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CAUTIONARY ANNOUNCEMENT
Alert Steel Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2003/005144/06)
(Share Code: AET ISIN Code: ZAE000092847)
("Alert" or "the Company")
Cautionary announcement re agreement in respect of:
- clawback offer;
- sale of shares;
- lease agreement;
- loan agreement;
- resignation of chairman; and
- appointment of new directors.
Shareholders are referred to the further cautionary announcement dated 6 February 2013 and
are informed that three of the four remaining (non-executive) directors of Alert have, on 6
February 2013, entered into Heads of Agreement on behalf of Alert with the following parties:
- Southern Palace Investments 265 (Pty) Limited (“Southern Palace”)
- AKM Sons Property Trust (“AKM”);
- Aquarella Investments 454 (Pty) Limited (“Aquarella”); and
- Alert Steel Corporate Services (Pty) Limited.
The Heads of Agreement dealt with a claw-back offer, the sale of shares in Aquarella and a
lease (“the Transactions”) and conditions precedent.
Clawback offer
In terms of the Heads of Agreement Alert will undertake a clawback offer of 48 000 000 shares
at 200 cents per share, to raise an amount of R96 million. The offer will be underwritten by
Southern Palace on the following basis:
- the recently acquired loan claim of Southern Palace and AKM against Alert will be
converted into 37 500 000 newly issued shares in Alert at an aggregate value of
R75 million; and
- the remaining R21 million will be paid in cash upon subscribing for the balance of
10 500 000 shares.
Further details will be announced once the conditions precedent set out below have been
fulfilled.
Sale of shares in Aquarella
Alert Steel Corporate Services (Pty) Ltd agreed to sell its shares in Aquarella, which owns the
office building of Alert situated on erf 227 East Lynne (“the Property”), to AKM for one Rand.
Alert agreed to waive its loans against Aquarella.
The financial effects of this sale will be announced in due course.
Lease agreement
Alert agreed to rent the Property from Aquarella, subject to the entering into of a formal lease
agreement between Aquarella and Alert.
Conditions precedent
The Transactions are subject to the fulfilment of the following conditions precedent:
(a) that Cannistraro Investments 282 (Pty) Limited (“Cannistraro”) purchases all the shares
held by Capital Africa Steel (Pty) Limited in Alert, constituting 47,5% of its current issued
share capital, on terms acceptable to Cannistraro by no later than 7 February 2013, Alert
has been informed that this condition has been fulfilled;
(b) that as (a) constitutes an affected transaction and change of control of Alert, Cannistraro
undertakes to proceed with a mandatory offer to all other shareholders of Alert at the
same price at which Cannistraro purchased the shares from Capital Africa Steel, subject
to (c) which follows;
(c) that should the Takeover Regulation Panel determine and require that Southern Palace
have to make a mandatory offer to all other shareholders of Alert at the claw-back offer
price of 200 cents per share, then the Transactions will be conditional upon the current
shareholders of Alert waiving their rights in respect of a mandatory offer;
(d) that Aquarella and Alert enter into of a formal lease agreement within 90 days, on the
basis of a rental of R700 000 per month excluding utilities;
(e) that all statutory and regulatory approvals be obtained;
(f) that Southern Palace and AKM undertake to facilitate negotiations with credit providers to
Alert;
(g) that Competition Commission approval be obtained for all the Transactions, if required;
(h) that the cash of R21 million be transferred to Alert within 14 days of date of signature of
the Heads of Agreement; and
(i) that all conditions precedent be fulfilled, extended or waived by 21 February 2013.
Loan agreement
In terms of an Addendum to the Heads of Agreement, entered into on 8 February 2013,
Southern Palace undertook to lend and advance on or before 12 February 2013 an amount of
R10 million to Alert, free of interest.
The loan will be discharged by way of set-off against any amounts owing by Southern Palace to
Alert. Failing such discharge within 45 calendar days from 8 February 2013 (or such longer
period as may be agreed to), the loan shall be repaid by Alert within 30 calendar days of
demand.
Undertakings by Alert
In the Heads of Agreement Alert agreed that should the conditions precedent be fulfilled, and up
to the fulfilment date, it will not:
- place Alert or any of its subsidiaries in liquidation or business rescue, as defined in the
Companies Act, 2008; and
- encourage any other party to take steps in pursuance of liquidation or business rescue
against Alert or its subsidiaries.
Nothing contained in this undertaking will however be construed as restricting the fiduciary
duties of the directors of any of the signatories to the Heads of Agreement.
In the event that the board of directors of Alert or any of its subsidiaries is required to take any of
the steps referred to above (i.e. liquidation or business rescue), Alert shall notify Southern
Palace and AKM thereof, affording them an opportunity to take the steps that they deem
appropriate.
Resignation of Board member
In compliance with Section 3.59 of the Listing Requirements of the JSE Limited, shareholders
are hereby notified that Malcolm McCulloch has resigned as non-executive Chairman with effect
from 9 February 2013. The board wishes to thank Malcolm for the valuable contribution he has
made to the board.
Appointment of new directors
Messrs Peter Dodson, Wynand Schalekamp and Afzal Loonat have been appointed as new
directors with effect from Monday, 11 February 2013.
Mr Dodson is currently the CEO of Metro Cash and Carry.
Mr Schalekamp is the founder of Alert and a former Chief Executive Officer.
Mr Loonat is a Chartered Accountant.
The Board of directors of Alert will therefore be constituted as follows with effect from Monday,
11 February 2013:
- Chairman – Mitesh Patel
- Chief executive officer - Peter Dodson
- Executive director in charge of steel operations - Wynand Schalekamp
- Non-executive director - Wessel van der Merwe (chairman of audit committee)
- Non-executive director - Gwen Mahuma
- Non – executive director – Afzal Loonat
Further cautionary announcement
Shareholders are advised to continue exercising caution when dealing in the Company’s
securities until a further announcement has been made.
11 February 2013
Johannesburg
Designated Advisor
Exchange Sponsors
Date: 11/02/2013 11:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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