To view the PDF file, sign up for a MySharenet subscription.

TRADEHOLD LIMITED - Proposed Acquisition by Tradehold

Release Date: 24/11/2014 14:35
Code(s): TDH     PDF:  
Wrap Text
Proposed Acquisition by Tradehold

TRADEHOLD LIMITED
(Registration number: 1970/009054/06)
("Tradehold" or “the Company”)
Incorporated in the Republic of South Africa
JSE Share code: TDH ISIN: ZAE000152658

PROPOSED ACQUISITION BY TRADEHOLD OF REWARD INVESTMENTS LIMITED SHARES AND
MOORGARTH HOLDINGS (LUXEMBOURG) S.À R.L SHARES

1. INTRODUCTION
Shareholders are advised that Tradehold has concluded an agreement (“the Agreement”) for the
acquisition of Timothy Andrew Vaughan’s (“Vaughan”) minority interests in Reward Investments Limited
(“Reward”) and Moorgarth Holdings (Luxembourg) S.à r.l (“MHLS”) with effect from 18 July 2014.

2. THE ACQUISITION
2.1 Rationale for the Vaughan transaction

Currently, Tradehold, via its 100% shareholding in Tradegro Holdings Proprietary Limited (“Tradegro
Holdings”) and Tradegro Holdings’ wholly-owned subsidiary Tradegro S.à r.l. (“Tradegro”), does not hold
all the issued shares in Reward and MHLS. Tradehold wishes to acquire all the minority interests in
Reward and increase its holding in MHLS in order to simplify Tradehold’s group structure and better align
Vaughan’s incentives with his role as joint CEO of Tradehold. Following the acquisition of Vaughan’s
shares in Reward and MHLS, Tradehold will hold 100% of the shares in Reward (up from 90%) and 95%
of the shares in MHLS (up from 85%).

Reward’s two operating subsidiaries, Reward Capital and Reward Commercial Finance, focus on short-
term, asset-backed loans to small and medium-sized businesses and on invoice-discounting facilities to
similar businesses, respectively. Following the acquisition of Vaughan’s shares, Tradehold’s effective
interest in these two operating subsidiaries will increase from 63% to 70%. MHLS manages a £91.9million
portfolio of retail, commercial and industrial buildings located in the United Kingdom.

2.2 Salient terms of Vaughan transaction

Pursuant to the Agreement:
-   Vaughan will sell to Tradegro 50 (fifty) ordinary shares in the share capital of MHLS for a cash
    consideration of £1 (one pound sterling), and 10 (ten) class C ordinary shares in the share capital of
    Reward for a mixture of cash in the amount of £187,237,20 (one hundred and eighty seven thousand
    two hundred and thirty seven pound sterling and twenty pence) and the issue by Tradegro to
    Vaughan of 398,481 (three hundred and ninety eight thousand four hundred and eighty one) ordinary
    shares in the share capital of Tradegro (“Tradegro Shares”);
-   immediately after the issue of the Tradegro Shares to Vaughan, Vaughan will sell to Tradegro
    Holdings the Tradegro Shares in exchange for the issue by Tradegro Holdings to Vaughan of 148
    (one hundred and forty eight) ordinary shares of R2,00 (two rand) each in the share capital of
    Tradegro Holdings (“Tradegro Holdings Shares”); and
-   immediately after the issue of the Tradegro Holdings Shares to Vaughan, Vaughan will sell to
    Tradehold the Tradegro Holding Shares in exchange for the issue by Tradehold to Vaughan of
    532,456 (five hundred and thirty two thousand four hundred and fifty six) ordinary shares with a par
    value of 1 cent each in the share capital of Tradehold (“the Vaughan Shares”).

The effective date of the Agreement is 18 July 2014.

Vaughan may not, during the period commencing on the date of issue of the Vaughan Shares and
terminating on the date falling three years thereafter (“Restricted Period”), dispose of 452,587 (four
hundred and fifty two thousand five hundred and eighty seven) of the Vaughan Shares (“Restricted
Vaughan Shares”) unless such disposal:
-   is with the prior consent of Tradehold, which consent may not be unreasonably withheld or delayed;
-   follows the termination of Vaughan’s employment with Tradehold or any of its subsidiaries in
    circumstances where he is a “Good Leaver”, which means, Vaughan if the termination of his
    employment with Tradehold or any of its subsidiaries occurs in any of the following circumstances:
    - retirement on or after contractual retirement date or otherwise in accordance which his
      employment contract (and any policy on retirement adopted by Tradehold, if any);
    - retirement on the grounds of ill health or permanent disability;
    - retirement with the prior consent in writing of Tradehold;
    - dismissal from employment which does not involve gross negligence or gross misconduct on the
      part of Vaughan; or
    - death; or
-   is pursuant to the acceptance of any general offer for the entire issued share capital of Tradehold or
    to the giving of an irrevocable undertaking to accept any such offer.

2.3 Conditions precedent
The issue by Tradehold to Vaughan of the Vaughan Shares (the “Vaughan Issue”) requires approval by
special resolution of the shareholders of Tradehold in terms of section 41(1) of the Companies Act, No 71
of 2008. A circular accompanied by a notice of extraordinary general meeting, at which meeting the issue
of the Vaughan Shares will be presented to Tradehold shareholders for approval, will be posted to
Tradehold shareholders in due course.

2.4 Small related party transaction
The Vaughan Issue constitutes a small related party transaction in terms of the JSE Limited (“JSE”)
Listings Requirements (“Listings Requirements”), and consequently requires a fairness opinion from an
independent professional expert acceptable to the JSE that the terms of the Vaughan Issue are fair as far
as the shareholders of Tradehold are concerned, but no shareholder approval is required in terms of the
Listings Requirements. Furthermore, the Vaughan Issue constitutes an acquisition issue in terms of the
Listings Requirements which also does not require shareholder approval.

In terms of the JSE Listings Requirements the fairness opinion which was prepared by Nodus Capital
(Pty) Ltd, a JSE approved independent expert, will lie open for inspection at Tradehold’s registered
offices, 3rd Floor, Pepkor Building, 36 Stellenberg Road, Parow Industria, for a period of 28 days from the
date of this announcement.


3. FINANCIAL INFORMATION RELATING TO THE VAUGHAN TRANSACTION
The value of the net assets of Reward are £3,206,000 at 31 August 2014, and the value of the net
liabilities of MHLS are (£4,191,487) at 31 August 2014. Group funding is included in liabilities.

The profits attributable to the net assets of Reward for the 6 months to 31 August 2014 are £681,613, and
the profits attributable to the net liabilities of MHLS for the same period are £2,633,239.

4. INCREASE IN THE AUTHORISED SHARE CAPITAL OF TRADEHOLD
Shareholders are advised that a circular relating to the following will be mailed today, 24 November 2014
to shareholders recorded in the share register of the Company on Friday, 14 November 2014:

•   an increase in the authorised share capital of the Company through the creation of 65,000,000
    redeemable preference shares of no par value, having rights, privileges, restrictions and conditions
    set out in the circular (“A Preference Shares”), which preference shares rank in priority to the
    non-convertible, non-participating non-transferable, redeemable preference shares (“N Preference
    Shares”) and ordinary shares with a par value of 1 cent each in the share capital of Tradehold
    (“Ordinary Shares”) in respect of dividends and on a winding up;
•   an increase in the authorised share capital of the capital of the Company through the creation of a
    total of 40,000,000 redeemable preference shares of no par value, having the rights, privileges,
    restrictions and conditions as determined by the directors upon issue thereof (“Unspecified
    Preference Shares”), but which are intended to rank in priority to the N Preference Shares and
    Ordinary Shares in respect of dividends and on a winding up;
•   the authority for the issue of up to 65,000,000 of the authorised but unissued A Preference Shares,
    subject to certain limitations;
•   the authority for the issue of up to 40,000,000 of the authorised but unissued Unspecified Preference
    Shares, subject to certain limitations;
•   the amendment of the Memorandum of Incorporation (“MOI”) to enable the proposals contained in the
    circular to be implemented; and
•   directors’ authority to issue Ordinary Shares to Vaughan in terms of section 41(1) of the Companies
    Act.

The circular also contains:

•   a notice of a combined general meeting of the Ordinary Shareholders and N Preference Shareholders
    to be held at the Company’s registered office on 22 December 2014 at 10:00, in order to consider and
    if deemed fit, approve, the resolutions in respect of the matters above as required in terms of the
    MOI; and
•   a notice of a special general meeting of the holders of N Preference Shares to be held at the
    Company’s registered office on 22 December 2014 at 10:30, in order to consider and if deemed fit,
    approve, the resolutions in respect of the matters above as required in terms of the MOI.

A copy of the circular will also be made available on the Company’s website: www.tradehold.co.za today,
24 November 2014.

24 November 2014
Cape Town

Sponsor
Bravura Capital (Pty) Ltd

Independent Expert
Nodus Capital (Pty) Ltd

Corporate Advisor
Mettle Specialised Finance Proprietary Limited

Attorneys
Cliffe Dekker Hofmeyr Inc.

Date: 24/11/2014 02:35:00 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.

Share This Story