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Terms announcement relating to the MineRP Business Disposal and Renewal of cautionary announcement
Gijima Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/021790/06)
ISIN: ZAE000147443
Share code: GIJ
("Gijima" or “the Company”)
TERMS ANNOUNCEMENT RELATING TO THE MINERP BUSINESS DISPOSAL AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements published on the Securities Exchange News Service of the
JSE Limited (“JSE”) on 25 April 2012, 8 June 2012, 19 July 2012, 30 August 2012 and 5 September
2012, Gijima shareholders ("Shareholders") are hereby advised that Gijima has entered into
agreements dated 25 September 2012 (“Agreements”) with Oakleaf Investment Holdings 89 (Pty) Ltd
(“Oakleaf”) and MineRP Solutions (Australia) Pty Ltd (“Aus BidCo”), a wholly owned subsidiary of
Oakleaf’s wholly owned subsidiary MineRP Holdings (Australia) Pty Ltd, all being newly incorporated
entities, (Oakleaf and Aus Bidco collectively referred to as “the Purchaser”) in terms of which and
subject to the fulfillment of the conditions precedent set out in paragraph 7 below -
• the Purchaser will purchase from MineRP Africa (Pty) Ltd ("MineRP Africa") its business
(including the shares which MineRP Africa holds in Sirius Consulting (Pty) Ltd ("Sirius
Consulting")), as well as all the shares held by Matsema International BV (Netherlands)
("Matsema"), a wholly-owned subsidiary of Gijima, in AST Holdings (Australia) Pty Ltd ("AST
Australia") and in MineRP Canada Ltd ("MineRP Canada"), including those loans owing by
each of AST Australia and MineRP Canada to Matsema at the closing of the transaction, but
specifically excluding the AU$16.5 million loan owed by AST Australia to a member or
members of the Gijima group (“Gijima Australian Loan”) (collectively referred to as “the
Disposal”); and
• the Gijima Australian Loan will be repaid in full,
collectively referred to as "the Transactions", being one indivisible transaction.
Oakleaf is owned by a consortium led by RMB Corvest (Pty) Ltd, Shalamuka Capital (Pty) Ltd, Hasso
Plattner Ventures Africa Management (Pty) Ltd and Emerald Panther Investments 99 (Pty) Ltd
(“Manco”).
Manco, which holds a 20% stake in Oakleaf, will have as initial shareholders:
• Mr. Pieter Nel, a director of MineRP Africa, MineRP Canada and MineRP (Australia) Pty Ltd
(a wholly owned subsidiary of AST Australia) (“MineRP Australia”), who holds 50% of Manco;
and
• Mr. John Megannon, a senior manager of MineRP Africa, MineRP Canada and MineRP
Australia, who holds 50% of Manco.
An Oakleaf employee stock ownership program ("Oakleaf ESOP") is in the process of being
established for key management and staff of MineRP Africa, AST Australia and MineRP Canada,
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which will ultimately hold a 50% stake in Manco, diluting Mr. Nel’s and Mr. Megannon’s holdings in
Manco to 25% each. Mr Nel and Mr Megannon will both be trustees of the Oakleaf ESOP. The
introduction of the Oakleaf ESOP as a shareholder in Manco is not expected to be in place at the time
when the circular, described in paragraph 9, is posted to Shareholders.
As both Oakleaf and Manco are newly established companies and were formed for the purpose of
facilitating the Transactions, the shareholders of Oakleaf and Manco are considered to be the parties
with whom Gijima is engaging for purposes of the Transactions. Mr Nel and Mr Megannon are
defined as related parties to Gijima in terms of paragraphs 10.1(b)(ii) and 10.1(b)(iv), respectively, of
the JSE Listings Requirements and, as Mr Nel and Mr Megannon have a beneficial interest in the
Transactions, the Transactions are a related party transaction in terms of the JSE Listings
Requirements.
The total value for Gijima of the Transactions is R175 million, which is inclusive of the repayment of
the Gijima Australian Loan. In the event that the aggregate net working capital of MineRP Africa's
business and the Target Companies (being AST Australia and its subsidiaries, MineRP Canada and
its subsidiaries and Sirius Consulting to the extent of the 50% shareholding in Sirius Consulting held
by MineRP Africa) is less than R20.2 million as at the Closing Date (as defined in paragraph 7 below)
and/or the aggregate cash-on-hand held by MineRP Africa and the Target Companies is less than
R21.2 million as at the Closing Date, which amounts shall be determined based on the Closing Date
accounts, the amount payable by the Purchaser in respect of the Disposal ("Disposal Consideration")
will be reduced accordingly. Whether an adjustment to the Disposal Consideration will need to be
made cannot yet be determined but, based on the balances as at 30 June 2012, an adjustment of
R6.3 million, reducing the Disposal Consideration, would have applied.
2. Rationale for the Transactions
The business of MineRP Africa, as well as AST Australia and MineRP Canada (collectively "the
MineRP Businesses") have historically attained a position amongst the top three mining technical
systems providers world-wide. This position has declined over the last few years, based on two
primary factors:
• large scale market consolidation; and
• lack of sufficiently significant investment in the MineRP Businesses to enable them to expand
globally through organic and inorganic means.
Ongoing investment into the MineRP Businesses is required to improve their competitive position.
However, given that the MineRP Businesses are non-core to Gijima and that the required funding
could be more appropriately invested in higher yielding, core Gijima business units, the Company has
taken a decision not to invest significantly in the MineRP Businesses. For this reason, Gijima has
taken a view that, in order to set the MineRP Businesses on their own growth trajectory, they should
be divested to investors that will adequately invest in them.
The Transactions are expected to unlock Shareholder value, bolster cash reserves and significantly
strengthen the Gijima group’s statement of financial position going forward.
3. Use of proceeds
The proceeds from the Transactions will be used to further Gijima’s various growth initiatives. To the
extent that there is surplus capital beyond the funding and growth requirements of Gijima, the funds
will be applied in a manner that enhances Shareholder value.
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4. Nature of business of the MineRP Businesses
The MineRP Businesses comprise of three business units, which are wholly-owned by Gijima and
which are located in South Africa, Australia and Canada.
The MineRP Businesses are leading mining technology and consulting businesses which provide an
integrated service offering of consulting services coupled with a broad set of mining software portfolio
solutions spanning both expert and enterprise mine technical solutions.
5. JSE Category 1 and related party transaction
The Transactions are collectively a Category 1 transaction and a related party transaction, as defined
by the JSE Listings Requirements. Accordingly, Shareholders are required to approve the
Transactions by way of an ordinary resolution proposed at a general meeting and approved by a
simple majority of the votes of Shareholders, other than the related party and its associates, being
cast in favour of the resolution.
Due to the Transactions being a related party transaction, for the reasons described in paragraph 1, a
fairness opinion by an independent expert appointed by the Gijima board of directors ("the Board")
confirming that the Transactions are fair insofar as the Shareholders are concerned, is required. The
Board has appointed PricewaterhouseCoopers Corporate Finance (Pty) Ltd ("PwC") to act as
independent expert in accordance with the JSE Listings Requirements. This exercise has been
undertaken by PwC, who have provided preliminary feedback that the Transactions are fair to
Shareholders. A fairness opinion letter prepared by PwC will be contained in the circular to
Shareholders.
6. Shareholder support
Shareholders holding or representing 37.72% of all Gijima shares have signed irrevocable letters of
undertaking to vote in favour of the proposed resolution to approve the Transactions. Details are set
out in the table below:
**
Shareholder Shares held % of issued shares
Guma Tech (Pty) Ltd 169,817,449 17.66
Guma Support (Pty) Ltd 123,503,600 12.84
Guma Investment Holdings (Pty) Ltd 44,409,958 4.62
Guma Tech Group (Pty) Ltd 15,437,950 1.61
*
Allan Gray (Pty) Ltd (“Allan Gray”) 9,535,480 0.99
Total 362,704,437 37.72
* Represents discretionary mandate shares only, which Allan Gray has the right to vote at its
discretion. Allan Gray has undertaken to recommend to non-discretionary or restricted mandate
clients to vote in favour of the Transactions. The total number of Gijima shares which are under the
management of Allan Gray as the authorised investment manager of clients who are beneficial
owners of such shares, and which comprise the discretionary mandate and the non-discretionary or
restricted mandate shares, is 231,922,163 shares (24.12% of the total issued Gijima shares).
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** Total shares in issue excluding treasury shares of 961,565,309.
7. Closing date and conditions precedent
The closing date for the Disposal will be the third business day after the date upon which the
Agreements become unconditional (“Closing Date”) and the Gijima Australian Loan will be repaid on
the Closing Date, prior to the implementation of the Disposal.
The Transactions are subject to the fulfillment and/or waiver of the following conditions precedent by
no later than the dates set out below (or such later dates as Gijima, Oakleaf and MineRP Africa may
agree in writing):
• by not later than 30 November 2012, obtaining the necessary Shareholder approval for the
Transactions;
• by not later than 30 November 2012, obtaining the required regulatory approval from the JSE for
the Transactions;
• by not later than 5 December 2012, obtaining the required regulatory approval from the South
African Reserve Bank or an authorised dealer, if sufficient, for the Transactions;
• by not later than 5 December 2012, approval by the Competition Authorities of the Transactions;
and
• by not later than 30 November 2012, obtaining the required consents from the counterparties to
certain contracts which MineRP Africa or a Target Company is a party ("Business Contracts"), to
the assignment of MineRP Africa's rights and prospective obligations under the Business
Contracts to which it is a party, to Oakleaf with effect from the Closing Date, or, in respect of the
Business Contracts to which a Target Company is a party, to the change of control of AST
Australia or MineRP Canada as contemplated by the Disposal (as the case may be); provided
that, in the event that such consents have been obtained in respect of Business Contracts
concluded by customers of MineRP Africa and the Target Companies ("Customer Contracts")
representing not less than 75% of the total value of those Customer Contracts as detailed in the
Agreements, and such Customer Contracts include certain specified contracts, then this condition
precedent will be deemed to have been fulfilled in respect of all of the Customer Contracts (but
not, for the sake of clarity, in respect of the Business Contracts other than the Customer
Contracts).
8. Gijima Group Limited Share Linked Bonus Scheme (“the Scheme”)
Gijima recognises that certain employees of, and service providers to, members of the Gijima group
(defined as "eligible employees" in accordance with the terms of the Scheme) play an integral role in
the current and future success of Gijima. In light of this, Gijima wishes to implement the Scheme on
the basis that the Scheme can potentially add significant value by developing an ethic and mindset of
ownership, responsibility and accountability within members of the Gijima group, which will drive
future growth and sustainability of the Gijima group's business.
The rationale for the Scheme is to:
• serve as an incentive and reward to eligible employees of Gijima and its subsidiaries, aimed at
promoting the continued growth of the members of the Gijima group;
• develop an ethic and mindset of ownership, responsibility and accountability within the Gijima
group; and
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• serve as a retention mechanism for eligible employees to ensure the future growth and
sustainability of Gijima's business.
The Scheme involves the issue of shares to eligible employees and is, therefore, subject to the
provisions of Schedule 14 of the JSE Listings Requirements and, in addition, will constitute a scheme
as contemplated in terms of sections 95 and 97 of the Companies Act, 2008. The Scheme complies
with the provisions of the King Report and Code of Governance Principles for South Africa 2009.
The Scheme remains subject to the fulfilment of the condition precedent that the necessary
Shareholder approval for the Scheme is obtained.
9. Circular to Shareholders
Given that Shareholder approval will be required to implement the Transactions and the Scheme, a
circular setting out the details required by the JSE Listings Requirements and incorporating a notice
convening a general meeting to approve the Transactions and the Scheme will be posted to
Shareholders in due course.
10. Further announcements and cautionary renewal
Further announcements setting out the pro forma financial effects relating to the Transactions as well
as the salient dates and times relating to the Transactions and the Scheme will be made in due
course. Accordingly, Shareholders are advised to continue exercising caution when dealing in Gijima
shares until the pro forma financial effects have been published.
Johannesburg
25 September 2012
Corporate adviser and sponsor to Gijima
Rand Merchant Bank (a division of FirstRand Bank Limited)
Transaction sponsor
KPMG Services (Pty) Ltd
Independent auditor and reporting accountant
KPMG Inc.
Independent expert
PricewaterhouseCoopers Corporate Finance (Pty) Limited.
Legal and tax adviser to Gijima
Webber Wentzel
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Date: 25/09/2012 05:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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