BLACKSTAR GROUP SE - Joint Announcement Of The Firm Intention Of Blackstar To Make An Offer To Acquire The Entire Issued Share Capital Of

Release Date: 04/03/2013 09:00
Code(s): BCK NBC
 
Wrap Text
Joint Announcement Of The Firm Intention Of Blackstar To Make An Offer To Acquire The Entire Issued Share Capital Of

New Bond Capital Limited
(Previously Mvelaphanda Group Limited)
Incorporated in the Republic of South Africa
Registration number: 1995/004153/06
Share code: NBC
ISIN: ZAE000170726
(“New Bond Capital” or “NBC”)


Blackstar Group SE
(Previously Blackstar Group PLC)
(Registered in Malta with registration number SE 4)
(Registered as an external company with limited liability in the Republic of South Africa under
registration number 2011/008274/10)
Share code: BCK / BLCK
ISIN: MT0000620105
("Blackstar")


JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF BLACKSTAR TO MAKE AN
OFFER TO ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF NEW BOND CAPITAL
BY WAY OF A SCHEME OF ARRANGEMENT (THE "SCHEME")

1.   INTRODUCTION

     1.1. Shareholders of New Bond Capital ("New Bond Capital Shareholders" or “NBC
          Shareholders”) are advised that Blackstar has made an offer for the acquisition by
          Blackstar, or its wholly owned subsidiaries, of the entire issued ordinary share
          capital of New Bond Capital, (the “Target Shares"), by way of a scheme of
          arrangement in terms of section 114 of the Companies Act 71 of 2008, as amended
          (the "Companies Act").
     1.2. If implemented, the Scheme will result in New Bond Capital Shareholders receiving
          newly issued ordinary shares in Blackstar (“Blackstar Shares”) (the "Scheme
          Consideration"). The mechanism for the calculation of the Scheme Consideration is
          set out in more detail in paragraph 4 below. The Scheme Consideration will not
          have a cash alternative.
     1.3. The board of directors of New Bond Capital has agreed to propose the Scheme on
          the terms and conditions summarised herein.

2.   RATIONALE FOR THE SCHEME FOR NEW BOND CAPITAL SHAREHOLDERS

     2.1. The Scheme will give NBC Shareholders a mechanism to exit the company, which
          has effectively become a “cash shell” after the completion of the unwinding of its
          investment portfolio.
     2.2. NBC’s remaining funds will be used, inter alia, for administrative expenses required
          to complete the complex and extensive task of settling outstanding liabilities and
          unwinding structures in the various group subsidiaries. This is expected to be a
          lengthy process as the group has had a long operating history and there are a
          number of unresolved queries relating to prior years which need to be resolved.
          The NBC board is obliged to hold back cash in order to meet the wind-down cost
          and any liabilities that may still arise. Additional assets acquired by Blackstar in
          terms of the Scheme will be used by Blackstar for investment opportunities as per
          Blackstar’s stated investment policy.


     2.3. NBC currently has operating expenses that are greater than the income being
          earned on the cash invested which is not a sustainable situation.
     2.4. NBC Shareholders will receive shares in Blackstar, which is an active investment
          holding company with a primary listing on the Alternative Investment Market,
          operated by the London Stock Exchange, and a secondary listing on the JSE’s
          AltX.
     2.5. Full details of Blackstar, its management and its track record will be included in the
          Scheme circular to be sent to New Bond Capital Shareholders (the "Scheme
          Circular").

3.   RATIONALE FOR THE SCHEME FOR BLACKSTAR SHAREHOLDERS

     3.1. Implementation of the Scheme will result in an increase in the asset base of
          Blackstar, thereby effectively reducing the cost base as a percentage of assets as
          the cost structure will not change. Blackstar will assume the assets and liabilities of
          NBC and will settle the outstanding liabilities in the ordinary course of business.
          The additional assets acquired by Blackstar will be used for investment
          opportunities as per its stated investment policy.
     3.2. The Scheme will not dilute Blackstar shareholders ("Blackstar Shareholders") as
          described in the Scheme Consideration below.

4.   SCHEME CONSIDERATION

     4.1. The Scheme Consideration shall be calculated with reference to the intrinsic net
          asset value per ordinary share (“NAV”) of each of Blackstar and NBC as at
          31 December 2012, less a 10% (ten percent) discount on each such NAV.
     4.2. The Scheme Consideration shall be calculated in accordance to the following
          formula –
          (A ÷ B) x 100 = X
          where –
          A     =       NAV of NBC, less a 10% (ten percent) discount
          B     =       NAV of Blackstar, less a 10% (ten percent) discount
          X     =       the number of Blackstar shares
                        exchanged for every 100 (one hundred) Target Shares ("Swap
          Ratio")
     4.3. Thus the Scheme Consideration as at 31 December 2012 is the Swap Ratio of
          1.1200 (one point twelve) Blackstar Shares for 100 (one hundred) Target Shares
          disposed of in terms of the Scheme, provided that any fraction of a Blackstar Share
          which an NBC Shareholder (participating in the Scheme) becomes entitled to will
          be rounded-off such that if it comprises 0.5 (zero comma 5) or –
     4.3.1 more of a Blackstar Share, it will be rounded upwards; and
     4.3.2 less of a Blackstar Share, it will be rounded downwards.
     4.4. In the event that the NAV of either Blackstar or NBC has increased or decreased by
          more than 10% (ten percent) as at a particular future date (to be agreed upon
          between Blackstar and NBC and which will be a date prior to the release of the
          Scheme Circular), from the NAV of either Blackstar or NBC as at 31 December
          2012, Blackstar and NBC will recalculate the Swap Ratio by applying the
          methodology for the calculation of the Swap Ratio set out in this section 4
          ("Adjusted Swap Ratio").
     4.5. The Adjusted Swap Ratio will be announced to NBC Shareholders on SENS and in
          the press as soon as possible after it has been calculated. The aforementioned
          announcement will also contain pro forma financial effects of the Scheme once the
          Adjusted Swap Ratio has been determined. Any dispute between the Parties in
          relation to the calculation of the Scheme Consideration and in particular the Swap
          Ratio and the Adjusted Swap Ratio will be referred for determination by an
          independent corporate financier operating in the Republic of South Africa.

5.   SHAREHOLDER SUPPORT

     Blackstar has received irrevocable undertakings or written confirmations of support from
     NBC Shareholders to vote in favour of the Scheme which shareholders collectively hold
     75.5% of the Target Shares.

6.   SCHEME CONDITIONS

     6.1. The Scheme will be subject to the fulfilment (or waiver, where applicable) of the
          following conditions precedent ("Scheme Conditions") on or before 30 June 2013 -


          6.1.1. the passing of all resolutions required to implement the Scheme by the
                  requisite majority of Blackstar Shareholders, which resolutions will include,
                  inter alia, the increase of Blackstar's authorised share capital and the
                  authority to issue the Scheme Consideration by Blackstar;
          6.1.2. the approval of the Scheme by the requisite majority of New Bond Capital
                  Shareholders as contemplated in section 115(2)(a) of the Companies Act,
                  and (a) to the extent required, the approval of the implementation of such
                  resolution by a High Court in South Africa in terms of section 115(2) and/or
                  section 115(3) of the Companies Act; and (b) if applicable, New Bond Capital
                  not treating the aforesaid resolution as a nullity, as contemplated in section
                  115(5)(b) of the Companies Act;
          6.1.3. in relation to any objections to the Scheme by New Bond Capital
                  Shareholders:
                6.1.3.1. no New Bond Capital Shareholders give notice objecting to the
                         Scheme, as contemplated in section 164(3) of the Companies Act
                         and vote against the resolutions proposed at the Scheme general
                         meeting; or
                6.1.3.2. if New Bond Capital Shareholders give notice objecting to the
                         Scheme, as contemplated in section 164(3) of the Companies Act,
                         and vote against the resolutions proposed at the Scheme general
                         meeting, that New Bond Capital Shareholders holding no more than
                         10% (ten percent) of the Target Shares, eligible to be voted at the
                         Scheme general meeting, give such notice and vote against the
                         resolutions proposed at the Scheme general meeting; or
                6.1.3.3. if New Bond Capital Shareholders holding more than 10% (ten
                         percent) of all Target Shares eligible to vote at the Scheme general
                         meeting give notice objecting to the Scheme, as contemplated in
                         section 164(3) of the Companies Act, and vote against the
                         resolutions proposed at the Scheme general meeting, that the
                         relevant New Bond Capital Shareholders do not exercise their
                         appraisal rights, by giving valid demands in terms of sections 164(5)
                         to 164(8) of the Companies Act within thirty business days following
                         the Scheme general meeting, in respect of more than 10% (ten
                        percent) of the Target Shares eligible to be voted at the Scheme
                        general meeting; and
          6.1.4. in respect of the implementation of the Scheme and only to the extent that
                  same may be applicable, the approval of the South African Competition
                  Authorities, the South African Reserve Bank, the JSE, the TRP (through the
                  issue of the requisite compliance certificate), the London Stock Exchange
                  and any other relevant regulatory authorities (either unconditionally or
                  subject to conditions acceptable to Blackstar and NBC); and
          6.1.5. the approval of the listing of the Blackstar ordinary shares to be issued as the
                  Scheme Consideration from the Blackstar South African share register by
                  JSE.


     6.2. The Scheme Conditions in paragraphs 6.1.1, 6.1.2, 6.1.4 (save for the approval by
          the Competition Authorities which may be waived by NBC) and 7.1.5 cannot be
          waived.
     6.3. The Scheme Conditions in paragraphs 6.1.3 and the approval by the Competition
          Authorities under clause 6.1.4 may be waived by NBC upon written notice to
          Blackstar, prior to the date for the fulfilment of this Scheme Condition..
     6.4. NBC will be entitled to extend the date for the fulfilment of any of the Scheme
          Conditions, by up to 30 days, in its own discretion, upon written notice to Blackstar,
          but shall not be entitled to extend the date to a date later than the aforesaid 30-day
          period without the prior written consent of Blackstar.

7.   CONFIRMATION AS TO SCHEME CONSIDERATION

     7.1. As the Scheme Consideration is entirely comprised of newly issued Blackstar
          shares, no cash confirmation is required in terms of Regulation 111(4) of the
          Companies Regulations, 2011 (the "Regulations").
     7.2. Blackstar confirms that it has sufficient ordinary shares available to issue as
          Scheme Consideration for the Target Shares.

8.   DELISTING OF NEW BOND CAPITAL

     Upon implementation of the Scheme, an application will be made to the JSE to terminate
     the listing of the entire ordinary issued share capital of New Bond Capital on the JSE.

9.   EXISTING HOLDING OF SHARES IN NEW BOND CAPITAL, BLACKSTAR ACTING
     AS PRINCIPAL

     9.1. As of the date of this announcement, Blackstar beneficially held 1 584 456 ordinary
          shares, either directly or indirectly, in New Bond Capital, equal to approximately
          0.3% of the issued share capital of New Bond Capital.
     9.2. Blackstar confirms that it is the ultimate prospective purchaser of the Target Shares
          and is acting alone and not in concert with any party.

10. INDEPENDENT BOARD, OPINION AND RECOMMENDATIONS

     10.1. In order to comply with the requirements of the Regulations relating to the
           composition of an independent board, Phumzile Langeni and Nonkqubela Maliza
           have been co-opted as independent non-executive directors to the New Bond
           Capital board of directors, with immediate effect until the implementation date of the
           Scheme.
     10.2. As required in terms of the Companies Act and the Regulations, New Bond Capital
           has constituted an independent board, comprising Patrick Ntshalintshali, Phumzile
           Langeni and Nonkqubela Maliza (the "New Bond Capital Independent Board"). The
           New Bond Capital Independent Board will appoint an independent expert
           acceptable to the TRP to provide the New Bond Capital Independent Board with
           external advice in regard to the Scheme and to make appropriate
           recommendations to the New Bond Capital Independent Board for the benefit of
           New Bond Capital Shareholders. The substance of the external advice and the
           opinion of the New Bond Capital Independent Board will be detailed in the Scheme
           Circular.

11. FURTHER DOCUMENTATION AND SALIENT DATES

     Further details of the Scheme will be included in a Scheme Circular, which is expected
     to be posted to New Bond Capital Shareholders on or about 29 March 2013. The salient
     dates in relation to the Scheme will be published prior to the issuing of the
     aforementioned documentation.

12. FOREIGN SHAREHOLDING

     The offer, as will be more fully set out in the Scheme Circular, is not made to any
     shareholder of New Bond Capital in any jurisdiction where it would be illegal for such
     offer to be made.

13. NEW BOND CAPITAL INDEPENDENT BOARD RESPONSIBILITY STATEMENT

     The New Bond Capital Independent Board accepts responsibility for the information
     contained in this announcement which relates to New Bond Capital and confirms that, to
     the best of its knowledge and belief, such information which relates to New Bond Capital
     is true and the announcement does not omit anything likely to affect the importance of
     such information.

14. BLACKSTAR RESPONSIBILITY STATEMENT

     The board of directors of Blackstar accepts responsibility for the information contained in
     this announcement which relates to Blackstar and confirms that, to the best of its
     knowledge and belief, such information which relates to Blackstar is true and the
     announcement does not omit anything likely to affect the importance of such information.
Johannesburg & London
4 March 2013
Transaction advisor to New Bond Capital: PKF Corporate Finance (Pty) Ltd
Sponsor to New Bond Capital: PSG Capital (Pty) Ltd
Legal advisor to New Bond Capital: Cliffe Dekker Hofmeyr Inc.
Sponsor to Blackstar: PSG Capital (Pty) Ltd
Nomad to Blackstar: Liberum Capital Limited
Legal advisors to Blackstar: Paul Hastings (Europe) LLP

Date: 04/03/2013 09:00:00 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.

Email this JSE Sens Item to a Friend.

Share This Story