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B&W B-BBEE Transaction And Withdrawal Of Cautionary Announcement
B&W INSTRUMENTATION AND ELECTRICAL LIMITED
Incorporated in the Republic of South Africa
(Registration number 2001/008548/06)
Share code: BWI ISIN: ZAE000098687
(“B&W” or “the Company” or “the Group”)
B&W B-BBEE TRANSACTION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
The board of directors of B&W (“the Board”) is pleased to advise shareholders that B&W has
entered into an agreement (“subscription agreement”) with Regiments Capital Proprietary Limited
(“Regiments Capital”), in terms of which Regiments Capital will become a strategic black economic
empowerment (“B-BBEE”) shareholder in B&W.
Accordingly, Regiments Capital has subscribed for 102 155 425 ordinary shares in the share
capital of B&W (“specific issue shares”) at a price of 58 cents per share, representing a 11.1%
discount to the 30 day volume weighted average price (“VWAP”) on the date of signature of the
subscription agreement, subject to the fulfilment of the conditions precedent set out in paragraph 6
below (“specific issue”).
The specific issue will result in 32.5% of the issued share capital of B&W being held by Regiments
Capital for a minimum period of 5 years.
Regiments Capital is a black-owned diversified financial services company, focussed on providing
investment banking, advisory services, property development as well as holding a portfolio of
strategic investments in various sectors, including infrastructure, healthcare and resources.
2. Rationale
It has been the intention of the Board to increase the Group’s B-BBEE shareholding, and to raise
new equity capital to improve B&W’s working capital position such that the Group can position
itself for future growth.
The benefits that will accrue to the Group as a result of the specific issue include:
- Accreditation as a B-BBEE supplier to the Mining Industry in terms of the Mining Charter, which
will ensure the retention of existing work in the mining industry, which is of paramount
importance given B&W’s exposure to this sector.
- Increased working capital in order to finance continued growth in the Company’s traditional
markets in South and Sub-Saharan Africa.
- Enhanced access to government, parastatal and state-funded markets, through better levels of
B-BBEE certification of the Company, due to the enhanced black equity.
- Opportunity to leverage off of Regiments Capital’s exposure to the commercial and industrial
sectors.
- Job creation and preservation.
- Expansion into the rest of Africa.
The improved B-BBEE shareholding will significantly strengthen the Group’s B-BBEE credentials,
re-enforcing the Group’s commitment to a multi-faceted approach to B-BBEE, which aims to
increase the number of previously disadvantaged individuals who manage, own and control the
Company.
3. Terms of the specific issue and effective date
Regiments Capital will subscribe for 102 155 425 new ordinary shares in B&W on the effective
date of the subscription agreement for a total consideration of R59.3 million. The specific issue
shares shall rank pari passu with all other issued ordinary shares in the share capital of the
Company.
The effective date of the subscription agreement is the seventh business day after the fulfilment, or
waiver, of the conditions precedent set in paragraph 6 below.
4. Application of capital raised
The capital raised will be used to reduce debt and finance charges, negate settlement discounts
offered to clients for early settlement, take advantage of early settlements offered by suppliers in
the short term, boost operating capital to fund growth in the medium term, as well as affording the
Company the opportunity to seek out appropriate acquisitions in the long term.
5. Financial effects
The table below sets out the unaudited pro forma financial effects of the specific issue on B&W’s
earnings per share, headline earnings per share, net asset value per share and net tangible asset
value per share.
The unaudited pro forma financial effects have been prepared to illustrate the impact of the
specific issue on the reported financial information of B&W for the year ended 31 August 2012,
had the specific issue occurred on 1 September 2011 for statement of comprehensive income
purposes and on 31 August 2012 for statement of financial position purposes.
The unaudited pro forma financial effects have been prepared using accounting policies that
comply with International Financial Reporting Standards and that are consistent with those applied
in the audited results of B&W for the year ended 31 August 2012.
The unaudited pro forma financial effects, which are the responsibility of the directors, are provided
for illustrative purposes only and, because of their pro forma nature, may not fairly present B&W’s
financial position, changes in equity, results of operations or cash flows.
Before After Change
(cents) (cents) (%)
Earnings per share 1.4 2.1 47.5
Headline earnings per share 1.4 2.1 50.7
Net asset value per share 89.7 78.4 (12.5)
Net tangible asset value per share 85.2 75.5 (11.4)
Weighted average number of shares in issue
(‘000) 204 374 306 529 50.0
Total number of shares in issue (‘000) 212 169 314 324 48.1
Notes:
1. The “Before” column has been extracted from the audited results of B&W for the year ended 31
August 2012.
2. The “After” column reflects the pro forma financial effects of the specific issue on B&W.
3. The financial effects are based on the assumption that the specific issue will raise R57.2 million
in cash, net of the transaction costs, which will be used to settle debt. The South African
corporate tax rate of 28% has been applied.
4. The effects on earnings per share and headline earnings per share are calculated based on the
assumption that the specific issue was effected on 1 September 2011.
5. The effects of net asset value per share and net tangible asset value per share are calculated
based on the assumption that the specific issue was effected on 31 August 2012.
6. Conditions precedent
The specific issue is subject to the fulfilment, or waiver, of the following conditions precedent:
- the receipt of written regulatory approval of the circular to be issued to B&W shareholders on or
before 5 March 2013 in respect of the specific issue, as set out in the subscription agreement,
by JSE Limited;
- the passing of a resolution by the board of directors of B&W and Regiments Capital on or
before 5 March 2013 ratifying the terms of the subscription agreement;
- Regiments Capital raising the necessary funding from a third party on or before 5 March 2013
in order to subscribe for the specific issue shares;
- Regiments Capital confirming in writing to B&W on or before 31 January 2013 that it is satisfied
with the outcome of the due diligence investigation on the Company; and
- the shareholders of B&W passing the special and/or ordinary resolutions required in order to
give effect to the subscription agreement.
7. Circular to B&W shareholders
A circular containing full details of the specific issue and incorporating a notice to convene a
general meeting of B&W shareholders in order to consider and, if deemed fit, to pass with or
without modification, the resolutions necessary to approve and implement the specific issue that
will be distributed to B&W shareholders in due course.
8. Withdrawal of cautionary
Further to the cautionary announcement released on SENS on 9 November 2012, shareholders
are advised that caution is no longer required by shareholders when dealing in the shares of B&W.
Johannesburg
22 November 2012
Designated adviser
Merchantec Capital
Date: 23/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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