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Update Relating To The Acquisition Of Knife Capital Proprietary Limited, Rights Offer And Specific Issue And Caution
African Dawn Capital Limited
Incorporated in the Republic of South Africa
(Registration Number: 1998/020520/06)
JSE share code: ADW
ISIN: ZAE000060703
(“Afdawn” or the “Company")
UPDATE RELATING TO THE ACQUISITION OF KNIFE CAPITAL PROPRIETARY
LIMITED, RIGHTS OFFER AND SPECIFIC ISSUE AND CAUTIONARY
ANNOUNCEMENT
A) UPDATE RELATING TO THE ACQUISITION OF KNIFE CAPITAL PROPRIETARY
LIMITED
1. INTRODUCTION
Shareholders are referred to the announcement released on SENS
on Friday, 13 December 2013 (“the Announcement”), advising
shareholders that Afdawn had entered into an agreement to
acquire 100% of the issued shares in Knife Capital Proprietary
Limited (“Knife Capital”), which if successfully implemented
would result in Afdawn acquiring 100% of the issued shares in
Knife Capital for a purchase consideration of R10 million (“the
Knife Capital Acquisition”) (“the Knife Capital Agreement”).
Shareholders are hereby advised that the parties entered into an
addendum to the Knife Capital Agreement on 17 February 2014
(“The Knife Capital Addendum”).
In terms of the Knife Capital Addendum, the terms relating to
the purchase consideration and conditions precedent were
amended. The details of same are presented in paragraph 2 and 3
below.
In terms of the Knife Capital Acquisition Agreement and the
Knife Capital Addendum, the effective date of the Knife Capital
Acquisition, subject to the fulfilment of the conditions
precedent set out in paragraph 3 below, is expected to occur on
or about 3 March 2014 or a later date agreed to by the Company
and the Knife Capital vendors (“the Effective Date”).
Shareholders are further advised that in terms of the Knife
Capital Addendum, the Knife Capital vendors, consisting of Eben
van Heerden, Keet van Zyl and Andrea Böhmert will be appointed
as executive directors of Afdawn upon the successful
implementation of the Knife Capital Acquisition.
2. PURCHASE PRICE ADJUSTMENT
In terms of the Knife Capital Addendum, the purchase
consideration payable to the Knife Capital vendors will be
adjusted in the event that the capital raised through the rights
offer or any subsequent capital raising and the realisation of
non-core assets of the Company within 12 months (“Capital
Raised”) of the Effective Date is less than R50 million.
The purchase price adjustment will be calculated as R50 million
less Capital Raised multiplied by 20%, but will be limited to a
maximum purchase price adjustment of R2 million (“the Purchase
Price Adjustment”). Afdawn shall issue such number of shares to
the Knife Capital vendors as is equal to the Purchase Price
Adjustment divided by the 30 day volume weighted average price
of Afdawn shares on the day preceding the one year anniversary
of the Effective Date.
3. CONDITIONS PRECEDENT
The Knife Capital Acquisition is subject to the following
remaining conditions precedent after the Knife Capital Addendum:
i) Knife Capital becoming the beneficial owner of all the
issued shares in Grindstone Accelerator (Proprietary)
Limited, on or before 21 February 2014, structured in
such a way as agreed to by Afdawn in writing;
ii) the written consent to the change of control of Knife
Capital, together with the waiver of any restrictions
pertaining to such change, from third party clients
and/or parties with whom Knife Capital has entered into
agreement before the date of signature of the Knife
Capital Acquisition Agreement, together with the written
consent of Knife Capital’s third party clients and/or
such third parties to any affect that such change in
control may have on the agreements concluded, being
obtained by no later than the Effective Date;
iii) the extension of the HBD Business Holdings Proprietary
Limited management agreement on terms acceptable to
Afdawn, being obtained by no later than the Effective
Date;
iv) Afdawn’s board of directors approving a detailed budgeted
forecast of income and expenses for the 24 month period
from the Effective Date of the Knife Capital Acquisition,
by no later than the Effective Date;
v) Afdawn has before the Effective Date secured irrevocable
undertakings from certain shareholders in terms of which
they undertook to support in the capital raising by:
voting in favour of all resolutions required to
effect the proposed rights offer; and
following their rights in the proposed rights offer
and/or to underwrite a portion of such rights offer,
which irrevocable undertakings will collectively
equate to a capital raising of not less than R15
million;
The effect of the irrevocable undertakings being that the
rights offer will yield a minimum amount of R15 million,
that would be available for new investments and related
costs post the closing date of the rights offer.
vi) Willem Jakobus Groenewald signing a 3 year service
contract with Afdawn by no later than the Effective Date;
vii) Johannes Stephanus van der Merwe agreeing to be the non-
executive chairman of Afdawn for a period of 6 months
after the Effective Date; and
viii) the conclusion of employment and service agreements of at
least 5 years with each of the Knife Capital vendors by
no later than the Effective Date.
B) UPDATE RELATING TO THE RIGHTS OFFER AND SPECIFIC ISSUE
1. INTRODUCTION
Shareholders were further advised in the Announcement and in an
announcement released on SENS on 17 January 2014 that Afdawn
intends to raise up to R40 654 732.40 from its shareholders by
way of a partially underwritten renounceable rights offer (“the
Rights Offer”) in terms of which 508 184 155 shares (“Rights
Offer Shares”) will be offered to shareholders recorded in the
Afdawn share register at the applicable record date to be
determined, at a subscription price of 8 cents per Rights Offer
Share, in the ratio of 1 Rights Offer Share for every 1 Afdawn
ordinary share held at the close of trade on the applicable
record date to be determined.
Afdawn has received an irrevocable undertaking from Vaalmac
Investments (Proprietary) Limited (“the Underwriter”) to
underwrite 50 000 000 of the Rights Offer Shares. In order to
ensure that the Underwriter obtains a meaningful stake in Afdawn
if insufficient shares are obtained as part of the underwriting,
Afdawn has agreed to propose the specific issue of shares to the
Underwriter (“the Specific Issue”). In the event that the
Specific Issue is approved by shareholders at the General
Meeting then the Company will issue up to a maximum of
50 000 000 Afdawn shares to the Underwriter, provided that the
maximum number of shares issued to the Underwriter shall be
decreased by each share acquired by the Underwriter by virtue of
being an underwriter of the Rights Offer.
The full details of the Rights Offer and the Specific Issue will
be announced on SENS and set out in a circular to be sent to
Afdawn shareholders in due course.
2. UPDATED PRO FORMA FINANCIAL EFFECTS OF THE RIGHTS OFFER AND THE
SPECIFIC ISSUE
The updated pro forma financial information applicable to the
Rights Offer and the Specific Issue are still in the process of
being finalised and will be published in due course.
C) CAUTIONARY ANNOUNCEMENT
Shareholders are hereby advised to exercise caution when
dealing in the Company’s securities until a full announcement
regarding the updated pro forma financial effects in relation
to the Rights Offer and Specific Issue is made.
Johannesburg
18 February 2014
Corporate Adviser and Transaction Designated Adviser
PSG Capital
Date: 18/02/2014 11:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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