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Acquisition of up to 100% of the total issued ordinary shares in Control Instruments & withdrawal of cautionary
CONTROL INSTRUMENTS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1964/003987/06)
Share Code: CNL
ISIN: ZAE000001665
(“Control Instruments” or “the Group”)
NOTICE OF FIRM INTENTION RECEIVED TO ACQUIRE UP TO 100% OF THE TOTAL
ISSUED ORDINARY SHARES IN CONTROL INSTRUMENTS AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1 Shareholders are referred to the cautionary announcements dated 29 November 2013,
13 December 2013 and 14 January 2014 issued by the Group and specifically the
announcement issued by Torre Industrial Holdings Limited (“Torre”) on 31 January 2014.
1.2 The board of directors is pleased to announce that it has entered into an agreement with
Torre thereby giving effect to a firm intention by Torre to make an offer to acquire up to
100% of the total issued ordinary shares in Control Instruments not already owned by
Torre, being 91 761 265 shares (the “Offer Shares”), by way of:
1.2.1 a scheme of arrangement in terms of section 114(1)(c) of the Companies Act,
No. 71 of 2008, as amended (the "Companies Act"), to be proposed by the
board of directors of Control Instruments between Control Instruments and its
shareholders other than Torre (the "Control Instruments Shareholders") (the
"Scheme"); or
1.2.2 an offer by Torre if the Scheme is not proposed or fails, at the election of
Torre, to the Control Instruments Shareholders to acquire the Offer Shares
(the “General Offer”),
(the "Proposed Offer").
1.3 The Proposed Offer constitutes a firm intention by Torre to make an offer to Control
Instruments Shareholders as contemplated in Chapter 5 of the Companies Act and
Chapter 5 of the Companies Regulations, 2011, promulgated under the Companies Act
(which includes the Takeover Regulations issued pursuant to sections 120 and 223 of
the Companies Act) (the “Companies Regulations”).
1.4 Control Instruments Shareholders will, if the Scheme becomes operative or upon
acceptance of the General Offer, as may be applicable, receive a cash consideration of
R1.40 per Control Instruments Share (the “Offer Consideration”) disposed of, which is
equivalent to an aggregate cash consideration of R128 465 771 for all the Offer Shares
and represents a premium of:
1.4.1 19.66% to the closing price of the Offer Shares on the securities exchange
operated by the JSE Limited ("JSE") as at 29 November 2013, being the date
of the publication by Control Instruments of the first cautionary
announcement related to the Proposed Offer ("First Cautionary"); and
1.4.2 44.33% to the volume weighted average price ("VWAP") of the Offer Shares
on the securities exchange operated by the JSE for the 30 trading days up to
and including 29 November 2013, being the date of publication of the First
Cautionary.
2. RATIONALE FOR THE PROPOSED OFFER
2.1 Nature of the business of Control Instruments
Control Instruments’ main subsidiaries are Control Instruments Automotive Proprietary
Limited and Control Instruments Automotive Plastics Proprietary Limited, which
manufacture and/or market, sell and distribute premium branded automotive aftermarket
products (including the brand names Gabriel, Autocom, Echlin, VDO, Textar, Mag-
Brakes, Warn, Hi-Lift, VisionX and Truck-Lite), and manufacture and sell automotive
battery cases, directly and/or indirectly into sub-Saharan Africa. The automotive
aftermarket is the secondary market of the automotive industry concerned with the
supply of automotive products after the sale of the vehicle to the end-user.
2.2 Nature of the business of Torre
Torre is a listed industrial group which provides equipment, engineering and financing
solutions to its customers in selected global markets. Torre is currently comprised of
three operating segments, namely: the Plant and Equipment segment, consisting of SA
French Limited, Forktech Proprietary Limited and imminently Kanu Equipment Limited;
the Engineering Services and Supplies segment, consisting of Tractor and Grader
Supplies Limited and, upon implementation of the Proposed Offer, Control Instruments;
and the Financial Solutions segment, consisting of Torre Capital Limited. Torre is
committed to achieving ongoing, controlled growth via a combination of organic and
acquisitive expansion in its targeted markets.
2.3 Torre considers the Proposed Offer consistent with its long term growth strategy and
believes the following benefits can be achieved as a result of the implementation of the
Proposed Offer:
- Immediate scale and earnings power for Torre via the consolidation of 100% of the
operations of Control Instruments;
- Opportunity to unlock significant value by consolidating certain functions, improving
operating efficiencies and reducing operating expenses;
- Addition of attractive range of self-owned and exclusively distributed products;
- Strong management team; and
- Diversification into the automotive aftermarkets part sector.
2.4 The Proposed Offer will, if implemented by way of the Scheme, or if accepted in respect
of the General Offer, afford Control Instruments Shareholders an opportunity to realise
their investment in Control Instruments.
3. MECHANICS OF THE PROPOSED OFFER
3.1 The Proposed Offer constitutes an "affected transaction" as defined in section 117(1)(c)
of the Companies Act. The Proposed Offer will be implemented either by way of the
Scheme or, in the event that the Scheme is not proposed or fails and Torre so elects, by
way of the General Offer (refer paragraph 3.4 below).
3.2 Torre's firm intention to make the Proposed Offer is subject to the fulfilment or waiver (as
the case may) of the suspensive conditions set out in paragraph 4.1 below.
3.3 The implementation of the Scheme will be subject to the fulfilment or waiver (as the case
may) of the suspensive conditions set out in paragraph 5.2 below (the "Scheme
Conditions"). In the event that the Scheme becomes operative, the listing of Control
Instruments’ shares on the Main Board of the JSE will be terminated, and Control
Instruments Shareholders will be deemed to have sold their Offer Shares for the Offer
Consideration, thereby constituting Control Instruments a wholly owned subsidiary of
Torre.
3.4 In the event that the Scheme is not proposed or fails, Torre may, at its election, make the
General Offer to Control Instruments Shareholders, which General Offer will be subject
to the suspensive conditions set out in paragraph 6.1 below. To the extent that the
General Offer is implemented, following the approval of the Delisting Resolution (as
referred in paragraph 6.1.2 below), only Control Instruments Shareholders who have
accepted the General Offer will sell their Offer Shares to Torre for the Offer
Consideration. Those Control Instruments Shareholders who do not accept the General
Offer will remain shareholders in Control Instruments, which will become an unlisted
subsidiary of the Torre Group.
4. OFFER CONDITIONS
4.1 Torre’s firm intention to make the Proposed Offer, and accordingly also the posting of a
circular in respect of the Proposed Offer (the "Circular") is subject to the fulfilment of the
suspensive conditions (“Offer Conditions”) that, on or before 28 February 2014:-
4.1.1 the independent board of directors of Control Instruments, being those
directors of Control Instruments who act independently as contemplated in the
Companies Regulations, namely Messrs Peter Surgey, Sam O’Leary and
Prof. Alex Watson (the "Independent Board"), has retained an independent
expert in terms of section 114(2) of the Companies Act and regulation 90 of
the Companies Regulations, and such expert has prepared and issued a
report in terms of section 114(3) of the Companies Act on the Offer
Consideration and the fairness and reasonableness thereof;
4.1.2 the Independent Board recommends to the Control Instruments
Shareholders to vote in favour of (i) the Scheme, and (ii) the Delisting
Resolution and to accept the General Offer, as may be applicable;
4.1.3 to the extent applicable, all requisite regulatory approvals have been obtained
from the JSE, the Takeover Regulation Panel (the “TRP”), the Financial
Surveillance Department of the South African Reserve Bank to make the
Proposed Offer (either unconditionally or subject to conditions acceptable
to Torre); and
4.1.4 in respect of the proposal of the Scheme only, Control Instruments has
concluded an unconditional agreement (save for any condition requiring that
the Scheme becomes unconditional) with all holders of options to acquire
Control Instruments shares in terms of the Control Instruments Share
Incentive Scheme ("Options"), to waive all their rights in respect of the Options
and the Control Instruments Share Incentive Scheme, on such terms and
conditions as may be acceptable to Torre and Control Instruments, failing
which Torre shall make such comparable offer as may be required by the TRP
in terms of the Companies Regulations, 2011.
4.2. The conditions in paragraphs 4.1.1 and 4.1.3 above are regulatory in nature and cannot
be waived . Torre and Control Instruments may, by agreement and to the extent they are
permitted to do so in terms of the Companies Act and the Companies Regulations,
extend the time period within which the Offer Conditions are to be fulfilled by providing
Control Instruments with written notice thereof. Torre may, in its discretion, waive either
or both of the conditions set out in paragraph 4.1.2 and/or 4.1.4 above on written notice
to Control Instruments.
5. THE SCHEME
5.1 Under the terms of the Proposed Offer, if the Scheme is implemented, all Control
Instruments Shareholders will receive the Offer Consideration of R1.40 per Offer Share
and Torre will acquire all the issued shares in Control Instruments which it does not
already own. The Offer Consideration is calculated on the assumption that Control
Instruments will not conduct any capital reduction, make any distributions, dividends or
similar payments to or for the benefit of shareholders of Control Instruments
("Distribution") between 1 January 2014 and the settlement date of the Offer
Consideration. In the event that Control Instruments makes any such Distribution, the
Offer Consideration will be adjusted downwards by the amount of the Distribution on a
per share basis.
5.2 The implementation of the Scheme is subject to the fulfilment or, if appropriate, waiver (in
whole or in part), by Torre of the following suspensive conditions by no later than 30
April 2014 or such later date/s as may be agreed to between Torre and Control
Instruments:-
5.2.1 to the extent applicable, all requisite regulatory approvals required for the
Scheme have been obtained from the JSE, the TRP, the Financial
Surveillance Department of the South African Reserve Bank and the South
African Competition Commission (either unconditionally or subject to
conditions acceptable to Torre);
5.2.2 the approval of the Scheme by the requisite majority of Control Instruments
Shareholders as contemplated in section 115(2)(a) of the Companies Act
(being not less than 75% of the votes exercised by shareholders present and
entitled to vote) at the general meeting of Control Instruments shareholders to
be convened for purposes of approving the Scheme (the “CI General
Meeting”), and:
5.2.2.1 to the extent required, the approval of the implementation of such
resolution by a court in terms of section 115(2)(c) and/or section
115(3) of the Companies Act; and
5.2.2.2 if applicable, Control Instruments not treating the aforesaid
resolution as a nullity, as contemplated in section 115(5)(b) of the
Companies Act;
5.2.3 the receipt of unconditional approval from the TRP in terms of a compliance
certificate or exemption to be issued in terms of the Companies Act in relation
to the Scheme;
5.2.4 in relation to any objections to the Scheme by Control Instruments
Shareholders:
5.2.4.1 if shareholders give notice objecting to the Scheme, as
contemplated in section 164(3) of the Companies Act, and vote
against the resolutions proposed at the CI General Meeting,
shareholders holding no more than 10% of all Offer Shares eligible
to be voted at the CI General Meeting give such notice and vote
against the resolutions proposed at the CI General Meeting; or
5.2.4.2 if shareholders holding more than 10% of all Offer Shares eligible
to vote at the CI General Meeting give notice objecting to the
Scheme, as contemplated in section 164(3) of the Companies Act,
and vote against the resolutions proposed at the CI General
Meeting, the relevant shareholders do not exercise their appraisal
rights afforded to them in terms of section 164 of the Companies
Act, by giving valid demands in terms of sections 164(5) to 164(8)
of the Companies Act within 30 (thirty) business days following the
CI General Meeting, in respect of more than 10% of the Offer
Shares eligible to be voted at the CI General Meeting; and
5.2.5 the counterparties to the list of material contracts agreed to between Torre and
Control Instruments, as confirmed by email on Friday, 31 January 2014
(“Material Contracts”), consenting to the change of control as a result of the
implementation of the Scheme.
5.3 The Scheme Conditions in:
5.3.1 paragraphs 5.2.1, 5.2.2 and 5.2.3 above are regulatory in nature and cannot
be waived; and
5.3.2 paragraphs 5.2.4 and 5.2.5 above have been inserted for the benefit of Torre,
which will be entitled, in its sole discretion, to waive fulfilment of such Scheme
Conditions, in whole or in part, on written notice to Control Instruments.
5.4 An announcement will be published on SENS as soon as practicable after all the
Scheme Conditions have been fulfilled or waived, as the case may be.
6. GENERAL OFFER
6.1 Should the Scheme not be proposed or fail (but subject to the fulfilment or waiver,
where appropriate, of the Offer Conditions), Torre may, at its election, make an offer to
the Control Instruments Shareholders to acquire all of their Offer Shares for the Offer
Consideration, subject to the fulfilment or waiver of the following suspensive conditions
by no later than 30 April 2014 or such later date/s as may be agreed to between Torre
and Control Instruments:
6.1.1 to the extent applicable, all requisite regulatory approvals required for the
General Offer have been obtained from the JSE, the TRP, the Financial
Surveillance Department of the South African Reserve Bank and the South
African Competition Commission (either unconditionally or subject to
conditions acceptable to Torre);
6.1.2 approval by the requisite majority of Control Instruments Shareholders at the
CI General Meeting of the termination of Control Instruments’ listing on the
Main Board of the JSE in terms of section 1.14(a) of the Listings
Requirements of the JSE (the “Delisting Resolution”);
6.1.3 approval by the board of directors of Control Instruments of the termination of
Control Instruments’ listing on the Main Board of the JSE;
6.1.4 the receipt of unconditional approval from the TRP in terms of a compliance
certificate or exemption to be issued in terms of the Companies Act in relation
to the General Offer; and
6.1.5 the counterparties to the Material Contracts consenting to the change of
control as result of the implementation of General Offer.
6.2 The conditions in:
6.2.1 paragraphs 6.1.1 and 6.1.4 above are regulatory in nature and cannot be
waived; and
6.2.2 paragraph 6.1.2, 6.1.3 and 6.1.5 above has been inserted for the benefit of
Torre, which will be entitled, in its sole discretion, to waive fulfilment of such
conditions, in whole or in part, on written notice to Control Instruments.
6.3 If the General Offer is made, Control Instruments Shareholders will only be able to
accept the General Offer in respect of all of their Offer Shares.
7. SHAREHOLDING IN CONTROL INSTRUMENTS AND ACTING AS PRINCIPAL
7.1 Torre currently beneficially and indirectly owns 47 675 489 Offer Shares, representing
34.54% of the issued share capital of Control Instruments (excluding treasury shares)
(“Torre’s Control Instruments Shares”).
7.2 Torre is acting as principal and not as agent in respect of the Proposed Offer and it is not
acting in concert with any other parties for purposes of the implementation of the
Proposed Offer.
8. CONFIRMATION OF FINANCIAL RESOURCES
In accordance with Regulation 111(4) and Regulation 111(5) of the Companies Regulations,
Cliffe Dekker Hofmeyr Incorporated has provided Control Instruments and the TRP with an
irrevocable cash confirmation and Standard Bank of South Africa Limited has provided
Control Instruments and the TRP with an irrevocable bank guarantees, which confirm that, in
aggregate, Torre has sufficient cash resources held in Escrow and by way of bank guarantee
in terms of Regulation 111, to satisfy payment of the Offer Consideration in full.
9. IRREVOCABLE UNDERTAKINGS
The Company has been informed by Torre that it has received irrevocable undertakings from
the following Control Instruments Shareholders to vote in favour of the Scheme and the
Delisting Resolution, as may be applicable, in respect of their entire shareholding in Control
Instruments, to the extent they are permitted to do so in terms of the Companies Regulations
and the Listings Requirements of the JSE:
Delisting
Scheme Resolution
% of issued % of issued
% of total issued share capital of share capital of
share capital of Control Control
Total Number of Control Instruments Instruments
Control Control Instruments prior to the prior to the
Instruments Instruments prior to the Proposed Offer Proposed Offer
Shareholder shares held Proposed Offer eligible to vote* eligible to vote*
Torre 47 675 489 34.54% - 34.54%
Kanthu Nkhama 28 000 000 20.29% 31.00% 20.29%
Automotive
Proprietary
Limited
Westbrooke 19 918 150 14.43% 22.05% 14.43%
Capital
Management
Special
Opportunities
En Commandite
Partnership
Flagship Unit 7 616 044 5.52% 8.43% 5.52%
Trusts
Niall Brown 5 735 287 4.16% 6.35% 4.16%
Total 108 944 970 78.94% 67.83% 78.94%
* Excluding 1 424 712 treasury shares
In terms of section 115(4) of the Companies Act, Torre’s Control Instruments Shares will be
excluded from voting on the resolution to approve the Scheme at the CI General Meeting.
10. TERMINATION OF CONTROL INSTRUMENTS’ LISTING
In the event that the Scheme becomes operative or the General Offer is implemented,
application will be made to the JSE to terminate the listing of all of the Control Instruments
shares from the Main Board of the JSE.
11. OPINIONS AND RECOMMENDATIONS
11.1 In accordance with section 114(3) of the Companies Act and regulation 90(1) of the
Companies Regulations, the Independent Board is required to retain an independent
expert acceptable to the TRP for the purposes of providing external advice in regard to
the Scheme and the General Offer and to make appropriate recommendations to the
board of directors of Control Instruments for the benefit of Control Instruments
Shareholders. The substance of such external advice and the views of the Independent
Board in this regard will be detailed in the Circular.
11.2 Similarly, in accordance with paragraph 1.14(d) of the Listings Requirements of the
JSE, the board of directors of Control Instruments is required to retain an independent
expert acceptable to the JSE for the purposes of providing external advice in regard to
the fairness of the Offer Consideration insofar as same relates to the termination of
Control Instruments’ listing on the Main Board of the JSE, in the event that the Scheme
is not proposed or fails but the General Offer is made. The substance of such external
advice and the views of the board of directors of Control Instruments in this regard will
be detailed in the Circular.
12. DOCUMENTATION AND SALIENT DATES
Further details of the Scheme and the General Offer will be included in the Circular, which
will contain, inter alia, a notice of the CI General Meeting, a form of proxy and a form of
acceptance, surrender and transfer. Each of the Scheme and the General Offer will
constitute a separate affected transaction for purposes of the Companies Regulations and
the Circular will distinguish between them and accordingly contain, inter alia, separate
disclosures regarding each of the Scheme and the General Offer. The Circular is expected
to be posted on or about 28 February 2014. The salient dates in relation to the Scheme and
the General Offer will be published on SENS and in the press prior to the posting of the
Circular.
13. RESPONSIBILITY STATEMENT
The Independent Board and the board of directors of Control Instruments accept
responsibility for the information contained in this announcement insofar as it relates to
Control Instruments. To the best of their knowledge, the information contained in this
announcement is true and this announcement does not omit anything likely to affect the
import of the information.
14. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The Control Instruments Cautionary Announcement is hereby withdrawn and caution is no
longer required to be exercised by Control Instruments Shareholders when dealing in Offer
Shares.
Johannesburg
3 February 2014
Sponsor
Investec Bank Limited
Legal advisor
Bowman Gilfillan Inc
Date: 03/02/2014 05:25:00 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
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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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