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HOSKEN CONSOLIDATED INVESTMENTS LTD - Declaration and finalisation announcement relating to the unbundling by HCI of its shares in Montauk Holdings

Release Date: 19/11/2014 11:47
Code(s): HCI     PDF:  
Wrap Text
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'). 
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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