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FURTHER CAUTIONARY ANNOUNCEMENT RE ASSIGNMENT, SPECIFIC ISSUE AND TRP RULINGS
Alert Steel Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2003/005144/06)
(Share Code: AET ISIN Code: ZAE000092847)
("Alert Steel" or "the Company")
Further cautionary announcement
in respect of:
- assignment of rights and obligations to Cannistraro;
- specific issue of shares for cash to Cannistraro; and
- rulings by the TRP
and further cautionary announcement
1. Introduction and background
Shareholders are referred to the further cautionary announcements dated 11 February 2013
and 26 March 2013 respectively in which, inter alia, the following were announced:
1.1. further detail in respect of the purchase of shares in Alert Steel by Cannistraro
Investments 282 (Pty) Limited (“Cannistraro”) from Capital Africa Steel (Pty) Limited
(“CAS”) and from Nedbank Limited (“Nedbank”) (jointly referred to hereafter as “the CAS
Sale and the Nedbank Sale”); and
1.2. the disposal of property holding companies and other immovable property.
2. Assignment and further loan
2.1. On 27 February 2013 Southern Palace Investments 265 (Pty) Limited (“Southern
Palace”) and AKM Sons Property Trust (“AKM”) informed Alert Steel that they had
assigned to Cannistraro all of their rights and obligations in terms of the banking facilities
(including but not limited to a R70 million term loan and a R20 million term loan), property
loan agreement and various other securities (all of which had been assigned to such
entities by Nedbank Limited on or about 1 February 2013, as set out in the
announcement dated 4 February 2013). As a result of this assignment, Cannistraro inter
alia acquired the medium term loan of R70 million against Alert Steel, which, as a result
of the interest accrued thereon, has a current outstanding balance of approximately
R75 million (“the Term Loan”).
2.2. Cannistraro subsequently purchased 35 021 939 shares in Alert Steel from CAS and
Nedbank as announced on 26 March 2013. The CAS Sale and the Nedbank Sale are
both subject, inter alia, to Competition Commission approval, and upon the
implementation of such sales, Cannistraro shall hold 62.28% of the shares in Alert Steel.
2.3. On or about 1 March 2013, Cannistraro entered into a loan agreement with Alert Steel in
terms of which Cannistraro agreed to lend and advance an aggregate amount of
R21 million to Alert Steel, which loan shall bear interest at the prime rate and be
repayable by no later than 31 December 2013 (“the Cannistraro Loan”).
3. Specific issue of shares for cash
3.1. Alert Steel decided to change the previously announced subscription and clawback offer
to a specific issue of shares for cash to Cannistraro, subject to certain conditions
precedent being fulfilled.
3.2. On 11 April 2013 Alert Steel and Cannistraro entered into an agreement in terms of
which Alert Steel will undertake a specific issue of 48 000 000 shares to Cannistraro at
200 cents per share for cash to raise R96 million (“the Specific Issue”). The cash raised
will be utilised to redeem debt.
3.3. The Specific Issue is subject inter alia to the following conditions precedent:
3.3.1. that shareholders of Alert Steel approve the Specific Issue by a 75% majority vote
by all shareholders excluding Cannistraro and its associates;
3.3.2. that, should Cannistraro be obliged to effect a mandatory offer arising out of the
Specific Issue, shareholders of Alert Steel waive such potential mandatory offer
by Cannistraro at 200 cents per share; and
3.3.3. that shareholders of Alert Steel authorise the issue of shares in Alert Steel to be
issued in terms of the Specific Issue which will comprise more than 30% of the
shares in issue and will therefore require the approval of shareholders in terms of
section 41(3) of the Companies Act, 2008.
3.4. The discharge of the aggregate subscription price payable by Cannistraro in terms of the
Specific Issue will take place as follows:
3.4.1. R75 million of Cannistraro’s obligations to effect payment of the aggregate
subscription price in respect of the Specific Issue will be set off against Alert
Steel’s obligations to Cannistraro in terms of the Subject Loan; and
3.4.2. the remaining R21 million of Cannistraro’s obligations to effect payment of the
aggregate subscription price in respect of the Specific Issue will be set off against
Alert Steel’s obligations to Cannistraro in terms of the Cannistraro Loan.
3.5. Financial effects:
The unaudited pro forma financial effects have been prepared for the purposes of
illustrating how the Specific Issue would have affected the financial position, changes in
equity, results of operation or cash flows of Alert Steel for the historical financial period
indicated. Accordingly, such effects may not necessarily fairly represent the financial
effects of the Specific Issue on Alert Steel’s financial position, changes in equity and
results of operations or cash flows.
The unaudited pro forma financial effects have been compiled using accounting policies
that comply with IFRS and that are consistent with those applied in the unaudited
consolidated financial statements of Alert Steel for the six months ended 31 December
2012. The pro forma figures have been given no greater prominence than unadjusted
financial figures, and are presented in a manner consistent with both the format and
accounting policies adopted in the historical financial information and adjustments have been
quantified on the same basis as would normally be calculated in preparing financial
statements.
The directors are responsible for the preparation of the unaudited pro forma financial
effects.
The table below sets out the unaudited pro forma financial effects of the Specific Issue
on Alert Steel:
Before the After the Change
Specific Specific %
Issue Issue
Loss per share (cents) (62.8) (25.82) 59%
Headline loss per share (61.6) (25.26) 59%
(cents)
Net asset value per share (0.45) 95.07 21141%
Net tangible asset value per (11.45) 89.35 880%
share
Number of ordinary shares in 52 014 100 000
issue (‘000)
Weighted average number of 44 546 92 532
shares in issue (‘000)
Notes
(1) The “Before the Specific Issue” column is based on Alert Steel’s published
reviewed financial statements for the six months ended 31 December 2012.
(2) The loss and headline loss per share were calculated as if the Specific Issue took
place on 1 July 2012.
(3) The “After the Specific Issue” column assumes that the 48 000 000 shares were
issued at 200 cents per shares and the cash was received on 31 December 2012.
(4) The net asset value and net tangible asset value in the “After the Specific Issue”
column were calculated as if the Specific Issue took place on 31 December 2012.
(5) The “After the Specific Issue” column net asset value and net tangible asset value
per share have been adjusted to include:
- current and non- current liabilities have been reduced by R96 million;
- stated capital account has been increased with the Specific Issue of
48 000 000 shares at 200 cents.
(6) The “After the Specific Issue” column loss per share and Headline loss per share
have been adjusted to include after tax interest saving on interest bearing debt
calculated at prime interest rate.
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4. Rulings by the TRP
On 9 April 2013 the TRP ruled as follows:
4.1. that once the CAS Sale and the Nedbank Sale have become effective, Cannistraro will
be obliged to make a mandatory offer to all Alert Steel’s shareholders (other than CAS
and Nedbank), to acquire all of their shares at 54.58 cents per share (“the Subject
Mandatory Offer”);
4.2. that the TRP would be prepared to waive a potential mandatory offer being required to be
made by Cannistraro to the other shareholders in Alert Steel at 200 cents per share
arising out of Cannistraro exceeding the “prescribed percentage” of shares in Alert Steel
by virtue of the Specific Issue, provided that independent shareholders in Alert Steel
waive the benefits of such mandatory offer by ordinary resolution in terms of
Regulation 86(4) of the Companies Regulations, 2011;
4.3. that, as required by the Companies Act, 2008, and the Companies Regulations, 2011,
Cannistraro will have to provide a cash confirmation to the TRP from a bank confirming
unconditionally and irrevocably that it holds sufficient funds on behalf of Cannistraro to
enable Cannistraro to settle the full cash consideration payable in terms of the Subject
Mandatory Offer. The Subject Mandatory Offer will be made to the holders of 16 977 697
shares in Alert Steel, of which 10 113 241 have already waived the right to receive the
Subject Mandatory Offer. A cash confirmation will therefore only be required in respect of
the balance of the shareholders in Alert Steel (being 6 864 456 shares, as set out below)
(“the Remaining Shares”). The position is therefore as follows:
Alert shares in issue 51 999 636
Shares purchased by Cannistraro from CAS (24 734 906)
Shares purchased by Cannistraro from Nedbank (10 287 033)
Irrevocable waivers received not to accept offer (10 113 241)
Shares for which cash confirmation will be required 6 864 456
The TRP consented to the amount of the cash confirmation being R3,746,620.00 (being
the Remaining Shares multiplied by the purchase price in respect of the CAS Sale of
54,58 cents per share).
5. Further cautionary announcement
Further detailed announcements will be made in respect of the Specific Issue and the
Subject Mandatory Offer in due course. Shareholders are therefore advised to continue
exercising caution when dealing in the Company’s securities until such further
announcements have been made.
11 April 2013
Johannesburg
Designated Advisor
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Exchange Sponsors
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