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S A FRENCH LIMITED - UPDATE ANNOUNCEMENT: MIRROR LISTING OF SA FRENCH

Release Date: 21/08/2012 09:30
Code(s): SFH     PDF:  
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UPDATE ANNOUNCEMENT: MIRROR LISTING OF SA FRENCH

                          SA FRENCH LIMITED
            Incorporated in the Republic of South Africa
               (Registration number: 1982/009174/06)
                           Share code: SFH
                         ISIN: ZAE000108890
                   (“SA French” or the “Company”)


UPDATE ANNOUNCEMENT:   MIRROR LISTING OF SA FRENCH, INCORPORATING
DETAILS OF TRANSACTIONS TO BE CONCLUDED IN ANTICIPATION OF THE
MIRROR LISTING, INCLUDING, INTER ALIA, A CASH ISSUE, THE ASSIGNMENT
AND CONVERSION OF A SHAREHOLDER LOAN ACCOUNT AND THE ACQUISITION OF
FORKTECH PROPRIETARY LIMITED (“Forktech”)

1.     INTRODUCTION
1.1    Shareholders are referred to the announcement released on
       SENS on 28 June 2012 (the “Announcement”) detailing, inter
       alia:
       1.1.1 the restructuring of SA French through a mirror listing
             to be implemented by way of a scheme of arrangement in
             terms of section 114 of the Companies Act, No. 71 of
             2008 (the “Companies Act”) (the “Scheme”), proposed by
             the SA French board between SA French and its
             shareholders, in terms of which, if implemented, a
             newly incorporated company (“New Listco”) will acquire
             all the ordinary shares in SA French in exchange for 1
             (one) New Listco share for every 10 (ten) SA French
             shares disposed of in terms of the Scheme, following
             which SA French will become a wholly owned subsidiary
             of New Listco (the “Mirror Listing”);
       1.1.2 the specific issue of New Listco shares for cash to the
             investors identified herein (the “Cash Issue”);
       1.1.3 the specific issue of 462 251 New Listco shares for
             cash at a subscription price of R1.00 (one Rand) per
             share, amounting to a total consideration of R462 251
             to Mowana Investments Proprietary Limited (“Mowana”),
             which subscription price will be set-off against the
             amount owed to Mowana in terms of its shareholder loan
             account (the “Shareholder Loan Conversion”); and
       1.1.4 the acquisition of 100% of the ordinary shares and
             claims in Forktech Proprietary Limited, a Cape Town
             based company engaged in forklift rentals, from
             Mr Johann van Tonder for a total purchase consideration
             of R15 million, subject to adjustment as contemplated
             in the Announcement (the “Acquisition”).

1.2   The purpose of this announcement is to provide an update in
      respect of the corporate actions contemplated in paragraph
      1.1 above and to provide information regarding further
      developments.

2.    NAME OF NEW LISTCO
      Shareholders are hereby advised that the name of New Listco
      will be “Torre Industrial Holdings Limited” (“Torre”), which
      name signifies a tower of strength of this industrial holding
      company going forward. Torre was incorporated and registered
      with the Companies and Intellectual Property Commission
      (“CIPC”) on 13 August 2012.

3.    DIRECTORS AND MANAGEMENT OF TORRE
3.1   The proposed board of directors of Torre will be as follows:
      Executive directors
      CE Pettit (Interim Group Chief Executive Officer)
      SR Midlane (Group Financial Director)
      QCA van Breda (Group Technical Director)

      Non-executive directors
      PJ van Zyl (Chairman)
      S Swana (Lead Independent Director)

      JWLM Fizelle (Independent)
      CWJ Lyons (Independent)

 3.2  The proposed board committees of Torre will be as follows:
      Audit Committee
      S Swana (Chairman)
      PJ van Zyl
      JWLM Fizelle

      Remuneration Committee
      PJ van Zyl (Chairman)
      S Swana
      CWJ Lyons

3.3   Messrs Warwick van Breda and Johann van Tonder will fulfil
      the role of Managing Director of SA French and Forktech,
      respectively.

3.4   Brief curricula vitae of the aforementioned directors        of
      Torre, SA French and Forktech are set out below:

3.4.1 Executive directors of Torre
      Charles Pettit (BCom (Hons), CFA)
      Interim Group Chief Executive Officer
      As the Managing Director of AfrAsia Corporate Finance
      Proprietary Limited (“AfrAsia Corporate Finance”), Charles
      has gained extensive corporate finance and turnaround
      experience in various SADC and COMESA countries which
      includes   acquisitions,    disposals,  IPO’s,    fundraisings,
      interim management roles and debt restructurings.       Charles
      founded   AfrAsia   Corporate   Finance in   June   2009,   and
      subsequently led the origination and execution activities of
      the team, the sale of 50 per cent of the business to AfrAsia
      Bank Limited, a boutique bank headquartered in the Mauritian
      International     Financial    Services  Center,     and    the
      establishment and growth of the AfrAsia Special Opportunities
      Fund, which is a Mauritian registered collective investment
      scheme that invests throughout SADC in structured credit
      opportunities.    Prior to establishing AfrAsia Corporate
      Finance, Charles worked on M&A and Restructuring transactions
      with Close Brothers Corporate Finance in London.      Charles
      graduated from the University of Cape Town with a First Class
      Honours degree in Finance and subsequently qualified as a CFA
      charter holder.    He currently serves as a non-executive
      director of JSE Limited (“JSE”) listed companies Mine
      Restoration Investments Limited and Convergenet Holdings
      Limited.

      Stephen Roy Midlane (BCom, BAcc, CA (SA))
      Group Chief Financial Director
      Roy started his career in the music industry as part of the
      leadership team that established Sony Music SA Proprietary
      Limited. He then joined Set Point Holdings Limited as Group
      Financial Director prior to the listing on the JSE.     Later,
      he joined MGX Holdings Limited as the Group Financial
      Director and was integrally involved in the successful
      turnaround of this distressed business.     This business was
      subsequently renamed Metrofile Holdings Limited. In 2006 Roy
      became a non-executive director of Metrofile Holdings Limited
      and he joined Drive Control Services Proprietary Limited, a
      large distributor of IT hardware, software and consumables,
      as Financial Director.   After a period in private equity as
      the Chief Financial Officer and Compliance Officer of African
      Global Capital Proprietary Limited, Roy was approached to
      join The House of Busby Proprietary Limited as the Group
      Financial Director to corporatise the group, a business taken
      private by Ethos in 2008, where he remained until May 2012,
      within which time he played a senior role in driving
      strategic initiatives including a strategic 5 year planning
      process and the raising of a R650 million high yield bond.

      Quentin Cecil Alexander van Breda (Prof Eng Technician, CPFA)
      Group Technical Director
      Quentin began his career as a trainee draftsman in 1970,
      progressing to design draftsman and section leader by 1974.
      He joined Potain SA, a wholly-owned subsidiary of Potain
      France, in 1975 as a draftsman/production controller.      The
      Potain agency was given to Triplejay Equipment later that
      year when the French owned parent company disinvested from
      South Africa.      Quentin remained with Triplejay as a
      production engineer for four years thereafter.    In 1980, he
      was promoted to Triplejay’s head office where he was employed
      as the product manager for the Potain agency until 1982. In
      1982, he established SA French, taking over the sole
      distribution for Potain in South Africa.         In 2002, he
      furthered his professional engineering qualifications and in
      2004 completed a certificate programme in finance and
      administration at Wits Business School.

3.4.2 Non-executive directors of Torre
      Peter van Zyl
      Chairman
      Peter has wide-ranging operational experience in financial
      management   and    Financial   Director   roles   and   has
      entrepreneurial experience, with a particular focus on the
      Information and Communication Technology industry. From 2004
      to 2009 he was Commercial Director of Sekunjalo Investments
      Limited, where he managed a wide range of transactions,
      including the Sekunjalo Health Care rights issue, the
      acquisition of a BEE stake in British Telecom and Marine
      Growers from Transnet, as well as the restructuring of
      Sekunjalo Financial Services and hence has many years of
      experience in the listed environment.

3.4.3 Independent non-executive directors of Torre
      Sandile Swana (BCom, BCom Hons, MBA)
      Lead independent director
      Sandile completed a Bachelor of Commerce degree under the
      Anglo American Scholarship Programme at Wits University,
      Johannesburg and later completed the Business Advisors
      Programme at WBS-Centre for Developing Business. He holds an
      MBA from the University of Pretoria as well as a B.Th degree
      in Ethics from UNISA.    He has received sponsorship from the
      Department of Transport for part of the degree Honors B.Comm
      Logistics) at UNISA which he completed. Sandile has prepared
      and presented conference papers for IPSA, Supply Chain
      Council and SAPICS.     He spent seven years in the retail
      sector with Caltex Oil and Zenex Oil where he gained
      experience in business planning, oil retail and general
      management.   He has also worked as group operations manager
      for the JSE listed Don Group. He is presently non-executive
      director of JSE listed Gold One International Limited,
      Queensgate Hotels & Leisure Limited, chairman of ConvergeNet
      Holdings Limited and a member of the Institute of Directors.

      Joseph William Leo Murphy Fizelle (BCom, HDipPrAcc, FCA)
      Joseph was appointed as an independent non-executive director
      and a member of the audit committee of SA French on 1 July
      2009. Joseph is a fellow of the Irish Institute of Chartered
      Accountants and began his career in the audit and advisory
      division of PricewaterhouseCoopers in 1993. He joined Mowana
      Investments   Proprietary   Limited,   a   black   empowerment
      investment holding Company, as an executive director in 2004.
      Prior to this, Joseph gained extensive experience in
      corporate finance at JPMorgan Chase (Johannesburg) and
      Standard Bank.

      Craig Warwick John Lyons (BCom)
      Craig studied at the University of the Witwatersrand where he
      graduated with Bachelor of Commerce degree and then graduated
      at Oxford University in England. Craig worked for Standard
      Corporate and Merchant Bank (Corporate Finance and Private
      Equity division) prior to joining Mvelaphanda Holdings.    He
      was   the  co-founder   and  CEO  of   Mvelaphanda  Strategic
      Investments Proprietary Limited. As CEO, he was responsible
      for building and managing its investment portfolio of non-
      mining assets. He built Mvelaphanda into one of the leading
      BEE investment houses in South Africa.     Shortly after the
      merger with Rebserve Limited he left Mvelaphanda to pursue
      personal interests while remaining on as a special advisor to
      the group, in addition to sitting on a number of portfolio
      company boards and committees.    He is an investment banker
      with 19 years’ experience in investment banking and private
      equity fund management. He has sat on the boards of various
      listed and private companies in Southern Africa and is
      currently actively engaged in private equity investments
      throughout Africa.

3.4.3 Managing Director of SA French
      Warwick van Breda (LLB, LLM)
      Warwick completed his legal qualifications at the University
      of Stellenbosch in 2004, and worked within the profession for
      three years in, amongst others, the corporate finance
      department of Clifford Chance in London (UK).    He joined SA
      French as its general manager and legal advisor in February
      2007,   having  worked   part-time  at   the  Company  during
      educational vacations for over ten years.

3.4.4 Managing Director of Forktech
      Johann van Tonder
      Johann   completed    his  studies    at   the   University   of
      Stellenbosch with the Executive Development Programme in
      2004.    During the period 1981 to 1982 he studied at
      University of the Free State as a Personnel Manager.        From
      1982 to 1984 he joined the army in order to complete his
      National     Service.          Thereafter,     Johann     joined
      Hartebeestfontein Gold Mine in 1985 as Trainee Official:
      Environmental Officer where he was involved in the design and
      monitor   of   underground   mine    ventilation   systems   and
      refrigeration and other environmental issues both on surface
      and underground.   In April 1989 he was appointed as Section
      Environmental Officer (Mine Overseer) at Crocodile River Mine
      at Brits. In 1991 Johann decided to move out of the mining
      industry and joined City Hardware and Plumbing Supplies in
      Pretoria as Distribution and Warehouse Manager until 1992,
      when the opportunity to move to Cape Town arose.         He was
      appointed as Risk Manager in Cape Town at International
      Harbour Services in 1992, and in December 1992 was appointed
      as Technical Services and Risk Manager, which position he
      held until 30 June 1997. During this period he ran several
      projects   involving   building   construction   and   expansion
      projects and optimizing the use of equipment (mainly
      forklifts).   In 1997 the IHS Board approved his proposal to
      privatize the forklift division by purchasing a fleet of 87
      forklifts from IHS and then started Forktech on 1 July 1997.
      He remained in the position as Technical Manager at IHS until
      November 1999 and in December 1999 purchased the Nissan
      Forklift dealership.

4.    INCREASED VALUE OF THE CASH ISSUE
4.1   Since the date of the Announcement, and in anticipation of
      the Mirror Listing, the following investors have agreed to
      subscribe for Torre shares by way of a specific issue for
      cash at a subscription price of R1.00 (one Rand) per share,
      totalling R30 million of equity capital (the “Cash Issue
      Subscription Price”) as follows:
      4.1.1  8 500 000 Torre shares for a total consideration of
             R8 500 000 to Typhoon Investment Holdings Limited
             (“Typhoon”);
      4.1.2  6 000 000 Torre shares for a total consideration of
             R6 000 000 to Heritage Capital Assets Limited;
      4.1.3  5 000 000 Torre shares for a total consideration of
             R5 000 000 to SR Midlane;
      4.1.4  3 500 000 Torre shares for a total consideration of
             R3.5 million, to Trinity Asset Management Proprietary
             Limited (“Trinity Asset Management”);
      4.1.5  3 000 000 Torre shares for a total consideration of
             R3 million to AfrAsia Corporate Finance;
      4.1.6  2 000 000 Torre shares for a total consideration of
             R2 million to CWJ Lyons; and
      4.1.7  2 000 000 Torre shares for a total consideration of
             R2 million to Mowana.
4.2   The Cash Issue is subject to the approval by the sole
      shareholder of Torre as well as the approval of the Scheme by
      SA French shareholders.
4.3   Subsequent to the Mirror Listing, Trinity Asset Management,
      Typhoon and Mowana will be material shareholders in Torre and
      therefore related parties as defined in terms of section
      10.1(b)(i) of the Listings Requirements of the JSE (“Listings
      Requirements”).   SR Midlane and CWJ Lyons are directors of
      Torre and therefore related parties as defined in terms of
      section 10.1(b)(ii) of the Listings Requirements. CE Pettit
      and PJ van Zyl are directors of Torre and AfrAsia Corporate
      Finance.   AfrAsia Corporate Finance is therefore a related
      party as defined in terms of section 10.1(b)(vii) of the
      Listings Requirements.    The Cash Issue Subscription Price
      represents, on a like-for-like basis, a discount of 2.2% to
      the 30-day volume weighted average traded price of SA French
      as at 28 June 2012, being the date that the Cash Issue
      Subscription Price was agreed to in writing between Torre and
      the aforementioned related parties.

5.    INDEPENDENT BOARD
      In terms of the Companies Act and the Listings Requirements,
      the board of directors of Torre is required to appoint an
      independent board (“Independent Board”) to provide an
      independent expert opinion on the Scheme, Cash Issue and the
      Shareholder Loan Conversion.    In addition thereto and in
      order to formulate its opinion, the Independent Board
      appointed BDO Corporate Finance Proprietary Limited, an
      independent expert acceptable to the Takeover Regulation
      Panel (“TRP”) and the JSE, for the purpose of providing
      external advice in regard to the Scheme, the Cash Issue and
      the Shareholder Loan Conversion and to make appropriate
      recommendations to the Independent Board for the benefit of
      Shareholders (“Fairness Opinion”). The Fairness Opinion will
      be included in the circular referred to in paragraph 8.2
      below.

6.    INVESTMENT BY STANLIB ASSET MANAGEMENT LIMITED (“STANLIB”)
      In accordance with section 122(3)(b) of the Companies Act,
      and as announced on SENS on 6 July 2012, shareholders are
      advised that, since the date of the Announcement, STANLIB has
      acquired a total number of 60 000 000 SA French shares,
      constituting an interest of 9.81% in the issued share capital
      of the Company.

6.    UPDATED PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
6.1   The Scheme, the Cash Issue, the Shareholder Loan Conversion
      and the Acquisition are collectively referred to as the
      “Transactions” for purposes of this paragraph 6.
6.2   As a result of the increase in the value of the Cash Issue,
      the unaudited pro forma financial effects of the Transactions
      on Shareholders have been updated as follows:

                                          After
                                      Shareholder    After        After
             Before the     After         Loan       Cash     Acquisition         %
           Transactions1   Scheme2     Conversion   Issue3         5
                                                                               change
Profit
for the
period               219        219           219       219            1 782   713.70%
Headline
(loss)/
earnings
per
share               -916       -916          -916      -916              647   170.63%
Net
asset
value
per
share
(cents)             9.06      90.57         90.65     90.42            92.26     1.87%
Net
tangible
asset
value
per
share
(cents)             9.06      90.57         90.65     90.42            86.88    -4.07%
Basic
earnings
per
share
(cents)             0.04       0.39          0.38      0.25            1.92    397.69%
Headline
(loss)/            -0.16      -1.62         -1.60     -1.05            0.70    143.20%
earnings
per
share
(cents)
Weighted
and
actual
number
of
shares
in issue
at    the
end    of
the
period      566 375 689   56 637 569   57 099 820   87 099 820    92 599 820

      Notes and assumptions:
      1. The amounts set out in the “Before the Transactions” column
         above have been extracted from the published unaudited
         consolidated financial results of the SA French for the six
         months ended 31 December 2011.
      2. Shareholders will receive the Scheme Consideration of 1
         (one) Torre share for every 10 (ten) Scheme Shares disposed
         of in terms of the Scheme.
      3. The Cash Issue is for an amount of R30 million in respect
         of 30 000 000 Torre shares issued at R1 (one Rand) each.
         The effect of the Cash Issue is presented net of
         transaction fees of R3 million.       Accordingly, the Cash
         Issue will result in an increase of R27 million in total
         NAV (89 cents per newly issued share) and a decrease in NAV
         per newly issued share to 90.42 cents per share.
      4. It has been assumed that:
         (a)  the Transactions had been implemented on 31 December
              2011 for purposes of compiling the statement of
              financial position and on 1 July 2011 for purposes of
              compiling the statement of comprehensive income;
         (b)  the Cash Issue will be for an amount of R30 million;
         (c)  the earn out targets in respect of the Acquisition as
              contemplated in paragraphs 4.2.1(ii) and (iii) of this
              Section B above are fully met (i.e. full contingent
              consideration paid in respect of the Acquisition,
              calculated in accordance with IFRS3);
         (d)  all the Transactions are implemented;
         (e)  transaction fees amount to R3 million and will be
              applied against share capital;
         (f)  a portion of the proceeds from the Cash Issue were
              utilised to settle R0.83 million interest bearing debt
              resulting in a finance cost saving of R38 000.
              Interest bearing debt carried an interest rate of 9%
              per   annum  (calculation   assumes   monthly  interest
              compounding); and
         (g)  the portion of the proceeds from the Cash Issue which
              were not utilised to settle debt or fund the
              Acquisition (R13.79 million) earned interest at 5% per
              annum resulting in investment revenue of R348 000
              (calculation assumes monthly interest compounding).
      5. Financial information relating to Forktech was extracted
         from Forktech’s unaudited balance sheet as at 31 December
         2011 and unaudited income statement for the period
         1 October 2011 to 31 December 2011.
      6. All adjustments have a continuing effect.

6.3   The above unaudited pro forma financial effects of the
      Transactions on Shareholders are the responsibility of the SA
      French directors.   They have been prepared for illustrative
      purposes only to assist shareholders in assessing the impact
      of the Transactions on the unaudited interim results of SA
      French for the six months ended 31 December 2011 and, due to
      its nature, may not give a fair reflection of SA French’s
      financial position and results after the Transactions.

7.    IRREVOCABLE UNDERTAKINGS
      SA French has received irrevocable undertakings from the
      following Shareholders to vote in favour of all the
      resolutions to be proposed at the general meeting, as detailed
      in paragraph 8.1 below, to the extent they are permitted to do
      so in terms of the Companies Regulations and the Listings
      Requirements:

                                                          % of issued
                                              Number of         share
                                              SA French    capital of
      Shareholder                           shares held     SA French
      Trinity Asset Management*             152 282 204        24.89%
      Mowana*#                               94 030 162        15.37%
      SA French Group Trust                  93 517 500        15.29%
      STANLIB                                60 000 000         9.81%
      Wilduso 112 Proprietary Limited^       40 000 000         6.54%
      Typhoon*~                              35 620 475         5.82%
      SA   French  Economic   Empowerment
      Trust                                  34 840 000         5.69%
      AfrAsia Corporate Finance*             25 000 000         4.09%
      Total                                 535 290 341        87.50%

      * Precluded from voting on the Cash Issue (to the extent they
        are participants).
      # Precluded from voting on the Shareholder Loan Conversion.
      ^ Disposed of 10 million shares after the date of the
        Announcement.
      ~ Disposed of 35 million shares after the date of the
        Announcement.

8.    GENERAL MEETING, FURTHER DOCUMENTATION AND SALIENT DATES
8.1   SA French will convene a general meeting of shareholders to
      consider and, if deemed appropriate, pass resolutions in
      respect of the approval of the following:
      8.1.1  the Scheme;
      8.1.2  the Cash Issue;
      8.1.3  the Shareholder Loan Conversion;
      8.1.4  the specific issue of 40 000 Torre shares at a
             subscription price of R1.00 (one Rand) per share,
             amounting to an aggregate total consideration of
             R40 000 to J de Bruyn and S Swana in lieu of SA French
             directors’ fees;
      8.1.5  the provision of financial assistance to a director of
             Torre to acquire 7 500 000 shares in Torre at a
             subscription price of R1.00 (one Rand) per share in
             accordance with section 44 and 45 of the Companies Act;
             and
      8.1.6  the adoption of the Torre Industrial Holdings Limited
             Share Plan.
      (collectively hereinafter referred to as the “Corporate
      Actions”).

8.2   A circular, which will include further details of the Scheme
      and the Corporate Actions as well as, inter alia, a notice of
      a general meeting of SA French shareholders, a form of proxy,
      a form of surrender and transfer and a prospectus in relation
      to Torre (which requires registration with the CIPC prior to
      the circular being posted) (the “Circular”), is in the process
      of being prepared and will be issued to Shareholders in due
      course.

      The salient dates in relation to the Scheme will be published
      prior to the posting of the Circular. In this regard, the TRP
      has granted SA French an extension in respect of the date for
      the posting of the Circular in order to allow for the
      registration of Torre’s prospectus with CIPC.

9.    RESPONSIBILITY STATEMENT
      The independent board of SA French accept responsibility for
      the information contained in this announcement.    To the best
      of their knowledge and belief, the information contained in
      this announcement is true and nothing has been omitted which
      is likely to affect the importance of the information included.

Johannesburg
21 August 2012

Corporate advisor: AfrAsia Corporate Finance Proprietary Limited
Designated advisor: PSG Capital Proprietary Limited

Date: 21/08/2012 09:30:00 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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