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Declaration Announcement in respect of the Rights Offer
JD Group Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1981/009108/06)
(“JD Group” or “the Company”)
Share code: JDG ISIN: ZAE000030771
Bond code: JDGCB ISIN: ZAE000168415
DECLARATION ANNOUNCEMENT IN RESPECT OF THE RIGHTS OFFER
1. INTRODUCTION
1.1 Shareholders are referred to the announcements published
on SENS on 11 April 2014 and 21 May 2014 (collectively
the “SENS Announcements”) advising shareholders, inter
alia, that:
1.1.1 JD Group will undertake a rights offer, to raise
approximately R1,0 billion, which rights offer is to
be underwritten by Steinhoff International Holdings
Ltd (“Steinhoff”) (the “Rights Offer”); and
1.1.2 the proceeds of the Rights Offer will be utilised to
reduce JD Group’s debt, primarily the redemption of
the JD Group Convertible Bonds to the extent that
bondholders exercise their rights to elect early
redemption pursuant to the change of control notice
released on SENS on 14 April 2014.
1.2 Further to the SENS Announcements, shareholders are
advised that the terms of the Rights Offer are as set
out below.
2. SALIENT TERMS OF THE RIGHTS OFFER
2.1 In terms of the Rights Offer, JD Group will offer
40 000 000 ordinary shares in the authorised share
capital of the Company (“Rights Offer Shares”) to
shareholders, at a subscription price of R25.00 per
Rights Offer Share, in the ratio of 17.44148 Rights
Offer Shares for every 100 JD Group ordinary shares
(“JDG Shares”) held on the record date of the Rights
Offer.
2.2 The aforementioned subscription price represents the JD
Group share price as at the close of trade on 10 April
2014, which is the day after the conclusion of the
underwriting agreement between JD Group and Steinhoff
(“Underwriting Agreement”).
2.3 The implementation of the Rights Offer is conditional
upon the approval thereof by the JSE Limited (“JSE”),
which approval is anticipated to be received in due
course.
2.4 The Rights Offer will not include the right for
shareholders to apply for excess Rights Offer Shares.
3. UNDERWRITING AND UNDERTAKING TO FOLLOW RIGHTS
3.1 In terms of the Underwriting Agreement, Steinhoff has
agreed to follow its rights in terms of the Rights Offer
and to underwrite the remaining balance of the Rights
Offer in full. Steinhoff has, however, retained the
right to secure third-party sub-underwriters to all or a
portion of the Rights Offer, underwritten by Steinhoff,
in its sole discretion and on terms and conditions to be
agreed between Steinhoff and the respective third
party/ies (“Underwriter”). Thus, all rights not taken up
by qualifying shareholders will revert to the Underwriter.
3.2 In terms of the Underwriting Agreement, an underwriting
and commitment fee equal to 2.5% of the amount raised in
terms of the Rights Offer, being a maximum amount of
R25,0 million (excluding VAT), is payable by the Company
to the Underwriter, which underwriting and commitment
commission is, in the opinion of the JD Group board of
directors (“Board”), a competitive market rate. In terms
of the Underwriting Agreement, the underwriting and
commitment fee is only payable upon fulfillment of the
underwriting and subscription commitment by the Underwriter.
4. PRO FORMA FINANCIAL EFFECTS
4.1 The pro forma financial effects of the Rights Offer on
JD Group are based on the unaudited interim results for
the six-month period ended 31 December 2013, which was
compiled in terms of the JSE Listing Requirements and
the Guide on Pro Forma Financial Information issued by
SAICA, the preparation of which is the responsibility of
the directors of the Company.
4.2 The pro forma financial information should be read in
conjunction with the independent reporting accountant’s
report thereon, a copy of which will be included in the
Rights Offer circular to shareholders (“Circular”).
4.3 The unaudited pro forma financial information has been
prepared for illustrative purposes only to provide
information as to how the Rights Offer might have
impacted on the financial position and results of JD
Group, assuming that the Rights Offer had been
implemented on 31 December 2013 for purposes of the
statement of financial position, and on 1 July 2013 for
purposes of the statement of comprehensive income, and
because of its nature, may not give a fair reflection of
JD Group’s financial position and results, changes in
equity or cash flows after the Rights Offer.
Unaudited Pro forma Pro forma Percentage
6 months adjustment adjustment change
ended 31 relating effect of
December to the the Rights
2013(1) Rights Offer
Offer (2)
Basic loss
per share
(cents) (67.1) 15.3 (51.8) 22.8%
Headline
loss per
share
(cents) (59.1) 14.1 (45.0) 31.3%
Basic
diluted
loss per
share Anti- Anti- Anti-
(cents) (58.9) dilutive dilutive dilutive
Headline
diluted
loss per
share Anti- Anti- Anti-
(cents (66.9) dilutive dilutive dilutive
NAV per
share
(cents) 3 835 (221) 3 614 (5.7%)
Ordinary
Shares in
issue
(‘000) 229 338 40 000 269 338 17.4%
Weighted
average
number of
Ordinary
Shares in
issue
basic 225 681 40 000 265 681 17.72%
Weighted
average
number of
Ordinary
Shares in
issue
diluted 226 297 40 000 266 297 17.68%%
Notes:
1. The “Unaudited 6 months ended 31 December 2013” column is based
on the JD Group unaudited results for the six-month period ended
31 December 2013.
2. The “Pro forma adjustment relating to the rights offer” column
refers to the impact of the Rights Offer.
3. The cash inflow from the Rights Offer is earmarked to repay the
convertible bond amounting to R1,0 billion to the extent
exercised. It is assumed that cash inflow and repayment of the
convertible will occur on 1 July 2013 for statement of
comprehensive income purposes and on 31 December 2013 for
statement of financial position purposes. The interest saving
relating to the convertible debt was determined at the effective
interest rate of this bond. The interest savings are of a
continuing nature.
4. The re-measurement of the convertible bond at redemption date
resulted in a once-off loss of R26,0 million. The volume
weighted average price for the month of June 2013 was used to
determine a fair value relating to the convertible bond.
5. The tax has been determined by applying the effective tax rate
of 28% to the taxable income, which resulted from points 3 and
4.
6. It is assumed that all the Rights Offer Shares are issued in
terms of the Rights Offer.
7. The convertible bondholders have the option to elect either a
cash settlement or settlement in shares. Based on the current
share price of JD Group, it is expected that the convertible
bondholders will elect settlement in cash. However, should
bondholders elect the conversion option, then approximately 220
JDG Shares will be allocated to bondholders for each bond being
converted. Assuming a JDG Share price of R27.00 per share, the
value of the JDG Shares would be approximately R5 940.00,
compared to the redemption value of each bond being R10 000.00
if the Redemption Option is elected. The share settlement option
therefore appears highly unlikely based on the value of the
respective options.
8. Once-off transaction costs amounting to R30.2 million have been
debited to stated capital.
9. It is assumed that all the Rights Offer Shares are issued in
terms of the Rights Offer and that 40 000 000 Rights Offer
Shares are therefore exercised at R25.00 per share. This
resulted in an adjustment to equity of R1,0 billion, before
expenses of R30.2 million debited against stated capital. The
re-measurement of the liability to its fair value on redemption
date resulted in a portion of equity recognised on initial
recognition being transferred to liabilities and settled in cash
amounting to R21,0 million.
10. At initial recognition the deferred tax relating to the issue of
the convertible bonds was recognized in equity. With the payment
of the liability, a portion of the deferred tax recognized in
equity is now released.
11. There are no other post balance sheet events which need
adjustment to the pro forma financial information.
5. SALIENT DATES AND TIMES
The salient dates and times of the Rights Offer are as
follows:
2014
Declaration data released on SENS Friday, 23 May
Finalisation data released on SENS Tuesday, 27 May
Last day to trade in JDG Shares in order
to participate in the Rights Offer (cum
entitlement) Friday, 30 May
Listing of and trading in the Letters of
Allocation under the JSE Code JDGN and
ISIN ZAE000191243 on the JSE commences at
09:00 on Monday, 2 June
JDG Shares commence trading ex-Rights on
the JSE at 09:00 on Monday, 2 June
Circular posted to Certificated
Shareholders together with a Form of
Instruction Tuesday, 3 June
Record Date for the Rights Offer Friday, 6 June
Rights Offer opens at 09:00 on Monday, 9 June
Certificated Shareholders will have their
Letters of Allocation credited to an
electronic account held at the Transfer
Secretaries Monday, 9 June
Dematerialised Shareholders will have
their accounts at their CSDP or Broker
credited with their entitlement Monday, 9 June
Circular posted to Dematerialised
Shareholders on Monday, 9 June
Last day for trading Letters of Thursday, 12 June
Allocation on the JSE
Form of Instruction lodged by
Certificated Shareholders wishing to sell
all or part of their entitlement at the Thursday, 12 June
Transfer Secretaries by 12:00
Listing of Rights Offer Shares and
trading therein on the JSE commences Friday, 13 June
Rights Offer closes at 12:00. Payment to
be made and Form of Instruction lodged by
Certificated Shareholders wishing to
renounce or subscribe for all or part of
the entitlement at the Transfer
Secretaries* on Friday, 20 June
Record Date for the Letters of Allocation Friday, 20 June
Rights Offer Shares issued and posted to
Shareholders in certificated form on or
about Monday, 23 June
CSDP or Broker accounts in respect of
Dematerialised Shareholders will be
updated with Rights Offer shares and
debited with any payments due on Monday, 23 June
Results of Rights Offer announced on SENS Monday, 23 June
*CSDPs effect payment in respect of Dematerialised
Shareholders on a delivery versus payment method.
Notes:
1. All times are South African times.
2. JD Group Shareholders may not dematerialise or rematerialise their
JDG Shares between Monday, 2 June 2014, and Friday, 6 June 2014,
both dates inclusive.
6. FOREIGN SHAREHOLDERS
6.1 Any shareholder resident outside the common monetary
area who receives the Circular and Form of Instruction,
should obtain advice as to whether any governmental
and/or any other legal consent is required and/or any
other formality must be observed to enable such a
subscription to be made in terms of such Form of
Instruction.
6.2 The Rights Offer does not constitute an offer in any
jurisdiction in which it is illegal to make such an
offer and the Circular and Form of Instruction should
not be forwarded or transmitted by recipients thereof to
any person in any territory other than where it is
lawful to make such an offer.
6.3 The Rights Offer Shares have not been and will not be
registered under the Securities Act of the United States
of America. Accordingly, the Rights Offer Shares may not
be offered, sold, resold, delivered or transferred,
directly or indirectly, in or into the United States or
to, or for the account or benefit of, United States
persons, except pursuant to exemptions from the Securities
Act. The Circular and the accompanying documents are not
being, and must not be, mailed or otherwise distributed or
sent in, into or from the United States. The Circular does
not constitute an offer of any securities for sale in the
United States or to United States persons. The Rights Offer
contained in the Circular does not constitute an offer in
the District of Colombia, the United States, the Dominion of
Canada, the Commonwealth of Australia, Japan or in any other
jurisdiction in which, or to any person to whom, it would not
be lawful to make such an offer.
6.4 Non-qualifying shareholders should consult their professional
advisers to determine whether any governmental or other consents
are required or other formalities need to be observed to allow
them to take up the Rights Offer, or trade their entitlement
therein.
6.5 To the extent that non-qualifying shareholders are not entitled
to participate in the Rights Offer as a result of the aforementioned
restrictions, such non-qualifying shareholders should not take up
their Rights Offer entitlement or trade in their Rights Offer entitle-
ment and should allow their rights in terms of the Rights Offer to lapse.
7. CIRCULAR
The Circular containing full details of the Rights Offer will be posted to
shareholders on the dates set out in paragraph 5 above, subject to the
approval of the Rights Offer by the JSE as referred to in paragraph 2.3
above.
BY ORDER OF THE BOARD
Steinhoff Africa Secretarial Services (Pty) Ltd
COMPANY SECRETARY
Johannesburg
23 May 2014
Corporate Advisor and Sponsor: PSG Capital Proprietary
Limited
Date: 23/05/2014 05:42:00 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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