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Announcement of a Mandatory Offer
MONTAUK HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2010/17811/06)
(Previously HCI International Holdings Limited and Elgabrite Proprietary Limited)
Share code: MNK
ISIN: ZAE000197455
(“Montauk”)
ANNOUNCEMENT OF A MANDATORY OFFER
1. INTRODUCTION
Montauk hereby advises shareholders that a consortium comprising certain directors and senior
managers of Hosken Consolidated Investments Limited (“HCI”) and/or their associates, which are
set out in paragraph 5 below (“the Consortium”), has increased its shareholding in Montauk such
that its aggregate direct and indirect shareholding has increased to 44.1% (net of treasury shares).
As previously disclosed in the Montauk Pre-listing Statement, dated 19 November 2014, the
Southern African Clothing and Textile Workers’ Union (“SACTWU”) and the Consortium, who
became shareholders of Montauk Holdings following the unbundling of Montauk by HCI, by virtue
of their shareholdings in HCI, have entered into an agreement to regulate the manner in which they
will conduct themselves in relation to their Montauk shareholdings. The agreement established a
voting pool amongst the parties to the agreement and the parties furthermore granted one another
pre-emptive rights in respect of the parties’ Montauk ordinary shares (“Montauk Shares”).
The Consortium has acquired 41,372,115 Montauk Shares from SACTWU at a price of 320 cents
per share which has increased its combined shareholding to 44.1%. Consequently, in terms of
Section 123 of the Companies Act, No. 71 of 2008, as amended, (the "Companies Act") read with
the Takeover Regulations promulgated in terms of sections 120 and 223 of the Companies Act (the
“Takeover Regulations”) the Consortium, through its nominated entity, HCI Invest17 Holdco
Proprietary Limited (the “Offeror”), is obligated to make an offer to all Montauk shareholders to
acquire all of the ordinary shares of Montauk, other than those that it already owns (the “Offer
Shares”), on the terms set out in paragraph 3.1 below (the “Offer”).
The Offeror has notified the board of directors of Montauk of its obligation to proceed with the
proposed acquisition of the Offer Shares. The Offer is an affected transaction as defined in section
117(1)(c) of the Companies Act and, accordingly, will be regulated by the Companies Act, the
Takeover Regulations and the Takeover Regulation Panel ("TRP").
2. RATIONALE FOR THE OFFER
On 1 December 2014, it was announced that the Consortium had entered into an option agreement
(“Option Agreement”), comprising a put and call option, with SACTWU in respect of SACTWU’s
shares in Montauk. SACTWU had previously indicated that it may divest from its investment in
Montauk as the investment does not fit its investment mandate of supporting businesses that
operate in South Africa and, as such, the option agreement provided SACTWU with the opportunity
to exit its 30.6% shareholding in Montauk in an orderly manner which doesn’t adversely impact
Montauk or its shareholders.
The call option provided that the Montauk Shares held by SACTWU can be acquired by the
Consortium for an aggregate consideration of R142 645 000 (plus an amount of R3.44 per
additional Montauk Share acquired by SACTWU prior to the exercise of the call option) during the
call option period of 180 days commencing on the date of listing of the Montauk Shares on the Main
Board of the JSE (“Listing”)
The put option (“Put Option”) allowed SACTWU to sell the Montauk Shares to the Consortium at
the lesser of the 20 business-day volume weighted average price (“VWAP”) prior to the date on
which the put option is exercised and the aggregate amount of R142 645 000 (plus R3.44 per
additional Montauk Share acquired by SACTWU prior to exercise of the put option). The Put Option
could be exercised during the Put Option period which commences when the call option period
ends and lasts for 20 business days thereafter (“Put Option Period”).
Following the conclusion of the Option Agreement, there have been dramatic changes to the global
energy sector including declines in natural gas prices in the United States. Furthermore, SACTWU
indicated to the Consortium that it wished to exercise the Put Option prior to the Put Option Period.
Following negotiations with SACTWU the Consortium has agreed to SACTWU’s request in terms of
an addendum to the Option Agreement (“Option Agreement Addendum”) on the proviso that the
consideration per Montauk Share is agreed at 320 cents.
Following the conclusion of the Option Agreement Addendum, the Consortium has acquired
SACTWU’s Montauk Shares. As a result, the Consortium’s aggregate, direct and indirect,
shareholding in Montauk has increased to more than 35%, and the Consortium is therefore
required, in terms of the Takeover Regulations, to make a mandatory offer to Montauk
shareholders for the Offer Shares at the highest price paid by the Offeror or concert parties in the
past six months.
There is limited liquidity in Montauk shares and the Offer provides Montauk shareholders with an
opportunity to realise their investment at a premium to the volume weighted average price of
Montauk since the Listing of 293 cents.
3. THE OFFER
3.1. Terms of the Offer
The Consortium, via the Offeror, shall offer to acquire all of the Offer Shares in exchange for
the Offer consideration of 320 cents per Offer Share (“Offer Consideration”) in cash.
Montauk shareholders may elect to accept the Offer in whole or in part.
In the event that the Montauk shareholders holding at least 90% of the Offer Shares accept
the Offer within 4 months after the date of the Offer, the Offeror reserves the right to invoke
the provisions of Section 124 of the Companies Act to compulsorily acquire all of the Offer
Shares in respect of which the Offer was not accepted.
3.2. The Offer period
The Offer is expected to be open for acceptance on Thursday, 26 March 2015 with the initial
closing date being on Friday, 15 May 2015 ("Closing Date"). The Consortium reserves the
right to change the Closing Date to a later date.
3.3. Payment of the Offer Consideration and cash confirmation
Nedbank Limited, acting through the Nedbank Corporate division, has furnished the TRP with
a cash confirmation that the Offeror has sufficient cash resources and/or facilities to conclude
the Offer.
The payment of the Offer Consideration will be made to Montauk shareholders on the basis
set out in paragraph 7 below.
3.4. No set-off of Offer consideration
Settlement of the Offer Consideration pursuant to the Offer will be implemented in accordance
with the terms of the Offer without regard to any lien, right of set-off, counterclaim, deduction,
withholding or other analogous right to which the Consortium may otherwise be, or claim to be,
entitled against any shareholder.
3.5. Offer not made where unlawful
The Offer shall not constitute an offer to purchase or the solicitation of an offer to sell any
Montauk Shares in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to the registration or qualification under the laws of such jurisdiction.
4. CONDITIONS PRECEDENT
The Consortium has obtained Competition Commission approval for the acquisition of control of
Montauk during 2014 and, accordingly the Offer is not subject to any conditions precedent, other
than the receipt of the required approval of the TRP, including the issuance by the TRP of the
requisite compliance certificate.
5. OFFEROR AND CONCERT PARTIES’ SHAREHOLDINGS IN MONTAUK
Subsequent to the acquisition of SACTWU’s 41,372,115 Montauk Shares in terms of the Option
Agreement Addendum on 2 March 2015, the Consortium owns a direct and indirect beneficial
interest of 44.1% in Montauk Shares (net of treasury shares), as indicated below:
Before 1 % After 2 %
JA Copelyn and his nominated entities 6,705,348 4.96 6,705,348 4.96
A van der Veen and his nominated entities 813,272 0.60 6,366,510 4.71
JR Nicolella and his nominated entities 85,363 0.06 665,433 0.49
MA Jacobson and his nominated entities 65,299 0.05 3,255,689 2.41
Y Shaik and his nominated entities - 580,070 0.43
The Corjo Trust 1,356,577 1.00 1,356,577 1.00
Majorshelf 183 Pty Ltd 1,625,555 1.20 12,731,899 9.41
Rivetprops 47 Pty Ltd 4,900,372 3.62 25,262,375 18.68
Chearsley Investments Pty Ltd 1,197,275 0.89 1,197,275 0.89
Circumference Investments Pty Ltd 1,484,968 1.10 1,484,968 1.10
18,234,029 13.48 59,606,144 44.07
1
Before the acquisition of SACTWU’s Montauk Shares.
2
After the acquisition of SACTWU’s Montauk Shares.
6. RECOMMENDATION AND FAIR AND REASONABLE OPINION
A sub-committee of the Montauk board of directors comprising 3 independent directors of Montauk
(the “Independent Board”) was formed for the purposes of considering the Offer in accordance
with the requirements of the Takeover Regulations. The Independent Board is comprised of the
following directors:
- M H Ahmed
- N B Jappie
- B S Raynor
The Independent Board has appointed BDO Corporate Finance Proprietary Limited, an
independent advisor acceptable to the TRP, to provide it with external advice in relation to the Offer
and to make appropriate recommendations to the Independent Board for the benefit of Montauk
shareholders. The substance of the external advice and the views of the Independent Board will be
detailed in the joint Offer circular to be sent to Montauk shareholders in relation to the Offer.
7. SALIENT DATES AND TIMES
The salient dates and times of the Offer are set out below:
2015
Posting date for the combined Offeror and offeree Wednesday, 25 March
circular to Montauk shareholders
Opening date of Offer Thursday, 26 March
Last date to trade in order to participate in the Offer Friday, 8 May
Record date on which Montauk shareholders must Friday, 15 May
be recorded in the register in order to participate in
the Offer
Closing date of the Offer Friday, 15 May
Results of the Offer released on SENS Monday, 18 May
Offer Consideration posted to Offer participants Offer Consideration settlement dates, being
(once documents of title have been received) within six business days after acceptance
of the Offer until the sixth business day
after the closing date of the Offer
Notes:
1) The above dates and times are subject to amendment by the Offeror. Any such change will be released on SENS
and/or published in the press.
2) All times indicated above are South African times.
8. CIRCULAR
A circular containing full detail of the Offer, and including, inter alia, a form of acceptance,
surrender and transfer, will be posted to Montauk shareholders on or about Wednesday, 25 March
2015.
9. RESPONSIBILITY STATEMENT
The Consortium accepts responsibility for the information contained in this announcement. To the
best of their respective knowledge and belief, the information contained in this announcement is
true and nothing has been omitted which is likely to affect the import of the information.
Cape Town
4 March 2015
Investment Bank:
Investec Bank Limited
Sponsor:
Investec Bank Limited
Legal Advisers:
Edward Nathan Sonnenbergs Inc.
Independent Expert:
BDO Corporate Finance Proprietary Limited
Date: 04/03/2015 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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