Wrap Text
Acquisition by Sherbourne of a 51% stake in Arkein International and Renewal of Cautionary Announcement
Sherbourne Capital Limited
(Previously trading as IFCA Technologies Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2006/030759/06)
Share code: SHB ISIN: ZAE000165403
(“Sherbourne” or the "Company”)
ACQUISITION BY SHERBOURNE OF A 51% STAKE IN ARKEIN INTERNATIONAL LIMITED, AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
On 18 October 2012, Sherbourne entered into an agreement with Arkein International Limited (“Arkein”)
to subscribe for shares resulting in Sherbourne taking up a 51% stake in the issued ordinary share
capital of Arkein (the "Agreement”), for a total purchase consideration of US$9 562 500 (nine million,
five hundred and sixty two thousand, five hundred United States Dollars) to be settled by a cash
payment of US$3 750 000 (three million, seven hundred and fifty thousand United States Dollars) in
cash and US$4 218 750 (four million, two hundred and eighteen thousand, seven hundred and fifty
United States Dollars) through the issue of Sherbourne ordinary shares at ZAR0.50 (fifty cents) per
share (the "Transaction”), as well as a Control Premium of US$1 593 750 (one million, five hundred
and ninety three thousand, seven hundred and fifty United States Dollars) payable within three years
from the effective date of the Agreement. 67 500 000 new Sherbourne shares will be issued to
Arkein which will result in them holding 11.12% of the proposed enlarged shareholding of Sherbourne.
2. NATURE OF THE ARKEIN BUSINESS
Arkein is a Mauritian based investment holding company that is focused on early stage projects within
the industrials sectors across the African Continent. Sherbourne and Arkein have formally executed a
Subscription Agreement under which Sherbourne has become the new strategic partner in Arkein.
Arkein has a pipeline of 5 significant projects which include a titanium pigment project in South Africa,
Lake Kivu Methane extraction plant to produce power and liquid fuels in Rwanda, a Copper concentrate
tolling concession in Zambia, and an Iron Ore contract mining venture. The pipeline is in an advanced
stage, and with prospects in Tin and Peat mining being developed. Sectors of focus include mining &
mineral processing, oil & gas, and power & energy. Arkein is in the process of becoming the leading
platform for global investors seeking to invest in Africa's industrial potential. Arkein has already started
attracting global hedge funds and private equity funds as Africa steadily becomes the most attractive
investment destination of the future.
The portfolio size under development is projected to be in excess of US$500 000 000 (five hundred
million United States Dollars) over the next 5 (five) years, in terms of the total planned capital
commitment. The first project is expected to be in cash flow by the 4th quarter of 2013 in Zambia, and
the bulk of the remaining projects coming online in 2014 and 2015. Nedbank Capital (a division of
Nedbank Limited) is the appointed corporate finance advisor and investment bank to Arkein, and has
already commenced with preparations to raise a further US$30 000 000 (thirty million United States
Dollars) by July 2013 in order to fund the construction and commissioning of copper concentrate plants
in Zambia, as well as methane gas extraction and liquid fuels project at Lake Kivu in Rwanda.
Arkein’s major shareholder is AfrikInt Limited, a private equity company owning 82% of the issued share
capital of Arkein. Private international investors own a further 18% of the issued share capital of Arkein.
AfrikInt Limited plans to continue to dilute its holding in Arkein in the event of any capital raising to fund
development of the projects in the pipeline.
3. RATIONALE FOR THE TRANSACTION
The Transaction positions Sherbourne to tap into significant growth opportunities in Africa’s emerging
and potent industrials sector.
Sherbourne’s Chief Executive Officer, Sagie Van Niekerk, said: “Our partnership with Arkein is a
landmark agreement for us and will transform the Company’s investment footprint across the African
continent. We welcome Arkein as our partners in early stage industrial projects and believe together we
will build an impressive Pan-African diversified industrials portfolio”.
“This transaction marks the dawn of listed investment companies playing a role in the development of
Africa’s industrial sector based on the continents wealth of resources. Sherbourne will lead the way in
resource backed investing while also spreading the ownership franchise of African resources to the
people of the continent and thereby assisting in creating sustainable infrastructure across the continent”,
Van Niekerk added.
4.SUSPENSIVE CONDITIONS
The Transaction is subject, inter alia, to the fulfilment of the following Suspensive Conditions:
* the granting of all regulatory approvals or clearances as may be required, including that of
the Competition Commission, the JSE Limited (“JSE”), the Takeover Regulation Panel and
the Exchange Control division of the South African Reserve Bank;
* the shareholders of the Company and Sherbourne entering into a shareholders' agreement
in order to regulate the relationship between the shareholders of the Company inter se and
the shareholders and the Company;
* the shareholders of Sherbourne passing all necessary resolutions to give effect to the
transaction contemplated herein (including, where necessary, resolutions to increase the
authorised share capital of Sherbourne and to amend the memorandum of incorporation of
Sherbourne);
* the registration (where necessary) of the aforesaid resolutions; and
* the approval of the JSE in respect of the listing of the shares constituting the share portion of
the Subscription Price.
5.EFFECTIVE DATE
The Effective Date, being the date of implementation of the Transaction, will be the first business day
following the fulfilment of the Suspensive Conditions.
6.ARTICLES OF ASSOCIATION
Sherbourne undertakes to amend the Memorandum and Articles of Association of Arkein, as
required by Schedule 10 of the JSE Listing Requirements.
7.INDEPENDENT OPINION
In terms of the listing requirements of the JSE (the "Listings Requirements"), the transaction is
classified as a related party transaction as Colin Clarke serving on the boards of both Sherbourne
and Arkein. The Sherbourne board of directors will appoint an independent expert to provide the
Company with a fairness opinion on the Transaction.
8.CIRCULAR TO SHAREHOLDERS
The transaction is classified as a reverse take-over in terms of the Listing Requirements; the JSE will
therefore evaluate the continued listing of Sherbourne as if the company were a new applicant.
Shareholders are accordingly advised as to the uncertainty of whether or not the JSE will allow the
listing to continue following the transaction. A circular relating to the transaction incorporating revised
listing particulars, independent fairness opinion and a notice of general meeting and form of proxy
will be posted to shareholders in due course. Shareholders are referred to paragraph 11 of this
announcement which refers to further negotiations on future corporate actions.
9.RESPONSIBILITY STATEMENT
The directors of Sherbourne accept responsibility for the information contained in the announcement
and confirm that to the best of their knowledge and belief, the information is true; and correct and
that it does not omit anything likely to affect the importance of the information.
10.FINANCIAL EFFECTS OF THE TRANSACTION AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
In compliance with paragraph 9.15 of the JSE Limited Listings Requirements, pro forma financial
effects must be disclosed to provide information on the impact of the acquisition on Sherbourne’s
reported financial statements. Shareholders are advised to continue exercising caution when dealing
in the shares in the Company until such a time that the financial effects are released.
Further to the cautionary announcement published on 10 September 2012, shareholders are advised
that the Company has entered into negotiations on other acquisitions which, if successfully
concluded, may have a material effect on the price of the Company’s securities. Accordingly,
shareholders are advised to exercise caution when dealing in the Company’s securities until a further
announcement is released.
Sandton
18 October 2012
Designated Adviser: Bridge Capital Advisors (Pty) Limited
Contact:
Sagie van Niekerk
CEO – Sherbourne Capital
011 784 0120
Date: 18/10/2012 10:15:00 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.
Sharenet Sites 
