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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').
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