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POYNTING HOLDINGS LIMITED - Specific Issue Of Redeemable, Convertible Preference Shares And Renewal Of Cautionary Announcement

Release Date: 06/03/2014 07:05
Code(s): POY     PDF:  
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Specific Issue Of Redeemable, Convertible Preference Shares And Renewal Of Cautionary Announcement

POYNTING HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/011142/06)
Share code: POY ISIN: ZAE000121299
(“Poynting” or “the Company”)


SPECIFIC ISSUE OF REDEEMABLE, CONVERTIBLE PREFERENCE SHARES AND 
RENEWAL OF CAUTIONARY ANNOUNCEMENT


1.     SPECIFIC ISSUE OF REDEEMABLE, CONVERTIBLE PREFERENCE SHARES

       1.1.   Shareholders of the Company (“Shareholders”) are referred to the announcement
              released on SENS on 12 February 2014 wherein shareholders were advised that
              PSG Private Equity Proprietary Limited (“PSG Private Equity”) agreed to subscribe
              for, and the Company agreed to issue, convertible debt instruments, for a total
              subscription consideration of R51 000 000, convertible into ordinary shares of the
              Company (“Ordinary Shares”), subject to Shareholder approval.

       1.2.   Shareholders are hereby advised that the Company and PSG Private Equity have
              entered into a Preference Share Subscription Agreement (“Agreement”) on
              4 March 2014 (“Signature Date”) in terms of which PSG Private Equity will subscribe
              for, and the Company agreed to issue, 20 400 000 redeemable, convertible
              preference shares of no par value (“Preference Shares”), at a subscription price of
              R2.50 per Preference Share (“Subscription Price”), for a total subscription
              consideration of R51 000 000 (“the Specific Issue”).

       1.3.   The salient terms of the Agreement, which have been agreed between the parties,
              are, set out below:

              1.3.1.      subsequent to Poynting providing written notice to PSG Private Equity to
                          subscribe for the Preference Shares in accordance with the Agreement
                          (“Subscription Notice”), PSG Private Equity will subscribe for the
                          Preference Shares on the first business day following receipt of the
                          Subscription Notice. In the event that Poynting has not delivered the
                          Subscription Notice to PSG Private Equity on or before 30 June 2014,
                          PSG Private Equity will subscribe for the Preference Shares on 1 July
                          2014;

              1.3.2.      PSG Private Equity shall be entitled to convert the Preference Shares
                          into Ordinary Shares (“Conversion Shares”) at any time within a period of
                          three years and one business day from the date on which they are
                          issued (“Final Redemption Date”);

              1.3.3.      in the event that PSG Private Equity elects to convert the Preference
                          Shares into the Conversion Shares, each Preference Share shall be
                          converted into one Ordinary Share at a conversion price of R2.50 per
                          Ordinary Share (“Conversion Price”), representing a premium of 65.6%
                          to the weighted average traded price of the Ordinary Shares measured
                          over thirty business days prior to 19 December 2013 (being the date on
                          which the Conversion Price was agreed between the Company and PSG
                          Private Equity), of R1.51 per share;

              1.3.4.      the Preference Shares will be subject to a dividend equivalent to 72% of
                          the sum of the prime interest rate of ABSA Bank Limited plus 3% per
                          annum on the Subscription Price per Preference Share, compounded
                          monthly in arrears (“Preference Share Dividend”), which Preference
                           Share Dividend will be serviced on a monthly basis;

              1.3.5.       the Company shall be obliged to compulsorily redeem the Preference
                           Shares on the Final Redemption Date, to the extent that same have not
                           been converted or redeemed prior to the Final Redemption Date; and

              1.3.6.       in the event of the conversion or redemption of the Preference Shares,
                           all future Preference Share Dividends will be forfeited.

     1.4.     Poynting and PSG Private Equity have provided warranties which are normal in a
              transaction of this nature. In addition, Poynting has provided certain undertakings to
              PSG Private Equity which are normal in a transaction of this nature.

     1.5.     Based on the Conversion Price, the number of Conversion Shares to be issued upon
              the conversion of the Preference Shares will be 20 400 000 Ordinary Shares,
              representing 11.6% of the number of Ordinary Shares in issue prior to the Specific
              Issue. After the Specific Issue, PSG Private Equity will hold a total of 26% of the
              Ordinary Shares.

     1.6.     In terms of paragraph 5.53(a)(i) and 5.51(g) of the Listings Requirements of JSE
              Limited (“the JSE”), the issue of the Preference Shares is considered to be a specific
              issue of shares for cash and requires the approval by way of an ordinary resolution
              (requiring at least a 75% majority of the votes cast in favour of such resolution) of all
              Shareholders present or represented by proxy at the general meeting on which any
              specific issue participants and their associates, have not voted on, or whose votes
              have not been counted in respect of such ordinary resolution.

     1.7.     The Company has received irrevocable undertakings from Shareholders holding
              78.7% of the shares eligible to vote on the Specific Issue pursuant to which, inter alia,
              such Shareholders have irrevocably undertaken to vote in favour of any and all
              resolutions required to issue the Preference Shares.

2.   RATIONALE FOR SPECIFIC ISSUE

     The Company will use the net proceeds of the Specific Issue for the purpose of the Company’s
     acquisition strategy and to fund working capital going forward.

3.   PSG PRIVATE EQUITY

     3.1.     PSG Private Equity is a 100% subsidiary of listed PSG Group Limited (“PSG Group”).

     3.2.     PSG Group is an investment holding company consisting of underlying investments
              that operate across industries which include financial services, banking, private
              equity, agriculture and education. PSG Group’s market capitalisation is approximately
              R18.6 billion, with its largest monetary investment being a 28.3% interest in Capitec
              Bank Holdings Limited. The companies in the PSG Group have a combined market
              capitalisation of approximately R80 billion.

     3.3.     PSG Private Equity is a private equity investment company that invests in a variety of
              sectors other than food, agriculture and beverages.

4.   AMENDMENTS TO THE MEMORANDUM OF INCORPORATION

     In order to be able to issue the Preference Shares to PSG Private Equity in terms of the
     Agreement, Poynting will be required to amend its Memorandum of Incorporation (“MOI”) in
     order to incorporate the rights, privileges, restrictions and conditions attaching to the
     Preference Shares.

     Accordingly, Poynting will be proposing the relevant amendments to the MOI, which in terms of
     paragraph 5.92(A), Schedule 10.5(d) of the Listings Requirements and section 16(1)(c) of the
     Companies Act, 2008 (71 of 2008), as amended (“Companies Act”), requires the approval by
     way of a special resolution (requiring at least a 75% majority of the votes cast in favour of such
     resolution) of all Shareholders present or represented by proxy at the general meeting.

5.   CONDITIONS PRECEDENT AND EFFECTIVE DATE

     The Specific Issue is conditional upon the fulfillment, or waiver, of the following conditions
     precedent by no later than 30 April 2014 (or such later date as may be extended by PSG
     Private Equity):

     -   the Company passing such special resolutions as may be necessary to approve the
         amendment to the MOI and such special resolutions and any applicable notices of the
         amendment to the MOI required in terms of the Companies Act, have been filed on the
         manner prescribed by the Companies Act; and

     -   the Company passing such ordinary and or special resolutions as may be necessary to
         issue the Preference Shares, and if applicable, the Conversion Shares, in terms of the JSE
         Listings Requirements and the Companies Act.

     The effective date of the Specific Issue shall be the date of issue of the Preference Shares.

6.   PRO FORMA FINANCIAL EFFECTS

     The pro forma financial effects in relation to the Specific Issue are in the process of being
     finalised and will be published in due course.

7.   RELATED PARTY

     PSG Private Equity is a material shareholder of the Company and is therefore considered to be
     a related party. Accordingly in terms of paragraph 5.53(b) of the Listings Requirements, as the
     Specific Issue is to a related party, the Company is required to obtain a fairness opinion on the
     Specific Issue from an independent expert (“Fairness Opinion”) and the board of directors of
     the Company are required to include a statement in the circular to be issued to Shareholders
     confirming whether the issue is fair to shareholders (“Board Statement”).

8.   CIRCULAR AND GENERAL MEETING

     A circular containing, inter alia, full details of the Specific Issue, the amendments to the MOI,
     the Fairness Opinion and the Board Statement will be posted to Shareholders in due course.
     The circular will contain a notice of general meeting of Shareholders to vote on the Specific
     Issue and the amendments to the MOI.

9.   RENEWAL OF CAUTIONARY ANNOUNCEMENT

     Further to the cautionary announcement released on SENS on 12 February 2014,
     Shareholders are advised that as the pro forma financial effects of the Specific Issue are still in
     the process of being finalised, Shareholders should continue to exercise caution when dealing
     in the Company’s securities until a further announcement has been published on SENS.


Johannesburg
6 March 2014


Corporate Advisor to PSG Private Equity:
PSG Capital

Corporate and Designated Advisor to Poynting:
Merchantec Capital

Date: 06/03/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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