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Distribution Of Circular And Abridged Revised Listing Particulars Of Afdawn
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")
DISTRIBUTION OF CIRCULAR AND ABRIDGED REVISED LISTING PARTICULARS OF
AFDAWN
Shareholders are referred to the declaration announcement released on
SENS on Thursday, 6 March 2014 and the finalisation announcement
released on SENS on Monday, 10 March 2014 advising shareholders of a
partially underwritten renounceable rights offer (“the Rights Offer”)
and the proposed specific issue of shares to the underwriter of the
Rights Offer (“the Specific Issue”).
1. DISTRIBUTION OF THE CIRCULAR
Shareholders are advised that the circular containing full details of
the terms of the Rights Offer and the Specific Issue, incorporating a
form of instruction in respect of the letters of allocation, a notice of
general meeting and a proxy form in respect of the general meeting (“the
Circular”) has been distributed today to all shareholders recorded in
the Afdawn share register as such on the record dates, being Friday, 7
March 2014 for purposes of the Circular and Friday, 14 March 2014 for
purposes of the form of instruction in respect of the letters of
allocation, where applicable.
The Circular incorporates revised listing particulars (“Revised Listing
Particulars”) in respect of the Company. Shareholders are advised to
review the Circular and Revised Listing Particulars for detailed
information regarding the Rights Offer, the Specific Issue and related
aspects. The Circular, including the Revised Listing Particulars, will
be available on the Company’s website at www.afdawn.co.za.
2. ABRIDGED REVISED LISTING PARTICULARS OF AFDAWN
These abridged revised listing particulars are not an invitation to the
public to subscribe for securities, but are issued in compliance with
the JSE Listings Requirements, for the purpose of providing information
to the public and shareholders with regard to the Company. Capitalised
terms used below and that are not otherwise defined, bear the meanings
ascribed to them in the Circular, which incorporates the Revised Listing
Particulars.
The Revised Listing Particulars have been prepared on the assumption
that the Rights Offer, the Specific Issue and the acquisition of Knife
Capital Proprietary Limited (“Knife Capital”) (“the Knife Capital
Acquisition”) are implemented. Full details of the Knife Capital
Acquisition are set out in the SENS announcements dated 13 December 2013
and 18 February 2014. The full details of the Revised Listing
Particulars appear in the Circular.
2.1. Background and history of Afdawn
Afdawn was incorporated on 12 October 1998 as a micro finance
company which, following its listing on the Altx in 2004, grew into
a niche finance provider covering micro finance, debtor discounting
and structured property finance. Utilising internal expertise,
professional advisers, strategic alliances and acquisitions, the
Group grew significantly following its listing. With the
spectacular rise in its share price, Afdawn was able to acquire
additional businesses and utilise shareholders funds to grow its
loan books.
Lending was concentrated on individuals and businesses that needed
funding to develop, build and grow wealth, on the one hand, and a
burgeoning micro finance customer base on the other.
In 2009 the Group had significant exposure to the property sector
where aggressive expansion had been pursued in, mainly, property
developments. The Group faltered in 2009 due to the increase in
doubtful loans and the concomitant collapse in the property
markets. This impacted significantly on the Group but more so the
majority of Afdawn’s executive management who, based on the
meteoric rise in the share price, had entered into a highly geared
single stock structure with Nedbank. The falling Afdawn share price
triggered margin calls by Nedbank which, when they were not
settled, lead to Nedbank exercising their security and thereby
becoming the single biggest Shareholder in Afdawn.
The majority of the executive directors were subsequently removed
from the Board at the Company’s AGM in October 2009 and a new Board
was constituted. The newly constituted Board called for a
limited forensic review of the Company and some of its
subsidiaries.
The report revealed fraud and mismanagement in Nexus and Afdawn.
Afdawn is currently co-operating with the various authorities in
their investigations of the Group’s Directors and advisers. As part
of the normalisation of the business, Grant Thornton was appointed
as auditors to the entire Group.
In July 2010, Nedbank agreed to sell the majority of their
shareholding to PCI, with the remaining shares being sold to a fund
manager. Shortly thereafter there were further changes to the Board
with the appointment in July 2010 of PC Gordon as executive
chairman and L Taylor as an independent non-executive Director. TF
Kruger was appointed as CEO in August 2010. CF Wiese and H Hickey
were subsequently appointed to the Board.
As announced on SENS on 10 April 2013 and 15 October 2013, the
Afdawn board of directors decided to change the strategic vision of
the Company to become an active investment holding company,
acquiring shareholdings in entrepreneurial companies with a strong
innovation drive. In terms of the new strategy the Company will
seek to acquire interests in companies which are in proven growth
phases and will assist these companies to enhance their
capabilities in order to accelerate their long term sustainable
growth.
In addition, the composition of the Board has changed significantly
since the last year end as the Company embarked on sourcing the
appropriate capabilities at board level to execute the Company’s
new strategic vision. On 10 April 2013, TF Kruger stepped down as
CEO and was appointed as financial director and on the same date,
Mr JS van der Merwe was appointed as executive chairman. Further
changes occurred to the Board with the appointments of Ms WN
Luhabe, V Lessing and JK van Zyl on 29 May 2013. Subsequently the
Board accepted the resignations of L Taylor (29 May 2013), CF Wiese
(10 June 2013), Ms WN Luhabe (30 September 2013), Dr GE Stoop (5
November 2013) and TF Kruger (1 February 2014). On 25 February 2014
Mr JS van der Merwe stepped down as CEO, while remaining on in the
position of chairman and WJ Groenewald was appointed as the acting
CEO.
In pursuit of the new strategy, the existing business of the
Company from which Afdawn will divest in the near future consists
of the following business units:
a) Micro and personnel finance through Elite;
b) Medical aid discounting;
c) Collections, in support of the loan book. Elite runs a
collections department which deals with recoveries, tracing,
collections and all related legal work; and
d) Properties in possession acquired as a result of exercising
securities held in respect of defaulting loans and includes
rental earning properties.
2.2. Rationale for the Rights Offer and the Specific Issue
In order to successfully implement its new strategic vision, Afdawn
would either have to develop or acquire a range of capabilities in
order to turn investment opportunities into successful investments.
In pursuit of this new strategy and in order to acquire the
necessary capabilities required to implement the strategy, the
Company entered into an agreement for the Knife Capital
Acquisition.
The purpose of the Rights Offer and the Specific Issue is to
provide Afdawn with additional capital in order to further pursue
its new strategic vision.
2.3. Background and history of Knife Capital
Knife Capital focuses on investing in high growth, high impact
technology-enabled businesses in South Africa and other frontier
economies across Sub-Saharan Africa. Knife Capital manages HBD
Business Holdings’ South African portfolio of investments. Knife
Capital provides consulting, training and business acceleration
services to high-growth early-stage ventures in Southern Africa and
is committed to creating African success stories and filling
critical gaps in the local entrepreneurial ecosystem. In addition,
Knife Capital is deeply involved in skills-, technology- and
knowledge transfer initiatives to groom skilled entrepreneurs as
the future leadership class of Africa. Knife Capital has also
partnered with the UCT Graduate School of Business to present an
executive education programme known as Find-Make-Grow-Realise:
Investing in early-stage growth companies. This will provide Afdawn
with valuable deal flow and network opportunities.
Knife Capital has established the Grindstone Accelerator which will
assist high-growth innovative companies to become sustainable and
fundable. This is being done via a range of products and services
designed to build a foundation for growth, create relevant business
networks and enable these companies to take advantage of market
access opportunities. The SMEInsight proprietary tool (which is an
actionable, light-touch diagnostic tool to access small and medium
enterprises’ businesses for targeted strengthening and positioning
for growth) is used to assess participant companies for fundability
and to provide the relevant management teams with the insights
required to make informed decisions in order to address weaknesses
in their businesses that constrain growth, evaluate strategic
options and the underlying resource requirements of their
businesses (such as access to customers, partners, skills or
funding and market positioning) and to access networks and business
development strategies, both locally and internationally. This will
improve the quality of deal flow for potential investment
opportunities for Afdawn.
Knife Capital is an ideal fit for Afdawn in light of its new
strategic vision. Knife Capital has an envious investment record
that includes successful international exits. The Knife Capital
team has proven investment and growth enabling skills diversified
across all investment phases. Knife Capital has a deep local and
international network in the investment industry and of value-
adding service providers. The structured and disciplined investment
process and the business building capabilities of Knife Capital
will ensure the required return on capital is achieved by Afdawn.
Knife Capital will also contribute to the Afdawn business model
through additional revenue streams earned from the HBD Business
Holdings investment agreement in the form of management fees and
carried interest, the tuition fees from the executive education
programme and consulting fees and transactional fees from the
Grindstone Accelerator.
It is anticipated that underlying opportunities will present
themselves to Knife Capital (and Afdawn, post implementation of the
Knife Capital Acquisition) through the Grindstone Accelerator
process, which is based on a rigorous selection process followed by
a lengthy period of getting to know the businesses and the
management teams of the participant companies, while working on the
participant companies’ growth strategies. The unique insight and
close relationships that will develop between Knife Capital and the
participant companies will provide opportunities to Knife Capital
to invest in the most promising of these participants.
In addition, the Knife Capital due diligence process, deal
structuring and closing capabilities will assist Afdawn in
quantifying the strengths and shortcomings of potential investment
opportunities and through a process of milestone investing, will
ensure that investment risks are reduced.
2.4. Share capital
Following the maximum issue of 508 184 155 ordinary shares at 8
cents per share in terms of the Rights Offer, the maximum issue of
50 000 000 ordinary shares in terms of the Specific Issue at 8
cents per share and the issue of 100 000 000 ordinary shares in
terms of the Knife Capital Acquisition at 10 cents per share, the
total value of the Company’s issued share capital will be
approximately R93 309 464.
The Shares issued in terms of the Rights Offer, Specific Issue and
Knife Capital Acquisition will rank pari passu with the Company’s
existing Shares and, without derogating from the generality of the
aforesaid, will rank together with the existing ordinary Shares of
the Company for distributions.
2.5. Dividend and distribution policy
There are no fixed dates for payment of dividends by the Company.
Afdawn is in a growth phase and therefore no dividends will be paid
in the foreseeable future. In terms of the Memorandum of
Incorporation, any dividends unclaimed for a period of three years
from the date on which they were declared or confirmed (as the case
may be) may be declared forfeited by the Directors for the benefit
of the Company. The Company will hold monies, other than dividends,
due to Shareholders in trust indefinitely until lawfully claimed by
the Shareholders.
2.6. Directors
The names, ages, business addresses and capacities of the directors
of the Company based on the implementation of the Rights Offer, the
Specific Issue and the Knife Capital Acquisition are provided
below:
Director Age Capacity Business Address
JS van der Merwe 66 non- 1st Floor, Quadrum 4
executive Quadrum Office Park
chairman 50 Constantia Boulevard
Constantia Kloof, Ext 28
1709
HH Hickey 60 independent 1st Floor, Quadrum 4
non- Quadrum Office Park
executive 50 Constantia Boulevard
director Constantia Kloof, Ext 28
1709
WJ Groenewald 47 CEO 1st Floor, Quadrum 4
Quadrum Office Park
50 Constantia Boulevard
Constantia Kloof, Ext 28
1709
V Lessing 59 independent 8th Floor, Zeeland House
non- 7 - 9 Heerengracht Street
executive Cape Town
director 8001
E van Heerden 43 financial Unit E5B, Century Square,
director Heron Crescent, Century
City, 7441
JK van Zyl 39 executive Unit E5B, Century Square
director Heron Crescent
Century City
7441
A Böhmert 46 executive Unit E5B, Century Square
director Heron Crescent
Century City
7441
2.7. Copies of the Circular and Revised Listing Particulars
Copies of the Circular and Revised Listing Particulars will be
available for inspection at the registered office of Afdawn at 1st
Floor, Quadrum 4, Quadrum Office Park, 50 Constantia Boulevard,
Constantia Kloof, Ext 28, and at PSG Capital’s offices in
Johannesburg at 1st Floor, Building 8, Inanda Greens Business Park,
54 Wierda Road West, Wierda Valley, Sandton and in Stellenbosch at
1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, during normal
business hours, from the date of the Circular, being Monday,
17 March 2014 up to and including Friday, 4 April 2014.
Johannesburg
17 March 2014
Transaction Adviser and Transaction Designated Adviser: PSG Capital
Date: 17/03/2014 05:00:00 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.
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