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Declaration announcement and terms of the Capitec renounceable rights offer
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY,
IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN, AUSTRALIA OR HONG KONG
CAPITEC BANK HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1999/025903/06)
Share Code: CPI
ISIN Number: ZAE000035861
("Capitec" or "the company" or "the group")
DECLARATION ANNOUNCEMENT AND TERMS OF THE CAPITEC RENOUNCEABLE RIGHTS OFFER
1. INTRODUCTION
Shareholders are hereby advised that Capitec intends to raise approximately
ZAR2.248 billion by way of an underwritten renounceable rights offer
("the rights offer"), of 14 050 848 new Capitec ordinary shares ("rights offer shares")
to qualifying shareholders at a subscription price of ZAR160.00 per rights offer share,
in the ratio of 7.00000 rights offer shares for every 50 Capitec ordinary shares held on
the rights offer record date, being the close of business on Friday, 19 October 2012
("the record date").
2. RATIONALE FOR THE RIGHTS OFFER
In anticipation of the growth prospects in the market in which Capitec operates and
of the new Basel III capital requirements, Capitec's board of directors and
executive management believe it is responsible to proactively optimise the capital
base and provide the financial flexibility needed to support the group's growth
prospects by raising capital through the rights offer. In particular, Capitec is
seeking to achieve the following objectives through the rights offer:
- Support Capitec Bank Limited ("Capitec Bank"), Capitec's wholly-owned banking
subsidiary's, growth prospects and further strengthen its position in the South
African unsecured lending market;
- Enhance Capitec Bank's ability to pursue attractive opportunities competitively
to expand its infrastructure and branch network while maintaining flexibility to
deal with regulatory challenges and uncertainty;
- Optimise the capital base whilst offering consistently attractive returns to
shareholders; and
- Provide a fair and transparent market solution to raise the capital required to
support strategic initiatives.
Capitec therefore intends to use the net proceeds of the rights offer to: (i)
optimise the capital base of Capitec and its subsidiaries; (ii) increase capacity
for loan book growth; and (iii) expand Capitec Bank's infrastructure and branch
network.
The above is not an exhaustive list of Capitec's planned expenditure. In the short
term the net proceeds from the rights offer will be invested in cash and cash
equivalents, which will, in due course, be allocated to the initiatives listed
above.
3. TERMS OF THE RIGHTS OFFER
In terms of the rights offer, 14 050 848 rights offer shares will be offered to
qualifying shareholders at a subscription price of ZAR160.00 per rights offer share
("rights offer subscription price"), in the ratio of 7.00000 rights offer shares for
every 50 Capitec ordinary shares held on the record date. The rights offer will give
all qualifying shareholders recorded in the register of shareholders on the record date an
opportunity to participate in the rights offer.
The mechanics of the rights offer will entail Capitec issuing nil paid renounceable
letters of allocation ("letters of allocation")to qualifying shareholders on the
following basis
· each qualifying shareholder will be issued 7.00000 letters of allocation for
every 50 Capitec ordinary shares held by such qualifying shareholder on the
record date, provided that if the number of letters of allocation to be issued
to a qualifying shareholder (by applying the ratio mentioned above) is a
fraction, it will be rounded up or down to the nearest whole number;
· 1 (one) letter of allocation will confer on the holder thereof a right
("allocation right") to subscribe for 1 rights offer share at the rights offer
subscription price; and
· the letters of allocation will be (i) issued in dematerialised electronic form
and listed on the exchange operated by JSE Limited ("JSE"); (ii) capable of
being traded on the JSE during the offer period applicable to the rights offer
and (iii) renounceable.
The rights offer subscription price represents a discount of 22.44% to the closing
price of Capitec shares on the JSE, on 25 September 2012, being ZAR206.30, and being
the last trading day before the publication of this declaration announcement.
Excess applications for rights offer shares will not be allowed and any rights offer
shares that are not accepted shall revert to the underwriters.
The rights offer shares issued will rank pari passu with the existing issued
ordinary shares of Capitec.
4. IRREVOCABLE COMMITMENTS AND UNDERWRITING
IRREVOCABLE COMMITMENTS
PSG Financial Services Limited ("PSG Financial Services") and Themebeka Capital
Limited ("Thembeka") have irrevocably undertaken to take up and exercise all of
their allocation rights under the rights offer and to subscribe for all of the
rights offer shares to which they are entitled ("shareholders' commitments").
These irrevocable undertakings by PSG Financial Services and Thembeka are in respect
of 4,524,096 and 486,247 rights offer shares, respectively, representing
approximately 32.20% and 3.46% of the rights offer shares to be issued pursuant to
the rights offer.
In terms of the irrevocable commitments, a commitment fee which is equal to 3% of
the aggregate subscription price for the rights offer shares mentioned above is
payable to each of PSG Financial Services and Thembeka in relation to their
respective commitments.
UNDERWRITING
Capitec has entered into an underwriting agreement with Merrill Lynch International
and Sanlam Capital Markets Limited (together "the Joint Underwriters"), dated 26
September, 2012, with respect to the rights offer shares ("underwriting agreement").
Pursuant to the terms of the underwriting agreement, the Joint Underwriters have
severally agreed, in their agreed proportions, to procure subscribers and payment
for, or failing which, to subscribe and pay for, and Capitec has agreed to issue to
the purchasers procured by the Joint Underwriters, or failing which, to the Joint
Underwriters themselves, any rights offer shares (other than the rights offer shares
to be taken up pursuant to the shareholders' commitments) that have not been
subscribed for pursuant to the rights offer (the "rump shares").
The rump shares will be subscribed for at the subscription price of ZAR160.00 per
share. With respect to this subscription, the Joint Underwriters will subscribe for
the percentage of the rump shares indicated in the following table.
Joint Underwriters Percentage
Merrill Lynch International 65.4%
Sanlam Capital Markets 34.6%
The obligations of the Joint Underwriters pursuant to the underwriting agreement are
subject to certain conditions that are typical for an agreement of this nature.
These conditions include, among others, the accuracy of the representations and
warranties in the underwriting agreement, the receipt of opinions on certain legal
matters from counsel, the absence of any force majeure and other conditions
customary in international capital markets transactions.
In addition the underwriting agreement provides that, until the settlement of the
rump shares, Merrill Lynch International may terminate the joint underwriters
several commitments under the underwriting agreement and demand payment of costs and
expenses incurred to date in connection with the rights offer upon the occurrence of
certain specified events.
As is customary with offerings of this type, Capitec will pay the Joint Underwriters
an underwriting commission equal to 3% of the aggregate value of the subscription
price of ZAR160.00 per share multiplied by the maximum number of shares comprised
in the underwriting of the rump shares (together with any applicable VAT), excluding
the rights offer shares which are the subject of the shareholders' commitments.
Details of the underwriting agreement will be set out in the rights offer circular
(the "rights offer circular") which will be posted to shareholders when the rights
offer opens on or about Monday, 22 October 2012 and, in the case of qualifying
shareholders that hold shares in certificated form, will be accompanied by a form of
instruction ("form of instruction")
5. FOREIGN SHAREHOLDERS
Any shareholder resident outside the Republic of South Africa ("foreign
shareholder") who receives the rights offer circular and/or a form of instruction,
should obtain advice as to whether any governmental and/or any other legal consent
is required and/or any other formality must be observed to enable such shareholder
to exercise its allocation rights and subscribe for rights offer shares.
The rights offer does not constitute an offer in any jurisdiction in which it is
illegal to make such an offer and the rights offer circular and form of instruction
should not be forwarded or transmitted by recipients thereof to any person in any
territory other than where it is lawful to make such an offer.
Foreign shareholders should consult their professional advisers to determine whether
any governmental or other consents are required or other formalities need to be
observed to allow them to take up the rights offer, or trade their letters of
allocation. Shareholders holding Capitec shares on behalf of persons who are foreign
shareholders are responsible for ensuring that taking up the rights offer, or
trading in their letters of allocation, do not breach regulations in the relevant
overseas jurisdictions.
To the extent that foreign shareholders are not entitled to participate in the
rights offer as a result of the aforementioned restrictions, the letters of
allocation that would have been issued to such shareholder shall be treated as
having lapsed.
See "Item 11. Important Information" below for additional details.
6. PRO FORMA FINANCIAL EFFECTS OF THE RIGHTS OFFER
The unaudited pro forma financial effects of the rights offer will be included in
the rights offer finalisation announcement which will be announced on or about
Friday, 5 October 2012.
7. SALIENT DATES AND TIMES
Last day to trade in Capitec shares in order to
settle trades by the record date for the rights offer
and to qualify to participate in the rights offer on Friday, 12 October 2012
Capitec shares commence trading ex-allocation rights
on the JSE at 09:00 on Monday, 15 October 2012
Listing of and trading in the letters of allocation
commences at 09:00 on Monday, 15 October 2012
Record date for purposes of determining the Capitec
qualifying shareholders entitled to participate in
the rights offer at the close of business on Friday, 19 October 2012
Rights offer circular and, where applicable, form of
instruction posted to qualifying shareholders on Monday, 22 October 2012
Rights offer opens at 09:00 on Monday, 22 October 2012
Qualifying dematerialised shareholders will have
their securities accounts at their CSDP or broker
automatically credited with their letters of
allocation on (see note 3) Monday, 22 October 2012
Qualifying certificated shareholders will have their
letters of allocation credited to an electronic
register at the company's transfer secretaries,
Computershare Investor Services ("transfer
secretaries") on Monday, 22 October 2012
Last day to trade ("LDT") in letters of allocation in
order to settle trades by the closing date for the
rights offer and participate in the rights offer at
the close of business on Friday, 2 November 2012
Last day for form of instruction to be lodged with
the transfer secretaries by qualifying
certificated shareholders wishing to sell and trade
all or part of their letters of allocation on the JSE
by 12:00 on Friday, 2 November 2012
Listing and trading of rights offer shares commences
on the JSE at 09:00 on Monday, 5 November 2012
Record date for letters of allocation on Friday, 9 November 2012
Rights offer closes Last day for form of
instruction and cheque or banker's draft to be lodged
with the transfer secretaries by qualifying
certificated shareholders wishing to renounce their
letters of allocation or exercise their allocation
rights by 12:00 on (see note 2) Friday, 9 November 2012
CSDP/broker securities accounts credited with rights
offer shares and debited with any payments due in
respect of qualifying dematerialised shareholders'
rights offer shares on Monday, 12 November 2012
Share certificates evidencing rights offer shares
issued to qualifying certificated shareholders on or
about Monday, 12 November 2012
Results of rights offer announced on SENS on Monday, 12 November 2012
Results of rights offer published in the press on Tuesday, 13 November 2012
Notes:
1. All times referred to in the announcement are local times in South Africa.
2. Qualifying dematerialised shareholders are required to notify their CSDP or
broker of the action they wish to take in respect of the rights offer in the
manner and by the time stipulated in the agreement governing the relationship
between the Capitec shareholder and his CSDP or broker.
3. Certificated Capitec shares may not be dematerialised or rematerialised between
Monday, 15 October 2012 and Friday, 19 October 2012, both days inclusive.
4. CSDPs effect payment in respect of qualifying dematerialised shareholders'
rights offer shares on a delivery versus payment method.
5. Qualifying dematerialised shareholders will have their securities accounts at
their CSDP automatically credited with their letters of allocation and
qualifying certificated shareholders will have their letters of allocation
credited to an account at Computershare Investor Services.
6. The dates above are subject to change. Any changes will be released on SENS and
in the press.
8. FINALISATION ANNOUNCEMENT
The rights offer is conditional upon formal approval of the rights offer circular by
the JSE Limited. It is anticipated that, once the rights offer becomes unconditional
in accordance with the JSE Listings Requirements, the finalisation announcement for
the rights offer will be released on SENS on or about Friday, 5 October 2012 and
published in the press on or about Monday, 8 October 2012.
9. POSTING OF THE RIGHTS OFFER CIRCULAR
Shareholders are advised that the rights offer circular containing full detail of
the terms of the rights offer and, where applicable, a form of instruction will be
posted to all qualifying shareholders recorded in the register of the company on the
record date on Monday, 22 October 2012.
10. CAUTIONARY ANNOUNCEMENT
Due to the fact that the pro forma financial effects of the rights offer must still
be disclosed, shareholders are advised to exercise caution when dealing in the
Company's securities until a further announcement is made.
26 September 2012
Corporate adviser and Sponsor
PSG Capital
Independent reporting accountants
PricewaterhouseCoopers Incorporated
Lead independent sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Sole Global Co-ordinator, Sole Bookrunner and Joint Underwriter
BofA Merrill Lynch
Joint Underwriter
Sanlam Capital Markets Limited
Legal advisers to the Joint Underwriters as to U.S. and English law
Allen & Overy LLP
South African legal advisers to the Joint Underwriters
Werksmans Attorneys
Legal advisers to Capitec as to U.S. and English law
Davis Polk & Wardwell London LLP
South African legal advisers to Capitec
Cliffe Dekker Hofmeyr Incorporated
11. IMPORTANT INFORMATION
This announcement has been prepared and issued by and is the sole responsibility of
Capitec. This announcement does not constitute, or form part of an offer to sell, or the
solicitation of an offer to subscribe for or buy, any rights offer shares or letters of
allocation.
This announcement is not a prospectus, disclosure document or offering document under the
laws of South Africa or any other law and does not purport to be complete. Investors
should not subscribe for or purchase any securities referred to in this announcement
except solely on the basis of information in the rights offer circular to be published by
Capitec in due course in connection with the rights offer and made available on Capitec's
website (www.capitecbank.co.za). This announcement does not constitute or form part of
any offer or invitation to sell or issue, or any solicitation of any offer to acquire,
the rights offer shares or letters of allocation offered by any person in any
jurisdiction in which such an offer or solicitation is unlawful. Any decision to
participate in the rights offer or to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of any securities should only be made solely on the basis of
information contained in the rights offer circular when it is published in due course,
which will contain further information relating to Capitec as well as a summary of the
risk factors to which any investment is subject.
The information contained in this announcement is for background purposes only and does
not purport to be full or complete. No reliance may or should be placed by any person for
any purpose whatsoever on the information contained in this announcement or on its
accuracy or completeness. The information in this announcement is subject to change.
This announcement is not for distribution, directly or indirectly, in or into the United
States, Australia, Canada, Japan and Hong Kong, subject to certain exceptions, and any
other jurisdiction where the extension or making of the rights offer would be unlawful or
in contravention of certain regulations. The distribution of this announcement and/or the
rights offer circular and/or the letters of allocation and/or the rights offer shares
into jurisdictions other than the Republic of South Africa may be restricted by law.
Persons into whose possession this announcement comes should inform themselves about and
observe any such restrictions. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such jurisdiction.
This announcement and the information contained herein do not contain or constitute an
offer for sale or the solicitation of an offer to purchase securities in the United
States, or any other jurisdiction. The securities mentioned herein have not been, and
will not be, registered under the U.S. Securities Act and may not be offered sold, taken
up, exercised, resold, renounced, transferred or delivered directly or indirectly within
the United States absent registration or an exemption from the registration requirements
of the U.S. Securities Act. There will be no public offer of the securities in the United
States.
This announcement and the information contained herein do not contain or constitute an
offer for sale or the solicitation of an offer to purchase securities. No public offer of
rights offer shares or letters of allocation will be made in the United States,
Australia, Canada, Japan and Hong Kong and any other jurisdiction where the extension or
making of the rights offer would be unlawful or in contravention of certain regulations.
The rights offer shares and letters of allocation have not been and will not be
registered under the securities laws of such jurisdictions and may not be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly,
within such jurisdictions except pursuant to an exemption from and in compliance with any
applicable securities laws. It is noted, however, that pursuant to available exemptions
under the securities laws of Australia, Hong Kong, Japan and the United States, certain
institutional investors from those jurisdictions will be able to participate in the
rights offer.
In member states of the European Economic Area ("EEA") which have implemented the
Prospectus Directive (each, a "Relevant Member State"), this announcement and any offer
if made subsequently is directed exclusively at persons who are "qualified investors"
within the meaning of the Prospectus Directive ("Qualified Investors"). For these
purposes, the expression "Prospectus Directive" means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to the extent implemented
in a Relevant Member State), and includes any relevant implementing measure in the
Relevant Member State and the expression "2010 PD Amending Directive" means Directive
2010/73/EU. In the United Kingdom this announcement is directed exclusively at Qualified
Investors (i) who have professional experience in matters relating to investments falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005, as amended (the "Order") or (ii) who fall within Article 49(2)(A) to (D) of
the Order, and (iii) to whom it may otherwise lawfully be communicated. This announcement
is not an offer of securities or investments for sale nor a solicitation of an offer to
buy securities or investments in any jurisdiction where such offer or solicitation would
be unlawful. No action has been taken that would permit an offering of the securities or
possession or distribution of this announcement in any jurisdiction where action for that
purpose is required. Persons into whose possession this announcement comes are required
to inform themselves about and to observe any such restrictions.
The transaction sponsor, lead independent sponsor, and the Joint Underwriters are acting
exclusively for Capitec and no one else in connection with the rights offer and will not
regard any other person as their respective clients in relation to the rights offer and
will not be responsible to anyone other than Capitec for providing the protections
afforded to their respective clients or for providing advice in relation to the rights
offer or any matters referred to in this announcement.
In connection with the rights offer, each of the Joint Underwriters and any of their
respective affiliates, acting as an investor for its own account, may take up rump shares
in the rights offer and in that capacity may retain, purchase or sell for its own account
such securities and any rump shares or related investments and may offer or sell such
rump shares or other investments otherwise than in connection with the rights offer. In
addition certain of the Joint Underwriters or their affiliates may enter into financing
arrangements and swaps with investors in connection with which such Joint Underwriter(s)
(or their respective affiliates) may from time to time acquire, hold or dispose of rump
shares. Accordingly, references in the rights offer circular, once published, to rights
offer shares or letters of allocation being offered or placed should be read as including
any offering or placement of rump shares to either of the Joint Underwriters or any of
their respective affiliates acting in such capacity. None of the Joint Underwriters
intends to disclose the extent of any such investment or transactions otherwise than in
accordance with any legal or regulatory obligation to do so.
None of the Joint Underwriters or the transaction sponsor or the lead independent sponsor
or any of their respective directors, officers, employees, advisers or agents accepts any
responsibility or liability whatsoever for, and makes no representation or warranty,
express or implied, in respect of, the contents of this announcement, including its
accuracy, completeness or verification or regarding the legality of an investment in the
rights offer shares, the letters of allocation or the allocation rights by an offeree or
purchaser thereof under the laws applicable to such offeree or purchaser or for any other
statement made or purported to be made by them, or on their behalf, in connection with
the company, the rights offer shares, the letters of allocation or the allocation rights
or the rights offer, and nothing in this announcement is, or shall be relied upon as, a
promise or representation in this respect, whether as to the past or future. The Joint
Underwriters, the transaction sponsor and the lead independent sponsor accordingly
disclaim to the fullest extent permitted by law all and any responsibility and liability
whether arising in tort, contract or otherwise which they might otherwise be found to
have in respect of this announcement or any such statement.
Neither the content of Capitec's website nor any website accessible by hyperlinks on
Capitec's website is incorporated in, or forms part of, this announcement.
Certain statements made in this announcement constitute forward-looking statements. These
statements include all matters that are not historical fact, including information with
respect to Capitec's financial condition, Capitec's results of operations and businesses,
strategy, plans and objectives. Words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks", "estimates", "may", "will", "continue", "project" (or in
each case, their negative) and similar expressions, as well as statements in the future
tense, identify forward-looking statements. These forward-looking statements are not
guarantees of Capitec's future performance and are subject to assumptions, risks and
uncertainties that could cause actual future results to differ materially from those
expressed in or implied by such forward-looking statements. Many of these assumptions,
risks and uncertainties relate to factors that are beyond Capitec's ability to control or
estimate precisely, such as changes in general economic and business conditions in the
sector in South Africa; changes and volatility in currency exchange rates, interest
rates, share price and credit spreads; changes in the price of Capitec shares; changes in
the availability and conditionality of funding; changes in governmental policy and
regulation; changes in the Capitec group's competitive environment; and factors that are
not known to Capitec at this time. The effects of these factors are difficult to predict.
New factors emerge from time to time and Capitec cannot assess the potential impact of
any such factor on Capitec's activities or the extent to which any factor, or combination
of factors, may cause results to differ materially from those contained in any forward-
looking statement.
These forward-looking statements speak only as at the date of this announcement. Except
as required by the JSE and applicable law, Capitec does not have any obligation to update
or revise publicly any forward-looking statement, whether as a result of new information,
further events or otherwise. Except as required by the JSE and applicable law, Capitec
expressly disclaims any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statement contained herein to reflect any change in
Capitec's expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. In light of these risks,
uncertainties and assumptions, the forward -looking events discussed herein might not
occur. Each of the Joint Underwriters and transaction sponsor and lead independent
sponsor and their respective affiliates expressly disclaims any obligation or undertaking
to update, review or revise any forward looking statement contained in this announcement
whether as a result of new information, future developments or otherwise.
Date: 26/09/2012 07:45:00 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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