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conclusion of non-binding term sheet in relation to a general and specific issue of shares for cash and withdrawal
Ububele Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/011074/06)
Share code: UBU
ISIN Code: ZAE000140182
(“Ububele” or “the Company”)
CONCLUSION OF NON-BINDING TERM SHEET IN RELATION TO A GENERAL
AND SPECIFIC ISSUE OF SHARES FOR CASH AND WITHDRAWAL OF
CAUTIONARY
1. INTRODUCTION
1.1. Shareholders are hereby advised that pursuant to a
board decision on 15 May 2013 and a satisfactory due
diligence the Company has concluded a non-binding term
sheet with The African Agriculture Fund (“AAF”), in
terms of which AAF wishes to secure a strategic
shareholding in Ububele, through an issue of shares
for cash and a potential acquisition of shares, the
details of which are set out below (“Term Sheet”).
1.2. The AAF is a private equity fund specifically focused
on investing in the food and agricultural sectors in
Africa.
1.3. In terms of the Term Sheet, AAF wishes to subscribe
for 121 582 176 (one hundred and twenty one million
five hundred and eighty two thousand one hundred and
seventy six) Ububele shares, representing 40.5% (forty
point five percent) of the total issued ordinary share
capital of the Company, post the aforementioned issue,
at a subscription price of R0.60 (sixty cents) per
share, being a total subscription of R72 949 305.60
(seventy two million nine hundred and forty nine
thousand three hundred and five rand and sixty
cents)(“AAF Subscription”). The AAF Subscription is
subject to the fulfilment of the conditions precedent
and the conditions subsequent, as set out below.
1.4. The AAF Subscription, if implemented, will provide
Ububele with an investment partner that will assist
Ububele in expanding its business into Africa, as well
as providing capital to Ububele in order to reduce
debt, strengthen its balance sheet and reduce interest
costs.
1.5. Shareholders are further advised that another company
by the name of K2012197774 (South Africa) (Pty)
Limited (K2012) approached the TRP and the courts to
prevent the subscription by Phatisa on the basis that
an offer at 50 cents per share to Ububele minority
shareholders from K2012 was imminent. The company is
opposing this application on the basis that Ububele
was in negotiations and the board of directors had
approved the subscription by AAF, subject to due
diligence and various other conditions precedent prior
to receipt of a letter on 17 May 2013 advising the
company that a potential offer at 50 cents per share
was imminent.
2. THE AAF SUBSCRIPTION
2.1. In terms of the Term Sheet, it is intended that the
AAF Subscription will be implemented in two tranches
as set out below:
2.1.1. the Company will issue 26 762 673 (twenty six
million seven hundred and sixty two thousand six
hundred and seventy three) ordinary shares at a
subscription price of R0.60 (sixty cents) per share,
being a total subscription of R16 057 603.80
(sixteen million fifty seven thousand six hundred
and three rand and eighty cents), in terms of a
general authority to issue shares for cash granted
to the directors of the Company at the annual
general meeting held on Thursday, 29 November 2012
(“Tranche 1”); and
2.1.2. the Company will issue 94 819 503 (ninety four
million eight hundred and nineteen thousand five
hundred and three) ordinary shares at a subscription
price of R0.60 (sixty cents) per share, being a
total subscription of R56 891 701.80 (fifty six
million eight hundred and ninety one thousand seven
hundred and one rand and eighty cents), in terms of
a specific authority to issue shares for cash to be
sought from shareholders at a general meeting to be
held in due course (“Tranche 2”).
2.2. Prior to the implementation of Tranche 1, AAF requires
confirmation to its satisfaction that:
2.2.1. the majority of the board of Ububele and all senior
management approve the AAF Subscription, as well as
certain identified strategic shareholders; This
confirmation has been given to AAF by the Ububele
board of directors and
2.2.2. it will secure a minimum 25.1% shareholding in
Ububele at the conclusion of Tranche 1, through an
acquisition of shares from certain shareholders at
R0.60 (sixty cents) per share.
2.3. The general issue consideration, in Tranche 1, and the
specific issue consideration, in Tranche 2, both
reflect a premium of 20% (twenty percent) to the 30
(thirty) day volume weighted average trading price of
Ububele shares prior to 12 June 2013, being the date
on which the non-binding Term Sheet was concluded.
2.4. In the event that the specific issue of shares in
terms of Tranche 2 is not approved by shareholders in
general meeting or if agreed by Ububele and AAF in
writing, then Ububele will proceed with the issue of
the 94 819 503 (ninety four million eight hundred and
nineteen thousand five hundred and three) ordinary
shares at a subscription price of R0.60 by way of
either a claw back offer or a rights offer, which will
be underwritten by AAF at no extra cost to Ububele.
The rationale for this is that Ububele will benefit
from the injection of additional cash into the Company
as indicated above.
2.5. In the event that a shareholding of 35% has been
secured, AAF will make a formal offer to all
shareholders in Ububele at the same issue price of
R0.60 (sixty cents per share), excluding certain
shares held by Mentele Investments Proprietary Limited
(being one of the founding BEE partners of Ububele),
key management and the majority of any agents that
hold shares in Ububele. The offer will be made in
accordance with the requirements of the Takeover
Regulation Panel (“TRP”).
3. CONDITIONS PRECEDENT
The AAF Subscription is subject to the following
conditions precedent:
3.1. Approval of the AAF Subscription by the AAF investment
committee, the AAF board and such further approvals as
may be required in terms of AAF’s approval mandates;
3.2. Approval of the AAF Subscription by the board and
shareholders of Ububele, where necessary, and such
further approvals as may be required in terms of
Ububele’s approval mandates;
3.3. Necessary legal and regulatory opinions being obtained
in favour of Phatisa, being the fund manager of AAF,
regarding the AAF Subscription;
3.4. Securing all relevant regulatory approvals including
the JSE and the Takeover Regulation Panel, where
applicable;
3.5. Conclusion of the court case brought about by
K2012197774 represented by Mr. A.A. de Villiers to the
satisfaction of AAF;
3.6. Conclusion of binding subscription agreements to give
effect to the AAF Subscription;
3.7. Development of a 100-day plan to be agreed on or
before the 30th business day following the fulfilment
or waiver of the other conditions precedent (the 100-
day plan to include uses of funds); and
3.8. AAF being satisfied that all authorisations necessary
for the carrying on of the business (including,
without limitation, the Environmental and Social
Permits) have been obtained and/or with the process
proposed by Ububele for obtaining the same. In
addition, AAF being satisfied with the undertakings by
Ububele and the directors to adhere to the IFC
Performance Standards and the AAF Social Environmental
Management System and implement any corrective action
plans and social and environmental management plans
required therefrom.
4. CONDITIONS SUBSEQUENT
The Transaction is subject to the following conditions
subsequent:
4.1. Implementation of the 100-day plan; and
4.2. Implementation of the Social and Environmental
Management Systems (SEMS).
5. PRO FORMA FINANCIAL EFFECTS
5.1. The pro forma financial effects of the AAF
Subscription are presented for illustrative purposes
only and because of their nature may not give a fair
reflection of Ububele’s financial position nor of the
effect on future earnings after the AAF Subscription.
5.2. Set out below are the unaudited pro forma financial
effects of the AAF Subscription, based on Ububele’s
unaudited interim results for the six months ended 31
December 2012. The directors of Ububele are
responsible for the preparation of the unaudited pro
forma financial effects.
Unaudited Pro forma Change Pro forma Change
before after (%) after (%)
the AAF the the General
Subscription General Issue and
(cents) Issue and the
before Specific
the Issue
Specific (cents)
Issue
(cents)
Earnings per
share 2.78 2.67 (3.91) 2.81 5.23
Headline
earnings per
share 1.53 1.58 3.60 2.07 30.64
Net asset
value per
share 21.68 26.24 21.02 35.71 36.10
Tangible net
asset value
per share (29.58) (18.34) 38.01 5.22 128.48
Weighted
average
number of
shares in
issue(“000”) 178 418 205 181 15 300 000 46.21
Number of
shares in
issue(“000”) 178 418 205 181 15 300 000 46.21
Notes and assumptions:
1. The "Unaudited before the AAF Subscription" column has
been extracted from the unaudited abridged consolidated
financial statements for the six months ended 31 December
2012 as published.
2. The "Pro forma after the General Issue and before the
Specific Issue" column reflects the financial effect of
the issue of 26 762 673 ordinary shares of Ububele at 60
cents per share for a total amount of R16 057 603.80.
3. The "Pro forma after the Transactions" column reflects
the financial effect of the issue of 94 819 503 ordinary
shares of Ububele at 60 cents per share for a total
amount of R56 891 701.80.
4. The earnings per share and headline earnings per share
figures in the "Pro forma after the General Issue and
before the Specific Issue" column and the "Pro forma
after the General Issue and the Specific Issue" column
have been calculated on the basis that the AAF
Subscription was effected on 1 July 2012.
5. The net asset value per share and tangible net asset
value per share figures in the "Pro forma after the
General Issue and before the Specific Issue" column and
the" Pro forma after the General Issue and the Specific
Issue" column have been calculated on the basis that the
AAF Subscription was effected on 31 December 2012.
6. Transaction costs of R100 000 are assumed applicable to
the General Issue and transaction costs of R750 000 are
assumed applicable to the AAF Subscription.
7. The taxation rate of 28% is assumed, where applicable.
8. An interest rate of 9.5% was assumed for interest-bearing
borrowings.
9. All adjustments, except for transaction costs, are
expected to have a continuing effect.
6. FURTHER DOCUMENTATION AND SALIENT DATES
6.1. Further details of the AAF Subscription will be
announced on SENS when the binding agreements have
been concluded. Thereafter details of the specific
issue and/or rights offer or claw back offer will be
included in a circular that will be sent to Ububele
shareholders, containing, inter alia, a notice of a
general meeting and a form of proxy, which will,
subject to the approval of all regulatory authorities,
be posted to Ububele shareholders in due course.
6.2. The salient dates in relation to the AAF Subscription
will be published, prior to the issuing of the
aforementioned documentation.
7. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement
published on 17 May 2013 and are advised that, as details
of the AAF Subscription have been announced, caution is no
longer required to be exercised by shareholders when
dealing with their Ububele securities.
14 June 2013
Cape Town
Designated Adviser
PSG Capital (Pty) Limited
Date: 14/06/2013 05:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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