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Conclusion of a Subscription Agreement by NHL Regarding a Specific Issue of Shares for Cash to a BEE Consortium
NUTRITIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 2004/002282/06)
Share code: NUT ISIN: ZAE000156485
(“the Company” or “NHL”)
CONCLUSION OF A SUBSCRIPTION AGREEMENT BY NHL REGARDING A
SPECIFIC ISSUE OF SHARES FOR CASH TO A BLACK ECONOMIC
EMPOWERMENT (“BEE”) CONSORTIUM
1. Introduction and Rationale
1.1. Shareholders are advised that the Company has concluded
a subscription agreement with Philisani, being a black-
controlled entity led by Mr Thabo Mokgatlha (“BEE Consor-
tium” or “Philisani”) on 13 August 2014 (“Subscription
Agreement”) in terms of which the Company will issue
ordinary shares to the BEE Consortium for cash (“BEE
Subscription”).
1.2. Mr Mokgatlha, a Chartered Accountant(SA), graduated from
the University of the North West and was the Financial
Director of Royal Bafokeng Resources Management Services
(Pty) Limited. Previous and current non-executive director-
ship positions held by Mr Mokgatlha include inter alia Rand
Merchant Insurance Holdings Limited, York Timber Holdings
Limited, Astrapak Limited, Hyprop Investments Limited and
Impala Platinum Holdings Limited. It is anticipated that Mr
Mokgatlha will take up a more permanent position with the
Company as Chief Operating Officer in the event that the
conditions precedent to the BEE Subscription are fulfilled.
1.3. The proceeds from the BEE Subscription will be utilised to
fund expenditure on certain operational assets to improve
the production flow and capacity at its Klerksdorp factory,
as well as to fund the Company’s increased working capital
requirements. In addition, the BEE Subscription will further-
more strengthen the Company’s overall BEE credentials, with
a view of unlocking potential contracts for Nutritional.
2. Specific Issue
In terms of the Subscription Agreement, the Company will issue,
and the BEE Consortium will subscribe for, 1 300 000 000 (one
billion three hundred million) new ordinary shares in the authorised
but unissued share capital of the Company (“Subscription Shares”)
at an issue price of R0.01 (one cent) per share (“Issue Price”),
being equal to the 30-day volume weighted average trading price of
NHL shares as at 13 August 2014 (being the date on which the
Subscription Agreement was concluded), and constituting a total
purchase consideration of R13 000 000 (thirteen million rand)
(“Specific Issue”).
3. Consortium Members
3.1 The shareholders of the BEE Consortium comprise Mr Mokgatlha
(30%), Mr Jabulani Mabaso (30%), Mr Rob Etchells, chief executive
officer of NHL (13.33%), Mr Rick Wilson (13.33%) and Zustonelli
Limited (13.34%).
3.2 Notwithstanding that Mr Etchells is also a shareholder in the BEE
Consortium, the Specific Issue will not be deemed to be an issue
to a related party in terms of paragraph 10(1)(b)(vi) of the Listings
Requirements of the JSE Limited (“JSE”) as Philisani is not deemed
to be an associate of Mr Etchells.
4. Waiver of Mandatory Offer
The Subscription Shares will, subsequent to the implementation of the
Specific Issue, constitute approximately 40.53% of the total issued
share capital of NHL (net of treasury shares) and will, accordingly,
trigger a mandatory offer in terms of section 123 of the Companies Act,
2008, as amended (“Companies Act”) unless same is waived by way of an
ordinary resolution adopted by the independent holders of more than 50%
of the general voting rights of all the issued securities of the Company
in terms of regulation 86(4) of the Companies Regulations 2011 (“Waiver
of Mandatory Offer”).
5. Conditions Precedent
The implementation of the Specific Issue will be subject to
the fulfilment of the following conditions precedent set out
in the Subscription Agreement on or before 31 October 2014:
5.1. the board of directors of the Company (“the Board”)
agreeing to call a general meeting of NUT shareholders
for purposes of, inter alia, the Waiver of the Mandatory
Offer;
5.2. the BEE Consortium providing the necessary payment
guarantee equal to the Specific Issue consideration to
the satisfaction of the Company; and
5.3. all regulatory approvals including, inter alia, those
required in terms of the JSE Listings Requirements and
the Companies Act having been obtained.
To the extent that the conditions precedents are not
fulfilled or waived (as the case may be) on or before 31
October 2014, the Subscription Agreement will not become
effective and the Specific Issue will not be made.
6. Pro forma financial effects
6.1. The pro forma financial effects set out below have
been prepared for purposes of assisting the Company’s
shareholders to assess the impact of the Specific Issue
on the earnings per share (“EPS”), headline earnings
per share (“HEPS”), net asset value per share (“NAV”)
and tangible net asset value per share (“TNAV”).
6.2. It is assumed for purposes of the pro forma financial
effects that the Specific Issue took place with effect
from 1 March 2013 for purpose of the statement of
comprehensive income and at 28 February 2014 for
purposes of the statement of financial position.
6.3. The pro forma financial effects have been prepared for
illustrative purposes only and, because of their
nature, may not fairly present the Company’s financial
position, results of its operations, changes in equity
or cash flows.
6.4. The pro forma financial effects are the responsibility
of the Board and have not been reviewed by the auditors
of the Company.
Per Audited 28 Adjustments Pro forma %
Nutritional February for the after the Change
share 2014 Specific Specific
(cents) Issue Issue
EPS (loss) (0.32) 0.14 (0.18) 43.8%
HEPS (0.32) 0.14 (0.17) 46.9%
(loss)
NAV 1.55 (0.23) 1.32 (14.8%)
TNAV 0.90 0.03 0.93 3.3%
Number of 1 907 368 1 300 000 3 207 368 68.2%
shares in
issue
(‘000)
Weighted 1 907 368 1 300 000 3 207 368 68.2%
average
number of
shares in
issue
(‘000)
Notes:
a. The “Audited 28 February 2014” has been extracted, without
adjustment, from the audited financial statements of
Nutritional for the financial year ended 28 February 2014.
b. The “Pro forma after the Specific Issue” column is based on
the assumption that 1 300 000 000 NHL ordinary shares will be
issued to the BEE Consortium for a total consideration of R13
million.
c. It was assumed that the Company’s gearing was reduced with the
proceeds of the Specific Issue. The interest expense incurred
for the year ending 28 February 2014, amounting to R488 000
has been reversed in the pro forma’s. No adjustments have been
made for interest earned on the residual proceeds of the
Specific Issue.
d. Once-off transaction costs of approximately R400 000 have been
capitalised, comprising advisor fees, JSE fees and printing
costs.
e. A tax rate of 28% is assumed for the pro forma adjustments.
f. All adjustments above will have a continuing effect except
where otherwise stated.
7. NHL General Meeting
7.1. A circular, including a notice convening the NHL General Meeting,
detailing the terms of the Specific Issue as well as the action
required of the Company's shareholders will be posted to shareholders
in due course.
7.2. Further announcements concerning the relevant dates, including the
date of the NHL General Meeting, pertaining to the Specific Issue
will be released in due course.
13 August 2014
Umhlanga
Designated Advisor: PSG Capital Proprietary Limited
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