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Supplementary Announcement
Metair Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1948/031013/06
Share code: MTA
ISIN: ZAE000090692
(Metair or the Company, including any subsidiaries of Metair)
PRO FORMA FINANCIAL EFFECTS, SUPPLEMENTARY INFORMATION AND WITHDRAWAL OF CAUTIONARY IN RELATION TO METAIRS PROPOSED ACQUISITION IN TURKEY
1. Introduction
1.1 Metair shareholders (Shareholders) are referred to the cautionary announcement released on the Stock Exchange News Service (SENS) of
the exchange operated by the JSE Limited (JSE) on 10 October 2013 (Initial Announcement), wherein Shareholders were advised that the
Company (acting through a subsidiary):
1.1.1 will, subject to fulfilment of the conditions precedent outlined in the Initial Announcement, acquire 100% of the issued share capital
of Mutlu Holding Anonim Sirketi (Mutlu Holding) together with the residual stakes owned by Attila Turker, Ali Nuri Turker and other
members of the Turker family in the subsidiaries of Mutlu Holding (including Mutlu Aku ve Malzemeleri Sanayii Anonim Sirketi, the leading
battery manufacturer in Turkey (Mutlu Aku) and 55% of the issued shares in Mutlu Plastik ve Ambalaj Sanayii Anonim Sirketi (Plastik)
(Mutlu Acquisition); and
1.1.2 intends to enter into an agreement with the holders of the remaining 45% of the issued shares in Plastik to acquire their shares in
Plastik on substantially similar terms and conditions as the acquisition of 55% of the issued shares in Plastik which forms part of the Mutlu
Acquisition (Plastik Acquisition)
1.2 Following implementation of the Mutlu Acquisition, Metair will be required, in terms of the laws and regulations of Turkey, to make a
mandatory tender offer (MTO) to the minority shareholders of Mutlu Aku for the remaining publicly listed issued shares not acquired by
Metair pursuant to the Mutlu Acquisition, representing 25% of Mutlu Akus issued share capital, (the Mutlu Acquisition, the Plastik Acquisition
and the MTO are hereinafter collectively referred to as the Transaction).
1.3 The aggregate consideration payable for the Mutlu Acquisition is US$217 000 000 (Mutlu Purchase Price). In addition to the Mutlu
Purchase Price, the Company will also have an additional commitment (Additional Commitment) of approximately US$60 000 000 in relation
to the acquisition of shares pursuant to the Plastik Acquisition and the MTO (the Mutlu Purchase Price and the Additional Commitment are
herein after collectively referred to as the Transaction Purchase Price). Although Metair anticipates that the purchase price per Mutlu
Aku share which will be offered to minority shareholders of Mutlu Aku in terms of the MTO will be in line with the value attributable to
Mutlu Aku on a stand-alone basis by Metair for the purpose of the Mutlu Acquisition, Shareholders should be aware that given that Mult u
Aku will be acquired indirectly through Mutlu Holding, the Capital Markets Board of Turkey has the right to vary the MTO price based on
its assessment of the Mutlu Acquisition. This may impact the amount of the Additional Commitment.
1.4 The purpose of this announcement is to provide certain other updates to Shareholders in relation to the Transaction, to detail the pro
forma financial effects of the Transaction, which was not included in the Initial Announcement, and for the withdrawal of the cautionary
announcement in respect of the Transaction.
2. Update on Funding Arrangements
2.1 The Transaction Purchase Price will be funded with equity and debt on the following basis:
- R1 500 000 0015 of the Transaction Purchase Price will be raised through the issue of 46,454,011 new ordinary shares in the to be
authorised but unissued share capital of Metair (Vendor Consideration Placement Shares) in terms of a vendor consideration placement,
described further in paragraph 2.2 below (Vendor Consideration Placement); and
- the balance of the Transaction Purchase Price will be funded from new debt facilities to be raised for purposes of the Transaction,
described further in paragraph 2.3 below.
The entire equity funded component of the Transaction Purchase Price will be used to settle a portion of the Mutlu Purchase Price.
2.2 Vendor Consideration Placement
Metair has concluded vendor consideration placement agreements in terms of which, subject to the fulfilment of certain conditions precedent,
it has committed to place the Vendor Consideration Placement Shares at a placement price of R32.29 amongst five South African institutional
investors.
The conditions precedent to the Vendor Consideration Placement are linked to the successful implementation of the Mutlu Acquisition. The
R32.29 issue price represents a 5% discount to the 30-day volume weighted average price at which shares in Metair traded on the JSE for
the period ending 4 October 2013, being the business day prior to the approval of the Vendor Consideration Placement by the board of
directors of Metair on 7 October 2013. A commitment fee, calculated at 2% of the placement price, is payable by Metair to the participating
institutional investors.
2.3 Committed Debt Facilities Update
A financing package for the debt funded portion of the Transaction Purchase Price has been agreed with Absa Bank Limited (acting through its
Corporate and Investment Banking Division). The financing package is for an amount of up to R1.8 billion and matures on 1 January 2015. The
debt package will be sufficient to cover the balance of the Transaction Purchase Price that has not been settled with the equity capital
raised through the Vendor Consideration Placement. It will also provide adequate headroom to deal with any other re-financing requirements
flowing from the Transaction. The debt facilities will only be drawn to the extent required.
3. Financial Effects
3.1 The table below sets out the pro forma financial effects of the Transaction based on the consolidated results of Metair for the six
months ended 30 June 2013. The pro forma financial effects have been prepared for illustrative purposes only and, because of their nature,
may not fairly represent Metairs financial position, changes in equity, results of operations or cash flows, nor the effect and impact of
the Transaction going forward. The directors of Metair are responsible for the compilation, contents and presentation of the pro forma
financial effects of the Transaction.
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Before (Note 1) Pro forma after the Transaction Percentage change
(cents) (cents) (%)
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Earnings per share 143 61 (Note 2) (57.3%)
Headline earnings per share 143 62 (Note 2) (56.6%)
Net asset value per share 1 450 1 829 (Note 3) 26.1%
Net tangible asset value per share 1 393 1 378 (Note 3) (1.1%)
Weighted average number of shares in issue ('000) 146 112 192 566 (Note 4)
Number of shares in issue ('000) 146 667 193 121 (Note 4)
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Notes:
1. Based on the unaudited condensed consolidated interim report of Metair for the six months ended 30 June 2013.
2. Earnings and headline earnings per share are based on the Before information after adjusting for the following assumptions:
- The Transaction was effective 1 January 2013;
- Tangible and identifiable intangible assets were depreciated and amortised over their estimated remaining useful lives based on a provisional
fair value exercise in terms of IFRS3: Business Combinations;
- Transaction costs, debt commitment and draw-down fees are assumed to be funded from cash reserves, resulting in interest forgone at an average
rate of 4.5% per annum;
- Interest on the debt raised to partially settle the Transaction Purchase Price is calculated at an average rate of 6.58% per annum;
- Amortisation of debt commitment and draw-down fees initially capitalised to the debt; and
- Transaction costs, excluding debt commitment and draw-down fees and equity commitment and raising fees, amounted to R41 million.
3. Net asset value per share and tangible net asset value per share are based on the Before information after adjusting for the following
assumptions:
- The Transaction was effective 30 June 2013;
- Fair value uplift of tangible and identifiable intangible assets based on a provisional fair value exercise in terms of IFRS3: Business
Combinations. A fair value exercise in terms of IFRS3: Business Combinations will need to be completed at the effective date of the Transaction;
- The Transaction Purchase Price (as defined in 1.3) is assumed to total R2.8 billion, based on US$277.4 million translated to Rand at US$1:R10.05,
being the weighted average of hedged and current exchange rates.
- The Transaction Purchase Price is assumed to be settled as follows:
= R1.5 billion through the issue of 46.454 million shares at R32.29 per share; and
= R1.3 billion cash raised through interest bearing debt.
- A commitment fee of 2% of the equity raised amounting to R34 million and an equity raising fee of R20.5 million, both inclusive of VAT, are
capitalised to equity.
- Debt commitment and draw-down fees totalling R13.4 million are capitalised to the debt raised and will be amortised over the period of the debt.
- Transaction costs amount to R109 million, including the debt and equity fees above, are assumed to be settled from cash.
4. It was assumed that 46.454 million shares were issued as partial settlement of the Transaction Purchase Price in terms of the Vendor
Consideration Placement agreement (as defined in 2.1).
5. All adjustments have an on-going effect except for the transaction costs.
3.2 Shareholders attention is drawn to the fact that the pro forma financial effects:
are negatively impacted by Mutlu Holding and its subsidiaries consolidated results for the six months ended 30 June 2013 as:
= Mutlu Holding and its subsidiaries business is a highly seasonal business and, as such, generates the major portion of its profits in the
second half of the year (during the winter months); and
= Mutlu Holding and its subsidiaries collectively incurred significant foreign exchange losses on US$ loans during the six months ended 30 June 2013.
Metair will look to exit these positions and implement new strategies to manage exposures to currency fluctuations, and
have also been impacted by once-off costs pertaining to the Transaction.
4. Confirmation in terms of section 9.16 of the Listings Requirements of the JSE (Listings Requirements)
If the Transaction is successfully implemented, Mutlu Holding and its subsidiary companies will become subsidiaries of Metair. Metair confirms that
(i) the provisions of the constitutional documents of Mutlu Holding and its subsidiary companies do not frustrate Metair in any way from compliance
with its obligations in terms of the Listings Requirements; and (ii) nothing contained in the constitutional documents of Mutlu Holding and each of
the subsidiaries of Mutlu Holding will relieve Metair from compliance with the Listings Requirements.
5. Circular to Shareholders
Full details of the Transaction will be included in a circular, incorporating revised listings particulars, which is expected to be posted to
Shareholders on Monday, 4 November 2013 (Circular), containing, inter alia, a notice of general meeting of Shareholders (General Meeting) to
consider, and if deemed fit, pass the requisite resolutions to approve and implement the Transaction.
6. Documentation and Timetable
The salient dates relating to the Transaction are set out in the table below. Shareholders are to note that the salient dates have been updated
from the timetable included in the Initial Announcement and are subject to amendment:
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Notice record date, being the date on which a Metair Shareholder must have been recorded in the securities
register maintained by Metair (Register) in order to be eligible to receive the notice of General Meeting Monday, 28 October 2013
Circular posted on Monday, 4 November 2013
Release of notice of general meeting on SENS on Monday, 4 November 2013
Last day to trade to be recorded in the Register to be able to participate and vote at the General Meeting on Friday, 15 November 2013
Record date for the General Meeting, being the date on which a Shareholder must be recorded in the Register in
order to be eligible to attend and participate in the General Meeting by the close of trade on Friday, 22 November 2013
Last day to lodge forms of proxy in respect of the General Meeting with the transfer secretaries by 10:00 on Friday, 29 November 2013
General Meeting to be held at 10:00 on Tuesday, 3 December 2013
Results of General Meeting released on SENS on Tuesday, 3 December 2013
Results of General Meeting published in the press on Wednesday, 4 December 2013
Expected announcement that all conditions precedent in relation to the Mutlu Acquisition have been fulfilled on Friday, 6 December 2013
Anticipated date for listing of Vendor Consideration Placement Shares on Tuesday, 10 December 2013
Issue of Vendor Consideration Placement Shares on Tuesday, 10 December 2013
Anticipated completion of the Mutlu Acquisition on Tuesday, 17 December 2013
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Notes:
All dates and times shown are local times in South Africa. The above dates and times are subject to change. Any changes will be released on SENS and
published in the South African press.
7. Withdrawal of cautionary
Shareholders are referred to the Initial Announcement, and are advised that, following the release of the financial effects in respect of the
Transaction, caution is no longer required to be exercised by Shareholders when dealing in their Metair shares.
Johannesburg
29 October 2013
Financial advisor to Metair: Absa Bank Limited (acting through its Corporate and Investment Banking Division) and
Barclays Bank PLC (acting through its investment bank)
Sole bookrunner, sole debt advisor and transaction sponsor to Metair: Absa Bank Limited (acting through its Corporate and Investment Banking Division)
Independent Sponsor to Metair: One Capital
South African corporate law advisors to Metair: Taback and Associates (Pty) Ltd
Independent reporting accountants: PricewaterhouseCoopers Inc.
Turkish legal advisors to Metair: Taboglu & Demirhan Attorneys at Law
Legal advisors to Absa Bank Limited and Barclays Bank PLC: Bowman Gilfillan Inc.
Date: 30/10/2013 01:48:00 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,
information disseminated through SENS.
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