Wrap Text
Firm Intention by Heaven-Sent to make Cash Offer to acquire Issued Share Capital of Village Withdrawal of Cautionary
Village Main Reef Limited Heaven-Sent Capital Management Group
(Registration number 1934/005703/06) Co., Ltd
JSE code: VIL (company number 10000009864885)
ISIN: ZAE000154761 (incorporated and registered in accordance
("Village" or "the Company") with the laws of China)
("Heaven-Sent")
FIRM INTENTION BY HEAVEN-SENT TO MAKE A CASH OFFER TO ACQUIRE THE
ENTIRE ISSUED SHARE CAPITAL OF VILLAGE AT ZAR 12.25 PER SHARE AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements dated 13 October 2014, 25 November 2014, 11
December 2014 and 28 January 2015, respectively, the boards of directors of Village
("Village Board") and Heaven-Sent ("HSC Board") are pleased to advise shareholders of
Village ("Village Shareholders") that as part of the strategic review process to unlock value
for the Company’s shareholders the parties have entered into an implementation agreement
on 4 February 2015 ("the Implementation Agreement"). The Implementation Agreement
constitutes a firm intention offer by Heaven-Sent, which offer may be implemented either
directly by Heaven-Sent or through a nominated subsidiary, to acquire by way of a scheme
of arrangement ("Scheme") in terms of section 114 of the South African Companies Act No
71 of 2008 (the "Companies Act"), the entire issued share capital of Village (other than the
3,043,947 treasury shares) ("the Scheme Shares"), for a cash consideration of ZAR 12.25
per Village Share ("Scheme Consideration") (the "Proposed Transaction") on the terms and
conditions set out in the Implementation Agreement.
The Implementation Agreement was executed following discussions between Village and
Heaven-Sent and following the completion of a due diligence investigation on Village by
Heaven-Sent, and replaces the term sheet concluded between the parties on 4 January
2015 (as amended on 30 January 2015 and 2 February 2015) ("Term Sheet"). The Scheme
will be proposed by the Village Board between Village and the Village Shareholders.
2. Details of Heaven-Sent and Rationale for the Proposed Transaction
Heaven-Sent is one of the top ten private equity / venture capital firms in the People’s
Republic of China, having been a first mover in the industry in 2001. The major business
sectors of Heaven-Sent include venture capital, private equity and private wealth
management. Heaven-Sent has grown into a sizable asset manager with a team of over 200
professionals, invested in over 100 projects (among which over 60 are listed in China) and
launched over 70 investment funds with total assets under management of over RMB20bn
(over ZAR 37bn).
Heaven-Sent is committed to the spirit and intent of the Minerals and Petroleum Resources
Development Act No 28 of 2002 ("MPRDA"), and to sustain a culture of social investment
within South Africa. Village signifies an ideal investment into the South African market for
Heaven-Sent and supports Heaven-Sent’s strategy of developing an attractive business
portfolio in South Africa.
Heaven-Sent is offering a price of ZAR 12.25 per share, a 14.49% premium to Village's
closing share price on the securities exchange ("Exchange") operated by the JSE Limited
("JSE") on 3 February 2015 and a 45.68% premium to its 30 day volume weighted average
price ("VWAP") on the JSE on 3 February 2015 (the last trading day prior to signature of the
Implementation Agreement). Village considers this to be a significant premium given
previous global and South African gold sector transactions.
The Proposed Transaction is fully funded, not subject to further due diligence, bears no
substantive regulatory execution risk (other than the conditions set out in paragraphs 4 and
5) and offers Village Shareholders an opportunity to crystallize the value of their
shareholding in Village.
3. Material Terms of the Proposed Transaction
a) Proposed Transaction Mechanism
The Scheme will be proposed by the Village Board between Village and the Village
Shareholders and is subject to the conditions set out in paragraphs 4 and 5.
b) Proposed Scheme Consideration
Under the terms of the Scheme, Heaven-Sent will pay to Village Shareholders the
Scheme Consideration.
The Scheme Consideration represents a 101.91% premium to the 30 day VWAP of
Village Shares traded on the JSE on 29 December 2014, being the agreed pricing date
prior to execution of the Term Sheet.
The Scheme Consideration premium to Village’s market price and 30 day VWAP on 3
February 2015 (last trading day prior to signature of the Implementation Agreement) is
set out in the table below:
Share price prior to signing the
Premium
Implementation Agreement
ZAR %
Market price 10.70 14.49
30-day VWAP 8.41 45.68
60-day VWAP 7.23 69.33
Provided that all conditions precedent to the Proposed Transaction are fulfilled, the
Proposed Transaction will result in Heaven-Sent becoming the registered and beneficial
owner of 100% of the Village Shares. Heaven-Sent intends to terminate the listing of the
Village Shares on the Exchange once the Scheme has been successfully implemented.
c) Village Forfeitable Share Plan ("FSP") and Treasury Shares
The Village Shares to be acquired pursuant to the Scheme shall include the forfeitable
shares awarded to participants in the FSP (whether vested or unvested), but shall
exclude the treasury shares in issue on the date of implementation of the Scheme. For
the avoidance of doubt, no Scheme Consideration will be paid to participants in the FSP
in respect of forfeitable shares which have not vested on or before the date of
implementation of the Scheme.
d) Funding Arrangements
Heaven-Sent will fund the Scheme Consideration from its own cash resources, which are
sufficient for the purposes of satisfying the full Scheme Consideration. The South
African Takeover Regulation Panel, established in terms of section 196 of the
Companies Act ("Takeover Panel"), has been provided with an irrevocable and
unconditional bank guarantee from The Standard Bank of South Africa Limited for the
purpose of satisfying the full Scheme Consideration in compliance with regulations
111(4) and 111(5) of the Takeover Regulations.
e) Cons Murch
At the time of Heaven-Sent's first approach to Village, Cons Murch was in the process of
being sold to Stibium. Accordingly, Heaven-Sent never anticipated acquiring Cons
Murch as part of the Village group of companies. Heaven-Sent understands from its
interaction with the Village Board that the conditions precedent to the Stibium transaction
were never fulfilled and, as a result, the transaction lapsed.
Cons Murch was placed into business rescue pursuant to Chapter 6 of the Companies
Act on 15 December 2014 ("Cons Murch Business Rescue").
Village have committed an amount of approximately R22,000,000 as post
commencement finance to Cons Murch ("Cons Murch PCF") to enable the continued
operation of Cons Murch until the earlier of the date on which Cons Murch is sold to a
third party, taken out of business rescue or such post commencement finance is
depleted. As at the date of this announcement, no agreement has been concluded with
respect to the sale of Cons Murch. In addition, the Village Board will not commit or
provide any additional funding to Cons Murch while it is in business rescue. Accordingly,
there is the possibility that the business rescue practitioner of Cons Murch could apply to
court to place Cons Murch into provisional liquidation as soon as the Cons Murch PCF is
depleted. Any such decision would be taken by the business rescue practitioner in
consultation with the Village Board. Heaven-Sent would have no influence over or ability
to intervene in any such decision. Furthermore, any such decision will not have an
impact on the Proposed Transaction or the Scheme Consideration to be received by
Village Shareholders.
4. Material conditions to the posting of the circular
The posting of a circular to Village Shareholders in respect of the Scheme ("Circular") is
subject to the fulfilment or waiver of, inter alia, the following material conditions by not later
than 23:59 on 4 March 2015:
a) the Village Board having appointed an independent expert in terms of section 114(2) of
the Companies Act and Takeover Regulations ("Independent Expert") and the
Independent Expert having prepared and issued a report concerning the Scheme to
Village Shareholders ("the Report") in terms of section 114(3) of the Companies Act and
the independent board of Village established for the purpose of the Proposed
Transaction ("Independent Board") in terms of regulation 110 of the Takeover
Regulations;
b) the Independent Expert having made a statement, in writing, to the Village Shareholders
and the Independent Board confirming that the Scheme Consideration is, in its opinion,
fair and reasonable to the Village Shareholders;
c) the Independent Board having made an unqualified and unconditional recommendation
to the Village Board and the Village Shareholders that the Village Shareholders should
vote in favour of the special resolution required to approve the Scheme (“Independent
Board Recommendation”); and
d) all requisite approvals, including the approval of the Circular, having been obtained from
the JSE, the Takeover Panel and the Financial Surveillance Department of the South
African Reserve Bank for the posting of the Circular; provided that if any such approval is
granted conditionally or on terms, this condition will only be regarded as having been
fulfilled if HSC confirms in writing that such conditions and terms are acceptable to it.
5. Material conditions to implementation of the Scheme
The implementation of the Scheme will be subject to the fulfilment, or waiver of, inter alia,
the following conditions by the dates set out below or such later dates as Village and
Heaven-Sent may agree to in writing:
a) by not later than 23:59 on 31 July 2015, the passing of a special resolution approving the
Scheme by the requisite majority of Village Shareholders at the general meeting
convened to approve the Scheme ("Scheme Meeting"), as contemplated in section
115(2)(a) of the Companies Act and:
i. to the extent required, the approval of the implementation of that special
resolution by a court of competent jurisdiction as contemplated in section 115(3)
of the Companies Act; and
ii. if applicable, Village not treating the aforesaid special resolution as a nullity, as
contemplated in section 115(5)(b) of the Companies Act;
b) by not later than 23:59 on 31 July 2015, Village has not elected to treat the special
resolution as a nullity pursuant to section 115(5) of the Companies Act and a court of
competent jurisdiction has granted its approval pursuant to section 115(3) of the
Companies Act in circumstances where –
i. the special resolution referred is opposed by 15% or more of the voting rights that
were exercised in respect of that special resolution; or
ii. a person who voted against the special resolution requires Village, within five
business days after the vote, to seek court approval pursuant to section 115(3) of
the Companies Act;
c) if the special resolution is not opposed by 15% or more of the voting rights that were
exercised in respect of that special resolution, no leave is granted by a court of
competent jurisdiction to any person who voted against that special resolution to apply to
such court for a review of the Proposed Transaction pursuant to section 115(6), read
together with section 115(3)(a), of the Companies Act;
d) by not later than 23:59 on 31 July 2015, Heaven-Sent has elected in writing to proceed
with the Proposed Transaction in circumstances where, within the time period prescribed
in section 164(7) of the Companies Act, Village Shareholders have exercised appraisal
rights, by giving valid demands pursuant to sections 164(5) to (8) of the Companies Act,
in respect of 5% or more of all the Scheme Shares;
e) by not later than 23:59 on 31 July 2015, the Proposed Transaction has been approved
by the South African Competition Authorities, either unconditionally or on terms and
conditions which Heaven-Sent confirms in writing to be acceptable to it;
f) by not later than 23:59 on 31 July 2015, if the proposed amendments to the MPRDA, as
set out in section 8 of the Mineral and Petroleum Resources Development Amendment
Bill which will amend section 11 of the MPRDA, come into force and effect prior to the
implementation of the Scheme, and to the extent necessary, any consent, confirmation
or approval (conditional or otherwise) in writing which might be required in terms of the
MPRDA from the Minister of Mineral Resources has been obtained in accordance with
the requirements of such statute, which consent, confirmation or approval (conditional or
otherwise) has been approved of in writing by any party to the Proposed Transaction
affected by such amendment/s;
g) by not later than 23:59 on 31 July 2015, Heaven-Sent has competed the necessary
record-filing procedures with and received approval of the Proposed Transaction from –
i. the National Development and Reform Commission of the People's Republic of
China or its local counterpart;
ii. the Ministry of Commerce of the People's Republic of China or its local
counterpart; and
iii. the State Administration of Foreign Exchange of People Republic of China or its
local counterpart;
h) by not later than 23:59 on the first business day after the last of the conditions precedent
to the implementation of the Scheme referred to in 5a) to g) (both inclusive) have been
fulfilled or waived, a Material Adverse Change (as this term is defined in the
Implementation Agreement) has not occurred, or notwithstanding that a Material Adverse
Change (as this term is defined in the Implementation Agreement) has occurred,
Heaven-Sent has confirmed in writing to Village that it wishes to proceed with the
Proposed Transaction; and
i) by not later than 23:59 on the third business day after the last of the conditions
precedent to the implementation of the Scheme referred to in 5a) to g) (both inclusive)
have been fulfilled or waived, a compliance certificate issued in terms of section
119(4)(b) of the Companies Act in relation to the Scheme from the Takeover Panel has
been received; provided that, if such compliance certificate is issued conditionally or on
terms, this condition will not be regarded as having been fulfilled unless Heaven-Sent
confirms in writing that such conditions and terms are acceptable to it.
6. Other
a) Exclusivity Undertaking:
Village has undertaken not to solicit, initiate, encourage or otherwise seek to procure any
offers from third parties that compete with the Proposed Transaction ("Competing
Offers"). In addition, Village is obliged to notify Heaven-Sent of any approach that is
made, or circumstances indicating that an approach is likely to be made, to Village or
any member of its group (including, without limitation, by someone who has previously
approached Village or any member of its group).
If a Competing Offer is announced by Village and/or a third party, Heaven-Sent shall
have a right to match any such Competing Offer(s) (including the right to match any
revised Competing Offer) in accordance with the provisions of the Implementation
Agreement.
b) Break Fee
Village shall pay Heaven-Sent a fee equal to 1% of the Scheme Consideration payable
for all of the Scheme Shares (“the Break Fee”) if:
i. the Independent Board withdraws or adversely modifies the Independent Board
Recommendation or proposes, endorses or recommends a Competing Offer;
provided that the Break Fee shall not be payable in circumstances where a
Competing Offer is announced and Heaven-Sent fails to notify Village in writing of
its intention to increase or revise its offer so as to match the Competing Offer; or
ii. the Implementation Agreement is terminated as a result of Village breaching its
obligations under and in accordance with the Implementation Agreement and
failing to timeously remedy such breach in accordance with the Implementation
Agreement.
Heaven-Sent shall pay Village a Break Fee if:
i. representatives of Heaven-Sent have not submitted the initial submissions and
initiated the applications process in respect of the approvals referred to in
paragraph f) i, ii, and iii on or before the date of posting of the Circular to Village
Shareholders;
ii. Heaven-Sent fails to obtain the approvals referred to in paragraph f) i, ii, and iii;
iii. Heaven-Sent fails to provide the cash guarantee as required in terms of
regulation 111(5) of the Takeover Regulations; or
iv. the Implementation Agreement is terminated by Village as a result of Heaven-
Sent breaching its obligations under and in accordance with the Implementation
Agreement and failing to timeously remedy such breach in accordance with the
Implementation Agreement.
7. Village Shareholder Support
Heaven-Sent has received irrevocable undertakings from certain Village Shareholders to
vote or procure to vote the number of Village Shares held by each of them as at the record
date of the Scheme Meeting in favour of the Scheme, which Village Shareholders
collectively hold, as at the date of this announcement, 35.1% of the Village Shares.
8. Independent Board and Report
The Independent Board of Village has been appointed in accordance with regulation 108 of
the Takeover Regulations to consider the terms of the Proposed Transaction and the Report.
The Independent Board has appointed Venmyn Deloitte Proprietary Limited as Independent
Expert to consider the Scheme Consideration and to advise on, inter alia, whether the
Scheme Consideration is fair and reasonable to the Village shareholders. The full report of
the Independent Expert and the basis for its conclusion will be included in the Circular.
9. Posting of the Circular
Further details of the Scheme will be included in the Circular to be posted to Village
Shareholders on or about 4 March 2015, which will include, inter alia, the notice of Scheme
Meeting to be held on or about 2 April 2015 for the purposes of considering and, if deemed
fit, passing the special resolution required to approve the Scheme and other resolutions
which may be necessary in order to implement the Scheme. The salient dates in relation to
the Scheme will be published prior to the posting of the Circular.
10. Responsibility Statements
Heaven-Sent (to the extent that the information relates to Heaven-Sent) accepts
responsibility for the information contained in this announcement and, to the best of its
knowledge and belief, confirms that the information is true and this announcement does not
omit anything likely to affect the importance of the information included.
The Independent Board (to the extent that the information relates to Village) accepts
responsibility for the information contained in this announcement and, to the best of its
knowledge and belief, confirms that the information is true and this announcement does not
omit anything likely to affect the importance of the information included.
The Village Board (to the extent that the information relates to Village) accepts responsibility
for the information contained in this announcement and, to the best of its knowledge and
belief, confirms that the information is true and this announcement does not omit anything
likely to affect the importance of the information included.
11. Withdrawal of Cautionary announcement
Following the publication of the terms of the Proposed Transaction, caution is no longer
required to be exercised by Village Shareholders when dealing in their securities in the
Company.
Johannesburg
04 February 2015
Corporate adviser to Village Main Reef Corporate adviser to Heaven-Sent Capital
Limited Group Management Co., Ltd
Qinisele Resources Proprietary Limited Standard Chartered Bank
Independent Expert to Village Main Reef
JSE Sponsor to Village Main Reef Limited
Limited Independent Board
Bravura Capital Proprietary Limited Venmyn Deloitte Proprietary Limited
South African Legal Adviser to Village South African Legal adviser to Heaven-
Main Reef Limited Sent Capital Management Group Co., Ltd
Edward Nathan Sonnenbergs Incorporated Werksmans Attorneys
Date: 04/02/2015 02:09:00 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.
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