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Nictus Limited
Incorporated in the Republic of South Africa)
(Registration number 1981/001858/06)
JSE Share code: NCS
NSX Share code: NCT
ISIN Code NA0009123481
("Nictus" or "the Company" or a''the Nictus Groupa'')
Proposed distribution of shares in Nictus Holdings Limited (a''Nictus Namibiaa'') to Nictus
shareholders, a specific issue of shares for cash to Nictus Namibia, other actions and
transactions and renewal of cautionary announcement
1 Introduction
Nictus shareholders (a''Shareholdersa'') are referred to the detailed cautionary announcement
published on Tuesday, 12 June 2012 (a''Cautionary Announcementa''), in which it was indicated that the
board of directors of Nictus (a''the Boarda'') was considering a distribution of all the ordinary shares that
Nictus holds in Nictus Namibia (a''Nictus Namibia Sharesa'') to its Shareholders, in the entitlement ratio
of 1:1, in terms of section 46 and section 112 read together with sections 115 and 164 of the South
African Companies Act, 2008, as amended (a''SA Acta'') and in accordance with the relevant South
African and Namibian taxation regulations (a''Unbundlinga'').
It is Nictus Namibiaa''s intention that, subject to the fulfilment of the conditions precedent to the
Unbundling, the unbundled Nictus Namibia Shares will be listed on the Namibian Stock Exchange
(a''NSXa''). In addition, Nictus will retain its secondary listing on the NSX.
Shareholders are specifically referred to the rationale for the Unbundling detailed in the Cautionary
Announcement.
Subsequent to the Cautionary Announcement, the Board, on the recommendation of a committee of
independent directors constituted for this purpose, has resolved to propose the following transactions
and actions, which are subject to Shareholdersa'' approval:
- the Unbundling, subject to the conditions precedent set out in paragraph 3.3 below;
- amendments to the rules of the Nictus Employee Share Incentive Trust (a''Schemea'') to
accord with the applicable regulations of the JSE Limited (a''JSEa'') in terms of Schedule 14
of the Listings Requirements of the JSE (a''JSE Listings Requirementsa''), the SA Act and the
King Report on Governance for South Africa, as amended or replaced from time to time
(a''King IIIa'') (a''Amendments to the Schemea'');
- immediately subsequent to the Unbundling, a specific issue for cash of ordinary shares
(a''Sharesa'') in the post unbundling Nictus (a''Post Unbundling Nictusa'') to Nictus Namibia for a
total consideration of R29.5 million (a''Nictus Namibia Specific Issuea'');
- the conversion of all of the Companya''s authorised Shares from par value Shares to no par
value Shares (a''Conversiona'');
- subsequent to the Conversion, an increase in the number of authorised Shares (a''Increase
of Authorised Sharesa''); and
- subject to both the Conversion and the Increase of Authorised Shares, the adoption by
Nictus of a new Memorandum of Incorporation (a''MOIa'') complying with the provisions of the
SA Act and the revised Schedule 10 of the JSE Listings Requirements.
A special general meeting of Shareholders will be convened (a''General Meetinga'') to consider and, if
deemed fit, approve, inter alia, the ordinary and special resolutions necessary in order to implement
the Unbundling and the other actions and transactions listed above.
2 Prospects of Nictus subsequent to the Unbundling
The Post Unbundling Nictus will consist of its South African operations, which operate through the
Companya''s various South African subsidiaries, as follows:
- the South African furniture retail business (a''South African Furniture Segmenta''); and
- the South African insurance and finance business (a''South African Insurance Segmenta'')
(collectively a''South African Operationsa'').
The introduction of approximately R60.0 million of new capital into the Post Unbundling Nictus
through the declaration of a dividend amounting to R30.0 million by Nictus Namibia to Nictus,
immediately prior to the Unbundling, and the Nictus Namibia Specific Issue (a''Re-capitalisationa''),
brings a completely new dimension to the South African Operations. The areas that have traditionally
challenged the South African Operations in growing their businesses profitably are capital, skills and
challenges brought about by changes in regulation which challenges can be addressed efficiently
following the Unbundling and the Re-capitalisation as set out in more detail below.
2.1 South African Insurance Segment
The introduction of the interim measures required in terms of the Solvency Assessment and
Management framework (a''SAMa'') that is currently being developed by the Financial Services Board in
order to establish a risk-based supervisory regime for the regulation of both long-term and short-term
insurers in South Africa, has placed capital management under pressure in the insurance industry.
The required capital holding within insurance companies is now based on the risk profile of each
individual companya''s underlying investments resulting in significantly higher capital requirements for
higher risk, higher return investments.
The Re-capitalisation of the Post Unbundling Nictus will enable the South African Insurance Segment
to ensure that its compliance with the interim measures required in terms of SAM is structured in a
manner whereby it can achieve maximum returns in terms of its investment charter. The Re-
capitalisation of the South African Insurance Segment will create additional opportunities for it to
widen the range of its investments in order for better returns to be achieved. In addition, it will provide
the opportunity for the South African Insurance Segment to achieve its goal of selling significantly
more insurance premiums.
Expanding its South African footprint is one of the South African Insurance Segmenta''s main goals.
Key target areas throughout South Africa have already been identified as part of the Post Unbundling
Nictusa'' medium to long-term strategy for growing the South African Insurance Segment. The Re-
capitalisation will enable the South African Insurance Segment to establish representation in these
key target areas in a shorter time frame than was previously anticipated.
The primary focus for the South African Insurance Segment will remain its short-term profitability.
Achieving a maximum return on investments, within the risk appetite, will play an important part in
increasing profitability. Secondary focus areas are growing premium income in line with the available
capital and keeping operating costs to a minimum.
2.2 South African Furniture Segment
Being a smaller player in the South African environment provides the Post Unbundling Nictus with
various opportunities to grow the South African Furniture Segment. The South African Furniture
Segment has historically always been under pressure due to the limited availability of capital for
growth. This is mainly due to the fact that Nictus has always funded its own debtors book and the
majority of this funding has been sourced internally. The Re-capitalisation of the South African
Furniture Segment will enable it to restructure its capital requirements. In addition, the
implementation of the new capital structure will result in the realisation of economies of scale benefits
and the optimisation of the skills acquired by management during the past financial year.
Increasing throughput at all of the existing furniture outlets will be the initial focus area. This is
expected to result in increased gross profit as well as higher interest earned from the growth in the
debtors book. As the South African Furniture Segment focuses on the higher living standard
measurement market, bad debt write-offs are small compared to the existing debtors book. The
future credit rating of clients will remain in line with the Nictus Groupa''s current policies in order to
minimise bad debts.
The opening of new furniture outlets will also be considered going forward and management are
constantly looking to identify suitable areas where new, potentially profitable furniture outlets can be
opened. The Re-capitalisation will ensure that management can act immediately when such
opportunities are identified.
Exclusive furniture ranges play an important role in the furniture market and exclusive product lines
are already being imported.
Optimising the Post Unbundling Nictusa'' utilisation of its premises in Randburg will also play a major
role in growing the South African operations.
2.3 Post Unbundling Nictus
The Re-capitilisation of Post Unbundling Nictus will result in cash inflows. Post the Unbundling and
the Re-capitalisation, almost no debt will be owed by the Post Unbundling Nictus. This places the
Post Unbundling Nictus in a very strong position for future growth.
3 Details relating to the Unbundling
3.1 The entitlement ratio
As at the Unbundling record date, the number of Nictus Namibia Shares that Nictus holds will equal
the number of issued Shares. At the last practicable date prior to this announcement, being 5 July
2012, Nictusa'' issued ordinary share capital comprised of 53 443 500 Shares. Following the fulfilment
of the conditions precedent to the Unbundling, set out in paragraph 3.3 below, Nictus will unbundle
its 100% interest in Nictus Namibia to Shareholders and Shareholders will receive one Nictus
Namibia Share for each one Share held on the Unbundling record date.
3.2 Disposal in terms of section 112 read with section 115 of the SA Act
As Nictus Namibia comprises approximately 75% of Nictusa'' current undertaking, the Unbundling
constitutes the disposal by Nictus of a greater part of its undertaking as contemplated in section 112
of the SA Act. Accordingly, the Company needs to comply with the provisions of section 112 of the
SA Act, which in turn require compliance with sections 115 and 164 of the SA Act.
As Nictus is a public company, the Unbundling constitutes an affected transaction as defined in the
SA Act, and requires compliance with Part B and Part C of Chapter 5 of the SA Act as well as the
Takeover Regulations.
Following an application by Nictus to the Takeover Regulation Panel (a''TRPa''), the TRP has exempted
the Company from the need to retain an independent expert to report on the Unbundling on the basis
that there is no reasonable potential of the Unbundling prejudicing the interests of existing
Shareholders, given that the Unbundling envisages a distribution of all the Nictus Namibia Shares to
existing Shareholders pro rata to their existing shareholdings in Nictus and therefore all Shareholders
will be treated equally. A copy of the ruling in respect of Regulation 90(1) from the TRP is available
for inspection at the Companya''s registered offices.
3.3 Conditions precedent to the Unbundling
The Unbundling is subject to the fulfilment of the following conditions precedent:
- approval by Shareholders at the General Meeting of the resolutions required to implement the
Unbundling;
- none of the special resolutions are retracted or treated as a nullity;
- the obtaining of all regulatory approvals, to the extent required;
- the approval by the NSX for the listing of the unbundled Nictus Namibia Shares on the NSX;
and
- confirmation by the JSE that it has been satisfied that, immediately subsequent to the
Unbundling, Nictus will comply with the Main Board JSE Listings Requirements.
3.4 Shareholder approval
As the Unbundling constitutes a disposal in terms of section 112 of the SA Act, Shareholders are
required to pass a special resolution to authorise Nictus to undertake the Unbundling. In addition,
Shareholders are required to approve the Unbundling in terms of paragraph 5.85(c) of the JSE
Listings Requirements.
4 Nictus Namibia Specific Issue
Immediately subsequent to the Unbundling and subject to Shareholder approval, the Board proposes
to issue 16 876 895 Shares to Nictus Namibia, a related party, at an issue price of 175 cents per
Nictus Share (a''Issue Pricea''), for a total cash consideration of R29.5 million.
Post the Unbundling Mr NC Tromp will be a major shareholder and a director of both Nictus and
Nictus Namibia and, accordingly, the Nictus Namibia Specific Issue is to a related party in terms of
the JSE Listings Requirements.
As the Nictus Namibia Specific Issue will take place immediately after the Unbundling, the Issue
Price is based on the Boarda''s valuation of the Post Unbundling Nictus. The Issue Price will, therefore,
have no reference to the 30-day volume weighted average price (a''VWAPa'') of the Shares prior to the
unbundling and the post unbundling Shares will not have traded at the time of the Nictus Namibia
Specific Issue.
In terms of paragraph 5.51(f) of the JSE Listings Requirements, the Nictus Namibia Specific Issue
requires a fairness opinion in respect of the Issue Price from an independent expert as the Issue
Price will, as a result of the Unbundling, be at a discount to the 30-day VWAP immediately prior to
the date that the Issue Price is agreed by the Board.
The Board has appointed Mazars Corporate Finance (Pty) Ltd to consider whether the Issue Price is
fair to Shareholders.
Subsequent to the Nictus Namibia Specific Issue, Nictus Namibia will hold 24% of all the issued
Shares and will be a non-public shareholder as contemplated in the JSE Listings Requirements.
The Shares that are the subject of the Nictus Namibia Specific Issue will be of a class already in
issue.
The purpose of the Nictus Namibia Specific Issue is to provide Nictus with additional capital in order
for the Post Unbundling Nictus to maintain and grow its South African Operations. This will support
the strategic growth objective of the Post Unbundling Nictus. In addition, the Board considers it to be
beneficial to both Nictus and Nictus Namibia for Nictus Namibia to retain a strategic stake in the Post
Unbundling Nictus.
The Nictus Namibia Specific Issue constitutes a specific issue of shares for cash. The special
resolution necessary to implement the Nictus Namibia Specific Issue requires approval by a 75%
majority of the votes cast in favour of such resolution by all Shareholders present or represented by
proxy at the General Meeting.
5 Other transactions and actions
5.1 Amendments to the Scheme
The provisions of Schedule 14 of the JSE Listings Requirements, which set out the requirements for
equity settled share incentive schemes, were amended with effect from 15 October 2008. As a result
of these amendments it has become necessary to amend certain rules of the Scheme. In addition,
the Scheme will be amended to comply with the provisions of the SA Act and King III.
Shareholders will be asked to approve the proposed Amendments to the Scheme at the General
Meeting.
5.2 Conversion, Increase of Authorised Shares and adoption of a new MOI
At the General Meeting, Shareholders will also be asked to approve the proposed Conversion,
Increase of Authorised Shares and the adoption of a new MOI by the Company.
Subsequent to the Nictus Namibia Specific Issue, the Post Unbundling Nictus will have limited
available authorised Shares and, as the Company may wish to undertake further capital raising
procedures in the future, the Board has resolved to undertake the Conversion and the Increase of
Authorised Shares. In addition, the adoption of a new MOI is for the purpose of the Company
harmonising its existing memorandum of incorporation with the requirements for a memorandum of
incorporation contained in the SA Act, complying with the revised Schedule 10 of the JSE Listings
Requirements and King III.
6 Directorsa'' responsibility statement
The Board and a committee of independent directors constituted for this purpose, accept
responsibility for the information contained in this firm intention announcement and confirm to the
best of their respective knowledge and belief that the information is true and does not omit anything
likely to effect the importance of the information.
7 Renewal of cautionary
A further announcement will be released on SENS and in the press once the pro forma financial
effects and the salient dates of the transactions have been finalised. Accordingly, Shareholders are
advised to continue to exercise caution when dealing in the Companya''s securities until such further
announcement is published.
Johannesburg
6 July 2012
Corporate advisor, sponsor and joint tax Namibian legal advisors
advisor Theunissen, Louw & Partners
KPMG Services (Pty) Ltd
South African legal advisors and joint tax Namibian sponsor
advisor Simonis Storm Securities (Pty) Ltd
Webber Wentzel (Member of the NSX)
Reporting accountants and auditors Independent expert
KPMG Inc. Mazars Corporate Finance (Pty) Ltd
Date: 06/07/2012 04:00:00 Supplied by www.sharenet.co.za
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