Wrap Text
Sale of stake in Sabido by HCI to Seardel and Cautionary Announcement
HOSKEN CONSOLIDATED INVESTMENTS SEARDEL INVESTMENT CORPORATION
LIMITED LIMITED
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
Registration number: 1973/007111/06 Registration number: 1968/011249/06
Share code: HCI Share code: SRN; Share code: SER
ISIN: ZAE000003257 ISIN: ZAE000030144; ISIN: ZAE000029815
(“HCI”) (“Seardel”)
SALE OF STAKE IN SABIDO BY HCI TO SEARDEL AND CAUTIONARY ANNOUNCEMENT
1. Introduction
HCI and Seardel are pleased to announce that they have entered into an agreement (the “Transaction
Agreement”) whereby HCI will sell to Seardel its 70% interest in HCI Invest 3 Holdco Proprietary Limited
(“SPV”), which, following an internal restructuring within the HCI group, will hold a 63.9% interest in Sabido
Investments Proprietary Limited (“Sabido”). Sabido is the investment vehicle that houses HCI’s
investments in e-tv, eSat tv, yfm and Sasani Studios (the “Proposed Transaction”).
Shareholders of HCI are referred to the announcement released by HCI on 17 May 2013 (the “HCI
Sactwu Announcement”), which sets out the details of the transactions between HCI and the Southern
African Clothing and Textile Workers Union (“Sactwu”) (the “Sactwu Transactions”).
2. The Proposed Transaction
The current structure of HCI’s investment in Sabido is as follows:
[Please refer to the Business Day on Monday, 20 May 2013 for the image]
The current structure of HCI’s investment in Seardel is as follows:
[Please refer to the Business Day on Monday, 20 May 2013 for the image]
Note:
HCI holds 509 734 821 ordinary shares in Seardel and 11 580 352 N-shares in Seardel, which equates to an effective economic
interest and voting interest in Seardel of 76.3% and 81.1% respectively.
The Proposed Transaction will be implemented in terms of the following transaction steps:
1. HCI will implement an internal restructuring on the basis set out in the Subscription and Sale of
Shares Agreement entered into by HCI and SPV (“Restructuring Agreement”) in terms of which
SPV will acquire HCI’s 63.9% interest in Sabido. HCI shareholders and Seardel shareholders are
referred to the HCI Sactwu Announcement which sets out in more detail the internal restructuring
of HCI and the capital structure of SPV.
2. In terms of the Transaction Agreement, after implementing the internal restructuring HCI will
dispose of its 70% equity stake in SPV to Seardel for a purchase price of R560 million. The
purchase price will be settled by Seardel by the allotment and issue to HCI of 350 million new N-
shares in Seardel at a value of R1.60 per N-share. The ordinary shares in SPV will be sold to
Seardel ex the right to receive any dividends which will be declared by SPV, based on the dividend
which SPV will receive from Sabido, in May 2013 and November 2013. Both such dividends will
accrue to HCI or its nominee.
The Proposed Transaction will result in the following structure:
[Please refer to the Business Day on Monday, 20 May 2013 for the image]
Note:
As a result of the Proposed Transaction, HCI will hold a total of 361 580 352 N-shares in Seardel and will continue to hold
509 734 821 ordinary shares in Seardel, which equates to an effective economic interest and voting interest of 84.4% and 81.2%
respectively. HCI’s remaining 30% stake in SPV will be acquired by Sactwu in terms of the Sactwu Transactions as detailed in the
HCI Sactwu Announcement.
3. An overview of Sabido
Sabido is a media group that is jointly owned by HCI and Remgro Limited. The media group grew out of
the success of e.tv, South Africa’s first and only private commercial free-to-air television channel, which
launched in 1998 and which is wholly owned by Sabido.
In 2008, Sabido launched South Africa’s first 24-hour television news channel, the eNews Channel. It also
operates a pan-African entertainment channel, e.tv Africa, which broadcasts in 49 countries across the
continent and has direct investments in broadcasting businesses in Botswana and Ghana.
Sabido continues to expand its media business with investments in content production and distribution as
well as the launch of services across multiple platforms and territories.
4. Rationale for the Proposed Transaction
4.1 Benefits for HCI
The Proposed Transaction is intended to achieve several strategic objectives for HCI, including, inter alia:
- The Proposed Transaction, together with the Sactwu Transactions, will create an empowered
media platform;
- Investors will have greater visibility in respect of the performance of the media investments in
Sabido;
- The Proposed Transaction is anticipated to unlock value for HCI shareholders; and
- As a subsidiary of a separately listed investment holding company, Sabido will have greater
access to debt and equity capital markets to fund future growth opportunities.
4.2 Benefits for Seardel
The Proposed Transaction will provide Seardel with the following benefits:
- Seardel shareholders will obtain exposure to an investment in a cash generative media asset;
- Greater scale and appeal amongst institutional investors looking for more direct exposure to
Sabido; and
- An opportunity to acquire a significant asset in an attractive industry which is consistent with
Seardel’s stated strategic objective of diversification.
5. Conditions precedent for the Proposed Transactions
The Transaction Agreement remains subject to the fulfilment or waiver, inter alia, of the following
conditions precedent:
- the Restructuring Agreement becoming unconditional;
- Seardel obtaining a fairness opinion from an independent expert acceptable to the JSE Limited (“JSE”)
in compliance with the JSE Listings Requirements (“Listings Requirements”) and the Seardel board
of directors confirming that the Proposed Transaction is fair;
- the passing by the shareholders of Seardel, HCI and SPV of the shareholders' resolutions required to
authorise, approve and implement the Proposed Transaction in terms of the Companies Act, 2008, as
amended, the Listings Requirements and Seardel’s Memorandum of Incorporation;
- the obtaining of the consents of the bankers of HCI and Seardel to the Proposed Transaction; and
- the obtaining of such regulatory approvals as may be necessary, including, but not limited to, the
approval of the JSE and the Competition Authorities in terms of the Competition Act, 1998, as
amended.
6. Financial effects and salient dates
The financial effects and the salient dates relating to the Proposed Transaction will be released in due
course.
7. Categorisation of the Transactions
7.1 HCI categorisation
The Proposed Transaction constitutes a category 2 transaction for HCI in terms of the Listings
Requirements.
7.2 Seardel categorisation
The Proposed Transaction constitutes a category 1 transaction for Seardel in terms of the Listings
Requirements and is a related party transaction as a result of HCI being a material shareholder of
Seardel.
8. Documentation
A circular will be issued by Seardel to Seardel shareholders in accordance with the Listings Requirements,
which will incorporate a notice convening a general meeting of Seardel shareholders to approve the
Proposed Transaction.
9. Cautionary announcement
HCI shareholders and Seardel shareholders are advised that the Proposed Transaction, if successfully
concluded, may have a material impact on the price of the HCI’s and Seardel’s securities. Accordingly,
HCI shareholders and Seardel shareholders are advised to exercise caution when dealing in HCI and
Seardel securities until a further announcement incorporating the financial effects of the Proposed
Transaction is made.
Cape Town
17 May 2013
Investment bank & Sponsor
Investec Bank limited
Joint legal advisors
Edward Nathan Sonnenbergs
Joint legal advisors
Tabacks
4
Date: 17/05/2013 03:56:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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