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Declaration and finalisation announcement relating to the unbundling by HCI of its shares in Montauk Holdings
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1973/007111/06
Share code: HCI ISIN: ZAE000003257
(“HCI” or “the Company”)
DECLARATION AND FINALISATION ANNOUNCEMENT RELATING TO THE PROPOSED
UNBUNDLING BY HCI OF ITS SHARES IN MONTAUK HOLDINGS LIMITED (“MONTAUK
HOLDINGS”) TO ITS SHAREHOLDERS
1. Introduction
HCI shareholders are referred to the announcement released on SENS on 24 March 2014, which
confirmed the intention of HCI’s board of directors (“Board”) to proceed with the separate listing of
the shares in Montauk Holdings and the subsequent unbundling of HCI’s shares in Montauk to HCI
ordinary shareholders (“the Unbundling”). The Board has therefore made application for the separate
listing of Montauk Holdings (“Listing”) on the securities exchange operated by the JSE Limited
(“JSE”), and will unbundle all of the Montauk Holdings shares held by the Company to shareholders
recorded on the register on Friday, 12 December 2014 (the “Record Date").
2. Rationale for the Montauk Holdings Listing and Unbundling
HCI, the holding company of Montauk Holdings, believes that the Unbundling best serves the
interests of HCI shareholders and will enhance HCI shareholder value through improving the public
profile of, and providing additional information regarding, Montauk Holdings. The Board believes that
Montauk Holdings has the operational and financial capacity to pursue its envisioned growth strategy
independently of HCI and the Listing provides Montauk Holdings with the opportunity to raise
additional capital to facilitate future expansion, if required. The Listing is further intended to provide
HCI shareholders with the flexibility to maintain, increase or decrease their investment in Montauk
Holdings based on their respective assessments of its prospects. In addition, the Unbundling and
Listing is intended to provide HCI shareholders with the opportunity to obtain direct exposure to the
landfill gas sector thereby offering an alternative risk and return profile to that offered by a
shareholding in HCI. The Board believes that Montauk Holdings will offer HCI shareholders attractive
growth prospects over the medium to long term.
Montauk Holdings has in the past been overlooked by investors because of its size relative to other
larger and higher profile HCI investments. The Listing will provide visibility and additional information
regarding Montauk Holdings which will allow investors to better assess its value.
3. Listing
The JSE has granted Montauk Holdings a listing by way of introduction of all its issued ordinary
shares on the JSE main board under the abbreviated name “MONTAUK”, share code “MNK” and
ISIN ZAE000197455, with effect from the commencement of trade on 8 December 2014. Montauk
Holdings will be listed in the “Integrated Oil and Gas” sector.
4. Details of the Entitlement ratio
HCI will unbundle its shares in Montauk Holdings in the ratio of 120.03411 Montauk Holdings shares
for every 100 HCI ordinary shares held by the HCI shareholder on the Record Date and/or such
proportionate lower number of Montauk Holdings shares in respect of holdings of less than 100 HCI
Shares held on the Record Date
5. Tax consequences
The following summary describes certain tax consequences of the purchase, ownership and disposal
of the Montauk Holdings shares. It is not an exhaustive description of all the possible tax
consequences of any purchase, ownership or disposal of Montauk Holdings shares. This summary is
based on the laws as in force and as applied in practice on the date of Montauk Holdings’ pre-listing
statement (“Pre-listing Statement”) and is subject to changes to those laws and practices subsequent
to the date of the Pre-listing Statement. In the case of persons who are non-residents of South Africa
for fiscal purposes, it should be read in conjunction with the provisions of any applicable double tax
convention between South Africa and their country of tax residence. Investors should consult their
own advisers as to the tax consequences of the purchase, ownership and disposal of Montauk
Holdings shares in light of their particular circumstances, including, in particular, the effect of any
state, regional, local or other tax laws.
HCI shares held as trading stock:
Any HCI shareholder holding HCI shares as trading stock will be deemed to acquire the unbundled
Montauk Holdings shares as trading stock. The combined expenditure of such HCI shares and
Montauk Holdings shares will be the amount originally taken into account by the shareholder in
respect of the original HCI shares held by that shareholder, as contemplated in section 11(a), section
22(1) or section 22(2) of the Income Tax Act, 1962 (Act No. 58 of 1962), as amended (“Income Tax
Act”).
The expenditure to be allocated to the unbundled Montauk Holdings shares will be determined by
applying a specified ratio to the cost of the HCI shares. HCI will advise HCI shareholders of the
specified ratio by way of an announcement to be released on SENS on or about Wednesday, 10
December 2014.
Any expenditure allocated to the Montauk Holdings shares must be deemed to have been incurred
on the date that the expenditure was incurred in respect of the HCI shares.
HCI shares held as capital assets:
Any HCI shareholder holding HCI shares as capital assets will be deemed to acquire the unbundled
Montauk Holdings shares as capital assets. The original expenditure incurred in respect of the HCI
shares, in terms of paragraph 20 of the Eighth Schedule, and (where applicable), the CGT valuation
of the HCI Shares, as contemplated in paragraph 29 of the Eighth Schedule, will be apportioned
between the Montauk Holdings shares and the HCI shares.
The base cost to be allocated to the unbundled Montauk Holdings shares will be determined by
applying a specified ratio to the base cost of the HCI shares. HCI will advise HCI shareholders of the
specified ratio by way of an announcement to be released on SENS on or about Wednesday, 10
December 2014.
The base cost so allocated to the unbundled Montauk Holdings shares will reduce the base cost of
the HCI shares held, thus allocating the base cost between the HCI shares and the unbundled
Montauk Holdings shares.
HCI shareholders will be deemed to have acquired the unbundled Montauk Holdings shares on the
date on which the HCI shares were originally acquired.
Any expenditure allocated to the Montauk Holdings shares must be deemed to have been incurred
on the date that the expenditure was incurred in respect of the HCI shares.
Non-resident HCI shareholders:
HCI shareholders who are non-resident for tax purposes in South Africa are advised to consult their
own professional tax advisors regarding the tax treatment of the Unbundling in their respective
jurisdictions, having regards to the laws in their jurisdiction and any applicable tax treaties between
South Africa and their country of residence.
6. Posting of the Pre-Listing Statement
The Pre-listing Statement will be posted to HCI shareholders on Wednesday 19 November 2014
containing detailed information regarding Montauk Holdings. The Pre-listing Statement will also be
available on HCI’s website at www.hci.co.za.
7. Salient Dates and Times
The salient dates relating to the Listing and the Unbundling are set out below:
Release of the abridged Montauk Holdings Pre-listing Wednesday, 19 November
Statement on SENS on
Declaration and finalisation announcement released on Wednesday, 19 November
SENS on
Last business day to trade in HCI Shares on the JSE for Friday, 5 December
settlement by the Record Date, and thereby participate in
the Unbundling on
All trades in HCI shares from this day will exclude the right to Monday, 8 December
receive Montauk Holdings shares on
Listing of Montauk Holdings shares on the JSE under the Monday, 8 December
JSE code “MNK” and ISIN ZAE000197455 with effect from
the commencement of business on
Record Date to participate in the Unbundling being the date Friday, 12 December
on which HCI shareholders must be recorded in the Register
in order to participate in the Unbundling on
Montauk Holdings shares issued on Monday, 15 December
CSDP or broker accounts of HCI dematerialised Monday, 15 December
shareholders updated with the Montauk Holdings shares and
share certificates posted to HCI certificated shareholders
Montauk Holdings on
8. Copies of the Pre-Listing Statement
Copies of the Pre-listing Statement will be available for inspection during normal office hours from
Wednesday, 19 November 2014 up to and including Monday, 15 December 2014 at the registered
office of Montauk Holdings (Suite 801, 76 Regent Road, Seapoint, Cape Town, 8005, South Africa),
the offices of the investment bank and sponsor (100 Grayston Drive, Sandown, Sandton, 2196,
South Africa) and the offices of the Transfer Secretaries (70 Marshall Street, Johannesburg, 2001)
during normal business hours (excluding Saturdays, Sundays and South African public holidays). In
addition the Pre-listing Statement will be available electronically on HCI’s website, www.hci.co.za.
Cape Town
19 November 2014
Investment bank and sponsor
Investec Bank Limited
Corporate law advisor
Edward Nathan Sonnenbergs Inc.
Reporting accountants
Grant Thornton (Jhb) Inc
Date: 19/11/2014 11:47:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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