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Abridged offering document
Not for release, publication or distribution in whole or in part in or into the United States, Canada, Japan or Australia
Master Drilling Group Limited
(formerly Nicaud Companies 124 (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2011/008265/06)
JSE share code: MDI ISIN: ZAE000171948
("Master Drilling" or the "Company")
Abridged offering document
The definitions and interpretations used in the full offering document apply to this
abridged offering document.
This abridged offering document is not an invitation to the public to subscribe
for ordinary shares in Master Drilling, or an offer to the public to purchase the
ordinary shares in Master Drilling, but is issued in compliance with the Listings
Requirements, for the purpose of providing information to the general
public with regard to the Company.
The information in this abridged offering document has been extracted from the
full offering document issued by Master Drilling dated 7 December 2012. For a full
appreciation of Master Drilling and its subsidiaries ("Group") and the Offer, the full
offering document should be read in its entirety.
The Offer was conditional on the Underwriting Agreement being concluded
and becoming unconditional. The Underwriting Agreement was signed on
13 December 2012. The Offer remains conditional upon the Listing of all the Offer
Shares on the JSE, failing which the Offer and any acceptance thereof shall not
be of any force or effect and no person shall have any claim whatsoever against
the Company, the Selling Shareholder, the Bookrunner or any other person as a
result of the failure of any condition. If the Directors in their discretion determine
not to proceed with the offer, Master Drilling shall not be obliged to proceed with
the Offer but reserves the right to do so.
1. Introduction
This abridged offering document relates to an offer for subscription by Master Drilling and an offer for sale by
the Selling Shareholder, to selected institutional investors in South Africa and in other jurisdictions. The Offer
was subject to a minimum aggregate subscription amount of US$40 million in the issued share capital of the
Company (excluding the Sale Shares). The minimum subscription was fulfilled.
Final demand resulted in 44.9 million new Subscription Shares and 5.6 million existing Sale Shares at an
Offer Price of R7.85. Up to an additional 5.5 million Over-allotment Shares may be issued at the Offer Price
pursuant to the Over-allotment Option.
This abridged offering document is not an offer to the public as contemplated in the Companies Act
and accordingly no prospectus will be issued or registered in respect of the Offer. This abridged offering
document is issued in compliance with the Listings Requirements.
The Offer Shares will be issued in dematerialised form only and, accordingly, no physical documents of
title will be issued or delivered to successful applicants. The Offer Shares will rank pari passu with all other
Master Drilling ordinary shares in issue.
The JSE has granted Master Drilling a listing in respect of its entire issued ordinary share capital in the
"Industrial Machinery" sector of the main board of the JSE under the abbreviated name "Mastdrill", symbol
"MDI" and ISIN: ZAE000171948, subject to the fulfilment of certain conditions including the attainment of
the spread requirements of the JSE. The Listing is expected to be effective from the commencement of
business on 20 December 2012.
At the date of the Listing, the share capital of Master Drilling will comprise 500 000 000 authorised ordinary
shares and 148 265 491 issued ordinary shares. The Subscription Shares will represent 30.3% of the issued
share capital prior to the Offer. The Sale Shares represent 3.8% of the issued share capital prior to the Offer.
The subscription for and purchase of Offer Shares involves risks. Investors are referred to the section entitled
"Risk Factors" in the offering document.
The Offer Shares have not been and will not be registered under the U.S. Securities Act, or with
any securities laws of any state of, or other jurisdiction in, the United States, and may not be
offered or sold within the United States.
2. Rationale for listing and use of proceeds
The main purposes of the Offer and the Listing are to:
raise funds to repay existing indebtedness related to the reorganisation and purchase new rigs and
associated capital equipment;
enhance the public profile and general public awareness of Master Drilling; and
provide Master Drilling with a source from which capital can be raised, if required, to facilitate future
expansion.
Master Drilling intends to use approximately US$33.9 million of the net proceeds from the Offer to purchase
new drilling rigs and associated capital equipment to fulfil existing and new customer contracts, as and
when required.
Master Drilling intends to use any remaining net proceeds for general corporate purposes, including
working capital and capital expenditures. The amount and timing of Master Drilling's actual working capital
requirements and capital expenditures will depend on numerous factors related to the implementation of its
growth plan. Accordingly, Master Drilling's senior management will have broad discretion in the amount and
timing of the application of the net proceeds to its working capital and capital expenditure requirements, and
investors will be relying on the judgment of Master Drilling's senior management regarding such application
of the proceeds from the Offer.
Master Drilling will not receive any proceeds from the sale of Sale Shares by the Selling Shareholder, including
any Shares sold by the Selling Shareholder in connection with the exercise of the Over-allotment Option.
3. General information about Master Drilling and its business
Master Drilling is one of the global leaders in the raiseboring market, also providing other specialised drilling
services for mineral exploration and mining companies in Southern Africa, Latin America, Europe and the
Middle East. It offers drilling services to major, mid-tier and junior mineral exploration and mining companies
which focus on mining a range of different commodities and resources. Master Drilling provides complete
project management expertise in projects ranging from exploration stage drilling through to production
stage drilling. The Group has specialised in-house drilling equipment design, manufacturing, training and
maintenance capabilities, which allow it to tailor solutions to meet the specific conditions and drilling
requirements of its customers. It also provides drilling services for civil engineering applications in a variety
of emerging markets. The Group has the knowledge and experience to offer its clients a variety of drilling
services, including surface and underground raiseboring, blind hole drilling and underground and surface
exploration core drilling. The Group's raiseboring capability offers advantages over other conventional drilling
methods including increased speed and safety. As at 31 August 2012, the Group operated 160 drilling rigs
of various sizes. These rigs are owned or leased by Master Drilling, with a few operated through rentals from
third parties.
The Group comprises two operational divisions that were recently combined through a reorganisation to
form the current Group. The Group's corporate worldwide headquarters are located in Fochville, in the
Gauteng Province of South Africa. The Group manages operations in South Africa, Botswana and Zambia
from Fochville, through its South African subsidiary, Master Drilling South Africa (Pty) Limited ("MDSA").
International operations, including those in Chile, Peru, Brazil, Mexico, Burkina Faso and Saudi Arabia, are
conducted through its Maltese subsidiary, Master Drilling International Limited ("MDI"). The Group maintains
operating and engineering facilities in Santiago, Chile, Lima, Peru, Belo Horizonte, Brazil; Torreon, Mexico
and Chingola, Zambia, each of which is led by a resident country manager. Each country manager reports
to a regional manager, who in turn reports directly to the Company's Board of Directors.
For the financial year ended 31 December 2011, approximately 22.4%, 10.9% and 66.8% of the Group's
revenues were derived from exploration, capital project and production stage contracts respectively. For the
financial year ended 31 December 2011, approximately 52.3% of the Group's revenues were derived from
contracts in Africa, while approximately 42.2% and 5.5% were derived from contracts in Latin America and
the rest of the world, respectively.
4. Key strengths
Master Drilling's strategy is supported by the following competitive strengths:
An established client base among major international mineral exploration and mining companies.
A strong reputation in the market.
Its focus on large scale multi-rig, capital project and production stage drilling contracts for established
clients.
A client base with operations in a range of commodities and geographies.
Its large fleet of specialised drilling rigs.
Its expertise and experience in specialised drilling projects.
Its in-house design, manufacturing and maintenance capabilities.
A significant number of longer-term contracts.
The existence of significant barriers to entry.
Its emphasis on safety and training.
Its experienced, stable senior management team.
5. Strategy
Master Drilling's business strategy is to maintain and improve on its current status as a leading, global
specialised drilling services company and to deliver long-term, sustainable growth through the further
development and expansion of its drilling services. It intends to achieve this strategy by strengthening and
consolidating its position in existing markets through focused organic growth and strategic acquisitions,
expanding into new markets and enhancing operational efficiencies, while continuing its dedicated focus
on quality and safety. The Directors believe this will be supported through its strong client relationships,
its in-house design, manufacturing and maintenance capabilities and its commitment to training and
standard operating procedures, which allow it to exploit its core knowledge and experience and develop
customised solutions for a wide range of customers, no matter the location or size. Specifically its strategy
consists of the following:
Expand into new geographical territories.
Expand drilling services offering.
Continue focus on research and development.
Enhance in-house design, manufacturing, maintenance and procurement functions.
Implement integrated management system.
Enhancement of operational efficiencies.
6. Current trading and prospects
Since the Group published its historical accounts for the six-month period ended 30 June 2012 it has
continued to trade satisfactorily.
The Directors have been in discussions with existing customers in Latin America about entering into
additional contracts. The Directors expect to commence operations in Colombia during the first quarter
of 2013.
The unrest in South Africa's mining sector during July and August 2012 occurred largely due to worker's
disputes over pay and has been well documented. As a result, the Group's contract at Lonmin's Marikana
mine was cancelled, however the Group has subsequently entered into a new contract with Lonmin.
The Directors believe that the prospects for the Group are encouraging.
7. Dividend policy
The board anticipates that, following the Listing and during the Group's growth phase, its cash resources
will be used primarily for investment in the development of the Group's assets. In addition, it is the current
intention of the Company to declare and to pay dividends after each six-month reporting period following
this growth phase, maintaining a dividend cover ratio of between four to five times annual headline earnings.
However, there can be no assurance that a dividend will be paid in respect of the financial period, and
the declaration and payment by the Company of any dividends will depend on the results of the Group's
operations, its financial position, anticipated cash requirements, prospects, profits available for distribution,
and other factors deemed to be relevant at the time. As at the date of this abridged offering document,
the Company has not declared any dividends.
8. Overallotment and stabilisation
In connection with the Offer, the Stabilisation Manager may in terms of the Securities Services Act over-allot
or effect transactions with a view to supporting the market price of the Offer Shares at a higher level than that
which might otherwise prevail for a period of 30 days after the date of Listing. However, there is no obligation
for the Stabilisation Manager to do so. Such stabilising action, if commenced, may be discontinued at any
time, provided two business days' notice is given to the JSE, but may under no circumstances continue
beyond the 30th calendar day after the date of Listing.
The Selling Shareholder has granted the Stabilisation Manager the Over-allotment Option to purchase
additional ordinary shares in Master Drilling up to a maximum of 5.5 million shares, being 10.0% of the final
number of Offer Shares.
9. Directors
The full name, position, age, nationality, business address and qualifications of each Director are set out
below:
Name Daniel (Danie) Coenraad Pretorius
Position Executive Director, Chief Executive Officer ("CEO") and founder
Age 55
Nationality South African
Business address 4 Bosman Street, PO Box 902, Fochville, 2515, South Africa
Qualification Government Engineers Certificate of Competency, 1983
Name Andre Jean Van Deventer
Position Executive Director, Financial Director and Chief Financial Officer ("CFO")
Age 43
Nationality South African
Business address 4 Bosman Street, PO Box 902, Fochville, 2515, South Africa
Qualification Hons B. Acc, University of Potchefstroom, 1998; Chartered Accountant (SA),
SAICA 2000
Name Gareth (Gary) Robert Sheppard
Position Executive Director and Director for International Operations
Age 42
Nationality South African
Business address Av. Argentina 1937, Cercado de Lima, Lima 01, Peru
Qualification BSc Eng. (Mining), Wits University, 1997; MBA, Wits Business School, 2003; Mine
Managers Certificate of Competency issued by the Association of Mine Managers
(South Africa); Member, Instituto de Ingenieros de Minas del Perú
Name Barend Jacobus (Koos) Jordaan
Position Executive Director and Technical Director
Age 38
Nationality South African
Business address 4 Bosman Street, PO Box 902, Fochville, 2515, South Africa
Qualification B.MEng, Pretoria Technikon, 2000 B.S. in International Technology Management,
University of Groningen, Netherlands, 2000, M.B.A., Bond University, Australia, 2002
Name Shane Ferguson
Position Non-executive Director
Age 48
Nationality South African
Business address Ruimsig Country Office Park, Block CTop Floor, 193 Hole in One Street, Ruimsig
South Africa
Qualification BCom LLB, University of South Africa, 1986; LLB, University of South Africa, 1995
Name Peter John Ledger
Position Chairman, Independent Non-executive Director
Age 63
Nationality South African and British
Business address Sheffield Beach, KZN, South Africa
Qualification BSc (Mining Engineering), University of the Witwatersrand (Wits), 1972; Mine
Manger's Certificate of Competency issued by the Association of Mine Managers
(South Africa)
Name Roger Davey
Position Independent Non-executive Director
Age 66
Nationality British
Business address 26 Walton Road, East Molesey, Surrey, KT8 ODF, England
Qualification Associateship, Camborne School of Metalliferous Mining, 1970; MSc in Mineral
Production management, Imperial College London University, 1979; MSc
(Water Management), Bournemouth University, 1993; Chartered Engineer (C.Eng),
European Engineer (Eur. Ing.); Member of the Institute of Materials, Minerals and
Mining (IMMM)
Name Jacques de Wet
Position Independent Non-executive Director
Age 41
Nationality South African
Business address 2nd Floor, Ramsay Webber Building, 269 Oxford Road, Illovo, 2196
Qualification BCom (Accounting) Hons, CA(SA), MCom (Financial Management)
Name Akhter Alli Deshmukh
Position Independent Non-executive Director
Age 51
Nationality South African
Business address Fredman Towers, 3rd Floor, Cnr Fredman Drive and Bute Lane, Sandton, 2196,
South Africa
Qualification BCom, University of South Africa, 1999; Member of the Institute of Accounting and
Commerce (South Africa)
10. The Offer
The Offer comprises:
an offer of Subscription Shares;
an offer of Sale Shares; and
an offer of Over-allotment Shares, if the Over-allotment Option is exercised.
The principal terms of the Offer are as follows:
Principal term Amount
Offer Price R7.85
Amount raised R352.5 million
Number of Shares allocated 44.9 million Subscription Shares
5.6 million Sale Shares
5.5 million Overallotment Shares
The Offer was conditional on the Underwriting Agreement being concluded and becoming unconditional.
The Underwriting Agreement was signed on 13 December 2012. The Offer remains conditional upon the
Listing of all of the Offer Shares on the JSE, failing which the Offer and any acceptance thereof shall not
be of any force or effect and no person shall have any claim whatsoever against the Company, the Selling
Shareholder and the Bookrunner or any other person as a result of the failure of any condition. If the Directors
in their discretion determine not to proceed with the Offer, the Company shall not be obliged to proceed with
the Offer but reserves the right to do so.
11. Important dates
The expected listing date is 20 December 2012.
Note that all dates are subject to change. Any such change will be released on SENS and published in
the press.
12. Authorised and issued share capital
The authorised and issued share capital of Master Drilling before and after the Listing is set out in the table
below:
At the Last Practicable After the Offer
Date (2 November 2012) and Listing
Total authorised share capital (shares) 500 000 000 500 000 000
Total issued share capital (Rand) 409 003 255 1 282 746 419
Total issued share capital (shares) 45 445 695 148 265 491
There are no founders or deferred shares.
No subsidiary of the Master Drilling Group holds any of its issued ordinary share capital as treasury shares.
The JSE has granted Master Drilling a listing in respect of its entire issued ordinary share capital in the
"Industrial Machinery" sector of the main board of the JSE under the abbreviated name "Mastdrill", symbol
"MDI" and ISIN: ZAE000171948, subject to the fulfilment of certain conditions including the attainment of
the spread requirements of the JSE. The Listing is expected to be effective from the commencement of
business on 20 December 2012.
13. Copies of the full offering document
The full pre-listing statement is available in electronic form on Master Drilling's website
http://www.masterdrilling.com.
Fochville
14 December 2012
For more information please contact:
Master Drilling Group Limited +27 (0)18 771 8100
Daniël Pretorius, Chief Executive Officer
Andre van Deventer, Chief Financial Officer
Sasfin Capital (JSE Sponsor) +27 (0)11 809 7500
Noah Greenhill/Angela Teeling-Smith
Renaissance Capital (Bookrunners) +44 (0)207 367 7777
John Porter
Tavistock Communications +44 (0)207 920 3150
Jos Simson/Ed Portman/Jessica Fontaine
Russell and Associates +27 (0)11 880 3924
Charmane Russell/James Duncan
DISCLAIMER
This announcement has been prepared by Master Drilling Limited ("Master Drilling" or the "Company") and
contains information concerning Master Drilling, its subsidiaries, the proposed offering by Master Drilling, of its
ordinary shares (the "Offer") and the proposed listing on the securities exchange operated by the JSE Limited.
This announcement has been prepared for information purposes only and may not be used for any other purpose.
This communication is only directed at persons who (i) are "qualified investors" within the meaning of Article 2(1)(e) of
Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the "Prospectus
Directive") as may be amended from time to time, (ii) are outside the United Kingdom and/or (iii) have professional
experience in matters relating to investments who fall within the definition of "investment professionals" contained
in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended)
(the "Order"), or are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated
associations, etc.) of the Order, or fall within another exemption to the Order (all such persons referred to in (i) to
(iii) above together being referred to as "Relevant Persons"). Any person who is not a Relevant Person must
not act or rely on this communication or any of its contents. Any investment or investment activity to which this
communication relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
This announcement is not an advertisement for the purposes of the Prospectus Directive as may be amended
from time to time and the Prospectus Rules of the Financial Services Authority in the United Kingdom.
This announcement does not constitute or form part of any offer for sale or subscription or any solicitation of any
offer to buy or subscribe for any securities and neither this announcement nor any part of it forms the basis of or
may be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
Certain statements included herein may constitute forward-looking statements that involve a number of risks and
uncertainties. By their nature, forward-looking statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the future.
Bookrunner and Stabilisation Manager Sponsor
Renaissance Capital Sasfin Capital
Independent auditors South African legal adviser to the Company
Grant Thornton TW FERGUSON
South African legal adviser to the Bookrunner US and English legal adviser to the Company
GLYN MARAIS Hogan Lovells
English legal adviser to the Bookrunner
SNR DENTON
Date: 14/12/2012 01:12:00 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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