Wrap Text
Rights offer declaration announcement, posting of circular and notice of general meeting
SEARDEL INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1968/011249/06
N-Shares share code: SRN; Ordinary Shares share code: SER
ISIN: ZAE000030144; ISIN: ZAE000029815
(“Seardel” or “the Company”)
SEARDEL RIGHTS OFFER DECLARATION ANNOUNCEMENT, POSTING OF CIRCULAR AND NOTICE OF
GENERAL MEETING
1. Introduction
Holders of Seardel “N” ordinary shares (“N-Shares”) and Seardel ordinary shares (“Ordinary Shares”)
(collectively, the “Seardel Shareholders”) are advised that Seardel has proposed a fully underwritten
renounceable rights offer to raise R5 billion through the issue of 3.125 billion new N-Shares in the ratio of
258.93 new N-Shares (“Rights Offer Shares”) for every 100 Ordinary Shares and/or N-Shares (collectively
“Seardel Shares”) held on the rights offer record date, at an issue price of R1.60 per Rights Offer Share (the
“Rights Offer”).
The proceeds of the Rights Offer will be used to settle debt within the Seardel group to achieve an appropriate
and sustainable consolidated capital structure which will provide the Seardel group with the flexibility to pursue
potential acquisition opportunities and strategic growth initiatives.
The Rights Offer issue price of R1.60 per Rights Offer Share represents a:
- 22.7% discount to the 30-day volume-weighted average price of N-Shares listed on the JSE as at the
close of business on Tuesday, 18 February 2014, the last practicable date in terms of the Rights Offer
circular; and
- 33.3% discount to the closing price of N-Shares on the JSE on Tuesday, 18 February 2014.
The Rights Offer Shares will, upon issue, rank pari passu with all other issued N-Shares in all respects.
2. Terms of the Rights Offer
2.1. Opening and closing dates of the Rights Offer
The Rights Offer will open at 09:00 on Monday, 7 April 2014 and close at 12:00 on Friday, 25 April 2014.
Letters of allocation will be listed and commence trading at the commencement of business on Monday,
31 March 2014.
2.2. Excess applications
Seardel Shareholders will be permitted to apply for any additional Rights Offer Shares not taken up by
other qualifying Seardel Shareholders, but subject to a limit in aggregate of 600 million Rights Offer
Shares, or such higher number as determined by the directors of Seardel, in their sole discretion. Any
excess applications will be allocated to applicants, subject to the limit referred to above, in an equitable
manner by the directors of Seardel in accordance with the provisions of paragraph 5.33 of the JSE
Listings Requirements.
2.3. Underwriting
The Rights Offer will be fully underwritten by HCI Invest6 Holdco Proprietary Limited (“Underwriter”), an
entity which is owned 70% by Hosken Consolidated Investments Limited and 30% by the Southern Africa
Clothing and Textile Workers Union (“Sactwu”). In terms of the underwriting agreement entered into
between Seardel and the Underwriter, the Underwriter has agreed to subscribe for all of the Rights Offer
Shares not taken up by Seardel Shareholders or their renouncees in terms of the Rights Offer. An
underwriting fee of 0.6% will be paid to the Underwriter.
2.4. Foreign shareholders
The Rights Offer may be affected by the laws of the relevant jurisdictions of foreign qualifying Seardel
Shareholders. Neither the Rights offer circular, nor any form of instruction, will be regarded as an offer in
any jurisdiction in which it is illegal to make such an offer. It is the responsibility of any foreign Seardel
Shareholders to satisfy themselves as to the full observation of the laws and regulatory requirements of
the relevant jurisdiction in connection with the Rights Offer, including the obtaining of any governmental,
exchange control or other consent or the making of any filings which may be required, the compliance
with other necessary formalities, the payment of any issue, transfer or other taxes or other requisite
payments due in such jurisdiction.
2.5. JSE approval
The JSE Limited (“JSE”) has approved the listing of the letters of allocation and the listing of the Rights
Offer Shares on the securities exchange operated by the JSE.
3. Conditions precedent
The implementation of the Rights Offer is subject to the fulfilment of the following condition:
- Seardel Shareholders passing a special resolution at the general meeting to be held on 25 March 2014
(“General Meeting”), in terms of section 41(3) of the Companies Act, 2008 (Act 71 of 2008) approving
the issue of the Rights Offer Shares pursuant to the Rights Offer and any other resolutions required to
implement the Rights Offer.
4. Irrevocable letters of undertaking
Seardel has received irrevocable commitments from Seardel Shareholders representing a voting interest of
approximately 80.9% of the Seardel Shares to vote in favour of the resolutions to be voted on at the General
Meeting.
5. Publication of circular and notice of General Meeting
A circular containing the full details of the Rights Offer and incorporating a notice of General Meeting has been
posted to Seardel Shareholders today, Monday, 24 February 2014.
The General Meeting will be held in the boardroom at the offices of Seardel, 1 Moorsom Avenue, Epping
Industria 2, Cape Town, 7460, on Tuesday, 25 March 2014 at 10:00, to consider and, if deemed fit, pass, with
or without modification, the ordinary and special resolution required to implement the Rights Offer.
It is anticipated that a finalisation announcement in respect of the Rights Offer will be released on SENS on
Tuesday, 25 March 2014 following the conclusion of the General Meeting.
Where applicable, a form of instruction in respect of letters of allocation will be posted to Seardel Shareholders
on 1 April 2014.
6. Salient dates and times
The salient dates and times pertaining to the Rights Offer are as follows: 2014
Notice record date, being the date on which a Seardel Shareholder must be
registered in the securities register in order to be entitled to receive the
circular, on Friday, 14 February
Circular and notice convening the General Meeting posted to Seardel
Shareholders on Monday, 24 February
Declaration date announcement released on SENS on Monday, 24 February
Declaration date announcement published in the press on Tuesday, 25 February
Last day to trade in Seardel Shares in order to be recorded in Seardel’s
securities register to vote at the General Meeting, on Friday, 7 March
Meeting record date, being the date on which a Seardel Shareholder must
be registered in the securities register in order to be entitled to participate in
the General Meeting, close of trading on Friday, 14 March
Proxy forms for the General Meeting to be received, for administrative
purposes, by 10:00 on Thursday, 20 March
(or thereafter by no later than 10:00 on Tuesday, 25 March 2014)
General Meeting held at 10:00 on Tuesday, 25 March
Finalisation announcement released on SENS on Tuesday, 25 March
Last day to trade in Seardel Shares on the JSE for settlement by the Rights
Offer record date and to be recorded as a qualifying Seardel Shareholder
for the purpose of receiving rights, on Friday, 28 March
Seardel Shares trade ex-rights on the JSE, from Monday, 31 March
Listing and trading on the JSE of the letters of allocation
(ISIN-ZAE000188868), from the commencement of trade, on Monday, 31 March
Issue of letters of allocation to qualifying certificated Seardel Shareholders
and posting of the form of instruction (where applicable) Tuesday, 01 April
Rights Offer record date in order to be entitled to participate in the Rights
Offer, on Friday, 04 April
Rights Offer opens at 09:00 on Monday, 07 April
Letters of allocation credited to an electronic account held at the transfer
secretaries in respect of qualifying certificated Seardel Shareholders, on Monday, 07 April
CSDP or broker accounts credited with rights in respect of qualifying
dematerialised Seardel Shareholders, on Monday, 07 April
Last day to trade in letters of allocation on the JSE in order to settle by
close of the Rights Offer, on Wednesday, 16 April
Listing and trading on the JSE of Rights Offer Shares commences on Thursday, 17 April
Payment to be made to, and form of instruction to be lodged with, the
transfer secretaries by qualifying certificated Seardel Shareholders, by
12:00 on Friday, 25 April
Rights Offer closes at 12:00 on Friday, 25 April
Record date for letters of allocation, on Friday, 25 April
Rights Offer Shares issued on Tuesday, 29 April
CSDP or broker accounts of dematerialised Seardel Shareholders debited
and updated with Rights Offer Shares and share certificates posted to
certificated Seardel Shareholders on Tuesday, 29 April
Results of Rights Offer announced on SENS on Tuesday, 29 April
Results of Rights Offer announced in the press on Wednesday, 30 April
Refunds (if any) to qualifying Seardel Shareholders in respect of
unsuccessful excess applications made and/or Seardel certificates posted
on or about Friday, 2 May
Dematerialised Seardel Shareholders accounts updated and debited by
CSDP or broker in respect of any additional Seardel N-Shares allocated on Friday, 2 May
The above dates and times are subject to change. Any such changes will be published on SENS.
Notes:
1. All times indicated are South African times.
2. Dematerialised Seardel Shareholders are required to inform their CSDP or broker of their instructions in
respect of the General Meeting and the Rights Offer in the manner and time stipulated in the agreement
governing the relationship between the Seardel Shareholder and its CSDP or broker.
3. Seardel Share certificates may not be dematerialised or rematerialised between Monday, 31 March 2014
and Friday, 4 April 2014, both days inclusive.
4. Qualifying dematerialised Seardel Shareholders will have their accounts at their CSDP or broker
automatically credited with their rights and qualifying certificated Seardel Shareholders will have their rights
credited to a nominee account at Computershare Investor Services Proprietary Limited.
5. CSDPs effect payment in respect of dematerialised Seardel Shareholders on a delivery-versus-payment
method.
7. Pro forma financial effects
The table below sets out the pro forma financial effects of the Rights Offer on the earnings, diluted earnings,
headline earnings and diluted headline earnings per Seardel Share for the six months ended 30 September
2013 and the net asset value and tangible net asset value per Seardel Share at that date.
The pro forma financial effects have been prepared in accordance with the JSE Listings Requirements, the
Guide on Pro Forma Financial Information issued by the South African Institute of Chartered Accountants, ISAE
3420 and the measurement and recognition requirements of IFRS. The accounting policies used to prepare the
pro forma financial effects are consistent with those applied in the preparation of the financial results for the six
months ended 30 September 2013.
The pro forma financial effects have been prepared for illustrative purposes only, in order to provide information
on how the Rights Offer may have affected the financial results and position of a Seardel Shareholder and,
because of their nature, may not fairly present the Company’s financial position, changes in equity, results of
operations or cash flows. The pro forma financial effects are the responsibility of the directors of Seardel.
The financial results of Sabido Investments Proprietary Limited (“Sabido”) have been reviewed by its auditors,
Grant Thornton (Jhb) Inc, and an unmodified review conclusion has been expressed on the financial results of
Sabido for the six months ended 30 September 2013. Sabido’s auditor’s unmodified review report is available
for inspection as set out in the circular.
Adjustment
for the
Seardel disposal of Before Pro forma
interim Adjustment the apparel the adjustment Pro forma
results for the manufacturi Rights of the after the
2013 (“Sabido”) ng Offer Rights Rights
per acquisition business per Offer per Offer per
Seardel per Seardel per Seardel Seardel Seardel Seardel %
Share1 Share2 Share3 Share Share4,5 Share change
cents cents cents cents cents cents %
Earnings 4.1 1.2 (4.7) 0.6 3.0 3.6 500%
Diluted earnings 3.8 1.3 (4.5) 0.6 2.9 3.5 483%
Headline earnings 4.1 1.3 4.1 9.5 (3.5) 6.0 (37%)
Diluted headline
earnings 3.8 1.3 4.0 9.1 (3.2) 5.9 (35%)
NAV per share 217.1 (104.3) (8.9) 103.9 39.9 143.8 38%
Tangible NAV 212.6 (422.4) (8.4) (218.2) 273.3 55.1 125%
Diluted weighted
average shares in
issue (000’s) 730,820 500,000 - 1,230,820 3,125,000 4,355,820 254%
Weighted average
shares in issue
(000’s) 683,354 500,000 - 1,183,354 3,125,000 4,308,354 264%
Shares in issue
(000’s) 685,925 500,000 - 1,185,925 3,125,000 4,310,925 264%
Notes and assumptions:
1. The “Seardel interim results 2013 per Seardel Share” column reflects the earnings, diluted earnings,
headline earnings and diluted headline earnings per Seardel Share based on the consolidated results for the
interim period ended 30 September 2013 and the net asset value and the tangible net asset value per
Seardel Share based on the consolidated interim results as at 30 September 2013.
2. The “Adjustment for the Sabido acquisition per Seardel Share” column reflects the financial effects of the
corporate actions to acquire Sabido set out in the circulars dated 10 July 2013 and 5 November 2013
whereby Seardel acquired 100% of HCI Invest3 Holdco Proprietary Limited (“Sabido Holdco”) and is based
on the principal assumptions as set out in the aforementioned circulars which are summarised below:
i. the earnings, diluted earnings, headline earnings and diluted headline earnings per Seardel Share are
based on the Sabido and Sabido Holdco results for the interim period ended 30 September 2013 and
the net asset value and the tangible net asset value per Seardel Share based on the interim results as
at 30 September 2013;
ii. the earnings, diluted earnings, headline earnings and diluted headline earnings per Seardel Share
assumes funding to the value of R4.4 billion is raised on 1 April 2013 and that the funding incurs non-
tax deductible interest at a rate of 72% of the South African Prime lending rate. This impact is expected
to have a continuing effect;
iii. the administrative expenses relating to the Sabido acquisition have not been included in the calculation
as they are not considered to have a significant impact;
iv. the net asset value and the tangible net asset value per Seardel Share assumes that funding to the
value of R4.4 billion is raised on 30 September 2013 to finance the Sabido acquisition.
3. The “Adjustment for the disposal of the apparel manufacturing business per Seardel Share” column reflects
the financial effects of the corporate action set out in the circular dated 18 December 2013 whereby Seardel
disposed of its apparel manufacturing business to Sactwu for an assumed value of R77.1 million. The
assumptions applied in the pro forma financial effects above are the same as those set out the circular dated
18 December 2013 which are based on the results for the 6 months ended 30 September 2013.
4. The pro forma financial effects of the Rights Offer on earnings, diluted earnings, headline earnings and
diluted headline earnings per Seardel Share are based on the following assumptions and information:
i. the 3.125 billion new N-Shares were issued at R1.60 per share for proceeds of R5 billion on 1 April
2013;
ii. the proceeds of the Rights Offer are assumed to have been applied on 1 April 2013, firstly to settle
interest bearing debt of R4.5 billion, resulting in an interest saving at a rate of 72% of the South
African Prime lending rate with the excess cash raised assumed to be placed on call, earning
interest at 5.5% before taxation. These impacts are expected to have a continuing effect; and
iii. transaction costs estimated at R35.4 million have been taken into account in arriving at the above
financial effects and are once off in nature.
5. The pro forma financial effects of the Rights Offer on net asset value and tangible net asset value per
Seardel Share are based on the following assumptions:
i. the 3.125 billion new N-Shares were issued at R1.60 per share for proceeds of R5 billion on 30
September 2013;
ii. the proceeds of the Rights Offer are assumed to have been applied on 30 September 2013, firstly to
settle interest bearing debt of R4.5 billion with the excess cash raised assumed to be placed on call;
and
iii.transaction costs estimated at R35.4 million have been offset against the R5 billion Rights Offer
share issue.
Cape Town
24 February 2014
Investment bank and sponsor
Investec Bank Limited
Joint corporate law advisor
Taback and Associates Proprietary Limited
Joint corporate law advisor
Edward Nathan Sonnenbergs Inc.
Reporting accountants
Grant Thornton (Jhb) Inc
Date: 24/02/2014 02:20:00 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.
Sharenet Sites 
