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Category 2 Transaction announcement
Purple Group Limited
(Formerly Purple Capital Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE ISIN: ZAE000185526
(“Purple Group” or “the Company” or “PGL”)
CATEGORY 2 TRANSACTION ANNOUNCEMENT: PROPOSED INVESTMENT BY PURPLE GROUP IN
REAL PEOPLE INVESTMENT HOLDINGS LIMITED
1. THE TRANSACTION
Shareholders are advised that Purple Group has entered into various agreements with Real
People Investment Holdings Limited (“RPIH”) in terms of which Purple Group will subscribe
for ordinary shares, compulsory convertible preference shares and cumulative redeemable
“B” preference shares (“Subscription Agreements”) in RPIH (“the Transaction”).
2. BACKGROUND INFORMATION ON RPIH
The RPIH group offers a range of credit linked financial products to individuals and small and
medium enterprises primarily in South Africa, with growing operations in Kenya and Uganda.
3. RATIONALE
RPIH is in the process of raising tier 1 and tier 2 capital, required to strengthen its capital
adequacy ratio, which will enable the business to continue to raise funding to support its
lending operations. The capital is being raised at a discount to the net asset value of the
business.
Purple Group currently holds an indirect investment in RPIH through Blockbuster Trading 3
(Pty) Ltd (“BBT”). BBT, of which Purple Group is a 37.5% shareholder will not be partaking in
the proposed capital raising. In order to off-set the dilution of Purple Group’s investment in
RPIH through BBT, at the discounted capital raising price, Purple Group has decided to invest
directly in RPIH.
Although this investment is not core to the Purple Group’s operations, the board of directors
is of the opinion that the price at which capital is being raised by RPIH is at a significant
discount to fair value and as such it would be value destroying if Purple Group did not
partake in the proposed capital raising.
4. DETAILS OF THE SUBSCRIPTION SHARES
In terms of the subscription agreements PGL will subscribe for:
4.1 6 471 Ordinary shares at a subscription price of R1 700 per share;
4.2 5 293 Compulsory Convertible Preference Shares (“CCPS”) at a subscription price of
R1 700 per share. These preference shares will convert into 5 293 ordinary shares on the
fifth anniversary of the issue date. The CCPS will attract a non-cumulative dividend at a
rate equal to 72% of (JIBAR plus 10%) annually; and
4.3 763 Cumulative Redeemable B Preference shares (“CRPS”) at a price of R7 863.86 per
share. These preference shares have a face value per share of R13 686.09, and are
redeemable within two months, at face value, of the finalisation of the first RPIH Audited
Financial Statements after 36 months and one day from issue date and attract a
cumulative dividend of JIBAR plus 7% (this is an after tax rate to the holder). The CRPS are
senior to the ordinary shares and CCPS and rank pari passu with other cumulative
redeemable preference shares in issue.
4.4 The total consideration paid will amount to R25 998 925.18.
4.5 The ordinary shares in the share capital of RPIH will rank pari passu in all respects with
the existing ordinary shares in RPIH and the preference shares are no par value
compulsory convertible preference shares that will be converted in to ordinary shares in
RPIH
4.6 PGL will fund the Transaction via a R20 000 000 facility from Mercantile Bank and the
balance of R5 998 925.18 from cash resources.
5. THE EFFECTIVE DATE OF THE TRANSACTION
The effective date of the subscription will be the second business day following the
fulfilment or waiver of the last of the conditions precedent detailed below.
6. CONDITIONS PRECEDENT
The Transaction is subject to the fulfilment of the following conditions precedent on or
before 16 January 2015:
6.1 the board of directors of PGL and RPIH passing a resolution authorising the execution of
the subscription agreement or ratifying its execution (if applicable);
6.2 the other shareholders of RPIH, not subscribing for the ordinary shares or CCPS
(Subscription Shares”), waiving their right to subscribe for the Subscription Shares in
terms of section 39(2) of the Companies Act, 2008 (Act No. 71 of 2008) (“the Act”);
6.3 the execution of various agreements with existing shareholders of RPIH required for the
issue of the CRPS;
6.4 the passing of a special resolution by the shareholders of RPIH, in terms of section
36(1)(d) and 36(2)(a) of the Act in terms of which the memorandum of incorporation is
amended by the creation of the CCPS;
6.5 the passing of a resolution by the board of directors of RPIH in terms of section 36(1)(d)
of the Act, in terms of which the board of directors determines the rights and privileges
of the CCPS; and
6.6 the board of directors of RPIH passing a resolution in terms of section 38 of the Act
authorising the issue by RPIH of the Subscription Shares to Purple Group.
7. GENERAL
7.1 The value of the net assets of RPIH as at 31 August 2014 was R705,0 million prior to PGL
subscribing for the subscription shares.
7.2 The loss after tax attributable to the net assets of RPIH for the 12 months ended 31
August 2014 was R278,6 million.
7.3 PGL’s direct interest in RPIH arising out of this Transaction is 4.27%, and 5.75% in total
directly and indirectly, including the percentage previously held.
8. CATEGORISATION
In terms of the Listings Requirements, the Transaction is classified as a Category 2 transaction.
9. FURTHER ANNOUNCEMENT
Shareholders will be notified once the last of the conditions precedent has been fulfilled.
Johannesburg
15 December 2014
Sponsor:
Deloitte & Touche Sponsor Services (Pty) Ltd
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