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Abridged Pre-listing statement
Chemical Specialities Limited
Incorporated in the Republic of South Africa
(Registration number: 2005/039947/06)
Share code: CSP
ISIN: ZAE000109427
(“ChemSpec” or “the Company”)
ABRIDGED PRE-LISTING STATEMENT
This abridged Pre-listing Statement relates to the proposed rights offer of
536,930,824 new ChemSpec compulsory convertible preference shares (“CCPs”)
by the Company to ChemSpec shareholders and the listing of the CCPs on the
stock exchange operated by the JSE Limited (“JSE”) with effect from the
commencement of business on Monday, 18 November 2013. The Issuer Regulation
Division of the JSE has approved the listing of the CCPs.
This Abridged Pre-Listing Statement is not an invitation to the general
public to subscribe for the CCPs but is issued in compliance with the JSE
Listings Requirements for the purpose of providing information about
ChemSpec.
The information in this Abridged Pre-Listing Statement has been extracted
from the Pre-Listing Statement, to be issued on 28 October 2013. For a full
appreciation of ChemSpec and the proposed rights offer, the Pre-Listing
Statement should be read in its entirety.
The rights offer circular will incorporate this Pre-listing Statement and
is issued in compliance with the Listings Requirements of the JSE, for the
purpose of providing information to the public with regard to the Company.
1. INTRODUCTION
As initially announced on 27 June 2013, and the revised terms announced on
2 August 2013 on SENS, ChemSpec would like to raise a total amount of
R214,772,330 (before expenses) from existing shareholders by way of a
renounceable rights offer.
In terms of the rights offer, 536,930,824 new ChemSpec CCPs, in the
authorised but unissued share capital of the Company, will be offered to
ChemSpec shareholders recorded in the register at the close of trade on
Friday, 1 November 2013 who will receive rights to subscribe for rights
offer shares on the basis of 50 CCPs for every 100 ChemSpec shares held, at
40 cents per rights offer share. Shareholders are permitted to apply for
shares in excess of their entitlement.
As a result of the rights offer, ChemSpec’s spread of shareholders for the
CCPs will only be determinable after the rights offer has closed. The JSE
has granted ChemSpec dispensation from the spread requirements for the CCPs
as set out in paragraph 4.28(e) and (f) of the Listings Requirements on the
listing date on the condition that ChemSpec undertake to ensure that the
spread requirements are fulfilled within six months following the listing
date.
2. SHARE CAPITAL
ChemSpec has an authorised ordinary share capital of 2,250,000,000 no par
value shares, of which 1,073,861,648 ordinary shares are in issue,
representing R468,055,000 issued ordinary share capital. ChemSpec has
750,000,000 authorised CCPs of no par value, of which 536,930,824, will be
in issue, representing R212,772,330 issued CCP share capital. The Company
has no treasury shares.
3. ABOUT CHEMSPEC
The business was founded in 1957. This Company was incorporated on 10
November 2005 and obtained its certificate to commence business on the same
day. The Company purchased the business of ChemSpec on 1 January 2006.
On 14 September 2007, the Company was converted to a public company and on
6 November 2007, the Company listed on the AltX after raising R110 million
through a private placing of its shares.
ChemSpec is one of Africa’s larger coatings companies, manufacturing and
distributing a comprehensive range of high technology industrial,
decorative and automotive paint systems. ChemSpec has a solid 56-year track
record proudly earned in both domestic and international markets. The
Company is headquartered at its world-class manufacturing facility in
Canelands, Durban, South Africa.
ChemSpec has built an excellent reputation amongst its customers,
suppliers, staff and the communities in which it operate. ChemSpec is a
responsible corporate citizen committed to operating at the highest levels
of integrity and ethics.
ChemSpec’s passion for innovation, continuous improvement and imaginative
application of the latest technologies in its ranges enables it to compete
globally with the largest coatings companies in the world.
ChemSpec sees willingness among all its stakeholders for it to be
successful. The Company has a strong executive team and good corporate
governance, supported by a motivated team of coatings industry and support
professionals.
ChemSpec is entrepreneurial and has the advantage of being relatively small
and nimble, enabling it to take advantage of opportunities in the coatings
industry without any historic impediments. The Company is well established
locally in South Africa, has knowledge of doing business in Africa and has
a long-standing international footprint that is a significant part of its
business.
ChemSpec has “best of breed” international and local partners and is
developing relationships that it can build on for mutual success. These
partnerships also enable it to bolster its already high quality and diverse
product range.
4. PURPOSE OF THE RIGHTS OFFER AND LISTING OF THE CCPs
ChemSpec has reached the point in its growth path where it needs to be
financially independent while it generates sustainable profits.
The milestones achieved so far can be summarised as follows:
- A strong board
o Excellent non-executive directors; and
o Revised executive team comprising industry leaders
- Very good corporate governance;
- Industry specific workforce with good knowledge and experience;
- Great products with new routes to market;
- Good production and infrastructure with a focus on improved service
delivery;
- Good international and local partners; and
- Good sales growth in excess of 20% per annum for the last two years.
There is a clear strategic focus on ChemSpec’s sales growth. Clearly
defined and specific sales channels and products as well as margin and cost
management with a rationalisation plan and supply chain improvements should
result in double digit sales growth and improved financial performance into
the future.
The levels of growth opportunities that ChemSpec will achieve both locally
and internationally will require capital to “stay ahead of the curve” as
well as to further accelerate its organic growth strategies and to
strengthen and improve the structure and efficiency of its balance sheet.
The Company intends to use the proceeds to:
- Fund organic growth initiatives;
- Increase the balance sheet flexibility and proactively manage the
capital structure, better aligning the funding of the Group’s long
term investments with long term capital and diversifying and
improving funding sources and additional borrowing capacity; and
- Further improving working capital management, leveraging increased
liquidity to obtain better terms from suppliers and strategically
building inventory in an inflationary environment.
5. NEW LISTING OF CCPs
The Issuer Regulation Division of the JSE has approved the listing of the
CCPs as follow, with effect from the commencement of trade on the JSE on
Monday, 18 November 2013:
ISIN ZAE000184305
Share Code CSPP
Short name Chemspecpref
Sector Building Materials & Fixtures
6. PROSPECTS
ChemSpec is a good, sound business offering a host of opportunities.
The business has put together a strategic and methodical plan which will
allow sustainable growth through building brands and relationships earned
through consistency and credibility.
As a result, ChemSpec will continue to improve its position in the
decorative, automotive and industrial markets in its selected territories
through its international partnerships, its customer relationships and its
product mix improvement strategies. Opportunities in Africa are being
developed with all three brand portfolio platforms.
The US business is stable and self-sustaining, with significant growth
prospects in the short to medium term. The Australian business is poised
for growth, though this may take a little longer.
ChemSpec has adopted austerity measures on top of its growth plan and is
expected to continue to improve its results in the future.
7. DIRECTORS
The full names and business addresses of the directors are set out below:
Baron Christopher Schreuder
Chief Executive Officer
Business address: 2029, Old Mill Road, Canelands, 4339, Kwa-Zulu Natal
Bruce Robert Mackinnon
Chief Operating Officer
Business address: 2029, Old Mill Road, Canelands, 4339, Kwa-Zulu Natal
Jonathan Grant Maehler
Financial Director
Business address: 2029, Old Mill Road, Canelands, 4339, Kwa-Zulu Natal
Darryn John Coyle-Dowling
Commercial Director
Business address: 2029, Old Mill Road, Canelands, 4339, Kwa-Zulu Natal
Gerrard Metzer
Marketing Director
Business address: 2029, Old Mill Road, Canelands, 4339, Kwa-Zulu Natal
Ivan Arthur James Clark
Chairman of the Board
Business address: Clark Investments, Block 3, Suite 6, Rydall Vale Office
Park, La Lucia Ridge, 4019, Kwa-Zulu Natal
Neil Anthony Page
Non-Executive Director
Business address: Rand Merchant Bank, 1st Floor, 8 Mellville Road, Illovo,
2196
Ian Bruce Bereton Buchan
Non-Executive Director
Business address: The Unlimited, Marwick Clock Towers, Gate 4, 1 Lucas
Drive, Hillcrest, 7400
Namhla Thina Siwendu
Non-Executive Director
Business address: DLA Cliffe Dekker Hofmeyr, 1 Protea Place, Sandton, 2196
John Gifford Jones
Lead Independent Non-Executive Director
Business address: Retired
Sipho Eric Sono
Independent Non-Executive Director
Business address: Opis Advisory, Nelson Mandela Square, 2nd Floor, West
Tower, Sandown, 2146
8. COPIES OF THE PRE-LISTING STATEMENT
Copies of the full Pre-Listing Statement may be obtained, during normal
business hours between Monday, 28 October 2013 and Friday, 22 November
2013, from the following parties:
- the Company at 2029 Old Mill Road, Canelands, Verulam, 4319;
- the Designated Adivsor, Grindrod Bank Limited, at 4th Floor, Grindrod
Tower, 8A Protea Place, Sandton, 2146; and
- the Transfer Secretaries, Computershare Investor Services
(Proprietary) Limited, Ground Floor, 70 Marshall Street,
Johannesburg, 2001.
Sandton
18 October 2013
Independent Lead Sponsor
Grindrod Bank Limited
Independent reporting accountants and auditors
KPMG Inc.
Legal adviser
Garlicke & Bousfield Inc.
Date: 18/10/2013 05:31:00 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,
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