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JCI LIMITED - ISSUE OF SHARES BY BOSCHENDAL PROPRIETARY LIMITED, RIGHTS OFFER IN BOSCHENDAL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT

Release Date: 07/08/2012 15:15
Code(s): JCD     PDF:  
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ISSUE OF SHARES BY BOSCHENDAL PROPRIETARY LIMITED, RIGHTS OFFER IN BOSCHENDAL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT

JCI LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1894/00854/06
Share code: JCD
ISIN: ZAE0000039681 (Suspended)
("JCI" or "the Company")


ISSUE OF SHARES BY BOSCHENDAL PROPRIETARY LIMITED (“BOSCHENDAL”) TO CANOMBYS
LIMITED    (“CANOMBYS”),        ADVANCE         OF   SHAREHOLDER          LOAN   BY    CANOMBYS        TO
BOSCHENDAL, EQUALISATION OF SHAREHOLDER LOANS IN BOSCHENDAL, RIGHTS OFFER IN
BOSCHENDAL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT


1. Introduction


JCI is pleased to announce that Boschendal, a 62.67% subsidiary of JCI Investment Finance Proprietary
Limited (“JCIIF”) which is in turn a wholly-owned subsidiary of JCI, has entered into a transaction
agreement (“Transaction Agreement”) with Canombys whereby:
       Boschendal will issue 769,608 ordinary shares to Canombys for an aggregate value of R76.96
       (“the Subscription”). The Subscription will result in JCI’s indirect interest in Boschendal reducing
       to 49.0%. Canombys is about to acquire IFA Hotels & Resorts Limited’s (“IFA”) 37.33% interest in
       Boschendal (“IFA Acquisition”) which acquisition was announced by IFA on SENS on 20 July
       2012 (and which is conditional, inter alia, on the successful conclusion of the transactions
       outlined in the Transaction Agreement);
       Canombys will advance R79,999,923.04 to Boschendal as a shareholders loan (“the
       Shareholders Loan”);
       JCIIF and Canombys’ shareholder loans to Boschendal will be equalised such that Canombys
       and JCIIF shall hold 51% and 49% respectively of the shareholder loans owing by Boschendal to
       its shareholders (“the Equalisation”); and
       Boschendal shall effect a rights offer to its shareholders to raise R20,000,000.00 of additional
       capital (“the Rights Offer”)


   (collectively the “Transactions”).
The Transaction Agreement stipulates that the Transactions form one indivisible transaction and that
Canombys would not conclude any of the underlying transactions without concluding all of the other
transactions.


The Transactions are subject to the conditions precedent outlined in paragraph 2.7 below.


2. Overview of the Transactions


2.1.     Description of Boschendal


         Boschendal is one of the oldest wine farms in South Africa with a French viticultural heritage
         dating back to 1685. Boschendal is set on a 2,240 hectare estate between Stellenbosch and
         Franschhoek in the Western Cape, and consists of vineyards which cover an area of 254
         hectares, extending for six kilometres along the slopes of the Groot Drakenstein Mountain
         towards the Dwars River and the slopes of the Simonsberg Mountain.


         Boschendal is currently the site of a proposed mixed-use development.


2.2.     Rationale for the Transactions


         Boschendal is currently operating at a loss and is in need of a cash injection to provide the
         necessary working capital in order to fund its ongoing operations. The Transactions provide
         Boschendal with cash required to meet its operational cash flow requirements and to invest in
         infrastructure in order to allow the marketing and sale of Phase 1 of Boschendal’s proposed
         mixed-use development to progress.


         The Transactions also relieve JCI of the burden of financing Boschendal’s ongoing operational
         expenditure and will allow the Boschendal development to progress to a stage where it is
         materially self-funding.

2.3.     The Subscription


         Following the fulfillment of the conditions precedent outlined in paragraph 2.7, Boschendal will
         issue 769,608 ordinary shares to Canombys in exchange for an aggregate amount of R76.96
         which equates to an issue price per share of R0.0001.
2.4.   The Shareholder Loan


       Following the fulfillment of the conditions precedent outlined in paragraph 2.7, Canombys will
       advance R79,999,923.04 to Boschendal as a shareholders loan. The Shareholder Loan will
       accrue interest at Prime less 1 percent.


2.5.   The Equalisation


       In terms of the Equalisation, JCIIF and Canombys’ shareholder loans to Boschendal will be
       equalised such that Canombys and JCIIF shall hold 51% and 49% respectively of the
       shareholder loans owing by Boschendal. In order to effect the Equalisation, JCIIF will sell and
       cede approximately R43,496,625.87 of its shareholder loans to Canombys for R1.00. This will
       result in shareholder loans owing by Boschendal to Canombys and JCIIF after the Equalisation
       of approximately R286,776,454.91 and R276,374,750.13 respectively.


2.6.   The Rights Offer


       In terms of the Transaction Agreement, Boschendal will effect a rights issue to raise additional
       capital funding of R20,000,000.00 or such other amount as may be agreed to by JCIIF,
       Canombys and Boschendal subject to the following:
               The Rights Offer will be effected at a subscription price of R0.0001 per share to be
               offered proportionately to all shareholders of Boschendal;
               The new ordinary shares to be allotted in terms of the Rights Offer will rank pari passu
               with all previously issued shares of Boschendal;
               Each shareholder who wishes to follow its rights shall be obliged to give Boschendal
               written notice of its acceptance by no later than 10 business days following the date that
               the Boschendal board of directors agrees to implement the Rights Offer or such
               extended date as may be required by any shareholder of Boschendal should such
               shareholder by obliged to obtain any regulatory approval to implement acceptance of
               the Rights Offer;
               Canombys and JCIIF have agreed to subscribe for shares to the value of R10,200,000
               and R9,800,000 respectively; and
               Should JCIIF fail to subscribe for its proportionate number of shares in terms of the
               Rights Offer, Canombys shall have the right to subscribe for those shares for which
               JCIIF does not subscribe.
2.7.   Conditions precedent


       The Transactions are subject to the fulfillment or waiver of the following conditions precedent
       within 45 business days after the signature date of the Transaction Agreement, being 2 August
       2012:
       a)      The approval of the Financial Surveillance Department of the South African Reserve
               Bank being obtained to give effect to and implement the IFA Acquisition and the
               Transactions;
       b)      All other regulatory approvals, consents and shareholder approvals being obtained to
               give effect to the Transactions;
       c)      Canombys completing, to its satisfaction, a due diligence investigation into the affairs of
               Boschendal and its underlying businesses, assets and liabilities;
       d)      JCIIF and Canombys entering into a shareholders’ agreement and adopting a new MOI
               and the shareholders’ agreement becoming unconditional (save for any condition
               therein requiring that the Transaction Agreement become unconditional);
       e)      The IFA Acquisition becoming unconditional in all respects;
       f)      Boschendal’s bankers consenting in writing to the implementation of the IFA Acquisition
               and the Transactions, to the extent legally required;
       g)      Boschendal’s bankers providing written confirmation, to the satisfaction of Canombys,
               that:
                       they shall not call for repayment of the loan owing by Boschendal to them for a
                       period of at least 90 days from the date of signature of the Transaction
                       Agreement, being 2 August 2012; and
                       they, or such other third party financier as may be acceptable to Canombys, will
                       advance a loan or facility to Boschendal for at least R125 000 000, or such
                       lesser amount as Canombys may in its discretion determine, for a period of not
                       less than 3 years from the expiry of the 90 day period referred to above, and on
                       such terms and conditions as may be acceptable to Canombys.


       Each of the conditions precedent set out in paragraphs 2.7 (c) and (e) to (g) (inclusive) have
       been stipulated for the benefit of Canombys, and may be waived by Canombys by written notice
       delivered to JCIIF and Boschendal. The condition precedent set out in paragraph 2.7 (d) is for
       the benefit of Canombys, Boschendal and JCIIF and may be waived by written agreement
       between them. The conditions precedent set out in paragraphs 2.7 (a) and (b) are of a
       regulatory nature and may not be waived.
3. Circular to JCI shareholders


In terms of paragraph 9.5 read with paragraph 3.35 of the JSE Listings Requirements, the Transactions
have been categorised as a Category 1 transaction. A circular, containing a notice of general meeting, will
be sent to JCI shareholders in due course.


4. Financial effects and renewal of cautionary


The pro-forma financial effects based on JCI’s unaudited NAV statement are in the process of being
finalised, and as a result, shareholders are advised to continue to exercise caution when dealing in the
company’s securities until a further announcement is made. Shareholders are also reminded that JCI is in
the process of finalising its 2011 and 2012 annual financial statements.




Johannesburg
7 August 2012
Sponsor: Investec Bank Limited
Legal adviser to JCI: Eversheds
Legal adviser to Canombys: Edward Nathan Sonnenbergs

Date: 07/08/2012 03:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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