Wrap Text
BEE Specific Issue and BEE Share Acquisition, Hot Slots Acquisition Issue and Amendment to the MOI
Grand Parade Investments Limited
Incorporated in the Republic of South Africa
Registration number: 1997/003548/06
Share code: GPL
ISIN: ZAE000119814
(“GPI” or “the Company”)
BROAD-BASED BLACK ECONOMIC EMPOWERMENT (“BEE”) SPECIFIC ISSUE
AND BEE SHARE ACQUISITION, HOT SLOTS ACQUISITION ISSUE AND THE
AMENDMENT TO THE MEMORANDUM OF INCORPORATION (“MOI”)
1. BEE SPECIFIC ISSUE AND BEE SHARE ACQUISITION
1.1. Shareholders of GPI are hereby advised that the
Company wishes to:
1.1.1. establish a black ownership structure, being
a broad-based black female economic
empowerment ownership trust (“the BEE
Party”) to be established in terms of a
trust deed which will be lodged with the
Master of the High Court (“the Trust Deed”),
in terms of which the BEE Party will:
1.1.1.1. subscribe for 14 814 815 ordinary
shares of no par value in the
issued ordinary listed share
capital of the Company (“GPI
Shares”), at a cash issue price of
R4.05 per GPI Share, equal to the
30-day volume weighted average
trading price of GPI Shares on the
JSE Limited (“JSE”), for the 30-day
period ending on the day prior to
23 October 2013, in terms of a
specific issue of shares for cash
equating to a total subscription
consideration of R60 000 000 (“the
BEE Specific Issue”);
1.1.1.2. acquire GPI Shares in the open
market to the value of R40 000 000
(“the BEE Share Acquisition”); and
1.1.2. fund Rilapath Proprietary Limited
(registration number 2013/065530/07) (“BEE
SPV”), a wholly owned subsidiary of GPI, in
an amount of R100 000 000 by way of
subscribing for redeemable cumulative
preference shares (“RCPS”) in the BEE SPV,
the proceeds whereof will be used by the BEE
SPV to finance, by way of a capital
contribution, the subscription price payable
by the BEE Party to the Company pursuant to
the BEE Specific Issue and to finance the
purchase price payable by the BEE Party for
the BEE Share Acquisition (“the BEE
Funding”)
(collectively referred to hereinafter as “the BEE
Specific Issue and BEE Share Acquisition”).
1.2. The BEE Party refers to the GPI Women’s BBBEE
Empowerment Trust, which is in the process of being
established to uplift and develop Black females who
live in the communities in which GPI’s businesses
and investee companies operate. The Black ownership
structure will also serve to increase and entrench
the level of Black female shareholding in GPI,
thereby benefiting all shareholders given GPI’s
status as an empowerment company.
1.3. The BEE Specific Issue and the BEE Share Acquisition
will result in the BEE Party holding approximately
24 691 358 GPI Shares equal to approximately 5.19%
of the issued ordinary share capital of GPI
(assuming the BEE Share Acquisition is done at the
30-day volume weighted average trading price of GPI
Shares on the JSE, for the 30-day period ending on
the day prior to 23 October 2013).
1.4. The proceeds of the BEE Specific Issue (being
R60 000 000) and BEE Funding (being R100 000 000)
will be partially set-off against each other
resulting in a net cash outflow of R40 000 000 from
the perspective of GPI.
1.5. Acquiring a portion of the GPI Shares in the open
market, as opposed to a specific issue, increases
and entrenches the Black female shareholding in GPI
without diluting existing GPI Shareholders to the
full extent of the BEE Funding.
1.6. The BEE Party shall be restricted from selling the
GPI Shares acquired pursuant to the BEE Specific
Issue without the express permission of GPI for a
period of 5 years from the subscription date of the
BEE Specific Issue Shares by the BEE Party, thereby
ensuring that it continues to contribute to GPI’s
level of Black Shareholding.
1.7. In terms of paragraph 5.51(g) of the Listings
Requirements of the JSE, the BEE Specific Issue
requires the approval by way of an ordinary
resolution (requiring at least a 75% majority of the
votes cast in favour of such resolution) by all GPI
Shareholders present or represented by proxy at the
general meeting on which any BEE Specific Issue
participants and their associates, have not voted
on, or whose votes have not been counted in respect
of such ordinary resolution.
1.8. In terms of sections 44 and 45 of the Companies Act,
No. 71 of 2008, as amended (“Companies Act”), the
BEE Funding will or may constitute financial
assistance as contemplated in the Companies Act,
and, as such, requires the approval by way of a
special resolution.
2. RATIONALE FOR THE BEE SPECIFIC ISSUE AND BEE SHARE
ACQUISITION
2.1. GPI is an established empowerment company and has
historically leveraged its strong Black ownership
credentials to unlock value for investee companies
and the holders of GPI Shares (“GPI Shareholders”).
2.2. In light of GPI’s current proportion of Black GPI
Shareholders and taking into account the increasing
importance of Black female ownership under the
Broad-Based Black Economic Empowerment Codes of Good
Practice (“BEE Codes”), GPI wishes to implement the
BEE Specific Issue and BEE Share Acquisition to
increase and entrench its level of Black female
shareholding.
2.3. Furthermore, the BEE Specific Issue and BEE Share
Acquisition is intended to uplift and develop Black
females who live in the communities in which GPI’s
businesses and investee companies operate.
3. THE BEE PARTY
3.1. The BEE Party will be established as a broad-based
black economic empowerment ownership trust in
accordance with the BEE Codes. The Trust Deed and
operating practices of the BEE Party will be
prepared in compliance with the rules relating to
Broad-Based Ownership Schemes and Trusts as
prescribed by the BEE Codes.
3.2. The beneficiaries of the BEE Party will be limited
to black previously disadvantaged females and will
specifically exclude:
3.2.1. employees (including any of their
associates) of GPI and any of its
subsidiaries (“GPI Group”); and
3.2.2. GPI Group board members (including any of
their associates).
3.3. In terms of the Trust Deed, and consistent with the
BEE Codes, more than 50% of the Trustees of the BEE
Party must be independent persons having no
employment or indirect beneficial interest in the
BEE Party. In addition, at least 50% of the Trustees
must be Black people, and 25% must be Black women.
Furthermore, in order to safeguard the independence
of the BEE Party, the Trust Deed provides that more
than 50% of the Trustees of the BEE Party must not
(i) be an executive or non-executive director of any
company in the GPI Group; (ii) be an employee of any
company in the GPI Group; (iii) be engaged in any
business relationship with any company in the GPI
Group; or (iv) have any interest in any entity that
is engaged in any business relationship with any
company in the GPI Group.
3.4. The BEE Party will be a public shareholder, with
“public” being as defined in the Listings
Requirements of the JSE.
4. CONDITIONS PRECEDENT TO THE BEE SPECIFIC ISSUE AND BEE
SHARE ACQUISITION
4.1. The BEE Specific Issue and BEE Share Acquisition is
subject to, inter alia, the fulfilment of the
following conditions precedent:
4.1.1. GPI Shareholder approval of the BEE Specific
Issue and the BEE Funding;
4.1.2. the amendment of the MOI of the BEE SPV to
include the RCPS; and
4.1.3. the Trustees of the BEE Party passing and
providing copies of all relevant Trustee
resolutions approving the conclusion of all
agreements to which it is or will become a
party in order to implement the BEE Specific
Issue and BEE Share Acquisition.
5. THE HOT SLOTS ACQUISITION
5.1. GPI Shareholders were advised on Friday, 2 August
2013, on SENS that GPI, through its wholly-owned
subsidiary, GPI Slots Proprietary Limited (“GPI
Slots”), had, subject to GPI Shareholder approval
and the Hot Slots acquisition conditions precedent
(“Hot Slots Acquisition”), concluded an agreement to
acquire the entire issued share capital of Bohwa 1
Gaming Proprietary Limited (“Hot Slots”) from the
owners thereof (“Hot Slots Vendors”).
5.2. Hot Slots is licensed as a route operator in Gauteng
to operate 1 000 limited pay-out machines (“LPMs”)
and has 343 active LPMs in the Gauteng province and
a strong management team with a proven track record
in the LPM-industry. The Hot Slots brand has an
established presence in Gauteng and will join the
GPI Slots stable alongside its other brands which
include Grandslots in the Western Cape, Kingdomslots
in Kwazulu Natal and Grand Gaming Slots in Gauteng
and Mpumalanga.
5.3. The total purchase price payable in respect of the
Hot Slots Acquisition (“the Hot Slots Purchase
Consideration”) amounts to R62 000 000, plus any
increase in the Hot Slots Vendors’ loan claims
against Hot Slots from 9 April 2013 until the 3rd
business day following the fulfillment of the Hot
Slots Acquisition conditions precedent (“the Hot
Slots Completion Date”).
5.4. The Hot Slots Purchase Consideration will be settled
in a combination of a cash payment and the issue of
so many GPI Shares (rounded down to the nearest
whole number) to the Hot Slots Vendors as is
determined by dividing R40 000 000 by a subscription
price per GPI Share equal to the 30-day volume
weighted average trading price of GPI Shares on the
JSE, for the 30-day period immediately preceding the
Hot Slots Completion Date (“the Hot Slots
Acquisition Issue”).
5.5. The Hot Slots Acquisition is subject to the
fulfilment of the following outstanding conditions
precedent:
5.5.1. that by not later than 31 December 2013, to
the extent required by law, the
unconditional written approval of the Hot
Slots Acquisition shall have been obtained
from the Gauteng Gambling Board; and
5.5.2. that by not later than 31 December 2013, the
approval by the shareholders of GPI of the
Hot Slots Acquisition Issue has been
obtained.
5.6. The Hot Slots Acquisition does not constitute a
reportable transaction for JSE Listings Requirements
purposes and accordingly, GPI Shareholder approval,
in terms of the JSE Listings Requirements, is not
required.
5.7. However, notwithstanding the aforegoing, in terms of
the MOI of GPI, GPI Shareholder approval is required
for any issue of GPI Shares and due to the fact that
a portion of the Hot Slots Purchase Consideration
will be settled by the Hot Slots Acquisition Issue,
GPI Shareholder approval will have to be obtained in
respect thereof.
6. AMENDMENT TO THE MOI
6.1. The amendment to the MOI is being proposed in order
to align the MOI with the provisions of the JSE
Listings Requirements and the Companies Act, in
relation to the issue of GPI Shares for the
acquisition of assets by the Company or its
subsidiaries (“Amendment to the MOI”).
6.2. Section 16(1)(c) of the Companies Act requires the
shareholders of the Company to authorise the
Amendment to the MOI by way of a special resolution.
7. CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
7.1. The consolidated pro forma financial effects of the
BEE Specific Issue and the BEE Share Acquisition, as
set out below, are the responsibility of the
directors of GPI. The consolidated pro forma
financial effects are presented in a manner
consistent with the basis on which the historical
financial information has been prepared and in terms
of the Company’s accounting policies. The pro forma
financial effects have been presented for
illustrative purposes only and, because of their
nature, may not give a fair reflection of the
Company’s financial position post the implementation
of the BEE Specific Issue and the BEE Share
Acquisition.
7.2. No pro forma financial effects of the Hot Slots
Acquisition Issue have been included given that the
Hot Slots Acquisition is below the threshold to
categorise same in terms of the JSE Listings
Requirements and the pro forma financial effects on
GPI are not significant.
7.3. The table below sets out the pro forma financial
effects of the adjustments on the Company, based on
the audited results for the year ended 30 June 2013
and on the assumption that, for calculating the net
asset value per GPI Share and net tangible asset
value per GPI Share, the adjustments were effected
on 30 June 2013. In respect of the earnings per GPI
Share and headline earnings per GPI Share it is
assumed that the adjustments were effected on 1 July
2012.
Results Pro forma Change (%)
before the results after
adjustments the BEE
Specific
Issue and BEE
Share
Acquisition
Net asset value per Share
(cents) 359.00 339.00 (5.6%)
Net tangible asset value
per Share (cents) 320.00 301.00 (5.9%)
Earnings per Share (cents) 28.55 27.36 (4.2%)
Headline earnings per Share
(cents) 28.76 27.56 (4.2%)
Number of Shares in issue
(‘000) 460 680 475 495 3.2%
Weighted number of Shares
in issue (‘000) 460 680 475 495 3.2%
ASSUMPTIONS:
a) It has been assumed that the BEE Specific Issue and the BEE Share
Acquisition took place on 1 July 2012 when determining the effect on
the condensed statement of comprehensive income.
b) It has been assumed that the BEE Specific Issue and the BEE Share
Acquisition took place on 30 June 2013 when determining the effects
on the condensed statement of financial position.
c) Where applicable the tax rate has been assumed at 28%.
d) It has been assumed that the issue of GPI Shares has been made at
R4.05 per share.
e) It has been assumed that the acquisitions of GPI Shares on the open
market have been made at R4.05 per share.
f) Where applicable the Securities Transfer Tax (“STT”) has been
assumed at 0.25%.
g) It has been assumed that the average interest rate earned on cash
investments by the GPI Group is 4.78% per annum.
NOTES:
1. The “Unadjusted and audited results for the year ended 30 June 2013”
column has been extracted from the audited financial statements of
GPI for the twelve months ended 30 June 2013.
2. In order to implement the black ownership structure, GPI made a
specific issue of 14 814 815 ordinary no par value shares to the BEE
Party. The total consideration for the BEE Specific Issue amounts to
R60 000 000 and the shares were issued at R4.05 per share.
In terms of SIC 12: Consolidation – Special Purpose Entities, the
BEE Party forms part of the GPI Group, therefore the 14 814 815
shares issued to the BEE Party are treated as treasury shares. When
calculating the adjusted headline and adjusted diluted headline
earnings per share for the GPI Group, the treasury shares held by
the BEE Party are deducted from the weighted average number of
shares (“WANOS”) and the BEE Party’s net profit after tax eliminated
from the group’s headline earnings.
3. Also in terms of the implementation of the black ownership
structure, the BEE Party acquired 9 876 543 GPI Shares on the open
market. The GPI Shares were acquired at R4.05 per share for a total
consideration of R40 000 000.
In terms of SIC 12: Consolidation – Special Purpose Entities, the
BEE Party forms part of the GPI Group, therefore the 9 876 543
shares that the BEE Party acquired on the open market are treated as
treasury shares. When calculating the adjusted headline and adjusted
diluted headline earnings per share for the GPI Group, the treasury
shares held by the BEE Party are deducted from the WANOS and the BEE
Party’s net profit after tax eliminated from the group’s headline
earnings.
4. Transaction fees for the proposed transaction are R1 527 000 in
total. These costs have been allocated on a pro rata basis to the
BEE Specific Issue (R916 000) and to the BEE Share Acquisition
(R611 000).
The R916 000 transaction fees relating to the BEE Specific issue
have been deducted from the par value of the shares issued.
The R611 000 transaction fees relating to the BEE Share Acquisition
have been considered to be capital in nature and as a result have
been added to the carrying value of the treasury shares.
5. In order to implement the black ownership structure, GPI made a
specific issue of 14 814 815 ordinary no par value shares to the BEE
Party. The total consideration for the BEE Specific Issue amounts to
R60 000 000 and the shares were issued at R4.05 per share. No STT
has been levied on the new issue of shares.
In terms of SIC 12: Consolidation – Special Purpose Entities, the
BEE Party forms part of the GPI Group, therefore the 14 814 815
shares issued to the BEE Party are treated as treasury shares. When
calculating the adjusted headline and adjusted diluted headline
earnings per share for the GPI Group, the treasury shares held by
the BEE Party are deducted from the WANOS and the BEE Party’s net
profit after tax eliminated from the group’s headline earnings.
6. Also in terms of the implementation of the black ownership
structure, the BEE Party acquired 9 876 543 GPI Shares on the open
market. The GPI Shares were acquired at R4.05 per share for a total
consideration of R40 000 000. R100 000 in STT has been levied on the
BEE Share Acquisition and added to the carrying value of the
treasury shares.
In terms of SIC 12: Consolidation – Special Purpose Entities, the
BEE Party forms part of the GPI Group, therefore the 9 876 543
shares that the BEE Party acquired on the open market are treated as
treasury shares. When calculating the adjusted headline and adjusted
diluted headline earnings per share for the GPI Group, the treasury
shares held by the BEE Party are deducted from the WANOS and the BEE
Party’s net profit after tax eliminated from the group’s headline
earnings.
7. The GPI Group utilized R916 000 to settle the transaction fees
related to the BEE Specific Issue of 14 814 815 ordinary no par
value shares to the BEE Party.
GPI earns on average 4.78% per annum on its cash reserves and as a
result of utilizing its cash reserves to settle the transaction fees
related to the BEE Specific Issue, reduced its interest earned for
the year by R44 000.
Interest earned by the GPI Group is subject to companies tax and as
a result of the reduction in the interest of R44 000, the tax value
reduced by R12 000 for the year.
8. The GPI Group utilized R40 000 000 of cash on hand to fund the
acquisition of the 9 876 543 shares on the open market and a further
R711 000 to settle the STT (R100 000) and the transaction fees
(R611 000) relating to the BEE Share Acquisition.
GPI earns on average 4.78% per annum on its cash reserves and as a
result of utilizing its cash reserves to fund the acquisition of
shares on the open market and to settle the STT and transaction fees
related to the BEE Share Acquisition, reduced its interest earned
for the year by R1 944 000.
Interest earned by the GPI Group is subject to companies tax and as
a result of the reduction in the interest of R1 944 000, the tax
value reduced by R544 000 for the year.
9. All adjustments, except for transaction costs, are expected to have
a continuing effect.
8. GENERAL MEETING
A general meeting of GPI Shareholders will be held at
19:00 on Wednesday, 11 December 2013, at the Market Hall,
GrandWest Casino, Goodwood, Western Cape, to consider and,
if deemed fit, to pass, with or without modification, the
resolutions required to approve the the BEE Specific Issue
and the BEE Share Acquisition, the BEE Funding, the Hot
Slots Acquisition Issue and the Amendment to the MOI.
9. CIRCULAR
A circular containing full details of the BEE Specific
Issue and the BEE Share Acquisition, the BEE Funding, the
Hot Slots Acquisition Issue and the Amendment to the MOI
will be posted to shareholders on or about 8 November
2013.
8 November 2013
Stellenbosch
Sponsor and corporate advisor:
PSG Capital
Lead corporate advisor:
Leaf Capital
Legal advisor:
Bernadt Vukic Potash & Getz
Independent Reporting Accountants and Auditors:
Ernst & Young Incorporated
Date: 08/11/2013 08:11:00 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.