("the Acquisitions")
are considered to be category 1 acquisitions by the JSE and therefore
require shareholder ratification and/or approval, which will be sought
at a general meeting of MCubed shareholders.
1.6 In addition and subject to the approval of the reverse listing and the
lifting of the suspension of MCubed, shareholders are hereby advised
that MCubed intends to seek JSE approval for the mirror listing of
MCubed into a new entity named Trinity Investment Holdings Limited
("TIH") ("Mirror Listing"), as more fully disclosed in 3 below. A
circular providing full information on all corporate actions referred
to in this announcement ("Reverse Listing Circular") and convening a
general meeting will be sent the shareholders in due course.
1.7 The purpose of this announcement is to update certain aspects of the
Original Announcement that were inadvertently incorrectly disclosed
and to update shareholders of new developments.
2 THE ACQUISITIONS
2.1 THE CONVERGENET ACQUISITION
The paragraphs set out below replace the paragraphs with the same
heading in the Original Announcement.
2.1.1 Details of the Convergenet Acquisition
MCubed acquired a total of 94 833 926 Convergenet shares during
the period January 2011 to May 2011, as set out below.
MCubed acquired a total of 55 195 220 Convergenet shares from
clients of Trinity (all trades were executed through the market)
as follows ("Trinity Acquisition"):
- 676 650 Convergenet shares for R162 981 on 25 January 2011;
- 53 400 000 Convergenet shares for R12 340 450 on 26 January 2011;
- 416 720 Convergenet shares for R92 009 on 9 February 2011;
- 126 850 Convergenet shares for R28 018 on 14 February 2011;
- 575 000 ordinary shares for R138 660 on 6 May 2011 (acquired by
MCubed Specialised Lending, a wholly owned subsidiary of MCubed).
MCubed acquired a total of 5 481 158 Convergenet shares on the market as
follows ("Market Acquisitions"):
- 279 780 Convergenet shares for R61 775 on 9 February 2011;
- 100 000 Convergenet shares for R22 090 on 10 February 2011; and
- 5 000 000 Convergenet shares for R 1 267 440 on 25 May 2011; and
- 101 378 Convergenet shares for R24 447 on 6 May 2011 (acquired by
MCubed Specialised Lending).
MCubed Specialised Lending acquired 34 157 548 Convergenet shares for
R8 237 037 on 6 May 2011, from AfrAsia Corporate Finance (Proprietary)
Limited ("AfrAsia"), which trade was executed through the market
("AfrAsia Acquisition").
2.1.2 Vendor Information
The vendor of the Trinity Acquisition was Trinity and the vendor of
the AfrAsia Acquisition was AfrAsia. The Market Acquisitions were from
unknown vendors. As Trinity is a material shareholder of MCubed, the
Trinity Acquisition is a related party acquisition in terms of the
Listings Requirements.
2.2 METOREX ACQUISITION
2.2.1 Business carried on by Metorex
Metorex is a company that is focused on the base metals industry,
primarily copper and cobalt production in the central African
Copperbelt, which extends from Zambia to the Democratic Republic
of Congo. Metorex delisted from the JSE on 17 January 2012,
following the implementation of a scheme of arrangement.
2.2.2 Details of the Metorex Acquisition
MCubed acquired 10 000 futures contracts, each entitling MCubed
to acquire 100 ordinary shares in Metorex on 27 September 2011 on
the open market and subsequently disposed of the futures
contracts on 1 November 2011.
2.2.3 Rationale for the Metorex Acquisition
The MCubed board identified the Metorex Acquisition as an
opportunity to generate a return for MCubed shareholders in
excess of cash. MCubed generated a return of R27 000 after
transaction expenses on the Metorex Acquisition
2.2.4 Metorex Acquisition Consideration
The total Metorex Acquisition consideration was R8 120 000,
equating to R812 per futures contract and was settled in cash.
MCubed disposed of the futures contracts for a total disposal
consideration of R8 220 000, equating to R822 per futures
contract and same was settled in cash.
2.2.5 Vendor Information
The futures contracts were acquired on the market from unknown
vendors.
2.3 MINTAILS ACQUISITION
2.3.1 Business carried on by Mintails
Mintails Limited`s ("Mintails") main activities are the processing and
production of gold from "mining tailings" located on the West Rand
area of the Witwatersrand Basin, near Johannesburg, South Africa.
Mintails is an Australian company listed on the ASX. MSA is the South
African subsidiary of Mintails.
2.3.2 Details of the Mintails Acquisition
During the period May 2011 to September 2011, MCubed entered into
various agreements with, inter alia, Mintails, MSA, Mertech Services
(Proprietary) Limited ("Mertech") and Trinity ("Mintails Agreements"),
in terms of which MCubed acquired 10 convertible notes from Mertech
for the sum of R10 869 863.01, which convertible notes had been issued
by MSA to Mertech. In terms of the Mintails Agreements, MCubed was
entitled to:
2.3.2.1 receive interest at 25% per annum on the issue price of the
convertible notes;
2.3.2.2 convert the 10 convertible notes into 381 MSA ordinary shares;
and
2.3.2.3 convert the 381 MSA ordinary shares into 13 323 000 Mintails
shares, subject to South African Reserve Bank approval, whereby
Mintails would have repurchased the MSA ordinary shares in
exchange for Mintails shares.
In order to effect the above, MCubed was required to issue a
conversion notice to MSA on or before the redemption date of 15 June
2011.
MCubed duly issued a conversion notice on 5 May 2011, whereafter the
10 convertible notes were converted into 381 MSA ordinary shares.
Subsequent to the conversion of the 10 convertible notes, the new
board of Mintails disagreed with MCubed`s interpretation of certain
terms of the Mintails Agreements. The parties to the Mintails
Agreements thereafter entered into a deed of settlement to settle the
dispute. As part of the settlement, the conversion of the 10
convertible notes into 381 MSA ordinary shares was cancelled and the
purchase consideration were returned to MCubed by MSA, as if the
convertible notes had been redeemed. In this regard, a total
settlement consideration of R11 139 950.26 was received by MCubed and
was paid in cash.
Trinity facilitated the Mintails Acquisition on behalf of MCubed.
Trinity did not receive any unusual, vested or other interests or
rights as a result of facilitating the Mintails Acquisition.
2.3.3. Rationale for the Mintails Acquisition
The MCubed board identified the Mintails Acquisition as an opportunity
to generate a return for MCubed shareholders in excess of cash. The
conversion option further gave MCubed the ability to participate as an
equity holder in the Mintails group. MCubed earned interest of R270
086.99 on Mintails Acquisition.
2.3.4 Mintails Acquisition Consideration
The total Mintails Acquisition consideration was R10 869 863 and
was settled in cash.
2.3.5 Vendor Information
2.4 The vendor of the convertible notes was Mertech.
2.4.1 YELLOW STAR ACQUISITION
Business carried on by Yellow Star
Yellow Star is a private investment holding company. Yellow Star`s
investments range from investments in companies that are IT products,
services and solution suppliers, where its largest investment is an
interest in Convergenet, to manufacturing, where it has an investment
in a company that manufactures high chrome grinding balls. Full
details of Yellow Star`s investments will be contained in the Reverse
Listing Circular that will be sent to shareholders in due course.
2.4.2 Details of the Yellow Star Acquisition
MCubed has entered into a conditional share sale agreement to acquire
87 Yellow Star shares, equal to 34.66% of the issued share capital of
Yellow Star, together with all claims against Yellow Star held by the
vendors of the said shares. The Yellow Star Acquisition will be
implemented as follows:
2.4.31 65 Yellow Star shares will be acquired from Sheerprops 156
(Proprietary) Limited ("Sheerprops"), together with all claims
owed by Yellow Star to Sheerprops for R16 929 735.43. The
aforesaid price will escalate at 2% per month, compounded
monthly, from 1 April 2012 up until date of payment; and
2.4.3.2 22 Yellow Star shares will be acquired from the AfrAsia Special
Opportunities Fund (Proprietary) Limited ("ASOF") for R6 295
064.83, together with all claims owed by Yellow Star to ASOF. The
aforesaid price will escalate at 2% per month, compounded
monthly, from 1 April 2012 up until date of payment.
2.4.4 Rationale for the Yellow Star Acquisition
The MCubed board believe the Yellow Star Acquisition offers
shareholders exposure to valuable assets that if strategically
managed could result in above market returns over the next 12 to
24 months.
2.4.5 Yellow Star Acquisition Consideration
The total Yellow Star Acquisition consideration will be R23 224
800.26 escalating at an effective rate of 2% per month,
compounded monthly, from 1 April 2012 up until date of payment
and will settled partly in cash and partly in Convergenet shares.
A R10 000 000 refundable deposit will be paid pro rata to the two
vendors by MCubed. The deposit will be held by the vendors until
the transaction closes. Interest will accrue on the deposit at
money market rates for the benefit of MCubed. Once all conditions
are fulfilled and the purchase consideration becomes due and
payable it shall be settled firstly through offset against the
R10 000 000 deposit and interest thereon and secondly, the
balance of the purchase consideration shall be paid, through the
delivery of ordinary shares in Convergenet to the vendors at a
price of R0.26 per share.
2.4.6 Conditions Precedent
The Yellow Star Acquisition is subject to the following
conditions precedent:
2.4.6.1 the approval of the Company`s shareholders;
2.4.6.2 the approval by the JSE of the Company`s Mirror Listing
application; and
2.4.6.3 the shareholders of Yellow Star agreeing to waive all pre-
emptive rights that they may have in terms of the memorandum
of incorporation and/or any shareholders agreement, as well
as any rights which might accrue by virtue of section 123 of
the Companies Act No 71 of 2008 to receive a mandatory
offer.
2.4.7 Effective Date
The effective date of the Yellow Star Acquisition is the date of
fulfilment of the suspensive conditions to the transaction.
2.4.8 Voting rights
It has furthermore been agreed that the voting rights with
respect to the abovementioned 87 Yellow Star shares will remain
vested with Sheerprops and ASOF until they have each respectively
disposed of the remaining 41 shares they hold in Yellow Star.
However the total economic benefit with respect to the said 87
Yellow Star shares will immediately vest with MCubed from the
date of fulfilment of the suspensive conditions.
2.4.9 Vendor Information
The vendors of Yellow Star shares are Sheerprops and ASOF.
3 MIRROR LISTING
Subject to the Acquisitions being ratified and/or approved, by
shareholders, MCubed will seek approval from the JSE for the Mirror
Listing. The Mirror Listing will entail the disposal of all assets of
MCubed, save for certain excluded assets, to a wholly owned subsidiary of
MCubed, namely TIH.
Thereafter TIH will be unbundled to MCubed shareholders and will become the
listed entity going forward. The unbundling will require shareholder
approval.
The excluded assets that will remain in MCubed will be used by MCubed to
settle the liabilities of MCubed and/or make provision for contingent
liabilities of certain subsidiaries of MCubed.
Post the Mirror Listing, MCubed will, subject to shareholder approval, be
voluntarily wound up and any cash remaining in MCubed, if any, prior to its
final voluntary winding up will be distributed to MCubed shareholders.
4 PRO FORMA FINANCIAL INFORMATION
MCubed will publish updated pro forma financial information prior to the
release of the Reverse Listing Circular and completion of MCubed`s audit
for the financial year ended 29 February 2012 and therefore shareholders
should disregard the pro forma effects in the Original Announcement. The
pro forma financial effects will include all corporate actions set out in
this announcement.
5 LIFTING OF THE SUSPENSION OF M CUBED ON THE JSE
Subject to the ratification and/or approval of the Acquisitions,
application will be made to the JSE to approve the reverse listing and to
lift the suspension of MCubed and to effect the Mirror Listing. In the
event that the application to approve the reverse listing is not approved
by the JSE, the JSE will consider terminating the listing of MCubed.
6 IRREVOCABLE SUPPORT FROM SHAREHOLDERS
MCubed has received irrevocable support from shareholders holding 52% of
the Company`s issued share capital to vote in favour of the resolutions for
the ratification and/or approval of the Acquisitions, save for the Trinity
Acquisition and the Yellow Star Acquisition.
Trinity is a related party in the Trinity Acquisitions and therefore cannot
vote on the ratification of same. MCubed has received irrevocable support
from shareholders holding 28% of the remaining shares that are entitled to
vote in favour of the resolution for the ratification of the Trinity
Acquisition.
MCubed has not received any irrevocable support to vote in favour of the
resolution for the approval of the Yellow Star Acquisition.
7 CLASSIFICATION OF THE ACQUISITIONS AND CIRCULAR TO SHAREHOLDERS CONVENENING
A GENERAL MEETING
The Acquisitions are classified as category 1 transactions in terms of the
Listings Requirements and a Reverse Listing Circular providing more
information and convening a general meeting will be sent to the
shareholders in due course.
8 CAUTIONARY
Shareholders are advised to exercise caution when dealing in MCubed`s
shares until such time updated pro forma financial effects on all corporate
actions set out in this announcement are published.
26 April 2012
Cape Town
Sponsor
PSG Capital (Pty) Limited
Date: 26/04/2012 17:40:01 Supplied by www.sharenet.co.za
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