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Announcement regarding the restructure; update relating to the Target Assets and renewal of cautionary announcement
BK One Limited
Incorporated in the Republic of South Africa
Registration Number: 2011/008103/06
Preference Share Code: BK1P
ISIN: ZAE000161352
“BK One” or “the Company”
Announcement regarding the Company’s decision to restructure; an update relating to
developments in terms of the proposed acquisition by the Company of controlling interests
in selected assets (the “Target Assets”) owned by Basileus Investments Proprietary Limited
(in business rescue) (“Basileus Investments”); and the renewal of cautionary announcement
1 Introduction
BK One preference shareholders (“Shareholders”) are referred to the announcement
published by the Company on the Securities Exchange News Service (“SENS”) on 28
August 2012 (the “Previous Announcement”) in which Shareholders were informed that the
BK One Board of Directors (the “Board”) intended restructuring BK One, and that BK One
had entered into a binding memorandum of understanding (“MOU”) to acquire the Target
Assets from Basileus Investments, subject to the fulfilment of a number of conditions
precedent.
The Board is pleased to advise Shareholders of the following developments: the Board has
conducted a thorough analysis of the optimal structure through which the Target Assets,
and BK One’s existing assets, should be managed. In light of its analysis, the Board
concluded that the existing BK One structure, although appropriate for a co-investment
vehicle, is not appropriate for a company responsible for the principal management of a
portfolio of developmental assets such as the Target Assets and would, in the view of the
Board, not be conducive to creating a platform for sustainable growth.
For this reason, the Board has decided to enter into an assignment and option agreement
with Isitsaba Investment Group Limited (presently K2012149573 (South Africa) Proprietary
Limited) (“IIG”), a company established to take control of the Target Assets in a structurally
efficient manner (the “Assignment”). In addition to the Target Assets, IIG has secured a
pipeline of additional assets and has assisted in raising funding to support the Target
Assets until such time as Basileus Investments is able to dispose of the Target Assets.
2 Terms of the Assignment
The Assignment entitles IIG, subject to IIG entering into a binding sale and purchase
agreement with Basileus Investments, to acquire the Target Assets from Basileus
Investments. In turn, IIG has agreed to a “put” and “call” arrangement in terms of which BK
One will have the right to:
• acquire the Target Assets from IIG (the “Call Option”), at the value BK One would
have been entitled to acquire these assets from Basileus Investments reduced by
any changes in the interim value (the “Initial Valuation”), should certain trigger
events occur, which events are set out in more detail below (the “Trigger Event/s”);
• call on IIG to make an offer, using IIG ordinary shares, at the election of BK One,
either to acquire the assets of BK One or to acquire the shares and claims of
Shareholders (the “Put Option”) at a valuation which is the higher of:
o the Company’s valuation at the date of the call;
o the Company’s net asset value at 24 August 2012; or
o the Company’s market capitalisation at 24 August 2012.
IIG intends seeking a listing of its ordinary shares on the Johannesburg Stock Exchange
(“JSE”). Should IIG fail to obtain a listing, for whatever reason, a Trigger Event will occur
and BK One will be entitled to exercise its rights in terms of the Call Option and will acquire
the Target Assets from IIG in exchange for BK One preference shares. In addition, should
any director of IIG be removed from office for any reason, a further Trigger Event will occur
and BK One will be entitled to exercise its rights in terms of the Call Option.
3 Developments pertaining to the MOU
During the course of IIG and the Company’s evaluation of the various Target Assets
detailed in the Previous Announcement, the parties have, by mutual consent with Basileus
Investments, agreed that the following assets will no longer form part of the Target Assets
and will not be acquired by either IIG or BK One:
• Lefatse Minerals Proprietary Limited;
• Tor Oil Infrastructure Construction Proprietary Limited; and
• Agri-Technologies and Services Proprietary Limited.
4 Rationale for the Assignment
The Board’s objective is to assist in creating a platform which will result in:
• the protection of Shareholders’ value; and
• the transformation of BK One and the creation of an efficient and transparent
structure within which to develop the Target Assets and other suitable
developmental and investment opportunities.
The Assignment, and ultimate intended shareholding structure, allows for:
• the creation of an entity better placed to act as the principal manager of a portfolio
of developmental assets;
• the deployment of people with significant skills and experience to manage the new
entity;
• the implementation of the acquisition of the Target Assets within the timeline set by
the business rescue process at Basileus Investments;
• a simplified capital structure for the purposes of raising equity capital;
• greater access to potential investors by virtue of employing a widely accepted
capital structure, which is seen by investors as a traditional mechanism for early-
stage developmental capital projects and businesses;
• greater ability to utilise ordinary shares to make acquisitions;
• greater ability to attract and retain skilled staff through share-based incentive
mechanisms; and
• greater tax efficiency.
5 Regulatory approvals and conditions precedent
Once IIG and Basileus Investments have entered into a binding sale and purchase
agreement, the Assignment will become unconditional. The Assignment is not subject to
any regulatory approvals.
As the exercise of the Call Option and the Put Option are solely at BK One’s discretion, in
terms of the Listings Requirements of the JSE, the transaction will only be categorised
upon the exercise of the Call Option or the Put Option.
The conditions precedent per the MOU, and as detailed in the Previous Announcement,
remain in force and the Company and IIG are confident that these conditions will be fulfilled
before 30 November 2012, which will result in IIG acquiring the Target Assets from
Basileus Investments.
6 Renewal of cautionary announcement
The Company will continue to update Shareholders, through SENS, of developments
pertaining to IIG and the Company. Shareholders are consequently advised to continue to
exercise caution when dealing in the Company’s securities until a further announcement is
made.
Cape Town
8 November 2012
Investment Bank, Corporate Advisor and Attorneys
Sponsor to BK One
Cliffe Dekker Hofmeyr Inc
Nedbank Capital, a division of Nedbank
Limited
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