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Proposed specific share repurchase and cautionary announcement
Distribution and Warehousing Network Limited Ukhamba Holdings Proprietary Limited
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06) (Registration number 1998/017702/07)
Share code: DAW ISIN code: ZAE000018834 (“Ukhamba”)
(”DAWN” or the “Company”)
PROPOSED SPECIFIC SHARE REPURCHASE BY THE COMPANY OF 78 133 488 ISSUED
ORDINARY SHARES AND CAUTIONARY ANNOUNCEMENT
1. Introduction and Rationale
Shareholders of DAWN (“Shareholders”) are hereby advised that on 12 December 2014, DAWN
concluded a repurchase agreement (“the Agreement”) with Ukhamba Holdings Proprietary
Limited (“Ukhamba”) whereby, subject to the Agreement becoming unconditional (see
paragraph 3 below), Ukhamba will dispose of its 32.25% shareholding in the ordinary shares of
DAWN, namely, 78 133 488 ordinary shares (“the Repurchased DAWN Shares”), by means of a
specific share repurchase to be implemented by DAWN (“the Repurchase”).
Ukhamba was introduced as a black economic empowerment ("BEE") equity partner to DAWN
in November 2004 through its acquisition of a 38.8% equity interest in DAWN in the form of
ordinary shares and deferred ordinary shares. All of the deferred ordinary shares have
converted to ordinary shares. Ukhamba is a BEE investment holding company which is 47.1%
owned by the Ukhamba Trust, the balance owned by Imperial Holdings Limited ("Imperial")
(46.9%) and The Imperial Ukhamba Community Development Trust (6.0%). The Ukhamba
Trust was formed for the benefit of approximately 15,575 employees and former employees of
Imperial.
The directors of the Company (“the Board”) were notified by Ukhamba of its intention to dispose
of its shareholding in the Company. The Board, on receiving the notification, decided to engage
Ukhamba with a view to ensuring a controlled exit of Ukhamba from the Company.
The Board viewed it as being in the interests of the Company and its shareholders to enter into
a repurchase agreement with Ukhamba to acquire the Repurchased DAWN Shares.
Notwithstanding the Repurchase, the Company still intends to pursue its acquisitive strategy as
set out in its statements to the press in September 2014, and Integrated Report laid before the
annual general meeting in December 2014. Accordingly, it is contemplated that after the
Repurchase the Company will, as a separate transaction to the Repurchase but subject to the
approval of the Repurchase by DAWN shareholders, issue up to 38 000 000 DAWN ordinary
shares by way of a specific issue for cash to one or more investors who have yet to be identified
by the Board. The proceeds from this specific issue shall be applied in pursuance of the
Company’s acquisitive strategy. Full details of the issue of shares for cash will be announced in
due course and will be included in the circular to shareholders referred to in paragraph 4 below
for shareholder approval.
2. Salient terms of the Repurchase
The Repurchase of Ukhamba’s shareholding will take place at a price of R8,50 per share
payable in cash (“the Repurchase Price"), being a premium of R1,52 per share to the volume
weighted average traded price of the Company’s ordinary shares on the JSE Limited ("JSE")
measured over the 30 business days prior to the date of the Agreement. The total cost to Dawn
of the Repurchase is R664 134 648. It is envisaged that the Repurchase will be implemented
on 30 June 2015. Once the Repurchase has been implemented, application will be made to the
JSE for the delisting of the Repurchased DAWN Shares. The Repurchased DAWN Shares shall
all be cancelled and restored as authorised but unissued shares in the share capital of DAWN.
Due to the fact that Ukhamba is a related party to Dawn in terms of the Listings Requirements of
the JSE Limited (“the Listing Requirements”) and that the Repurchase will be implemented at a
premium, the Repurchase shall be subject to the inclusion of a statement by the Board in the
circular confirming that the Repurchase is fair insofar as the Shareholders (other than Ukhamba)
are concerned. In order to do so, the Board must obtain a fairness opinion from an independent
expert acceptable to the JSE. In this regard, BDO Corporate Finance Proprietary Limited has
been appointed by the Company and the content of its opinion will be contained in the circular to
Shareholders referred to in 4 below.
Further details regarding the Repurchase, including the financial effects relating to the
Repurchase and the date of the general meeting at which the specific authority will be sought,
will be announced on SENS by DAWN in due course.
3. Conditions Precedent
The Repurchase is subject to the fulfilment or waiver (as may be permissible) of the following
conditions precedent:
by no later than 17:00 on 31 January 2015 :
- Dawn having obtained irrevocable undertakings by members of its management who
are Shareholders holding not less than 7% of the total issued share capital of Dawn
(excluding the Seller) in support of the Repurchase Resolution;
by no later than 17:00 on 15 June 2015 :
- The Board of Dawn acknowledging and resolving that the Repurchase satisfies the
requirements of the solvency and liquidity test pursuant to section 48(2) and 46 of the
Companies Act No 71 of 2008 (“Companies Act”);
- The necessary resolutions to approve and implement the Repurchase having been
adopted by the requisite majority of DAWN shareholders, including a special resolution
in terms of which the votes of Ukhamba will be excluded;
- To the extent required, the approval of the implementation of the Repurchase by a
court; and if applicable, DAWN having not treated the resolutions authorising the
Repurchase as a nullity, as contemplated in section 115(5)(b) of the Companies Act;
- The receipt of all regulatory approvals for the Repurchase, including the Takeover
Regulation Panel (“TRP”) and the JSE;
- DAWN shareholders holding in aggregate no more than 5% of the ordinary shares in
issue at the date of the general meeting exercising their appraisal rights as envisaged in
the Companies Act; and
- the fairness opinion (referred to in 2 above and also in terms section 114 of the
Companies Act) on the Repurchase having not concluded that the Repurchase is unfair
or unreasonable to Shareholders.
4. Circular to Shareholders and notice of general meeting of Shareholders
A circular to Shareholders providing full information of the Repurchase and convening a general
meeting of Shareholders for this purpose is presently being prepared and subject to the required
prior approvals of the JSE and TRP, and will be posted to Shareholders as soon as possible.
5. Cautionary Announcement
Shareholders are advised to exercise caution in the trading of their securities in Dawn until such
time as the Company provides the financial effects of the Repurchase and details on the
contemplated specific issue for cash referred to in 1 above.
Johannesburg
15 December 2014
Corporate Advisor and Transaction Sponsor
PricewaterhouseCoopers Corporate Finance Proprietary Limited
Legal Advisor
Webber Wentzel
Independent Expert
BDO Corporate Finance Proprietary Limited
Legal Advisor to Ukhamba
Tugendhaft Wapnick Banchetti & Partners
Date: 15/12/2014 12:30:00 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,
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