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Announcement of a firm intention to make a cash offer to acquire all the issued shares in IFA
IFA Hotels and Resorts Limited
(Incorporated in the Republic of South Africa)
(Registration number 1919/001318/06)
(Share code: IFA)
(ISIN: ZAE000075669)
("IFA" or "the Company")
ANNOUNCEMENT OF A FIRM INTENTION TO MAKE A CASH OFFER TO ACQUIRE
ALL THE ISSUED SHARES IN IFA, SAVE FOR THE SHARES HELD BY THE
EXCLUDED SHAREHOLDER (DEFINED BELOW) AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction
1.1. IFA is pleased to announce (the “Firm Intention Announcement”) that it
has received written notice of a firm intention to make an offer (the
“Firm Intention to make an Offer Letter”) from IFA Hotels & Resorts
KSCC, a public company incorporated in accordance with the laws of
Kuwait commercial registration number 61718 (the party making the
offer to be hereinafter referred to as the "Offeror" or "IFA KSCC") to
acquire (the “IFA KSCC Offer”), subject to the applicable terms and
conditions referred to in this Firm Intention Announcement, all the
issued ordinary shares in the capital of IFA save for the IFA shares held
by IFA KSCC (the “Excluded Shareholder”).
1.2. This Firm Intention Announcement is made pursuant to Regulation 101
of the Takeover Regulations (the “Takeover Regulations”) issued in
terms of section 120 of the Companies Act, 2008, as amended (the
“Companies Act”).
2. The IFA KSCC Offer
2.1. The purpose of the IFA KSCC Offer to the shareholders of IFA is to enable
the Offeror to acquire, subject to the applicable terms and conditions as
set out in this Firm Intention Announcement, all the issued ordinary
shares in the capital of IFA (‘’IFA Shares”), save for the IFA Shares held
by the Excluded Shareholder(the “Excluded Shares”). The IFA KSCC Offer
will, subject to paragraph 14, be implemented by way of a scheme of
arrangement (the “Scheme”) between IFA and its shareholders
registered as such on the scheme record date (to be published in due
course, as envisaged in paragraph 13), other than the Excluded
Shareholder,in terms of section 114 of the Companies Act (read with
section 115 of the Companies Act) (all inclusive “the Transaction”). The
IFA Shares held by the Excluded Shareholder will not form part of the
Scheme.
2.2. The authorized and issued capital of IFA comprises ordinary shares
and IFA does not have any other class of shares in its authorized or
issued capital.
2.3. The IFA Shares that will form part of the Scheme (being all the IFA
Shares other than the Excluded Shares) are referred to as the “Scheme
Shares”.
2.4. The implementation of the Scheme will result in the de-listing of IFA
from the Main board (“the De-listing”) of the securities exchange owned
and operated by JSE Limited (“JSE”). The intention is to convert IFA to a
private company (subject to the provisions of the Companies Act)
subsequent to the implementation of the De-listing.
3. Scheme consideration for the IFA KSCC Offer
3.1. The offer price is twenty (20) cents (ZAR) per Scheme Share and is
payable in cash. It represents a:
3.1.1. 66,67% premium to the 12 cents closing price of an IFA share on 28
May 2013;
3.1.2. 17,65% premium to the 17 cents closing price of an IFA Share on 13
May 2013 being the date on which the first cautionary announcement
was published;
3.1.3. 36,43% premium to the 30 day volume weighted average closing
price of 14,66 cents an IFA Share; and
3.1.4. 29,31% premium to the 60 day volume weighted average closing
price of 15,47 cents an IFA Share.
3.2. The IFA KSCC Offer thus provides IFA shareholders (other than the
Excluded Shareholder) with a cash exit opportunity at a premium to the
current and historical market prices of the IFAShares.
4. Information regarding IFA KSCC
IFA KSCC is a public property investment company, established in
Kuwait by its controlling shareholder International Financial Advisors
KSCC (a company duly incorporated and registered according to the
laws of Kuwait).
5. Terms of the IFA KSCC Offer
The IFA KSCC Offer is made on the following basis:
5.1. The Offeror will pay twenty (20) cents (ZAR) cash for each Scheme
Share (“Scheme Consideration”) on the implementation date of the
Scheme (“Implementation Date”). Payment of the Scheme
Consideration will be administered by IFA;
5.2. The Scheme Consideration was determined on the basis that IFA will not
make any distributions (as defined in the Companies Act) between the
date of signature of the Firm Intention to make an Offer Letter by the last
party signing, being 29 May 2013,(the “Initial Date”) and the
Implementation Date. The IFA board does not intend to declare a
dividend or make any other distribution to IFA shareholders between
the Initial Date and the Implementation Date. Should IFA declare or pay
any dividend or make any other distribution to its shareholders(“Excess
Payment”), then the Scheme Consideration will be reduced by an
amount equal to such Excess Payment(s), and further decreased by any
amount for which IFA or any subsidiary of IFA is itself liable by way of
taxes on such payment(s) (that is, excluding any obligation on IFA or any
of its subsidiaries to withhold any amount payable by any IFA
shareholder).
6. The IFA shareholder base after the implementation of the
Transaction
Following implementation of the Scheme, IFA will be a wholly owned
subsidiary of IFA KSCC.
7. Funding
7.1. IFA KSCC will provide the funding for the Scheme.
7.2. Larson Falconer Hassan Parsee has provided the Takeover Regulation
Panel, established by section 196 of the Companies Act ("Takeover
Regulation Panel"),with an irrevocable bank guarantee as contemplated
in Regulations 111(4) and 111(5) of the Takeover Regulations, read with
the guidelines issued by the Takeover Regulation Panel in terms of
section 201(2)(b) of the Companies Act.
8. Shareholder support
IFA KSCC has obtained irrevocable undertakings from International
Investment Projects Company KSCC and Assjad Al Kuwait General
Trading & Contracting Company in terms of which, amongst other
things, they have undertaken to vote in favour of the Scheme and all
related resolutions. These shareholders hold, in aggregate, 83,75% of
the IFA Shares which IFA KSCC believe to be eligible to vote at the
shareholders meeting which will be convened in relation to the
Scheme(on a date to be published in due course, as envisaged in
paragraph 13).
9. Merger notification
To the extent that the parties meet the asset and turnover thresholds
prescribed for a notifiable merger in terms of the Competition Act, 1998,
then the Transaction will be subject to the approval by the South African
competition authorities, as envisaged in paragraph 10.2.2.
10. Pre-conditions and Suspensive conditions to the Scheme
10.1. The IFA KSCC Offer (and thus the posting of the circular to IFA
shareholders in relation to the Scheme) is subject to the fulfillment or, to
the extent possible in law, the written waiver (in whole or in part) by the
Offeror of the following pre-conditions precedent, at the cost of IFA,
within the period permitted by regulation-
10.1.1. the receipt by IFA of a “fair and reasonable” opinion in relation to the
Scheme from an independent expert appointed by the independent
board of IFA, and such opinion confirming to IFA’s independent board
and IFA shareholders that the Scheme Consideration is fair and
reasonable;
10.1.2. the independent board of IFA proposing the Scheme and
recommending that IFA’s shareholders vote in favour of the Scheme;
and
10.1.3. the eligible directors of IFA who are also direct or indirect
shareholders of IFA agreeing to vote in favour of the Scheme in
respect of the IFA Shares under their direct and indirect control.
10.2. The Scheme will be subject to the fulfillment or, to the extent
permissible in law, the written waiver by the Offeror (in whole or in
part) of the following suspensive conditions, at the cost of IFA, by no
later than 31 August 2013 or such later date as IFA KSCC and IFA may
agree (subject to a corresponding extension of the cash confirmation
referred to in paragraph 7.2) –
10.2.1. the Offeror obtaining such approval of the Financial Surveillance
Department of the South African Reserve Bank or its authorised
agents in terms of the South African exchange control regulations
promulgated under the Currency and Exchanges Act, 1933 and in
accordance with the requirements of those regulations and
accompanying directives and rulings, as may be necessary or
reasonably advisable in order to implement the Transaction;either -
10.2.1.1. on an unconditional basis; or
10.2.1.2. subject to conditions as may be imposed by the authorities referred to
in clause 10.2.1 above, and the person on whom such conditions are
imposed has approved such conditions;
10.2.2. to the extend required, the Transaction being –
10.2.2.1. unconditionally approved by the South African Competition
Commission and/or Competition Tribunal, as the case may be; or
10.2.2.2. approved by the South African Competition Commission and/or the
Competition Tribunal, subject to conditions and the person on whom
such conditions are imposed approves such conditions and
undertakes in writing to comply therewith;
10.2.2.3. approved by the JSE, either unconditionally or subject to such
conditions as the person on whom such conditions are imposed may
approve;
10.2.3. the Scheme being proposed at the shareholders meeting convened to
consider the Scheme (the "Scheme Meeting") and approved in
accordance with its terms by a special resolution of the IFA
shareholders entitled to vote at the Scheme Meeting (the "Special
Resolution"), at which sufficient shareholders are present in person
or by proxy to exercise in aggregate at least 25% (twenty-five
percent) of all the voting rights that are entitled to be exercised on the
Special Resolution, as required by section 115(2) (a) read with
section 115(4) of the Companies Act;
10.2.4. if the provisions of section 115(2) (c) of the Companies Act apply -
10.2.4.1. the Scheme being approved by the court unconditionally, or subject to
conditions and the person on whom such conditions are imposed
approves such conditions and undertakes in writing to comply
therewith; and
10.2.4.2. if applicable, IFA not treating the Special Resolution as a nullity in
terms of section 115(5) (b) of the Companies Act;
10.2.5. within the period prescribed by section 164(7) of the Companies Act,
no valid demands having been received by IFA in terms of that section
read with section 115(8) of the Companies Act which in aggregate
represent more than 5% of the issued IFA Shares as at the date of the
Scheme Meeting;
10.2.6. the securing of any third party consents which may be required by
IFA, arising from contractual obligations which become applicable in
the event of a De-listing of IFA, including the consent of IFA`s bankers
and relevant licensors, lessors and suppliers;
10.2.7. no material breach of a warranty or representation in paragraph 11
coming to the attention of the Offeror before the issue by the
Takeover Regulation Panel of the compliance certificate referred to in
10.2.10, where materiality is defined as a divergence of 15% from
warranted information;
10.2.8. the IFA Board may in the alternative to the Scheme propose a
resolution to de-list as provided for in terms of paragraphs 1.13 to
1.15 of the JSE Listings Requirements in the Scheme Circular to IFA
Shareholders as contemplated in 14 (a “De-listing in terms of
paragraphs 1.13 to 1.15 of the JSE Listings Requirements”);
10.2.9. the Offeror may not make any claim or institute any proceedings of
any kind in respect of any claim for breach of the aforementioned
warranties and representations after the period which shall expire
two months after the Implementation Date. The maximum aggregate
liability of IFA for all claims which may be made against it under the
aforementioned warranties and representations or at law, shall be
limited to R250 000 in aggregate, so that IFA shall not be liable for
any amount above R250 000;
10.2.10. the issue by the Takeover Regulation Panel of a compliance certificate
in relation to the Transaction as required by section 115(1)(b) read
with section 119(4) (b) and section 121(b) of the Companies Act; and
10.2.11. to the extent required, compliance with section 44 of the Companies
Act, approving the provision by IFA of financial assistance, by way of
the giving of the warranties and representations to the Offeror, as
envisaged in paragraph 11 below, and the payment of all the costs of
and incidental to the Scheme, for the purpose of, or in connection
with, the acquisition of Scheme Shares by the Offeror.
11. Warranties and representations
IFA has represented and warranted in favour of the Offeror, that on the
Initial Date and at all times from the Initial Date to the date on which the
Transaction fails or is implemented, as the case may be –
11.1. the 2012 annual report of IFA, for IFA`s financial year ended 31
December 2012, was certified without qualification by IFA’s auditors
and prepared –
11.1.1. in accordance with generally accepted and sound accounting
practices;
11.1.2. in a manner such as to fairly and accurately present the state of
affairs, operations and results of IFA and its subsidiaries as at the date
thereof and for the period to which it relates;
11.1.3. in accordance with the provisions of the Companies Act;
11.1.4. unless inconsistent with 11.1.1, on the same basis and applying the
same criteria as applied in the preparation of the audited financial
statements of IFA during previous years,
and reflects all liabilities at that date and since then no other liabilities,
whether actual or contingent, have arisen other than in the ordinary
course of conduct of the business of IFA and its subsidiaries;
11.2. no one has or will acquire any rights (of any nature whatsoever) to
obtain from IFA or any of its subsidiaries any shares (of any description)
or any convertible instruments (of any description) and/or loan capital
of IFA or any of IFA`s subsidiaries;
11.3. neither IFA nor any of its subsidiaries is or will be under any obligation
(whether contingent or otherwise) to issue any shares (of any
description) or any convertible instruments (of any description) to any
person and no person will acquire any such shares or instruments;
11.4. the issued and authorised shares of IFA and each of its subsidiaries is
and will be as reflected in the 2012 annual report of IFA;
11.5. no dividend will be declared or paid and no other distribution of any
kind will be made to IFA`s shareholders;
11.6. without the prior written consent of the Offeror neither IFA nor any of
its subsidiaries will –
11.6.1. dispose of any of its assets other than in the ordinary course of
business; or
11.6.2. dispose of any of their assets, the value of which exceed R20 million;
11.7. all agreements entered into by IFA and by IFA`s subsidiaries have been
entered into in the ordinary course of their businesses;
11.8. neither IFA nor any of its subsidiaries will -
11.8.1. take any steps to initiate a buy-back of any of its shares from any of its
shareholders; or
11.8.2. buy back any of its shares (including, without limitation, any treasury
shares) from any of its shareholders;
11.9. neither IFA nor any of its subsidiaries will enter into any agreements or
incur any liabilities or obligations outside the ordinary and normal
course of conduct of their business;
11.10. neither IFA nor any of its subsidiaries will commit itself to or implement
any capital expenditure in excess of R20 million; and
11.11. the business of IFA will be conducted in the ordinary course and no
extraordinary investments will be made by IFA.
In terms of the Firm Intention to make an Offer Letter the Offeror may
not make any claim or institute any proceedings of any kind in respect of
any claim for breach of the aforementioned warranties and
representations after the period which shall expire two months after the
Implementation Date. The maximum aggregate liability of IFA for all
claims which may be made against it under the aforementioned
warranties and representations or at law, shall be limited to R250 000 in
aggregate, so that IFA shall not be liable for any amount above R250
000.
12. Concert parties
12.1. Mr TJM Al-Bahar is the Chairman of IFA and also Vice – Chairman of IFA
KSCC the Offeror who is facilitating the De-listing of IFA from the JSE.
International Financial Advisors KSCC is a substantial shareholder of IFA
KSCC. The Takeover Regulations Panel has expressed the view that in
doing so Mr TJM Al-Bahar is acting in concert with IFA KSCC and he has
therefore made a declaration in the required form to IFA and the
Takeover Regulation Panel, as required by Regulation 84(5) of the
Takeover Regulations.
12.2. The Excluded Shareholder’s beneficial interests in the shares of IFA is
185 479 078 shares (85%).
12.3. In terms of section 115(4) and 115(4A) of the Companies Act, the IFA
Shares held by the Excluded Shareholder will not be included in
calculating the percentage of the voting rights required to be present, or
actually present, in determining whether the applicable quorum
requirements for the Scheme Meeting is satisfied, or required to be
voted in support of a resolution, or actually voted in support of a
resolution relating to the Scheme.
12.4. If the IFA KSCC Offer is proposed as an offer in terms of paragraph 1.14
(c) of the JSE Listings Requirements, in terms of paragraph 1.15 of the
JSE Listings Requirements the shares held by the Excluded Shareholder
shall not be taken into account for the purposes of determining
acceptances required by the relevant sections of the JSE Listings
Requirements for a De-listing in terms of paragraph 1.13 to 1.15 of the
JSE Listings Requirements.
13. Anticipated key dates for the Scheme
Assuming that the provisions of section 115(3) of the Companies Act do
not become applicable, we envisage the following key dates (which may
be subject to change) in regard to the Scheme, namely-
13.1. the date of the announcement of the Transaction on SENS in terms of
Regulation 101 of the Takeover Regulations is anticipated to be within
one business day from the Initial Date;
13.2. the circular is expected to be issued to IFA shareholders on or about the
date which falls 20 business days after the publication of the
announcement of the Transaction;
13.3. the salient dates in relation to the Scheme will be published prior to the
posting of the circular and will be contained in the circular to
shareholders relating to the Scheme.
14. A de-listing in terms of the JSE Limited Listings Requirements
14.1. The IFA Board may in the alternative to the Scheme propose a
resolution to de-list in terms of paragraphs 1.13 to 1.15 of the JSE
Listings Requirements.
14.2. The resolution to de-list in terms of paragraphs 1.13 to 1.15 of the JSE
Listings Requirements is proposed should the required 75% level of
shareholder support as envisaged in paragraph 10.2.3 above not be
obtained.
14.3. A 50% vote in favour of a resolution to de-list is required from
shareholders other than the Excluded Shareholder voting in an IFA
shareholder meeting in person or by way of proxy in terms of paragraph
1.15 of the JSE Listings Requirements.
14.4. In the circumstances the IFA KSCCOffer will therefore in the alternative
be proposed as an offer in terms of paragraph 1.14 (c) of the JSE Listings
Requirements on, mutatis mutandis, the same terms and conditions as
are contained in this Firm Intention Announcement.
15. IFA undertakings
IFA has consented to the Offeror proceeding as proposed and
irrevocably undertakes in favour of the Offeror –
15.1. to comply timeously with all IFA’s obligations under the Companies Act
and the Takeover Regulations and other applicable laws in relation to
the IFA KSCC Offer, including –
15.1.1. issuing the required circular/s to IFA shareholders;
15.1.2. issuing the required announcements;
15.1.3. convening the required shareholders meeting/s,including the Scheme
Meeting; and
15.1.4. doing all such things as may be required by or in relation to the terms
of the Scheme or general offer envisaged in paragraph 14, as the case
may be, to enable the successful implementation of the Transaction,
or as may otherwise be reasonably requested by the Offeror.
16. De-listing of IFA
Following the implementation of the Transaction, application will be
made by the Offeror to the JSE to terminate the listing of the IFA Shares
on the JSE.
17. Recommendation and fairness opinion
17.1. The Independent Board intends, based on the information currently
available to it, to make a unanimous recommendation to IFA
Shareholders to vote in favour of the resolutions to be proposed at the
shareholders meeting/s (including the Scheme Meeting) to approve the
Scheme, provided that the Independent Board receives an opinion from
the independent expert who is to be appointed by the Independent
Board, to the effect that the Scheme Consideration is fair and reasonable.
17.2. The substance of the external advice and the views of the Independent
Board will be detailed in the circular to be sent to IFA shareholders in
relation to the Scheme.
18. Documentation
Further details of the Scheme will be included in the Circular to be sent
to IFA Shareholders, containing, inter alia, a notice of the meeting/s of
IFA Shareholders, a form of proxy and a form of surrender and transfer.
The Circular is expected to be posted to IFA Shareholders on or about 26
June 2013. The salient dates in relation to the Scheme will be published
prior to the posting of the Circular and will be contained in the Circular.
19. Withdrawal of cautionary announcement
Following the release of this Firm Intention Announcement, the
cautionary announcement originally published by IFA on 13 May 2013 is
hereby withdrawn and caution is no longer required to be exercised by
IFA shareholders when dealing in IFA Shares.
20. Responsibility statement
The Independent Board and the Offeror accepts responsibility for the
information contained in this Firm Intention Announcement. To the best
of its respective knowledge and belief, the information contained in this
Firm Intention Announcement is true and nothing has been omitted
which is likely to affect the import of the information contained herein.
Zimbali
29May 2013
Transactional Sponsor to IFA: PSG Capital
Legal advisor to IFA: LFHP Law
Corporate Advisor to IFA: DEA-RU
Date: 29/05/2013 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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