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RAINBOW CHICKEN LIMITED - Terms Of The Rights Offer And Withdrawal Of Cautionary Announcement

Release Date: 06/12/2012 14:00
Code(s): RBW     PDF:  
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Terms Of The Rights Offer And Withdrawal Of Cautionary Announcement

Rainbow Chicken Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/004972/06)
Share code: RBW
ISIN: ZAE000019063
(RCL or the Company)

TERMS OF THE RIGHTS OFFER AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT

1. Introduction

RCL shareholders are referred to the announcement released on SENS
on 14 November 2012 and published in the South African press on
15 November 2012, relating to RCLs acquisition of an effective
64.2% stake in New Foodcorp Holdings (Proprietary) Limited
(Foodcorp Acquisition), to be funded by way of a fully
underwritten rights offer.

2. Rights offer

It is proposed that a total of R3.9 billion of new equity be
raised by way of a renounceable rights offer (Rights Offer) of
276 964 802 new RCL ordinary shares (Rights Offer Shares) at an
issue price of R14.20 per Rights Offer Share (Rights Offer
Price), in the ratio of 80 Rights Offer Shares for every 100 RCL
ordinary shares held on the Rights Offer record date, which is
expected to be close of business on Friday, 8 February 2013 (the
Record Date). The Rights Offer Price represents a 5.0% premium
to the 5-day volume weighted average price of RCL shares as at
5 December 2012.

3. Rationale for the Rights Offer

The proceeds from the Rights Offer will be used to fund the
Foodcorp Acquisition, as well as other strategic growth
opportunities.

Upon the successful completion of the Foodcorp Acquisition, the
consolidated debt of the RCL group will be significant. The Rights
Offer will ensure that the consolidated capital structure of the
RCL group is appropriate, with flexibility to pursue strategic
growth and development opportunities.

4. Underwriting

The Rights Offer will be fully underwritten by Remgro Limited,
through its wholly-owned subsidiary Industrial Partnership
Investments (Pty) Limited, or its assignee (the "Underwriter").
In terms of the underwriting agreement entered into between RCL
and the Underwriter, the Underwriter has agreed to subscribe for
all of the Rights Offer Shares that are not taken up by RCL
shareholders or their renouncees in terms of the Rights Offer. An
underwriting fee of 1.5% will be paid to the Underwriter.

Excess applications for Rights Offer Shares will not be allowed
and any Rights Offer Shares that are not taken up pursuant to the
Rights Offer shall be taken up by the Underwriter in accordance
with the provisions of the underwriting agreement.


5. Salient dates and times

Subject to the fulfilment of the conditions precedent as set out
in paragraph 6 below, the proposed salient dates and times for the
Rights Offer are set out below.

                                                              2013
    Last day to trade in RCL shares in order to
    participate in the Rights Offer (cum-                  Friday, 
    entitlement) on                                     1 February
    RCL shares commence trading ex-entitlement at          Monday,
    09:00 on                                            4 February
    Listing of and trading in the letters of
    allocation on the securities exchange operated
    by the JSE Limited (JSE) commences at 09:00          Monday,
    on                                                  4 February
                                                           Friday,
    Record Date on                                      8 February
                                                            Monday,
    Rights Offer opens at 09:00 on                     11 February
    Holders of dematerialised RCL shares will have
    their accounts at their CSDP or broker
    automatically credited with their letters of           Monday,
    allocation on                                      11 February
    Holders of certificated RCL shares will have
    their letters of allocation credited to an
    electronic register maintained by RCL's                Monday,
    transfer secretaries on                            11 February
    Circular and form of instruction, where
    applicable, posted to shareholders registered
    as such on the Record Date ("Qualifying                Monday,
    Shareholders") on                                  11 February
    Last day for trading letters of allocation on          Friday,
    the securities exchange operated by the JSE on     22 February
    Listing and trading of Rights Offer Shares on
    the securities exchange operated by the JSE            Monday,
    commences at 09:00 on                              25 February
    Rights Offer closes at 12:00 on (refer to note         Friday,
    4)                                                     1 March
    Record date for letters of allocation on               Friday,
                                                           1 March
    In respect of certificated Qualifying
    Shareholders (or their renouncees) wishing to
    exercise all or part of their nil paid rights,
    payment to be made and forms of instruction to
    be lodged with RCLs transfer secretaries by           Friday,
    12:00 on                                               1 March
                                                           Monday,
    Rights Offer Shares issued on or about                 4 March
    In respect of dematerialised Qualifying
    Shareholders (or their renouncees) their CSDP
    or broker accounts will be debited with the
    aggregate Rights Offer Price and credited with
    Rights Offer Shares and share certificates
    posted to certificated Qualifying Shareholders
    (or their renouncees) by registered post on or         Monday,
    about                                                  4 March
    Results of the Rights Offer announced on SENS          Monday,
    on                                                     4 March
    Results of the Rights Offer published in the          Tuesday,
    South African press on                                 5 March

Notes:

1. Share certificates in respect of RCL shares may not be
dematerialised or rematerialised between Monday, 4 February 2013
and Friday, 8 February 2013, both days inclusive.
2. All times are South African times.
3. CSDPs effect payment on a delivery versus payment basis in
respect of dematerialised shares.
4. Dematerialised RCL shareholders are required to inform their
CSDP or broker of their instructions in terms of the Rights Offer
in the manner and time stipulated in the agreement governing the
relationship between the RCL shareholder and their CSDP or broker.
5. The above dates and times are subject to amendment. Any
amendments to the dates and times will be released on SENS and
published in the South African press.

6. Conditions precedent

The implementation of the Rights Offer is subject to the
fulfilment of the following conditions:

- RCL shareholders passing a special resolution, at the general
meeting to be held on or about 15 January 2013 (General
Meeting), in terms of section 36(2)(a) of the Companies Act No.
71 of 2008, as amended ("Act") approving an increase in the
authorised number of RCL shares and an amendment to the Memorandum
of Incorporation of RCL in order to give effect to the increase in
the number of RCL's shares and such special resolution being filed
with the Companies and Intellectual Property Commission;

- RCL shareholders passing a special resolution at the General
Meeting in terms of section 41(3) of the Act, approving the issue
of the Rights Offer Shares pursuant to the Rights Offer, which
special resolution will also constitute a specific authority for
the board of directors of RCL to issue the Rights Offer Shares, as
envisaged in clause 6.7.2 of the Memorandum of Incorporation of
RCL;

- the JSE approving the Rights Offer circular, including revised
listing particulars, to RCL shareholders (Circular); and

- the JSE approving the listing of the letters of allocation and
the listing of the Rights Offer Shares on the securities exchange
operated by the JSE.

7. Unaudited pro forma financial effects of the Foodcorp
Acquisition and the Rights Offer

The table below sets out the unaudited pro forma financial effects
of the Foodcorp Acquisition and the Rights Offer on RCL for the
following key metrics: Earnings per share (EPS), Headline
Earnings per share (HEPS), Net Asset Value (NAV) per share and
Tangible Net Asset Value (TNAV) per share.

Due to revised assumptions relating to the terms of the Rights
Offer and the Foodcorp Acquisition purchase price allocation, the
pro forma financial effects of the Foodcorp Acquisition differ
from those released on SENS on 14 November 2012.

These pro forma financial effects have been prepared for
illustrative purposes only and, because of their nature, may not
fairly present RCLs financial position, changes in equity, and
results of operations or cash flows. The pro forma financial
information is the responsibility of the directors of RCL.
            Published   Adjustments Unaudited           Pro forma    Pro forma   
             Audited     for the    pro forma    %      adjustments   after the     %
            12 months    Foodcorp    after the  change   for the      additional  change 
              ended     Acquisition  Foodcorp   from A   additional   R2.9bn     from A    
             30 June                Acquisition  to B    R2.9bn       capital     to C   
              2012
			  (A)                    (B)
  
EPS (cents)
- Basic         90.6     (91.0)        (0.4)     (100.4)    18.7        18.3      (79.8)
- From
continuing                                  
operations      90.6     (86.1)         4.5       (95.0)    16.9        21.4      (76.4)
- From
discontinued
operations       -        (4.9)        (4.9)         NM      1.8        (3.1)        NM
HEPS (cents)
- Basic         90.7     (79.7)        11.0       (87.9)    14.6        25.6      (71.8)
- From
continuing     
operations      90.7     (87.1)         3.6       (96.0)    17.2        20.8      (77.1)
- From
discontinued
operations       -         7.4          7.4          NM    (2.6)         4.8          NM
NAV per share
(cents)        985.2      86.3      1 071.5         8.8    114.0      1185.5        20.3
TNAV per share   
(cents)        877.7   (1220.5)      (342.8)     (139.1)   618.3       275.5       (68.6)
Number of
ordinary
shares in
issue
(million)      295.0      73.0        368.0        24.8    203.9        571.9        93.9
Weighted
average number
of ordinary
shares in
issue
(million)      294.4      73.0        367.4        24.8    203.9        571.3        94.1
Weighted
average
diluted number
of ordinary
shares in
issue
(million)      295.1      73.0        368.1        24.7    203.9        572.0        93.9
Notes and assumptions:
1. The audited financial information has been extracted without
adjustment from the published audited financial statements of RCL
for the year ended 30 June 2012.
2. The pro forma adjustments to the statement of comprehensive
income have been calculated on the assumption that the Foodcorp
Acquisition was implemented on 1 July 2011 and the proceeds from
the Rights Offer were received on 1 July 2011.
3. The pro forma adjustments to the statement of financial
position have been calculated on the assumption that the Foodcorp
Acquisition was implemented on 30 June 2012 and the proceeds from
the Rights Offer were received on 30 June 2012.
4. A Rights Offer price of R14.20 per RCL share has been used for
the pro forma adjustments with 276 964 802 new RCL shares being
issued for gross proceeds of R3.9 billion.
5. The net proceeds of the Rights Offer are assumed to have been
used firstly to settle the purchase consideration for the Foodcorp
Acquisition and secondly to be placed on call, earning interest at
5.2% per annum before taxation, until such time as opportunities
are identified for investing in strategic growth and development.
6. The purchase consideration for the Foodcorp Acquisition has
been assumed to be allocated between identifiable intangible
assets and goodwill based on a provisional fair value allocation
exercise in terms of IFRS3: Business Combinations. The
identifiable intangible assets are assumed to be amortised over
their respective useful lives as determined within the provisional
fair value allocation exercise. The fair value exercise will need
to be performed on the effective date of the Foodcorp Acquisition
and may differ from the assumptions underlying these pro forma
effects. Amortisation of intangible assets is assumed to increase
by R57 million.
7. Various call options granted in terms of the Foodcorp
Acquisition are assumed to be at fair value. These options will be
required to be valued at the effective date of the Foodcorp
Acquisition.
8. Estimated once-off expenses of R91.8 million relating to the
Foodcorp Acquisition, and R59.7 million relating to the Rights
Offer, have been taken into account in determining the pro forma
financial effects, the latter being offset against the gross
proceeds raised.
9. Volatility in New Foodcorp Holdings (Proprietary) Limited 
earnings is largely attributable to the
highly leveraged capital structure and significant foreign
currency exposure. Over time RCL plans to reduce the gearing to
sustainable levels and manage foreign currency risk appropriately.
10. New Foodcorp Holdings (Proprietary) Limited earnings have not
been normalised for the R139.2 million prior year adjustment
relating to the assessed loss utilised as part of the settlement
agreement with SARS.
11. Further detail relating to the underlying financial
performance of New Foodcorp Holdings (Proprietary) Limited will be
included in the Circular.


8. Further notices

It is anticipated that a finalisation announcement in respect of
the Rights Offer will be released on SENS on 25 January 2013 and
published in the South African press on 28 January 2013.

The Circular, incorporating revised listing particulars and a form
of instruction in respect of letters of allocation, where
applicable, will be posted to all Qualifying Shareholders on or
about 11 February 2013.

9. Withdrawal of cautionary

Following this announcement of the final terms, salient dates and
times and the unaudited pro forma financial effects of the
Foodcorp Acquisition and the Rights Offer, RCL shareholders are no
longer required to exercise caution when dealing in their RCL
shares.

For media enquiries:
CapitalVoice (Proprietary) Limited:
Johannes van Niekerk
Tel: +27 82 921 9110

Durban
6 December 2012

Merchant bank and sponsor to RCL
RAND MERCHANT BANK (a division of Firstrand Bank Limited)

Attorneys to RCL
CLIFFE DEKKER HOFMEYR INC.

Communications advisor to RCL
CAPITALVOICE (PROPRIETARY) LIMITED

Reporting accountants to RCL
PRICEWATERHOUSECOOPERS INC.

Date: 06/12/2012 02:00:00 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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