LITHA HEALTHCARE GROUP LIMITED - Joint announcement of a firm intention by Paladin Labs Inc., a wholly-owned subsidiary of Endo

Release Date: 15/10/2014 17:15
Code(s): LHG
 
Wrap Text
Joint announcement of a firm intention by Paladin Labs Inc., a wholly-owned subsidiary of Endo

LITHA HEALTHCARE GROUP LIMITED                     ENDO INTERNATIONAL PLC
(Incorporated in the Republic of South Africa)     (Incorporated in the Republic of Ireland)
(Registration number 2006/006371/06)               (Registration number 534814)
Share code: LHG                                    Share code on the NASDAQ Stock Exchange:
ISIN: ZAE000144671                                 ENDP
(“Litha” or the “Company”)                         Share code on the Toronto Stock Exchange: ENL
                                                   ISIN: IE00BJ3V9050
                                                   (“Endo”)




JOINT ANNOUNCEMENT OF A FIRM INTENTION BY PALADIN LABS INC., A WHOLLY-OWNED
SUBSIDIARY OF ENDO, (“PALADIN”) TO MAKE AN OFFER TO ACQUIRE THE ENTIRE
REMAINING ISSUED ORDINARY SHARE CAPITAL OF LITHA AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT




1. INTRODUCTION


    Litha shareholders (“Shareholders”) are referred to the cautionary announcement published by
    Litha on 18 August 2014 (“Cautionary Announcement”) and the renewal of cautionary
    announcement published on 3 October 2014. The board of directors of Litha (“Board”) and the
    board of directors of Paladin are pleased to announce that they have agreed the terms and
    conditions upon which Paladin will make a cash offer (“Offer”) to acquire the entire issued
    ordinary share capital of Litha not already owned by Paladin, excluding Treasury Shares (as
    defined below), (“Remaining Shares”) for a cash consideration of R2.75 per Remaining Share
    (“Consideration”).


    Paladin holds approximately 70% of Litha’s issued ordinary shares (“Shares”). Treasury shares
    comprise (i) 1 164 905 Shares held by Litha Medical Proprietary Limited (“Litha Medical”), being
    a wholly owned subsidiary of Litha and (ii) 2 556 043 Shares held by the trustees for the time
    being of the Litha Executive Share Purchase Scheme (“Executive Scheme”) (collectively,
    “Treasury Shares”).


    Paladin proposes to implement the Offer by way of a scheme of arrangement, in terms of
    section 114, read together with section 115, of the Companies Act, No. 71 of 2008, as amended
    from time to time ("Companies Act"), proposed by the Board between Paladin and the holders
    of the Remaining Shares (“Remaining Shareholders”) (“Scheme”).


    The Offer, if implemented, will result in the Shares being delisted from the exchange operated by
    the JSE Limited (“Exchange”) (“Delisting”).


                                                                                        
   Although not required in terms of regulation 87 of the Companies Regulations, 2011,
   promulgated under the Companies Act ("Regulations"), Paladin has elected to make a cash
   offer to holders of vested and unvested options to acquire Shares (“Option Holders”) as more
   fully set out in paragraph 4 below (“Option Holder Offer”).


   The purpose of this firm intention announcement (“Firm Intention Announcement”) is to advise
   Shareholders on the salient terms and conditions of the Offer.


2. BACKGROUND AND RATIONALE FOR THE OFFER


  2.1 Background


      On 28 February 2014, Endo concluded a transaction which resulted in it indirectly owning
      100% of Paladin's issued share capital.


      The aforementioned transaction resulted in a detailed review and assessment by Endo of
      Paladin’s various business interests and investments including, inter alia, Paladin’s interest
      in Litha. The outcome of this review process resulted in Endo resolving to (i) attempt to
      increase its ownership in Litha from its current shareholding to 100% and, if successful, (ii)
      delist Litha from the Exchange.


  2.2 Rationale for Endo


      Endo is of the view that the Offer is congruent with its African growth and expansion strategy
      and presents an opportunity for Endo to capitalise on the synergies and benefits arising from
      the Offer, including, inter alia,:


      -    growing its presence in South Africa and the broader African market and servicing both
           private and public sector needs;
      -    transforming Litha’s operating model to further align with Endo’s business practices in
           order to maximise growth potential and cash flow generation;
      -    enhancing internal efficiencies through restructuring the operations and reporting lines
           within Litha and its associates and/or subsidiaries so as to conform with Endo’s
           operating practices;
      -    increasing Litha’s access to Endo’s established brands and partnerships; and
      -    increasing knowledge, technology and research transfer from Endo to Litha.


      Furthermore, Endo is of the view that the Delisting will enhance its flexibility to facilitate
      Endo’s growth strategy and various integration and restructuring initiatives.


                                                                                       
  2.3 Rationale for Shareholders


      The Consideration will be settled in cash and represents a premium of:


      -   36.8% to the closing price per Share on the Exchange as at 15 August 2014, being the
          last business day immediately prior to the date of publication of the Cautionary
          Announcement;
      -   40.3% to the volume weighted average price (“VWAP”) of the Shares on the Exchange
          for the 30 days up to 15 August 2014;
      -   44.0% to the VWAP of the Shares on the Exchange for the 60 days up to
          15 August 2014; and
      -   36.1% to the VWAP of the Shares on the Exchange for the 6 months up to
          15 August 2014.


3. MATERIAL TERMS OF THE OFFER


  Paladin has submitted a letter of firm intention to make the Offer as contemplated in Chapter 5 of
  the Companies Act and Chapter 5 of the Regulations (“Firm Intention”). The Firm Intention
  contains the terms and conditions of the Offer, further details of which are set out in this Firm
  Intention Announcement.


  3.1 Transaction mechanism


      As mentioned above, Paladin proposes to implement the Offer by way of the Scheme on the
      following basis:


      -   the Scheme is to be proposed in accordance with section 114 of the Companies Act, as
          read together with section 115 of the Companies Act;
      -   the posting of the Scheme circular (“Circular”) to Shareholders will be subject to the
          fulfilment of the Circular Conditions Precedent, as defined and set out in paragraph 5
          below;
      -   implementation of the Scheme will be subject to the fulfilment of the Scheme Conditions
          Precedent, as defined and set out in paragraph 6 below; and
      -   as a consequence of implementing the Scheme, the Delisting will be implemented
          pursuant to paragraph 1.16(b) of the JSE Limited Listings Requirements.

                                                                                      
  3.2 Consideration


       If the Offer is implemented, the Remaining Shareholders will receive the Consideration on
       implementation of the Scheme. The Consideration will be discharged in cash and is
       proposed on the basis that:


       -   immediately prior to the implementation of the Scheme, the number of issued Shares will
           be no more than 559,634,502; and
       -   Litha will not make any distribution nor amend its share capital during the period
           commencing on the date of the Firm Intention and terminating on the date of
           implementation of the Scheme (“Relevant Period”). If this assumption is incorrect, the
           Consideration will be adjusted accordingly.


4. OPTION HOLDER OFFER


  Although not required in terms of regulation 87 of the Regulations, Paladin has elected to extend
  the Option Holder Offer to:


   -   Option Holders holding options granted in terms of The Litha Healthcare Group Share
       Incentive Scheme (“Incentive Scheme Options”), on the basis contemplated in paragraph
       5.2.1 below; and
   -   CPoint Capital Inc. (“CPoint”), on the basis contemplated in paragraph 5.2.3 below.


5. CONDITIONS PRECEDENT TO POSTING OF THE CIRCULAR TO SHAREHOLDERS


  5.1 Details pertaining to the Scheme and notice of the general meeting of Remaining
       Shareholders (“Scheme Meeting”), to consider and, if deemed fit, approve the Scheme, will
       be set out in the Circular.


  5.2 Posting of the Circular is subject to the fulfilment or waiver (as the case may be) of the
       following conditions precedent (collectively, the “Circular Conditions Precedent”) that:

       5.2.1 by no later than 24 November 2014, each of the Option Holders holding Incentive
              Scheme Options:


              5.2.1.1   in respect of which the exercise price is less than or equal to the
                        Consideration ("In-The-Money Options") signs a waiver in form and
                        substance acceptable to Paladin and Litha ("the Parties"), in terms of
                        which, subject to the implementation of the Offer, such Option Holder
                        agrees to waive all of its rights to and under the In-The-Money Options held
                        by it on the basis that Paladin will pay to it, on the date on which the Offer is
                        implemented and in respect of each In-The-Money Option held by it, an
                        amount equal to the Consideration minus the exercise price of the relevant
                        In-The-Money Option; provided that the aggregate consideration that
                        Paladin will pay to all Option Holders of In-The-Money Options in respect of
                        such In-The-Money Options shall not exceed R8 584 664; and


             5.2.1.2    in respect of which the exercise price exceeds the Consideration ("Out-The-
                        Money Options") signs a waiver in form and substance acceptable to the
                        Parties, in terms of which, subject to the implementation of the Offer, such
                        Option Holder agrees to waive all of its rights to and under the Out-The-
                        Money Options held by it on the basis that Paladin will pay to it, on the date
                        on which the Offer is implemented and in respect of each Out-The-Money
                        Option held by it, an ex gratia amount in cash equal to the Option Value of
                        the   relevant   Out-The-Money     Option;   provided   that   the   aggregate
                        consideration that Paladin will pay to all Option Holders of Out-The-Money
                        Options in respect of such Out-The-Money Options shall not exceed
                        R1 000 000. For purposes of this paragraph 5.2.1.2 "Option Value" shall
                        mean the value assigned to each Out-the-Money Option as determined by
                        Paladin (whose determination shall be final and binding) according to the
                        Black-Scholes valuation model, being a closed-form option pricing model
                        developed by Fischer Black, Myron Scholes and Robert Merton to value
                        European options on non-dividend paying shares;


5.2.2 by no later than 24 November 2014, Paladin receives (A) an irrevocable undertaking
      (which is in form and substance acceptable to Paladin) from the trustees of the
      Executive Scheme, (i) not to vote in respect of any resolution in connection with the
      Scheme, (ii) not to issue or grant any options in terms of the Executive Scheme, (iii) at
      the election of Paladin, to either resign as trustees of the Executive Scheme or to
      unanimously agree in writing to terminate and wind-up the Executive Scheme in
      accordance with clause 15 of the trust deed of the Executive Scheme, in each case
      on or before a date determined by Paladin and (iv) in the case of the termination of
      the Executive Scheme, to dispose of any Shares held by the Executive Scheme to a
      person or entity nominated in writing by Paladin; and, if required by Paladin, (B) an
      irrevocable undertaking (which is in form and substance acceptable to Paladin) from
      the board of directors of Litha Healthcare Holdings Proprietary Limited to unanimously
      resolve in writing to terminate and wind-up the Executive Scheme in accordance with
      clause 15 of the trust deed of the Executive Scheme;


5.2.3 by not later than 24 November 2014 CPoint signs a waiver in respect of which it
      waives its rights in terms of all the options granted to it to subscribe for or acquire
      shares in Litha and agrees to the cancellation of such options on the basis that Litha
      shall pay to CPoint a price equal to the difference between the Consideration and the
      price at which that option is exercisable by CPoint, and such written waiver is in form
      and substance acceptable to the Parties;


5.2.4 by no later than 10 December 2014, the JSE Limited (“JSE”) and the Takeover
      Regulation Panel established in terms of section 196 of the Companies Act (“Panel”)
      approve the Circular; and


5.2.5 by the date on which the last of the conditions precedent referred to in paragraphs
      5.2.1, 5.2.2, 5.2.3 and 5.2.4 has been fulfilled or waived (as the case may be), the
      Independent Board (as defined in paragraph 10.1 below) shall not have withdrawn,
      changed or modified (in any respect) the recommendation given by them in terms of
      paragraph 10.4 below.


  5.3 The Circular Condition Precedent envisaged in:


      5.3.1 paragraph 5.2.1 is stipulated for the benefit of Paladin, which will be entitled to waive
            such Circular Condition Precedent upon written notice to Litha prior to the date for
            fulfilment thereof; provided that if such Circular Condition Precedent is so waived, it
            shall cease to be a Circular Condition Precedent but shall become a Scheme
            Condition Precedent, to be dealt with on the basis contemplated in paragraph 6.1.5
            below;

      5.3.2 paragraphs 5.2.2, 5.2.3 and 5.2.5 are stipulated for the benefit of Paladin, which will
            be entitled to waive such Circular Conditions Precedent upon written notice to Litha
            prior to the date for fulfilment thereof; and

      5.3.3 paragraph 5.2.4 is not capable of being waived.


  5.4 Should any of the Circular Conditions Precedent not be fulfilled or waived (as the case may
      be) by no later than the relevant date for fulfilment thereof, or by such later date as may be
      agreed to between the Parties in writing with the approval of the Panel, the Scheme will not
      be proposed and the Firm Intention will lapse and will be of no further force or effect.


6. CONDITIONS PRECEDENT TO THE IMPLEMENTATION OF THE SCHEME


  6.1 The implementation of the Scheme is subject to the fulfilment or waiver (as the case may
      be) of the following conditions precedent (collectively, the “Scheme Conditions
      Precedent”):
                                                                                        
 6.1.1 by not later than 28 February 2015, the Scheme is approved at the Scheme Meeting
      by a special resolution of the Remaining Shareholders ("Scheme Resolution"), as
      contemplated in section 115(2) of the Companies Act;


 6.1.2 in the event of the provisions of section 115(2)(c) of the Companies Act becoming
      applicable:


      6.1.2.1    the approval of the Scheme by a South African court with competent
                 jurisdiction;

      6.1.2.2    if applicable, Litha not treating the aforesaid resolution as a nullity as
                 contemplated in section 115(5)(b) of the Companies Act, it being recorded
                 that Litha shall not be entitled to treat the resolution as a nullity without
                 Paladin's prior written consent;

 6.1.3 by not later than 28 February 2015, unconditional approvals, consents or waivers
      from all applicable regulatory authorities as may be required in order to implement the
      Scheme (including the compliance certificate to be issued by the Panel) are received
      or, to the extent that any such approvals, consents or waivers are subject to
      conditions, Paladin and Litha (to the extent that it is adversely affected by such
      conditions) confirm in writing to the other that the conditions are acceptable to it,
      which confirmation shall not be unreasonably withheld or delayed;

 6.1.4 Remaining Shareholders who, amongst themselves hold more than 5% of all the
      Remaining Shares, do not (i) give notice objecting to the Scheme; (ii) vote against the
      Scheme Resolution, and (iii) exercise their appraisal rights in terms of section 164 of
      the Companies Act by giving valid demands in terms of sections 164(5) to 164(8) of
      the Companies Act within 20 business days immediately following the Scheme
      Meeting;


 6.1.5 if the Circular Condition Precedent envisaged in paragraph 5.2.1 is waived as a
      Circular Condition Precedent by Paladin and therefore becomes a Scheme Condition
      Precedent as contemplated in paragraph 5.3.1, then by not later than 28 February
      2015, either:


      6.1.5.1    such condition precedent is fulfilled; or

      6.1.5.2    the:


                 6.1.5.2.1   Shareholders pass a resolution, in form and substance
                             acceptable to the Parties, amending the trust deed applicable
                             to The Litha Healthcare Group Share Incentive Scheme
                             ("Incentive Scheme") in order to provide that (i) in the event
                             that Litha receives a bona fide offer in respect of an "affected
                             transaction" as defined in the Companies Act ("Relevant
                             Offer"), the trustees of the Incentive Scheme ("Trustees") shall
                             be entitled to give notice ("Cash Settlement Notice") to all
                             Option Holders holding Incentive Scheme Options (“Incentive
                             Scheme Option Holders”) at any time between the date that
                             the Relevant Offer is received and the date on which the
                             Relevant Offer is implemented and (ii) in terms of a Cash
                             Settlement Notice, the Trustees shall be entitled to cash settle
                             and cancel all existing Incentive Scheme Options, with effect
                             from the date on which the Relevant Offer is implemented, at a
                             price equal to the difference between the consideration offered
                             for the Shares in terms of the Relevant Offer ("Relevant Offer
                             Consideration") and the price at which the relevant Incentive
                             Scheme Option is exercisable by the Incentive Scheme Option
                             Holder (the "Strike Price"); provided that if the Strike Price
                             exceeds the Relevant Offer Consideration in respect of any
                             Incentive Scheme Option, the relevant Incentive Scheme
                             Option Holder shall not be entitled to any consideration in
                             settlement of such Incentive Scheme Option, and such
                             Incentive Scheme Option shall be deemed to be cancelled
                             without any further consideration being payable; and


                6.1.5.2.2    Trustees issue a Cash Settlement Notice, in form and
                             substance acceptable to the Parties, to all Incentive Scheme
                             Option Holders in terms of which all the Incentive Scheme
                             Options held by them are cash settled and cancelled on the
                             basis set out in paragraph 6.1.5.2.1 above;


 6.1.6 to the extent required in terms of any agreement in existence between Litha and/or
      any of its associates and/or subsidiaries on the one hand, and any third party on the
      other, by not later than 28 February 2015 that third party consents in writing to the
      implementation of the Offer;


 6.1.7 the following events not having occurred in relation to Litha or any of its associates
      and/or subsidiaries, at any time prior to the date of fulfilment or waiver, as the case
      may be, of the last of the conditions precedent referred to in paragraphs 6.1.1 to 6.1.6
      above:


      6.1.7.1   it is dissolved or de-registered; or

                                                                                
      6.1.7.2   an order or declaration is made, or a resolution is passed, for the
                administration, custodianship, bankruptcy, liquidation, business rescue,
                winding-up,      receivership,   supervision,     trusteeship,     de-registration   or
                dissolution (and, in each case, whether provisional or final) of it, its assets or
                its estate or an order or declaration is made, or a resolution is passed, to
                authorise the commencement of any business rescue proceedings in
                respect of it, its assets or its estate; or


      6.1.7.3  it convenes any meeting to consider the passing of a resolution for the
               administration, custodianship, bankruptcy, liquidation, business rescue,
               winding-up,      receivership,   supervision,     trusteeship,     de-registration   or
               dissolution (and, in each case, whether provisional or final) of it, its assets or
               its estate or to authorise the commencement of any business rescue
               proceedings in respect of it, its assets or its estate; or


     6.1.7.4   it has a secured party take possession of all or substantially all its assets or
               has a distress, execution, attachment, sequestration or other legal process
               levied, enforced or sued on or against all or substantially all its assets and
               such secured party maintains possession, or any such process is not
               dismissed, discharged, stayed or restrained, in each case within 30 days
               thereafter; or


     6.1.7.5   it is unable (or admits inability) to pay its debts generally as they fall due or
               is (or admits to being) otherwise insolvent (but excluding for this purpose
               any technical insolvency) or stops, suspends or threatens to stop or
               suspend payment of all or a material part of its indebtedness or proposes or
               seeks to make or makes a general assignment or any arrangement,
               compromise or composition with or for the benefit of its creditors or any
               class of its creditors or a moratorium is agreed or declared in respect of or
               affecting all or a material part of its indebtedness; or


    6.1.7.6   it seeks or requests the appointment of an administrator, liquidator (whether
              provisional or final), business rescue practitioner, conservator, receiver,
              trustee, administrative receiver, compulsory manager, custodian or other
              similar official for it or for all or substantially all its assets or estate; or


   6.1.7.7   it takes or proposes to its creditors any proceeding for, or seeks to make or
             makes, a general readjustment, rescheduling or deferral of its indebtedness
            (or any part thereof which it would otherwise be unable to pay when due); or



                                                                                    
      6.1.7.8   any receiver, administrative receiver, administrator, compulsory manager,
                trustee in bankruptcy, liquidator (whether provisional or final), business
                rescue practitioner or the like is appointed in respect of it, its estate or any
                material part of its assets; or


      6.1.7.9   it causes or is subject to any event with respect to it, which, under the
                applicable laws of any jurisdiction, has an analogous effect to any of the
                events specified in paragraphs 6.1.7.1 to 6.1.7.8 above;


 6.1.8 by the date on which the last of the conditions precedent referred to in paragraphs
      6.1.1 to 6.1.6 above has been fulfilled or waived (as the case may be):


      6.1.8.1   there not having arisen or occurred (or there is not reasonably likely to arise
                or occur), any circumstance, event or fact, or combination of circumstances,
                events or facts, that has had or might reasonably be expected to have
                (alone or together with any other such actual or potential circumstance/s,
                event/s or fact/s) a material adverse effect with respect to the business
                (including the assets and liabilities, whether viewed separately or in the
                aggregate), condition, continued existence, operations, financial and/or
                operating performance of Litha and/or its associates and/or subsidiaries
                (whether or not as a consequence of the Offer). For the purposes of this
                paragraph 6.1.8.1, to be material the circumstance/s, event/s and/or fact/s in
                question must have (or be reasonably expected to have) an aggregate
                adverse impact on Litha's annual consolidated earnings before interest, tax,
                depreciation and amortisation (“EBITDA”) or revenue for the 12-month
                rolling period ending on the date on which the last of the conditions
                precedent referred to in paragraphs 6.1.1 to 6.1.6 above have been fulfilled
                or waived (as the case may be) of no less than 10% when measured
                against the EBITDA or revenue of Litha for the financial year ended 31
                December 2013;


      6.1.8.2   the number of issued Shares will be no more than 559,634,502, the only
                Incentive Scheme Options in existence are those Incentive Scheme Options
                which will, pursuant to 5.2.1 or 6.1.5, as applicable, be cancelled and/or
                settled on the date of implementation of the Scheme, no person will have
                been granted rights or options in terms of the Executive Scheme, and there
                are no "Participants" as defined in the Executive Scheme;


      6.1.8.3   Litha shall not, and will procure that its subsidiaries and associates do not,
                during the Relevant Period, declare or pay distributions; issue any shares in

                                                                              
                         its/their share capital; issue or grant any options to subscribe for or acquire
                         shares in its/their share capital; take any other steps contemplated in
                         section 126 of the Companies Act, or dispose of any of its/their assets
                         (unless such disposal is in the ordinary course of business); and


               6.1.8.4   Litha shall procure that neither Litha Medical nor the Executive Scheme
                         disposes of any of the Treasury Shares held by it, unless such disposal is
                         by Litha Medical for the purpose of transferring Shares to Incentive Scheme
                         Option Holders who have exercised their Incentive Scheme Options.


  6.2 The Scheme Conditions Precedent in:


       6.2.1    paragraphs 6.1.1, 6.1.2 and 6.1.3 are not capable of being waived; and


       6.2.2    paragraphs 6.1.4, 6.1.5, 6.1.6, 6.1.7 and 6.1.8 above are stipulated for the benefit of
                Paladin, which will be entitled to waive fulfilment of any or all of such Scheme
                Conditions Precedent upon written notice to Litha by no later than the relevant date
                for fulfilment thereof.


  6.3 Should any of the Scheme Conditions Precedent not be fulfilled or waived (as the case may
       be) by no later than the relevant date for fulfilment thereof, or by such later date as may be
       agreed to between the Parties in writing with the approval of the Panel, the Scheme will not
       be implemented and the Scheme will be of no force or effect.


7. GUARANTEE TO THE PANEL


  Paladin will fund the full purchase consideration from its own cash resources, sufficient for
  purposes of satisfying the Consideration. As required in terms of the Companies Act and the
  Regulations, Rand Merchant Bank, a division of FirstRand Bank Limited, ("RMB") has provided
  an irrevocable and unconditional cash guarantee to the Panel in order to satisfy Paladin’s
  financial obligations payable in terms of the Offer, which is in a form acceptable to the Panel and
  which complies with regulations 111(4) and 111(5) of the Regulations.


8. SHAREHOLDERS PRECLUDED FROM VOTING


  In accordance with section 115(4) of the Companies Act, Paladin is precluded from voting on the
  Scheme and Shares held by Paladin will be excluded:

   -   when determining whether the applicable quorum requirements for the Scheme Meeting are
       satisfied; and
                                                                                       
   -    from the total number of Shares eligible to vote on the Scheme when calculating the number
        of votes for or against the Scheme.


9. IRREVOCABLE COMMITMENTS AND LETTERS OF SUPPORT


  Paladin has received overwhelming support for the Offer from Remaining Shareholders holding
  approximately 72.71% of the Remaining Shares, by way of irrevocable undertakings and letters
  of support to vote in favour of the Scheme and any other ordinary or special resolutions for the
  purposes of or in connection with the Scheme and matters ancillary thereto (including, without
  limitation, any resolution proposed to amend any share incentive scheme in relation to Litha or to
  settle any options and/or rights under any such share incentive scheme).


  The following table details the Remaining Shareholders, as well as the number of Remaining
  Shares held by such Remaining Shareholders, which have provided irrevocable undertakings
  (letters of support have been excluded from the table):


  Remaining Shareholder                       Remaining Shares         Percentage of Remaining
                                         subject to irrevocable      Shares beneficially held or
                                              undertakings 1             controlled (directly or
                                                                           indirectly)2

  Visio Capital Management                           62 249 498                           37.66%
  Proprietary Limited

  Management of Litha                                32 603 367                           19.73%

  Mawer Investment                                   13 814 762                            8.36%
  Management Limited

  Blackstar Fund Managers                             5 647 003                            3.42%
  Proprietary Limited

  Jorfect Limited                                     2 500 000                            1.51%

  Total                                             116 814 630                           70.68%


       Notes:
       1. Stated as at the date of the irrevocable undertakings.
       2. Represents the effective percentage voting rights in respect of the Scheme as at the date
           of the irrevocable undertakings and letters of support.


10. INDEPENDENT BOARD AND FAIR AND REASONABLE OPINION

                                                                                   
   10.1 The Offer is classified as an “affected transaction” in terms of section 117 of the
         Companies Act. Accordingly, Litha has convened an independent board of directors
         (“Independent Board”) comprised of Nkululeko Leonard Sowazi, Mandi Mzimba, Fadl
         Hendricks and Velile Mcobothi to consider the terms of the Scheme.


   10.2 In accordance with section 114(2) of the Companies Act and section 110 of the
         Regulations, the Independent Board has appointed BDO Corporate Finance Proprietary
         Limited as the independent expert (“Independent Expert”) acceptable to the Panel to
         provide the Independent Board with external advice in relation to the Offer and to make
         appropriate recommendations to the Independent Board for the benefit of Remaining
         Shareholders.


   10.3 The Independent Board is pleased to report that, having considered the terms and
         conditions of the Scheme, the Independent Expert is of the opinion that the Consideration
         is fair and reasonable to the Remaining Shareholders. The Independent Expert’s report
         containing its opinion pertaining to the terms of the Offer will be contained in the Circular.


   10.4 The Independent Board, after due consideration of the report of the Independent Expert,
         has determined that it will place reliance on the work performed by the Independent Expert
         in reaching its own opinion regarding the Scheme and the Consideration. Accordingly, the
         Independent Board is of the opinion that the Consideration is fair and reasonable to the
         Remaining Shareholders and therefore recommends that Remaining Shareholders vote in
         favour of the Scheme.


11. POSTING OF CIRCULAR


   It is expected that the Circular will be posted to Shareholders on or about 12 November 2014
   which will include the notice of the Scheme Meeting to be held on or about 11 December 2014. A
   further announcement setting out the salient dates and times in relation to, inter alia, posting of
   the Circular and the Scheme Meeting will be released in due course.


12. DELISTING


   An application will be made by Litha to the JSE to terminate the listing of the Shares on the
   Exchange upon implementation of the Scheme.


13. BENEFICIAL INTEREST AND ACTING AS PRINCIPAL


   None of Paladin nor Endo’s directors currently hold Shares and neither Paladin, nor Endo, nor
   any of their directors, currently hold any options to acquire Shares. Endo confirms that it is the

                                                                                        
    ultimate purchaser and is acting alone in relation to the Offer and not in conjunction with, or as
    agent or broker for, any other third party.


14. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT


    Following the release of this Firm Intention Announcement, the Cautionary Announcement is
    hereby withdrawn and caution is no longer required to be exercised by Shareholders when
    dealing in Shares.


15. RESPONSIBILITY STATEMENT


    The Independent Board accepts responsibility for the information contained in this Firm Intention
    Announcement to the extent that it relates to Litha. To the best of its knowledge and belief, such
    information contained in this Firm Intention Announcement is true and nothing has been omitted
    which is likely to affect the importance of such information.


    Paladin accepts responsibility for the information contained in this Firm Intention Announcement
    to the extent that it relates to Paladin. To the best of its knowledge and belief, such information
    contained in this Firm Intention Announcement is true and nothing has been omitted which is
    likely to affect the importance of such information.


Johannesburg
15 October 2014


Corporate advisor, transaction sponsor and JSE sponsor to Litha: One Capital


Legal advisor to Litha: Cliffe Dekker Hofmeyr Inc.


Independent expert to Litha: BDO Corporate Finance Proprietary Limited


Investment bank and corporate advisor to Endo and Paladin: Nedbank Capital, a division of Nedbank
Limited


Legal advisor to Endo and Paladin: Werksmans Incorporated




                                                                                     

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