Wrap Text
Share Repurchase by the Company of issued shares from shareholders on a voluntary, pro rata, basis
Combined Motor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1965/000270/06)
Share code: CMH ISIN: ZAE000088050
(“CMH” or “the Company” or “the CMH Group”)
SHARE REPURCHASE BY THE COMPANY OF A MAXIMUM OF 15 400 000 ISSUED SHARES
FROM SHAREHOLDERS ON A VOLUNTARY, PRO RATA, BASIS
1. Introduction
1.1 Shareholders of CMH (“Shareholders”) are referred to the CMH Group’s interim results
for the six months ended 31 August 2013 released on SENS on 15 October 2013 and
published in the press on 16 October 2013, wherein, inter alia, it was announced that the
Company intends making an offer to all Shareholders (“Share Repurchase Offer
Participants”) to voluntarily tender for repurchase at R13.00 per share in cash (“Share
Repurchase Offer Consideration”) all, or a portion only, of their holding of ordinary shares
(“Shares”) in the Company (“the Share Repurchase Offer”).
1.2 In accordance with sections 48(8), 114(e) and 115 of the Companies Act, 2008 (Act no.
71 of 2008), in order for the Share Repurchase Offer to be made and implemented, the
prior approval of Shareholders in general meeting is required. Accordingly, the circular
to Shareholders (“the Circular”) referred to in paragraph 9 below, inter alia, contains
notice convening a general meeting of the Company to be held on Tuesday, 10 December 2013
(“the General Meeting).
2. Rationale
2.1 The CMH Group currently has, and has had for a number of years, cash and near cash
equivalents surplus to its present and reasonably foreseeable requirements.
Rather than earn a relatively low interest rate return on the surplus funds, the Directors of
the Company (“the Board” or “Directors”) believe that optimal use thereof can better be
made by returning the surplus funds to Shareholders by way of the Share Repurchase
Offer.
2.2 In proposing this course of action, the Directors have also considered the rather limited
trading of the Company’s Shares on the JSE and the challenges that this may pose for
larger Shareholders wishing to create a liquidity event in order to realise cash.
Accordingly, the proposed Share Repurchase Offer has the ability to offer some of the
Company’s larger Shareholders the opportunity to create such a liquidity event whilst
facilitating future benefits accruing to smaller Shareholders by virtue of the fact that post
the Share Repurchase Offer, as a result of the cancellation and restoration to authorised
but unissued Shares in the Company, the reduced number of issued Shares will all
things being equal, have the effect of improving earnings and dividends per Share for the
remaining issued Shares.
3. Salient terms of the Share Repurchase Offer
The salient terms of the Share Repurchase Offer are as follows:
3.1 CMH, by way of the Share Repurchase Offer, will offer all Share Repurchase Offer
Participants the opportunity to tender for repurchase all or a portion of such Share
Repurchase Offer Participants’ holdings of Shares. Accordingly, Share Repurchase
Offer Participants are being invited to voluntarily tender to the Company for repurchase,
as many Shares as they deem fit, or, not to tender any Shares at all. On this basis,
acceptance of the Share Repurchase Offer is completely voluntary and free of any form
of compulsory expropriation. For this reason, dispensation from the necessity for CMH
to have prepared and included in the Circular a fairness opinion on the Share
Repurchase Offer was sought from the Transaction Regulation Panel (“TRP”) and duly
obtained. In this regard, a copy of the ruling letter of the TRP is available for inspection
at the Company’s registered office, the address of which is given in paragraph 9 below.
3.2 The Share Repurchase Offer is restricted to a maximum number of 15 400 000 Shares,
representing 14,12% of the Company’s total present issued Shares;
3.3 Share Repurchase Offer Participants will receive R13,00 in cash per Share repurchased
in terms of the Share Repurchase Offer, subject to paragraph 7 below. Accordingly, full
take up of the Share Repurchase Offer will result in the Company utilising some R200.2
million, exclusive of costs.
3.4 In the event that fewer than 15 400 000 Shares in aggregate are tendered by Share
Repurchase Offer Participants for repurchase in accordance with the Share Repurchase
Offer, participating Share Repurchase Offer Participants will have their tenders of Shares
for repurchase accepted in full and will accordingly receive payment in full, and no further
Shares will be repurchased under the Share Repurchase Offer.
3.5 In the event that in excess of 15 400 000 Shares in aggregate are tendered for
repurchase by Share Repurchase Offer Participants, then the number of Shares
repurchased from each individual Share Repurchase Offer Participant will be determined
in accordance with the following ratio (subject to paragraph 3.6 below):
A = B/C x D
Where:
A = the number of Shares to be repurchased from the Share Repurchase
Offer Participant
B = the number of Shares tendered by the Share Repurchase Offer
Participant for repurchase in terms of the Share Repurchase Offer
C = the total number of Shares tendered for repurchase by all Share
Repurchase Offer Participants in terms of the Share Repurchase
Offer
D = the maximum number of Shares being repurchased by CMH, namely
15 400 000
3.6 For administration and cost reasons, the number of Shares to be repurchased in terms of
paragraph 3.5 above will be rounded up or down to the nearest multiple of 50 Shares.
3.7 The Shares repurchased from the participating Share Repurchase Offer Participants will
be delisted from the Johannesburg Stock Exchange Limited (“the JSE”) on Wednesday,
5 February 2014 and in terms of section 35(5) of the Companies Act no longer form part
of the issued share capital of the Company.
4. Conditions Precedent
4.1 Implementation of the Share Repurchase and the making of the Share Repurchase Offer
is subject to the fulfillment of the following conditions precedent:
4.1.1 the approval of the Share Repurchase by way of a special resolution to be
passed in accordance with sections 48(8), 114(e) and 115(2)(a) of the
Companies Act by the requisite quorum and at least a 75% approval of the
Shares voted on the special resolution by Shareholders as are present and or
represented at the General Meeting; and
4.1.1.1 to the extent and if required, the approval of the implementation of
such special resolution by a South African Court in terms of Section
115(2)(c) of the Companies Act; and
4.1.1.2 if applicable, the Company not treating the aforesaid special
resolution as a nullity, as contemplated in terms of section 115(5)(b)
of the Companies Act; and
4.1.2 to the extent as may be applicable, the receipt of unconditional approvals,
consents or waivers from all regulatory bodies, the TRP (in terms of a
compliance certificate to be issued in terms of the Companies Act) or to the
extent that any such approvals, consents or waivers are subject to conditions,
such conditions being satisfactory to CMH and as will have been complied with.
4.2 Should all of the conditions precedent referred to in paragraph 4.1 above not have been
fulfilled (or waived if possible and as the case may be), by the conclusion of the General
Meeting or any adjournment thereof, or by such other later date as may be determined
by CMH, subject to the approval of the TRP and JSE (if necessary), the Share
Repurchase and consequently the Share Repurchase Offer will not become operative
and will therefore be of no force or effect.
4.3 It is expected that an announcement will be published on SENS on Tuesday, 10
December 2013 and in the South African press on Wednesday, 11 December 2013
reporting on the fulfillment or otherwise of the above conditions precedent and the
ramifications and effects thereof.
5. Pro Forma Financial effects
5.1 The table below illustrates the pro forma financial effects on CMH Group of the Share
Repurchase Offer, on the assumption that all 15 400 000 Shares are repurchased, and
based on the CMH Group’s interim results for the six months ended 31 August 2013.
5.2 The preparation of the pro forma financial effects is the responsibility of the Directors of
CMH. The pro forma financial effects have been prepared for illustrative purposes only to
provide information on how the Share Repurchase Offer may have impacted on the CMH
Group’s results and financial position and, due to the nature thereof, may not give a fair
reflection of the CMH Group’s results and financial position following the Share
Repurchase Offer.
As at 31 August 2013
1 Pro forma
Before After Change %
2
Basic earnings per Share (cents) 79.1 88.6 12.0
2
Headline earnings per Share (cents) 79.1 88.6 12.0
3
Net asset value per Share (cents) 656 549 (16.3)
Net tangible asset value per Share (cents) 587 469 (20.1)
Weighted average number of Shares in issue
(‘000) 108,982 93,582 (14.1)
Number of Shares in issue at period end (‘000) 109,073 93,673 (14.1)
Notes:
1. The unaudited interim results of the CMH Group for the six months ended 31 August 2013.
2. Pro forma earnings and headline earnings per Share are based on the following assumptions:
- the Share Repurchase was effective 1 March 2013; and
- interest foregone on the cash utilised for the Share Repurchase at an average rate of 4.5%.
3. Pro Forma net asset and net tangible asset value per Share are based on the following assumptions:
- the Share Repurchase Offer was effective 31 August 2013; and
- transaction costs of R700 000 are accounted for as a deduction from equity in terms of
IAS32:Financial Instruments: Presentation.
6. Opinions and Recommendations
6.1 The Board, as well as separately, the duly constituted independent board of directors of
CMH, namely, Messrs JTM Edwards, LCZ Zele and JS Dixon have carefully considered
the terms, conditions and rationale for the Share Repurchase Offer and are each of the
opinion that the Share Repurchase Offer is fair to all Shareholders. In this regard, the
Board recommends that Shareholders vote in favour of the special resolution necessary
to approve the Share Repurchase to be proposed at the General Meeting.
6.2 All of the Directors having direct or indirect beneficial holdings in Shares have signed
irrevocable undertakings to vote in favour of the special resolution to be considered at
the General Meeting.
7. Tax implications for Shareholders who elect to participate in the Share Repurchase Offer
7.1 The Share Repurchase Offer Consideration of R13.00 per Share in cash payable by CMH
for each Share repurchased in terms of the Share Repurchase Offer, will comprise 21.8
cents, being a refund of contributed tax capital, and 1 278.2 cents, being a dividend
distribution payment.
7.2 The dividend distribution payment element of the Share Repurchase Offer Consideration
will be subject to a dividend withholding tax ("DWT") at a rate of 15%, unless the
respective Share Repurchase Offer Participants are exempt from DWT in terms of section
64F of the Income Tax Act of South Africa, which will then accordingly result in a net
dividend distribution per Share repurchased of 1 086.47 cents.
7.3 It is recommended that all Share Repurchase Offer Participants who elect to participate in
the Share Repurchase Offer, prior to taking any action to accept the Share Repurchase
Offer in the manner and basis set out in detail in the Circular, obtain appropriate advice
from their professional advisers.
8. Important dates and timesThe following are the important dates and times pertinent to the
General Meeting and the Share Repurchase Offer:
Action 2013
Record date in order to be eligible to receive the Circular
including notice of General Meeting Friday, 1 November
Circular posted to Shareholders on Monday, 11 November
Announcement providing details of the Share Repurchase,
advising of posting of Circular and giving date and place of
General Meeting released on SENS on Monday, 11 November
Announcement providing details of the Share Repurchase,
advising of posting of Circular and giving date and place of
General Meeting released on SENS and published in the
South African press on Tuesday,12 November
Last day to trade in Shares in order to be eligible to attend,
participate in and vote at the General Meeting Friday, 22 November
General Meeting record date in order to be eligible to
attend, participate in and vote at the General Meeting Friday, 29 November
Completed Forms of proxy to be lodged with the Company,
c/o the Company Secretary, at the Company’s registered
office, 1 Wilton Crescent, Umhlanga Ridge, Durban, 4319,
South Africa (PO Box 1033, Umhlanga Rocks, 4320, South
Africa), by 10:00 on Monday, 9 December
Last date and time for Shareholders to give notice to CMH
in terms of section 164 of the Companies Act objecting to
the special resolution necessary to authorise the Share
Repurchase to be considered at the General Meeting at
10:00 Tuesday,10 December
General Meeting held at 10:00 on Tuesday, 10 December
Results of General Meeting as well as confirming dates
pertinent to the Share Repurchase Offer published on Tuesday, 10 December
SENS on
Results of General Meeting as well as confirming dates
pertinent to the Share Repurchase Offer published in the
South African press on Wednesday, 11 December
Share Repurchase Offer opening date being the expected December
date for the opening of the Share Repurchase Offer at 9:00
on Wednesday, 11 December
2014
Finalisation announcement on SENS Friday, 17 January
Share Repurchase Offer last day to trade in Shares in order
to be registered as a Shareholder in the Register of the
Company at the Share Repurchase Offer record date Friday, 24 January
Shares trade “ex” the right to participate in the Share
Repurchase Offer Monday, 27 January
Share Repurchase Offer record date being the date by
which a Shareholder must be recorded as such in the
Register of the Company in order to be entitled to
participate in the Share Repurchase Offer, on Friday, 31 January
Share Repurchase Offer closing date being the expected
date for the closing of the Share Repurchase Offer at 12:00
on Friday, 31 January
Share Repurchase Offer payment date being the expected
date for the settling of the Share Repurchase Offer
Consideration on or about Tuesday, 4 February
Expected date for the delisting from the JSE of the Shares
repurchased in terms of the Share Repurchase Offer from
the commencement of trading on the JSE on Wednesday, 5 February
Notes:
1. All of the above dates and times are subject to change following mutual agreement, as required between CMH, the
JSE and the TRP. Any changes made will be notified to Shareholders by release on SENS and by publication in the
South African press.
2. Although the salient dates and times are subject to change, such statement may not be regarded as carte blanche
consent or dispensation for any change to any relevant applicable time period which may be required in terms of any
regulations stipulated by the TRP and/or Companies Act requirements and regulations where applicable, and any
such consent or dispensation must be specifically applied for and approved by the TRP.
3. Shareholders should note that as transactions in shares are settled in the electronic settlement system used by
Strate, settlement of trades takes place five Business Days after such trade. Therefore, persons who acquire Shares
after the last day to trade in order to be eligible to vote at the General Meeting, namely, Friday, 22 November 2013,
will not be able to vote thereat, but may, nevertheless, provided the Share Repurchase is approved and they acquire
the Shares on or prior to the Share Repurchase Offer last day to trade expected to be Friday, 24 January 2014,
participate in the Share Repurchase Offer.
4. A Shareholder may submit a proxy at any time before the commencement of the General Meeting (or any
adjournment of the General Meeting) or hand it to the chairman of the General Meeting before the appointed proxy
exercises any of the relevant Shareholders’ rights at the General Meeting (or any adjournment of the General
Meeting), provided that should a Shareholder lodge a form of proxy with the Transfer Secretaries less than 24 hours
before the General Meeting, a Shareholder will also be required to furnish a copy of such form of proxy to the
chairman of the General Meeting before the appointed proxy exercises any of such Shareholder’s rights at the
General Meeting (or any adjournment of the General Meeting).
5. If the General Meeting is adjourned or postponed, forms of proxy submitted for the initial General Meeting will remain
valid in respect of any such adjournment or postponement.
6. All times given above are local times in South Africa.
9. Notice of General Meeting and posting of Circular
The Circular, as approved by the JSE and TRP, providing full details of the Share Repurchase
and the Share Repurchase Offer, and containing notice convening the General Meeting has
today been posted to all Shareholders.
The General Meeting will be held at 10:00 on Tuesday, 10 December 2013 in the boardroom at
the Company’s registered office, 1 Wilton Crescent, Umhlanga Ridge, Durban, South Africa.
11 November 2013
Sponsor and Corporate Independent Reporting
Advisor Accountants and
PricewaterhouseCoopers Auditors
Corporate Finance PricewaterhouseCoopers
(Proprietary) Limited Inc
Date: 11/11/2013 05:45:00 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.