Wrap Text
Taste raises R180 million for further growth declaration announcement in respect of the Taste rights offer
TASTE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2000/002239/06)
Share code: TAS ISIN: ZAE000081162
(“Taste” or “the Company” or “the Group”)
TASTE RAISES R180 MILLION FOR FURTHER GROWTH
DECLARATION ANNOUNCEMENT IN RESPECT OF THE TASTE RIGHTS OFFER
1. INTRODUCTION
Taste is pleased to announce that it intends to raise R180 157 542 by way of a
renounceable rights offer (“Rights Offer”) and advises Shareholders that it has already
been provided with irrevocable commitments from 59.4% of existing key Shareholders to
follow all of their rights in terms of the Rights Offer and to subscribe for all the ordinary
shares in Taste (“Shares”) to which they are entitled. In addition, certain of these
Shareholders have provided further irrevocable commitments that, to the extent that the
remaining Shareholders do not follow their rights in terms of the Rights Offer, these existing
key Shareholders will take up a further 41.1% of the Rights Offer Shares by way of Excess
Applications. Accordingly, the entire capital amount intended to be raised has been
irrevocably secured from existing Shareholders and therefore, no underwriter is required.
During July 2014, Taste registered a R1 billion Domestic Medium Term Note (“DMTN”)
programme. On 30 July 2014, in its inaugural issue under this programme, notes were
issued in aggregate of R125 million. The capital to be raised in terms of the Rights Offer is
therefore complementary to Taste’s access to debt facilities in terms of the R1 billion DMTN
programme.
In terms of the Rights Offer, Taste will offer a total of 60 052 514 new Shares (“Rights
Offer Shares”) at a subscription price of 300 cents per Rights Offer Share (“Subscription
Price”) in the ratio of 29.20 Rights Offer Shares for every 100 Shares held at the close of
business on the record date for the Rights Offer, being Friday, 12 September 2014
(“Record Date”).
2. PURPOSE OF THE RIGHTS OFFER
The purpose of the Rights Offer is to provide Taste with additional capital in the amount of
R180 157 542 so as to realise the opportunities of:
- leveraging the exclusive Domino’s Pizza licence it acquired in April 2014 for seven
African countries thereby capitalising on the fast growing Southern African pizza market
with the world leading Pizza Delivery Brand;
- pursuing acquisitions in line with its stated strategy in the Quick Service Restaurant
(“QSR”) segment that serves emerging middle income (LSM 4-6) consumers,
complementing its existing The Fish & Chip Co. and Zebro’s Chicken brands; and
- continuing to invest in corporate store ownership of NWJ outlets.
3. PROSPECTS
Taste has historically been cautious in its future outlook, especially with regard to
forecasting factors beyond its direct control. While sales in Taste’s two pizza brands have
shown continued positive sales growth during the current year, demand among lower
income consumers remains weak and it is anticipated that this will continue through the
2015 financial year, potentially offsetting gains made in the pizza division. With regard to
those factors within its control, the Group is encouraged by the medium and long-term
benefits the Domino’s Pizza roll-out and conversion will bring. As communicated in prior
announcements, this will however require initial once-off costs relating to the store
conversions, establishment of a centralised dough production facility; and initial training and
marketing. The decision was also taken not to open new Scooters Pizza or St Elmo’s
outlets, impacting comparability against prior periods.
As the costs associated with Domino’s Pizza relate to the investment in Domino’s, the Group
excludes such costs from reported Core earnings. Core earnings more accurately reflects
the comparable performance of the underlying business. For the six months ending 31
August 2014 (“the current period”), Core earnings excludes Domino’s Pizza related costs
and take into account normalising the prior years’ pizza division profit from store openings
that occurred in the six months ended 31 August 2013 (“the prior period”), as the decision
was taken not to open new Scooters Pizza or St Elmo’s outlets in the current period.
Core EBITDA for the current period is expected to be R1.2 million to R1.7 million higher than
the prior period. Core headline earnings for the current period is estimated to be between
R1.0 million and R1.5 million less than the prior period. Amortisation, depreciation and
finance costs are higher in the current period due to capital expenditure incurred in the
second half of the 2014 financial year to acquire NWJ stores and for the expansion and
integration of the food services division, which benefits are expected in the latter half of the
current year.
It is anticipated that the food services division will continue its improvement in efficiencies
and that the jewellery division will increase its corporate-owned store base.
Taste remains committed to being a diversified franchisor invested in retail and restaurant
brands within Southern Africa. The increased human resource capacity as a result of the re-
structure in the food division will see the Group continuing to assess opportunities in line
with its strategic intent, particularly within the food division.
4. SALIENT TERMS OF THE RIGHTS OFFER
In terms of the Rights Offer, Taste will offer a total of 60 052 514 Rights Offer Shares at a
subscription price of 300 cents per Rights Offer Share in the ratio of 29.20 Rights Offer
Shares for every 100 shares held in Taste on the close of business on the Record Date.
The Subscription Price represents a discount of 19.29% to the 30 day volume weighted
average traded price of Taste Shares on the JSE Limited (“JSE”) as at 31 July 2014, being
the date on which the Rights Offer was approved by the board of directors of Taste
(“Board”).
Qualifying Shareholders will have the right to apply for Rights Offer Shares in excess of their
entitlements, on the same terms and conditions as those applicable in terms of their
entitlements.
Upon their issue, the Rights Offer Shares will rank pari passu in all respects with the existing
Taste Shares.
5. IRREVOCABLE UNDERTAKING
59.4% of Shareholders have provided Taste with irrevocable undertakings to follow all of
their rights in terms of the Rights Offer and to subscribe for all the ordinary Shares to which
they are entitled. In addition, certain of these Shareholders have irrevocably applied for an
additional 41.1% of Rights Offer Shares by way of Excess Applications. In terms of the
irrevocable undertakings, such Shareholders have agreed to follow their Rights Offer
Entitlement as set out below:
Number of Number of Percentage Number of
Shares held Rights of Rights Shares held
in Taste Offer Offer in Taste
before the Shares Shares after the
Name of Shareholder Rights Offer offered (%) Rights Offer
The Hylton Rabinowitz
Family Trust* 29 039 954 8 479 667 14.1 37 519 621
Chickenland Proprietary
Limited 26 227 632 7 658 469 12.8 33 886 101
Brimstone Investments
Corporation Limited 24 540 099 7 165 709 11.9 31 705 808
PSG Asset Management
Proprietary Limited 11 842 756 3 458 085 5.8 15 300 841
Midbrook Lane Proprietary
Limited, Riskowitz Capital
Management LLC and
Protea Asset Management
LLC 11 176 795 3 263 624 5.4 14 440 419
Snowball Wealth 7 132 176 2 082 595 3.5 9 214 771
CoroCapital Proprietary
Limited 6 004 317 1 753 261 2.9 7 757 578
The Beare Foundation* 5 500 500 1 606 146 2.7 7 106 646
Hylton Roy Rabinowitz* 329 999 96 360 0.2 426 359
Julian Hilton Beare 300 000 87 600 0.1 387 600
122 094 228 35 651 516 59.4 157 745 744
* The Hylton Rabinowitz Family Trust and Hylton Roy Rabinowitz have, in terms of their Rights Offer
Entitlements, together committed to subscribe for 3 096 359 Rights Offer Shares, and to sell the
remaining 5 479 667 Rights Offer Shares to The Beare Foundation. The Beare Foundation has
committed to purchase the 5 479 667 Rights Offer Shares.
6. PRO FORMA FINANCIAL EFFECTS OF THE RIGHTS OFFER
The table below sets out the pro forma financial effects of the Rights Offer on Taste’s basic
earnings per share, diluted earnings per share, headline earnings per share, diluted
headline earnings per share, net asset value per share and tangible net asset value per
share.
The pro forma financial effects have been prepared to illustrate the impact of the Rights
Offer on the audited financial statements of Taste for the year ended 28 February 2014, had
the Rights Offer occurred on 1 March 2013 for purposes of the statement of comprehensive
income and on 28 February 2014 for purposes of the statement of financial position.
The pro forma financial effects have been prepared using accounting policies that comply
with IFRS and that are consistent with those applied in the audited financial statements of
Taste for the year ended 28 February 2014.
The pro forma financial effects which are the responsibility of the directors of the Company
are provided for illustrative purposes only and, because of their pro forma nature may not
fairly present Taste’s financial position, changes in equity, results of operations or cash flow
nor the effect and impact of the Rights Offer going forward.
The full financial effects will be included in the Rights Offer circular to Taste Shareholders
which circular is currently being finalised and is expected to be distributed on or about
9 September 2014.
Pro forma Percentage
Before the After the change
Rights Offer Rights Offer %
Basic earnings per share (cents) 15.6 15.3 (2)
Diluted earnings per share (cents) 15.1 14.9 (1)
Headline earnings per share (cents) 16 15.6 (3)
Diluted headline earnings per share (cents) 15.5 15.2 (2)
Net asset value per share (cents) 112.9 155.4 38
Tangible net asset value per share (cents) 44.0 102.5 133
Weighted average number of shares in
issue
Basic 194 790 561 254 843 075
Diluted 200 934 788 260 987 302
Total number of shares in issue (net of
treasury shares)
Basic 199 303 982 259 356 496
Diluted 206 904 412 266 956 926
Notes:
1. The Information in the “Before the Rights Offer” column has been extracted from the audited
financial statements of Taste for the year ended 28 February 2014.
2. The “Pro forma After the Rights Offer” column reflects the pro forma financial effects of the Rights
Offer on earnings, diluted earnings, headline earnings, diluted headline earnings, net asset value
and net tangible asset value per share based on the following assumptions:
3. 60 052 514 Rights Offer Shares are assumed to have been issued at a subscription price of 300
cents per Rights Offer Share in the ratio of 29.20 Rights Offer Shares for every 100 Taste Shares
held pursuant to the Rights Offer, thereby raising capital of R180 157 542.
4. The net proceeds of the Rights Offer after deduction of estimated once-off transaction costs of
R2 million (which have been offset against the stated capital account as per note 7 below) will be
used to settle loans, the balance of which will be held in a money market account at an interest
rate of 6% per annum.
5. The Rights Offer was implemented on 28 February 2014 for statement of financial position
purposes, and implemented on 1 March 2013 for statement of comprehensive income purposes.
6. All adjustments, except for transaction costs, are expected to have a continuing effect.
7. The transaction costs of approximately R2 million relating to the Rights Offer and listing of the
Rights Offer Shares has been offset against the stated capital account.
7. SALIENT DATES AND TIMES
2014
Rights Offer Declaration Data announcement released on SENS Thursday, 28 August
Rights Offer Finalisation announcement released on SENS Tuesday, 2 September
Last day to trade in Taste Shares in order to settle trades by the
Record Date for the Rights Offer and to qualify to participate in the
Right Offer (cum entitlement) on Friday, 5 September
Listing of and trading in the Letters of Allocation on the JSE under
JSE code TASN and ISIN ZAE000193876 commences at 09:00
on Monday, 8 September
Taste Shares commence trading ex-rights on the JSE at 09:00 on Monday, 8 September
Circular and Form of Instruction posted to Certificated
Shareholders on Tuesday, 9 September
Record date for the Rights Offer for purposes of determining the
Taste Shareholders entitled to participate in the Rights Offer at the
close of business on Friday, 12 September
Rights Offer opens at 09:00 on Monday, 15 September
Holders of Dematerialised Taste Shares will have their accounts at
their CSDP or broker automatically credited with their Letters of
Allocation on Monday, 15 September
Holders of Certificated Taste Shares will have their Letters of
Allocation credited to an electronic register at the Transfer
Secretaries on Monday, 15 September
Circular posted to Dematerialised Shareholders, who have elected
to receive such documents on Tuesday, 16 September
Last day to trade in Letters of Allocation in order to settle trades by
the Record Date for the Letters of Allocation and participate in the
Rights Offer at the close of business on Thursday, 18 September
Last day for Form of Instruction to be lodged with the Transfer
Secretaries by holders of Certificated Taste Shares wishing to sell
all or part of their Rights Offer Entitlement by 12:00 on Thursday, 18 September
Listing and trading of Rights Offer Shares commences on the JSE
at 09:00 on Friday, 19 September
Last day for Form of Instruction to be lodged with the Transfer
Secretaries by holders of Certificated Taste Shares wishing to
subscribe for or renounce all or part of their Rights Offer
Entitlement by 12:00 on (see note 2) Friday, 26 September
Record date for Letters of Allocation Friday, 26 September
Rights Offer closes at 12:00 and payment to be made on Friday, 26 September
CSDP/broker accounts credited with Rights Offer Shares and
debited with the payments due in respect of holders of
Dematerialised Taste Shares on Monday, 29 September
Rights Offer Share certificates in terms of the Rights Offer posted
to holders of Certificated Taste Shares via registered post on or
about Monday, 29 September
Results of Rights Offer announced on SENS on Monday, 29 September
CSDP/broker accounts credited with excess Rights Offer Shares,
where applicable, and debited with the payments due in respect of
holders of Dematerialised Taste Shares on Wednesday, 1 October
Rights Offer Share certificates in terms of the excess Rights Offer
Shares, where applicable, posted to holders of Certificated Taste
Shares via registered post on or about Wednesday, 1 October
Refund cheques posted to holders of Certificated Taste Shares in
respect of unsuccessful applications via registered post on or
about Wednesday, 1 October
Notes:
1. The above dates and times, which times are local times in South Africa, are subject to
amendment. Any such amendment will be released on SENS.
2. Holders of Dematerialised Taste Shares are required to notify their CSDP or broker of the action
they wish to take in respect of the Rights Offer in the manner and by the time stipulated in the
agreement governing the relationship between the Dematerialised Shareholder and his CSDP or
broker.
3. Taste share certificates may not be Dematerialised or rematerialised between Monday,
8 September 2014 and Friday, 12 September 2014, both days inclusive.
4. CSDPs effect payment in respect of holders of Dematerialised Rights Offer Shares on a delivery
versus payment basis.
5. To the extent that the rights are accepted, Dematerialised Shareholders will have their accounts at
their CSDP automatically credited with their rights and Certificated Shareholders will have their
rights credited to an account at Computershare Investor Services.
6. Rights Offer share certificates to be issued in terms of the Rights Offer will be posted to persons
entitled thereto, by registered post, at the risk of the Certificated Shareholders concerned.
8. RESTRICTIONS ON THE RIGHTS OFFER
Any Shareholder resident outside the Common Monetary Area, being the Republics of
South Africa and Namibia and the Kingdoms of Lesotho and Swaziland, who receives the
Rights Offer circular and accompanying 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.
The Rights Offer does not constitute an offer in any jurisdiction in which it is illegal to make
such an offer and the Rights Offer circular and accompanying form of instruction should not
be forwarded or transmitted any person in any territory other than where it is lawful to make
such an offer.
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 Rights Offer 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 Rights Offer 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 Rights Offer circular does not constitute an offer in the
District of Columbia, 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 (“Non-qualifying Shareholder”). 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. To the extent that Non-
qualifying Shareholders are not entitled to participate in the Rights Offer, such Non-
qualifying Shareholders should not take up their Rights Offer entitlement or trade in their
Rights Offer entitlement and should allow their rights in terms of the Rights Offer to lapse.
9. ANTICIPATED DIRECTORS DEALINGS IN TERMS OF RIGHTS OFFER SHARES
In compliance with the JSE Listings Requirements, the following disclosure is made prior
to Taste entering into a closed period.
The following directors have indicated that they intend accepting or selling the following
number of Rights Offer Shares:
Director Rights to be followed Rights to be sold
1
H R Rabinowitz 3 096 359 5 479 667
2
J B Currie 938 036 -
C F Gonzaga and associates 2 000 000 -
R L Daly and associates 1 300 000 177 286
D J Crosson 1 500 000 -
A Berman 394 200 -
W P van der Merwe 350 400 -
K Utian and associates 292 000 -
2
G Pattison 2 000 000 -
E Tsatsarolakis 29 200 -
1. H R Rabinowitz has committed to sell his Rights to an existing shareholder as per paragraph 5 of
this announcement.
2. J B Currie has agreed to renounce 2 million Rights to G Pattison. G Pattison intends to subscribe
for the 2 000 000 Rights Offer Shares.
10. FURTHER ANNOUNCEMENT AND CIRCULAR
The Rights Offer Finalisation Announcement is expected to be released on SENS on or
about 2 September 2014.
The Rights Offer circular, and accompanying form of instruction for use by certificated
Shareholders only, containing full particulars of the Rights Offer will be posted to
shareholders on or about 9 September 2014.
The Rights Offer circular containing full particulars of the Rights Offer will be distributed to
dematerialised Shareholders who have elected to receive such documents on or about 16
September 2014.
Johannesburg
28 August 2014
Sponsor, Corporate Advisor and Book Runner
Merchantec Capital
Forward Looking Statement:
This announcement contains certain forward looking statements. These forward-looking
statements are not historical facts but rather are based on the Company’s current expectations,
estimates and projections about the industry in which Taste operates, and beliefs and
assumptions regarding the Company’s future performance. Words such as “anticipates”,
“expected”, “intends”, “plans”, “believes”, “seeks”, “estimated”, “potential” and similar
expressions are intended to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to known and unknown risks, uncertainties
and other factors, some of which are beyond the control of the Company, are difficult to predict
and could cause actual results to differ materially from those expressed or forecasted in the
forward-looking statements. Taste cautions shareholders and prospective shareholders not to
place undue reliance on these forward-looking statements, which reflect the view of Taste only
as of the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are made. Taste will
not undertake any obligation to release publicly any revisions or updates to these forward-
looking statements to reflect events, circumstances or unanticipated events occurring after the
date of this announcement except as required by law or by any appropriate regulatory authority.
Date: 28/08/2014 08:00:00 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.