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ZEDER INVESTMENTS LIMITED - Joint firm intention announcement by Zeder Investments Ltd and Agri Voedsel Ltd

Release Date: 25/06/2014 17:40
Code(s): ZED     PDF:  
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Joint firm intention announcement by Zeder Investments Ltd and Agri Voedsel Ltd

Zeder Investments Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2006/019240/06
Share Code: ZED
ISIN Code: ZAE000088431
(“Zeder”)

Agri Voedsel Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2007/015880/06
(“AVL”)

JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF ZEDER TO MAKE AN
OFFER TO ACQUIRE ALL THE ORDINARY SHARES IN AVL, NOT ALREADY
HELD BY ZEDER, BY WAY OF A SCHEME OF ARRANGEMENT

1. INTRODUCTION

1.1     Shareholders are referred to Zeder’s SENS announcement
        dated   20  June   2014   and  are  advised   that  the
        preconditions referred to in that announcement have now
        been fulfilled.   Accordingly, shareholders are hereby
        notified of Zeder’s firm intention to make an offer to
        acquire all ordinary shares in AVL, not already held by
        Zeder, by way of a scheme of arrangement (“the Scheme”)
        ("Firm Intention Offer").

1.2     AVL is an investment holding company, having as its
        only investment, a shareholding in Pioneer Food Group
        Limited (“Pioneer Foods”).   The shares held by AVL in
        Pioneer Foods represent a 30.4% economic interest and a
        26.3% voting interest in Pioneer Foods. Zeder currently
        holds 48.5% of AVL.

1.3     The implementation of the Scheme will amount to a
        category 1 acquisition by Zeder in terms of the
        Listings Requirements of the JSE Limited (“JSE”) (“JSE
        Listings Requirements”).

1.4     The purpose of this announcement is to advise Zeder
        shareholders and AVL shareholders of the terms and
        conditions of the Firm Intention Offer.

 2. RATIONALE FOR THE FIRM INTENTION OFFER

 2.1    Rationale for Zeder

        Zeder wishes to acquire all AVL shares not already held
        by Zeder, in order to increase its exposure to AVL’s
        underlying interest in Pioneer Foods.

2.2       Rationale for AVL

2.2.1        AVL shares currently trade through AVL’s over-the-
             counter trading (“OTC”) platform.

2.2.2        Following the consultation paper published by the
             Financial Services Board (“FSB”) in December 2013,
             there is great uncertainty as to whether OTC trading
             platforms will be permitted to continue operating in
             future without the facilitator of the OTC platform
             (in this case, AVL) applying for a full exchange
             license.

2.2.3        Should AVL not register as an exchange or the FSB
             not extend OTC trading, AVL will be required to
             cease its OTC trading activities. AVL needs to take
             action   in  order   to   protect   value  for  its
             shareholders and believes that the Scheme should be
             considered in this context. OTC trading in AVL
             shares will be suspended from close of business on
             Monday, 30 June 2014 until further notice.

2.2.4        The Scheme will provide AVL shareholders with –

2.2.4.1          an opportunity to liquidate their investment in
                 AVL;

2.2.4.2          a more liquid instrument in a listed entity,
                 Zeder;

2.2.4.3          a mechanism to unlock the      discount   in   the
                 current AVL share price; and

2.2.4.4          an opportunity to diversify their investment in
                 AVL into a more diversified agri, food and
                 beverage portfolio.

3. MECHANICS OF THE SCHEME

3.1       The Scheme will constitute an “affected transaction” as
          defined in section 117(c) of the Companies Act, 2008
          (“Companies Act”) and will be regulated by the
          Companies   Act,   the   Companies  Regulations,   2011
          (“Companies Regulations”) and the Takeover Regulation
          Panel (“TRP”).

3.2       The Scheme will be implemented in terms of section 114
          of the Companies Act and will be proposed by the AVL
          board of directors (“AVL Board”) between AVL and its
          shareholders other than Zeder.

3.3       The Firm Intention Offer will be subject to the
          conditions precedent set out in paragraph 4.2 below
          ("Firm Intention Offer Conditions").

3.4       The Scheme will be subject to the conditions precedent
          set out in paragraph 5.1 below ("Scheme Conditions").

4. THE FIRM INTENTION OFFER

4.1       Material terms of the Firm Intention Offer

4.1.1        The Firm Intention Offer will be made on the basis
             that –

4.1.1.1          Zeder will acquire all ordinary shares in AVL
                 not already held by Zeder (“Scheme Shares”);

4.1.1.2          following the implementation of the Scheme, AVL
                 will be a wholly-owned subsidiary of Zeder
                 (Zeder confirms that it will adhere to the
                 provisions of paragraph 10.21 of Schedule 10 of
                 the JSE Listings Requirements, in this regard);

4.1.1.3          once all the Firm Intention Offer Conditions and
                 the Scheme Conditions have been fulfilled and
                 the Scheme is implemented, AVL shareholders will
                 receive   the  scheme   consideration  of   16.2
                 (sixteen point two) listed Zeder shares for
                 every 1 (one) unlisted Scheme Share disposed of
                 in terms of the Scheme, rounded to the nearest
                 whole number and credited as fully paid (“Scheme
                 Consideration”) (“Swap Ratio”);

4.1.1.4          the Scheme Consideration will not have a cash
                 alternative; and

4.1.1.5          the Scheme Consideration will be issued on
                 market and will be listed on the main board of
                 the JSE.

4.1.2        Zeder confirms that the Scheme Consideration has
             been calculated on the basis set out below –

4.1.2.1          the Scheme Consideration has been calculated on
                 a like-for-like basis, based on the see-through
                 sum-of-the-parts value per share of Zeder of
                 R6.11 per share, as at 4 June 2014, and the see-
                 through value per share of AVL of R99.00 per
                 share, as at 4 June 2014;

4.1.2.2          the see-through sum-of-the-parts value per share
                 (“See-through SOTP”) of Zeder is calculated
                 using the quoted market prices for all JSE-
                 listed and over-the-counter traded investments,
                 apart from using the see-through market price of
                 Pioneer Foods for Zeder’s investment in AVL, and
                 directors valuations for unlisted, unquoted
                 investments; and

4.1.2.3          the see-through value per share (“See-through
                 value”) of AVL is calculated using the see-
                 through market price for AVL’s investment in
                 Pioneer Foods.

4.2       FIRM INTENTION OFFER CONDITIONS

4.2.1        The   posting  of   the  scheme   circular to  AVL
             shareholders, other than Zeder, in relation to the
             Scheme ("Scheme Circular") is subject to the 
             fulfilment of the Firm Intention Offer Conditions
             that, by no later than 30 August 2014 –

4.2.1.1          the independent expert appointed to advise the
                 independent board of AVL furnishes an opinion
                 that the terms and conditions of the Scheme are
                 fair and reasonable to AVL shareholders; and

4.2.1.2          all requisite approvals have been received from
                 the JSE, the TRP and the Financial Surveillance
                 Department of the South African Reserve Bank for
                 the posting of the Scheme Circular, to the
                 extent required.

4.2.2        The Firm Intention Offer Condition   in   paragraph
             4.2.1.2 cannot be waived.

4.2.3        The Firm Intention Offer Condition in paragraph
             4.2.1.1 may be waived by Zeder upon written notice
             to AVL, prior to the date for fulfilment of that
             Firm Intention Offer Condition.

4.2.4        Zeder will be entitled to extend the date for the
             fulfilment of any of the Firm Intention Offer
             Conditions by up to 30 days, in its own discretion,
             upon written notice to AVL, but shall not be
             entitled to extend the date to a date later than the
             aforesaid 30 day period without the prior written
             consent of AVL.

5. THE SCHEME CONDITIONS

5.1       The Scheme will be subject to (and will become
          operative on the relevant operative date upon) the
          fulfilment of the following conditions precedent on or
          before 30 September 2014 –

5.1.1        that, as the implementation of the Scheme would
             amount to a category 1 acquisition by Zeder in terms
             of the JSE Listings Requirements, the Scheme be
             approved by Zeder shareholders as required under the
             JSE Listings Requirements;

5.1.2        that,   as   the   voting  power   of   the   Scheme
             Consideration shares will exceed 30% of the voting
             power of all the shares held by Zeder shareholders
             immediately prior to the issue of same, the issue of
             the Scheme Consideration by Zeder be approved by
             Zeder shareholders by way of a special resolution
             under section 41(3) of the Companies Act;

5.1.3        that the Scheme be approved by the requisite
             majority of AVL shareholders, as contemplated in
             section 115(2)(a) of the Companies Act, and, to the
             extent required, by a High Court in terms of section
             115(2)(c) of the Companies Act, and, if applicable,
             that AVL does not treat the aforesaid shareholder
             resolution as a nullity, as contemplated in section
             115(5)(b) of the Companies Act;

5.1.4        that, in relation to any objections to the Scheme by
             AVL shareholders –

5.1.4.1          no AVL shareholders give notice objecting to the
                 Scheme, as contemplated in section 164(3) of the
                 Companies Act and vote against the resolution
                 proposed at the general meeting to approve the
                 Scheme (“Scheme Meeting”); or

5.1.4.2          if AVL shareholders give notice objecting to the
                 Scheme, as contemplated in section 164(3) of the
                 Companies Act, and vote against the resolution
                 proposed at the Scheme Meeting, AVL shareholders
                 holding no more than 5% of all Scheme Shares
                 eligible to be voted at the Scheme Meeting give
                 such notice and vote against the resolutions
                 proposed at the Scheme Meeting; or

5.1.4.3          if AVL shareholders holding more than 5% of all
                 Scheme Shares eligible to vote at the Scheme
                 Meeting give notice objecting to the Scheme, as
                 contemplated in section 164(3) of the Companies
                 Act, and vote against the resolution proposed at
                 the    Scheme   Meeting,   the    relevant   AVL
                 shareholders do not exercise their appraisal
                 rights, by giving valid demands in terms of
                 sections 164(5) to 164(8) of the Companies Act
                 within 30 business days following the Scheme
                 Meeting, in respect of more than 5% of the
                 Scheme shares eligible to be voted at the Scheme
                 Meeting; and

5.1.5        that, in respect of the implementation of the Scheme
             and only to the extent that same may be applicable,
             the approval of the JSE, the TRP and any other
             relevant     regulatory      authorities     (either
             unconditionally or subject to conditions acceptable
             to Zeder) be obtained, it being recorded that on 26
             February 2014 the Competition Tribunal of South
             Africa approved in advance the acquisition of
             control by Zeder over AVL (provided that this occurs
             by no later than 25 February 2015).

5.2       The Scheme Conditions in paragraphs 5.1.1, 5.1.2, 5.1.3
          and 5.1.5 cannot be waived.

5.3       The Scheme Condition in paragraph 5.1.4 may be waived
          by Zeder upon written notice to AVL, prior to the date
          for fulfilment of the relevant Scheme Condition.

5.4       Zeder will be entitled to extend the date for the
          fulfilment of any of the Scheme Conditions, by up to 60
          days, in its own discretion, upon written notice to
          AVL, but shall not be entitled to extend the date to a
          date later than the aforesaid 60 day period without the
          prior written consent of AVL.

6. ACTING AS PRINCIPAL, COMMITMENTS FROM SHAREHOLDERS

6.1      Zeder confirms that it is the ultimate prospective
         purchaser of the Scheme Shares and is acting alone and
         not in concert with any party.

6.2      Zeder is in the process of approaching AVL shareholders
         for irrevocable commitments to vote in favour of the
         AVL resolution to be tabled at the Scheme Meeting to
         approve the Scheme. Details regarding the irrevocable
         commitments obtained by Zeder from AVL shareholders
         will be announced prior to the posting of the Scheme
         Circular.

6.3      Zeder confirms that it has already received commitments
         from Zeder shareholders holding approximately 75% of
         Zeder shares in issue, to vote in favour of the
         required Zeder shareholder resolutions.

7. VOLUNTARY GENERAL OFFER

7.1      In the unlikely event that the Scheme fails, Zeder
         intends to make a voluntary general offer to all AVL
         shareholders to acquire their AVL shares (“General
         Offer”).

7.2      The consideration to be offered in terms of the General
         Offer, if it is made, will be identical to the Scheme
         Consideration.

7.3      Zeder is in the process of acquiring irrevocable
         commitments from AVL shareholders in this regard.

8. AUTHORISED SHARE CAPITAL

      Zeder confirms that it has sufficient authorised share
      capital available to settle the Scheme Consideration shares
      to be issued to AVL shareholders in terms of the Scheme.

9. PRO FORMA FINANCIAL EFFECTS ON AVL SHAREHOLDERS

9.1      The pro forma financial effects on AVL shareholders are
         the responsibility of the AVL directors and have been
         prepared for illustrative purposes only to provide
         information about how the Scheme may affect the
         financial position of the AVL shareholders. The pro
         forma financial effects on AVL shareholders have been
         calculated in respect of 1 AVL Scheme Share held before
         the Scheme and 16.2 Zeder shares held after the Scheme.

9.2      The pro forma financial effects are presented for
         illustrative purposes only and, because of their
         nature, may not fairly present the actual financial
         effects of the Scheme on AVL shareholders.

                                Audited
                                results
                                for the
                             year ended
                              September    Pro forma
                                   2013        after
                             (cents)(1)   (cents)(2)  Change

Net asset value per
share                           3 721.1      9 175.0      146.6%

Tangible net asset value
per share                       3 721.1      8 753.3      135.2%

Adjusted headline
earnings per share                428.4        463.3        8.2%

Headline earnings per
share                             365.4        388.8        6.4%

Attributable earnings
per share                         361.1      2 765.3      665.8%

See-through value per
share as at 4 June 2014
(rand)                            99.00        99.00           -

      Notes and assumptions:

      1. Extracted, without adjustment, from the audited results
         of AVL for the year ended 30 September 2013, except for
         the See-through value per share, calculated as set out
         in paragraph 4.1.2.3.

      2. The “Pro forma after” column sets out the position of an
         AVL shareholder following implementation of the Scheme,
         now owning Zeder shares. The financial information is
         based   on   Zeder’s  financial   effects  pursuant   to
         implementation of the Scheme (for the year ended 28
         February 2014), multiplied by the Swap Ratio of 16.2 to
         provide the pro forma financial effects for AVL
         shareholders.

10. PRO FORMA FINANCIAL EFFECTS ON ZEDER SHAREHOLDERS

10.1   The pro forma financial effects on Zeder shareholders
       are the responsibility of the Zeder directors and have
       been prepared for illustrative purposes only to provide
       information about how the Scheme may affect the
       financial position of the Zeder shareholders.

10.2   The pro forma financial effects are presented for
       illustrative purposes only and, because of their
       nature, may not fairly present the actual financial
       effects of the Scheme on Zeder shareholders. Please
       note the substantial non-headline gains, as detailed in
       note 2 (c) and (d) below, which predominantly accounts
       for the increase in “Attributable earnings per share”
       in the “Pro forma after” column, are merely accounting
       entries in terms of International Financial Reporting
       Standards and by no means represent a financial gain to
       Zeder.


                               Audited
                               results
                               for the
                            year ended
                              February    Pro forma
                                  2014        after
                            (cents)(1)   (cents)(2)     Change

Net asset value per
share                            368.0        566.4     53.9%

Tangible net asset value
per share                        329.6        540.3     63.9%

Recurring headline
earnings per share                29.8         28.6     (4.0%)

Headline earnings per
share                             25.8         24.0     (7.0%)

Attributable earnings
per share                         29.7        170.7     474.7%

See-through SOTP per
share as at 4 June
2014(rand)                        6.11         6.11         -


   Notes and assumptions:

1. Extracted, without adjustment, from the audited results
   of Zeder for the year ended 28 February 2014, except for
   the See-through SOTP per share, calculated as set out in
   paragraph 4.1.2.2.

2. The pro forma results after the acquisition incorporates
   the following financial effects:

(a)   The acquisition of 28 620 719 AVL shares not already
      held by Zeder (by way of the Scheme) for a
      consideration of 463 655 648 Zeder shares.

(b)   The elimination of Agri Voedsel's equity and reserves
      at acquisition.

(c)   A non-headline fair value gain of R1 020m on the
      remeasurement of the pre-acquisition non-controlling
      interest to fair value.

(d)   A non-headline   gain   on   business   combination 
      of   R1 124m.

(e)   Transaction costs estimated to be approximately R9m.

(f)   With the exception of the adjustments set out in (c)
      to (e) above, all adjustments are expected to have a
      continuing effect.

3. The pro forma financial effects do not include any
   adjustment to the performance fee that was paid to PSG
   in terms of the management agreement for the year ended
   28 February 2014, due to the uncertain nature thereof.

11. INDEPENDENT BOARD, OPINION AND RECOMMENDATIONS

11.1   In accordance with the Companies Regulations, an
       independent AVL board, comprised of independent non-
       executive directors, has been appointed by the AVL
       Board, to evaluate the Scheme (“Independent Board”).

11.2   The Independent Board will appoint an independent
       expert acceptable to the TRP to provide the Independent
       Board with external advice in regard to the Scheme and
       to make appropriate recommendations to the Independent
       Board for the benefit of AVL shareholders. The
       substance of the external advice and the opinion of the
       Independent Board on the Scheme will be detailed in the
       Scheme Circular.

12. FURTHER DOCUMENTATION AND SALIENT DATES

12.1   Further details of the Scheme will be included in the
       Scheme Circular that will, subject to the fulfilment of
       the Firm Intention Offer Conditions, be posted in due
       course to AVL shareholders. The Scheme Circular will,
       inter alia, also contain a notice of the Scheme
       Meeting, a form of proxy and a form of surrender and
       transfer.

12.2   In addition, Zeder will in due course send a category 1
       acquisition circular to its shareholders, as required
       under   the   JSE   Listings   Requirements,  while   a
       prospectus/revised listing particulars will be sent to
       both Zeder shareholders and AVL shareholders.

12.3   The Scheme will become effective and be implemented
       following the fulfilment of the Firm Intention Offer
       Conditions and the Scheme Conditions. The salient dates
       in relation to the Scheme will be published in due
       course.

13. INDEPENDENT BOARD RESPONSIBILITY STATEMENT

    The Independent Board accepts responsibility for the
    information contained in this announcement which relates to
    AVL and confirms that, to the best of its knowledge and
    belief, such information which relates to AVL is true and
    the announcement does not omit anything likely to affect
    the importance of such information.

14. ZEDER BOARD RESPONSIBILITY STATEMENT

    The board of directors of Zeder accepts responsibility for
    the information contained in this announcement which
    relates to Zeder and confirms that, to the best of its
    knowledge and belief, such information which relates to
    Zeder is true and the announcement does not omit anything
    likely to affect the importance of such information.

15. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS

15.1   Zeder shareholders are referred to Zeder’s cautionary
       announcement on 18 June 2014, as renewed on 20 June
       2014, and are advised that, whereas the terms of the
       Scheme have now been announced, caution is no longer
       required to be exercised by shareholders when dealing
       in their Zeder securities.

15.2   AVL shareholders are referred to AVL’s cautionary
       announcement on 19 June 2014, as renewed on 20 June
       2014, and are advised that, whereas the terms of the
       Scheme have now been announced, caution is no longer
       required to be exercised by shareholders when dealing
       in their AVL securities.

Stellenbosch
25 June 2014

PSG Capital: Transaction adviser and sponsor to Zeder

Date: 25/06/2014 05:40:00 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
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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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