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Specific issue, provision of working capital, early redemption of debentures, subscription and withdrawal of caution
RBA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/009701/06)
(JSE code: RBA ISIN: ZAE000104154)
(“RBA” or “the company”)
SPECIFIC ISSUE OF SHARES, PROVISION OF WORKING CAPITAL, EARLY REDEMPTION
OF DEBENTURES, SUBSCRIPTION BY DEBENTURE HOLDERS AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction and rationale
1.1. Shareholders are referred to the cautionary announcements released on 22 September
2014 and 21 October 2014.
1.2. As advised in the trading update released on 12 February 2014, as well as the circular to
shareholders dated 5 September 2014 in respect of the approval of the issue of
debentures, and the interim results for the six months to 30 June 2014 released on 30
September 2014, the company has decided to raise capital to improve its liquidity position,
to support growth, further reduce short term debt, improve skills levels in the company and
implement an ERP system.
1.3. The board is pleased to announce that an agreement (“the Agreement”) has been entered
into with the Housing Impact Fund South Africa (“HIFSA”) on 19 November 2014, in terms
of which HIFSA will subscribe for 550 million shares at 10 cents each in the share capital
of RBA for an aggregate amount of R55 million on certain terms and conditions (“the
Specific issue”) summarised below.
1.4. In addition, HIFSA will be providing RBA with a R 70 million facility for the acquisition of
land and the provision of working capital for the construction of houses.
1.5. Debenture holders holding 260 000 000 debentures have agreed to the early redemption
of their debentures and to subscribe for 260 000 000 shares. This will result in an effective
additional equity injection into the business of R 31.2 million.
1.6. HIFSA is a R 9.15 billion fund created and managed by Old Mutual Alternative Investments
(Pty) Limited (“Old Mutual”) that invests in all forms of housing-related investments in the
affordable housing market, including physical development, ownership of rental stock and
end-user finance. HIFSA, via its various investments, thus has significant land holdings
and is a key provider of development finance in the affordable market segment that RBA
serves. RBA’s board believe that the HIFSA investment in RBA will make a decisive impact
on the ability of RBA to expand its operations and thus make a significant contribution to
the delivery of houses in the affordable market.
2. Suspensive conditions
2.1. The Agreement is subject to the fulfilment of two sets of suspensive conditions being
fulfilled.
2.2. All the initial suspensive conditions have been fulfilled.
2.3. The subscription by HIFSA shall only take place if the following additional suspensive
conditions (“the “Subsequent Suspensive Conditions”) are fulfilled by 31 March 2015, or
such later date as may be agreed between the parties in writing that:
2.3.1. as the issue will be more than 50% of the current issued shares as allowed by
Section 21.7(a) of the Listings Requirements for a general issue, the issue will be
a specific issue of shares for cash and that RBA shareholders approve the specific
issue in terms of the Listings Requirements;
2.3.2. as the issue will be more than the 30% of the shares in issue immediately before
the Specific issue, RBA shareholders approve the issue by special resolution in
terms of Section 41(3) of the Companies Act, 2008;
2.3.3. RBA’s shareholders approve the necessary resolutions, and the company files the
amended Memorandum of Incorporation (“MOI”) increasing the authorised shares
to 2 000 000 000 shares, and that the CIPC issues a certificate of confirmation in
respect of that amended MOI;
2.3.4. RBA’s shareholders waive the benefit of a mandatory offer by independent holders
of more than 50% of the general voting rights of shareholders present and voting,
in terms of Companies Regulation 86(4) and that the Takeover Regulation Panel
grants exemption to HIFSA or its nominee from the obligation to make a mandatory
offer in this case;
2.3.5. the JSE approves the Specific issue and the listing of the 550 000 000 subscription
shares on the JSE.
3. Issue of shares to HIFSA
3.1. It is proposed that RBA issues 550 000 000 shares to HIFSA or its nominee at 10 cents
per share on the terms set out in the agreement.
3.2. The issue price of 10 cents per share was determined by the board on 24 September 2014
and is at a premium of 35% to the 30 day VWAP of RBA for the 30 days preceding 24
September 2014 of 7.4 cents per share.
3.3. The shares to be issued will represent 37.04% of RBA’s issued shares after the Specific
issue and will be an affected transaction as defined in the Companies Act, 2008, but is
subject to a waiver of the mandatory offer referred to in 2.3.4 above.
3.4. The new shares will be issued in terms of the current MOI of RBA. On listing, all the issued
shares, including the new shares, will be of the same class and will rank pari passu in all
respects.
4. Loan
Within three days of the date of this announcement, HIFSA or its nominee shall lend and
advance a cash amount of R55 000 000 to RBA. The terms and conditions of the loan are set
out in the Agreement.
5. Redemption of debentures
5.1. The debenture holders agreed to an early redemption of the debentures, and have
undertaken to subscribe for a total of 260 000 000 shares. The redemption and subscription
will take place within 3 business days after RBA notifies the debenture holders in writing
that CIPC has issued the confirmation notice.
5.2. It was agreed that the 260 000 000 unissued shares will be issued to the debenture holders
before any of the subscription shares are issued to HIFSA or its nominee and before the
consolidation of share capital referred to in 8.3 below.
6. Additional terms
6.1. HIFSA has the right to nominate any subsidiary of Old Mutual Life Assurance Company
(South Africa) Limited or any FAIS-regulated fund which is managed by Old Mutual as
subscriber.
6.2. HIFSA has furnished warranties, on behalf of itself and its nominee, in respect of certain
matters.
6.3. RBA has furnished warranties which are customary in transactions of this nature.
7. Pro forma financial effects
The pro forma financial effects have been prepared for the purposes of illustrating how the
debenture redemption, the issue of shares to debenture holders and the Specific issue (“the
Transaction”) would have affected the financial position, changes in equity, results of operation
or cash flows of RBA for the historical financial period indicated. Accordingly, such effects may
not necessarily fairly represent the financial effects of the Transaction on RBA’s financial
position, changes in equity and results of operations or cash flows.
The pro forma financial effects have been compiled using accounting policies that comply with
IFRS and that are consistent with those applied in the Unaudited interim results for the six
month period ended 30 June 2014. The pro forma figures have been given no greater
prominence than unadjusted financial figures, and are presented in a manner consistent with
both the format and accounting policies adopted in the historical financial information and
adjustments have been quantified on the same basis as would normally be calculated in
preparing financial statements.
The table below sets out the pro forma financial effects of the Transaction on RBA:
Before the After the Change %
Transaction (1) Transaction
Earnings per share (3.32) (1.40) 58%
(cents) (2)(5)
Headline earnings per (3.27) (1.38) 58%
share (cents) (2)(5)
Net asset value per 2.77 7.26 162%
share (cents) (3)(4)
Net tangible asset 2.77 7.26 162%
value per share
(cents)(3)(4)
Number of RBA 599,182,577 1,409,182,577
ordinary shares in
issue
Weighted average 599,182,577 1,409,182,577
number of ordinary
shares in issue
Notes
(1) The “Before the Transaction” column is based on RBA’s Unaudited interim results for
the six month period ended 30 June 2014.
(2) The earnings and headline earnings per share were calculated as if the Transaction
took place on 1 January 2014.
(3) The net asset value and net tangible asset value per share were calculated as if the
Transaction took place on 30 June 2014.
(4) In the “After the Transaction” column net asset value and net tangible asset per share
have been adjusted for:
- 260 000 000 shares issued to the debenture holders at 12 cents per share;
- 550 000 000 shares issued to HIFSA at 10 cents per share, which equates to a
35% premium to the 30 day VWAP calculated on 24 September 2014 of 7.4 cents
per share, being the date the Board of RBA approved the Transaction with Old
Mutual;
- transaction costs of R597,997;
- a tax rate of 28% has been used to calculate the effect of the Transaction.
(5) In the “After the Transaction” column earnings per share and headline earnings per
share have been adjusted for:
- Interest earned on a R30 million cash balance for the period at 5% per annum;
- transaction costs of R597,997;
- a tax rate of 28% has been used to calculate the effect of the Transaction.
(6) The adjustments are expected to have a continuing effect, with the exception of
transaction costs.
8. Other matters to be approved
RBA will also use the opportunity at the general meeting of shareholders in order to pass, with
or without modification, such resolutions as are necessary to approve:
8.1. an increase in the company’s authorised share capital to 2 000 000 000 ordinary shares
of no par value;
8.2. an amendment to the company’s MOI to allow for written resolutions to be passed in
terms of Section 60 of the Companies Act, 2008;
8.3. the consolidation of the company’s shares on a 1 for 10 basis; and
8.4. an increase in the number of shares allocated to the RBA share incentive scheme.
9. Undertakings to vote
Irrevocable undertakings to vote have been obtained from shareholders holding 654 743 732
shares, in other words 70% of the issued shares (assuming that the 260 million shares will
have been issued to the debenture holders prior to the meeting).
10. Circular and general meeting
A circular containing inter alia full details of the issue and other matters referred to above
will be posted to shareholders in due course. The circular will contain a notice of general
meeting of shareholders to vote on the various matters referred to above.
11. Withdrawal of cautionary announcements
Caution is no longer required when dealing in the company’s securities.
Johannesburg
19 November 2014
Designated and Corporate Adviser
Exchange Sponsors
Date: 19/11/2014 12:58:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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