Wrap Text
Disposal Of Elite Group (Proprietary) Limited And Cautionary Announcement
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")
DISPOSAL OF ELITE GROUP (PROPRIETARY) LIMITED AND CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders are hereby advised that Afdawn has entered into
an agreement on 29 May 2014 (“the Signature Date”) with Elite
Group 1 Proprietary Limited represented by Mr Eddie Stoop
(“the Purchaser”), in terms of which, if successfully
implemented, Afdawn will dispose of 100% of the issued shares,
claims and assets in Elite Group (Proprietary) Limited (“Elite
Group”), a wholly-owned subsidiary of Afdawn to the Purchaser
on the terms and conditions more specifically set out below
(“the Agreement”)(“the Elite Group Disposal”).
2. THE BUSINESS OF ELITE GROUP
Elite is a leading credit provider company in South Africa,
which has been in operation for over 20 years with offices in
Gauteng, North-West Province, Free State and Kwa-Zulu Natal.
The established business units of Elite Group consist of:
• Micro and personnel finance;
• Medical aid discounting; and
• Collections in support of its loan book. Elite Group runs a
collection department which deals with recoveries, tracing,
collections and all related legal work.
3. THE RATIONALE FOR THE DISPOSAL
The Elite Group Disposal is in line with the change in the
Company’s strategy to become an active investment holding
company. The focus of the Company going forward is normally to
acquire significant minority shareholding in entrepreneurial
companies with a strong innovation drive and which are in
proven growth phases and subsequently enhancing the
capabilities of these entities to accelerate long term
sustainable growth. In line with the stated strategy the Board
has resolved to dispose a minimum of at least 50% of the
shareholding in the Elite Group. Accordingly, the Company
believes that the funds raised with the Elite Group Disposal
will greatly assist the Company in the implementation of its
new strategy.
4. RELATED PARTY TRANSACTION
As the result of the fact that the Purchaser, represented by
Mr Eddie Stoop, is an associate of a director of a major
subsidiary of Afdawn, the Elite Group Disposal will be
regarded as a related party transaction in terms of the
Listings Requirements of the JSE Limited (“JSE”).
The Elite Group Disposal is further classified as a category 2
transaction in terms of the Listings Requirements of the JSE.
Accordingly, as the transaction categorisation exceeds 10%, a
fairness opinion is required on the Elite Group Disposal and
shareholders will have to approve the Elite Group Disposal in
a general meeting prior to the implementation thereof. The
board will appoint an independent expert to prepare a fairness
opinion which will be included in the circular to shareholders
as set out in paragraph 11 below.
5. PURCHASE CONSIDERATION
The total purchase consideration payable by the Purchaser for
the Elite Group Disposal is an amount of R36 570 000, payable
in cash (“the Purchase Consideration”).
The Purchase Consideration payable by the Purchaser to Afdawn
shall be discharged by the Purchaser by paying the Purchase
Consideration to the Purchasers’ attorney in trust, by not
later than two business days prior to the Effective Date.
6. EFFECTIVE DATE
In terms of the Agreement, the effective date of the Elite
Group Disposal will be the 5th business day following the date
upon which the last of the suspensive considitions, as set out
in paragraph 7 below, are fulfilled (“the Effective Date”).
7. SUSPENSIVE CONDITIONS
The Elite Group Disposal is subject to the following
outstanding suspensive conditions, namely that:
7.1. Afdawn receives a letter of comfort from the bankers of
the Purchaser on the 17 June 2014, to the satisfaction
of Afdawn, confirming that the Purchase Consideration
has been deposited into the bank account of the
Purchaser held with the Purchaser's bankers and is
freely available for distribution to Afdawn;
7.2. pursuant to the fulfilment of the suspensive condition
set out in paragraph 7.1 above, Afdawn consents to the
following:
7.2.1. that Hester Hickey be appointed as a non-
executive director on the board of Elite until
the Effective Date; and
7.2.2. that the directors of Elite Group will have
full authority and control over Elite Group
from 17 June 2014, or as soon as the suspensive
condition set out in paragraph 7.1 above is
fulfilled, until the Effective Date without any
interference from Afdawn;
7.3. by no later than 15 September 2014:
7.3.1. Afdawn receiving a written confirmation from
Sandown Capital (Proprietary) Limited
(“Sandown”) confirming that the convertible
bond issued for R10 million by Elite Group to
Sandown (“the Convertible Bond”) has been
redeemed and that all restrictions,
obligations, duties and rights of or against
Afdawn in respect of the Convertible Bond have
been released and are of no further force or
effect;
7.3.2. Afdawn obtaining in writing all approvals of
any regulatory authorities (including, without
limitation, the JSE) which are required to
implement the transaction contemplated in the
Agreement;
7.3.3. the shareholders of Afdawn in a general
meeting pass all such resolutions as are
required in order to implement the transaction
recorded in the Agreement, in accordance with
the Listings Requirements of the JSE and the
Companies Act;
7.3.4. a written agreement in a form and substance
reasonably acceptable to the Purchaser and
Afdawn is entered into between the Purchaser,
Afdawn and the landlords of each of the
premises from which Elite Group conducts
business as at the Effective Date (“the
Premises”), pursuant to which, inter alia, the
existing lease agreement is terminated and
replaced with a new lease agreement in respect
of the Premises (“New Lease Agreement”), with
effect from a date to be agreed by the
Purchaser and the Seller, provided that any
New Lease Agreement shall contain a provision
that the New Lease Agreement shall fall away
and be of no further force or effect and the
existing lease agreement shall be reinstated
to the extent that the Agreement is not
implemented in accordance with its terms; and
7.3.5. the National Housing Finance Corporation SOC
Limited (“NHFC”) consents in writing to the
change in control of the Company in terms of
the NHFC facility agreement entered into
between the NHFC and Elite Group on 13
November 2012 and irrevocably agrees to
release Afdawn from all obligations in terms
of the guarantee agreement entered into
between the NHFC, Afdawn and Elite Group on 22
October 2012 with effect from the Effective
Date, against settlement of the Nexus
Personnel Finance (Proprietary) Limited
(“Nexus”) loan in the amount of R2 607 946 in
accordance with the provisions of the
Agreement;
7.4. by not later than 12h00 on 19 June 2014, Afdawn
delivers to the Purchaser irrevocable undertakings in
writing (in a form and in substance reasonably
acceptable to the Purchaser) from shareholders in Afdawn
holding at least 400,000,000 (four hundred million)
shares in Afdawn, in favour of Afdawn, to attend (either
in person or by proxy or in such other manner as may be
appropriate) the general meeting of shareholders of the
Company contemplated in paragraph 7.3.3 above for the
purposes of passing such resolutions as may be necessary
and/or incidental to approving and ratifying and/or
implementing the Elite Group Disposal;
7.5. the attorneys of the Purchasers provides an irrevocable
undertaking to Afdawn on the Signature Date, undertaking
to make all payments to Afdawn in the manner set out in
the Agreement; and
7.6. the attorney of Afdawn provides an irrevocable
undertaking to the Purchaser on the Signature Date,
undertaking to make all payments to the Purchaser in the
manner set out in the Agreement.
8. THE ELITE GROUP DISPOSAL BREAK FEE
8.1. In terms of the Agreement, the parties agree that:
8.1.1. to the extent that the Agreement lapses due to
the suspensive condition set out in paragraph
7.1 above, not being fulfilled or waived;
8.1.2. the Purchaser fails to fulfil its obligations
set out in paragraph 5 above; or
8.1.3. the Agreement is cancelled due to a breach of
the Agreement by the Purchaser,
the Purchaser shall pay Afdawn a break fee in
the amount of R1,500,000 (one million five
hundred thousand rand).
8.2. Further, in terms of the Agreement, the parties agree
that:
8.2.1. to the extent that the Agreement lapses due the
suspensive condition set out in paragraph 7.4
above not being fulfilled or waived; or
8.2.2. the Agreement is cancelled due to a breach of
the Agreement by Afdawn,
Afdawn shall pay the Purchaser a break fee in
the amount of R1,500,000 (one million five
hundred thousand rand).
8.3. All amounts due in terms of paragraph 8.1 and 8.2 above,
shall be due on demand and shall bear interest at the
prime interest rate of ABSA Bank plus 3% (three percent)
for the date of demand, until the date of settlement in
full.
9. PRO FORMA FINANCIAL EFFECTS
The pro forma financial information applicable to the Elite
Group Disposal are still in the process of being finalised and
will be published in due course.
10. OTHER RELEVANT INFORMATION
Save for set out in this announcement, the Purchaser and
Afdawn have provided warranties and indemnities to each other
that are standard to a transaction of this nature.
The proceeds from the Elite Group Disposal will be applied
primarily towards the implementation of the Company’s new
strategy as set out in paragraph 2 above.
11. DOCUMENTATION
A circular detailing the terms of the Elite Group Disposal,
incorporating a fairness opinion and convening a general
meeting will be posted to Afdawn shareholders in due course.
12. CAUTIONARY ANNOUNCEMENT
Shareholders are hereby advised to exercise caution when
dealing in the Company’s securities until a full announcement
regarding the pro forma financial effects in relation to the
Elite Group Disposal is made.
Johannesburg
30 May 2014
Corporate Adviser and Transaction Designated Adviser
PSG Capital
Date: 30/05/2014 02:36:00 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 
