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Loan, issue of debentures, share options and cautionary announcement
RBA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/009701/06)
(JSE code: RBA ISIN: ZAE000104154)
(“RBA” or “the company”)
LOAN, ISSUE OF DEBENTURES, SHARE OPTIONS AND CAUTIONARY ANNOUNCEMENT
1. Introduction
1.1. Shareholders are informed, as advised in the trading update released on 12
February 2014, that the company has decided to raise capital to improve its
liquidity position, to support growth, further reduce short term debt, improve skills
levels in the company and implement an ERP system.
1.2. RBA’s major shareholders are Riskowitz Capital Management LLC (“Riskowitz”),
Protea Asset Management LLC (“Protea”) and Midbrook Lane Proprietary
Limited (“Midbrook Lane”), which currently hold a total of 123 587 159 (20,01%)
of the 614 876 352 shares in issue. Riskowitz, Protea and Midbrook Lane are
hereafter jointly referred to as “the Subscribers”.
1.3. On 7 March 2014 RBA entered into a Loan, Debenture Subscription and Share
Option Agreement (“the Agreement”) with the Subscribers.
2. Suspensive conditions
The Agreement is subject to the fulfillment of the following remaining suspensive
conditions:
2.1. that by no later than 31 March 2014, all and any approvals required from the
South African Exchange Control authorities to implement the provisions of the
Agreement are obtained;
2.2. that by no later than 10 March 2014, the company delivers to the Subscribers a
copy of the resolution from the board of directors of the company approving the
debt in terms of section 46 of the Companies Act 71 of 2008 (the "Companies
Act") for the implementation of the Agreement.
3. Loan
The salient terms and conditions of the loan are as follows:
3.1. The Subscribers shall lend and advance an amount of R16 200 000 (sixteen
million two hundred thousand Rand) to the company for the aforesaid purposes.
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3.2. The loan shall bear interest at 90% of prime from the date of advance to the
repayment date as set out in 3.4 below. Interest shall be paid in cash on the
repayment date.
3.3. Interest not paid by its due date will accrue penalty interest at prime.
3.4. The loan shall be repayable by the company either by issuing 135 000 000
Debentures to the Subscribers on the basis set out in 4 below, or in cash by not
later than 31 July 2014 if the conditions precedent for the issue of the debentures
are not timeously fulfilled.
3.5. The Subscribers shall not be entitled to dispose of, cede or transfer the loan.
4. Issue of debentures
The salient terms and conditions of the redeemable debentures are as follows:
4.1. The issuing of the debentures to the Subscribers will be subject to the fulfilment
of the following conditions:
4.1.1. the company delivering to the Subscribers a copy of a resolution of the
shareholders in terms of paragraphs 5.51 and 5.53 of the JSE Listing
Requirements approving the issue of debentures, the granting of the
option and the issue of the option shares on exercise of the option, with a
75% majority of the votes cast in favour of such resolution;
4.1.2. approval in principle by the JSE, to the extent required in terms of the
JSE Listing Requirements, of the terms of the share options and listing of
the option shares after they had been issued.
4.2. On the subscription date the Subscribers will subscribe in cash for 135 million
debentures at 12 cents per debenture, for the aggregate price of R16 200 000
(sixteen million two hundred thousand Rand).
4.3. The debentures shall be redeemed by the company by not later than the third
anniversary of the subscription date.
4.4. The company will be entitled to call for the earlier redemption of all or some of
the debentures on the terms and conditions set out in the Agreement.
4.5. A Subscriber shall be entitled at any time to require the redemption of a specified
number of debentures against an exercise of the option in respect of an equal
number of option shares.
4.6. The Subscribers shall not be entitled to dispose of, cede or transfer the
debentures.
5. Issue of share options
The salient terms and conditions of the share options are as follows:
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5.1. The Subscribers will have the right to subscribe for 135 million ordinary shares in
RBA at 12 cents per share on the terms and conditions set out in the Agreement.
5.2. The option will be exercisable by the Subscribers at any time before the
redemption of the debentures.
5.3. Upon exercise of the option, the Subscribers shall pay to the company the option
subscription price of 12 cents per option share. If 4.5 above applies, the
obligation to pay shall be deemed to have been settled by the automatic set-off of
the obligation against the company’s obligation to redeem an equivalent number
of debentures held by the Subscribers.
5.4. The Subscribers shall not be entitled to dispose of, cede or transfer the share
options except with the written consent of the company.
6. Additional terms
6.1. For as long as any of the Subscribers hold debentures, Midbrook Lane shall be
entitled to nominate a director for appointment to the board of the company.
6.2 The Subscribers undertake, as shareholders of the company, to vote in favour of
any resolution proposed by the company at a meeting of its shareholders held
before 31 July 2015 to increase its authorised share capital by a maximum of
250 000 000 (two hundred and fifty million) ordinary shares.
7. Approvals and undertakings to vote
7.1. Should all the share options be exercised, 135 million ordinary shares would
have to be issued.
7.2. The shares will be issued at a premium of 32% to the weighted average trading
price of ordinary shares measured over thirty business days prior to 7 March
2014, namely 9.08 cents per share.
7.3. In terms of paragraphs 5.53(a)(i) and 5.51(g) of the JSE’s Listings Requirements,
the granting of share options to the Subscribers, and the issue of shares in terms
thereof, will be regarded as a specific issue of shares to a related party for cash.
In the light of the premium at which it will take place, the issue will require 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. The Subscribers may not vote, or if they voted,
their votes may not be counted in respect of such ordinary resolution.
7.4. The number of share options issued will be such that, if exercised, the aggregate
shareholding of the Subscribers in RBA will be less than 35%. The proposed
transaction will therefore not be an affected transaction as defined in the
Companies Act as well as in Chapter 5 of the Companies Regulations dealing
with Fundamental Transactions and Takeover Regulations. No offer to minorities
of RBA will be required.
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8. Pro forma financial effects
The pro forma financial effects of the issue of the debentures and the share options are
in the process of being calculated and will be published in due course.
9. Circular and general meeting
A circular containing inter alia full details of the loan, debentures and share options will
be posted to shareholders in due course. The circular will contain a notice of general
meeting of shareholders to vote on the debentures, share options and increase in
authorised share capital.
10. Cautionary announcement
Shareholders are advised to exercise caution when dealing in the company’s securities
until the financial effects of the issue of the debentures and the share options have been
announced.
Johannesburg
7 March 2014
Designated and Corporate Adviser
Exchange Sponsors
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