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Zeder Invst \ Capespan Group -Joint Announcement of a firm intention offer by way of a Scheme of Arrangement
Zeder Investments Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2006/019240/06
Share Code: ZED
ISIN Code: ZAE000088431
(“Zeder”)
Capespan Group Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2008/01697/06
(“Capespan”)
JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF ZEDER TO MAKE AN
OFFER TO ACQUIRE ALL THE ORDINARY SHARES IN CAPESPAN, NOT
ALREADY HELD BY ZEDER AND MEMBERS OF CAPESPAN’S MANAGEMENT,
EXCLUDING TREASURY SHARES, BY WAY OF A SCHEME OF ARRANGEMENT.
CAPESPAN SHAREHOLDERS WILL RECEIVE 85 ZEDER SHARES IN EXCHANGE
FOR EVERY 100 CAPESPAN SHARES DISPOSED OF. ZEDER'S 30-DAY
VOLUME WEIGHTED AVERAGE TRADING PRICE ("VWAP") AS AT 31 MARCH
2015 WAS R7.64, THEREBY IMPLYING AN OFFER VALUE OF R6.50 PER
CAPESPAN SHARE, REPRESENTING A 65% PREMIUM TO CAPESPAN’S 30-DAY
VWAP PRICE OF R3.95 PER SHARE AS AT THE SAME DATE.
1. INTRODUCTION
1.1 Shareholders are hereby notified that the Capespan
board of directors (“Capespan Board”) has received a
firm intention from Zeder to make an offer to acquire
all the ordinary shares in Capespan not already held by
Zeder and members of Capespan’s management (“Capespan
Management Team”), by way of a scheme of arrangement
(“the Scheme”) (“Firm Intention Offer”). Shareholders
are further advised that the Capespan Board has
appointed an independent board, which excludes any
Zeder representative, (“Independent Board”) to evaluate
the Scheme and to advise shareholders in due course on
whether same is regarded as fair and reasonable.
1.2 Capespan is involved in global fruit production,
procurement, marketing and distribution. Over the past
70 years, Capespan has developed its portfolio into
three complementary divisions, namely Fruit, Farming
and Logistics, which are increasingly less
interdependent and individually more profitable.
Capespan has an annual turnover in excess of R7 billion
and has operations in 12 countries, providing services
and produce to more than 60 countries across four
continents.
1.3 The implementation of the Scheme is below the
transaction categorisation threshold as set out in the
Listings Requirements of the JSE Limited (“JSE”) (“JSE
Listings Requirements”).
1.4 The purpose of this announcement is to advise Zeder
shareholders and Capespan shareholders of the terms and
conditions of the Firm Intention Offer.
2. RATIONALE FOR THE FIRM INTENTION OFFER
2.1 Rationale for Zeder
2.1.1 Zeder wishes to acquire all shares in Capespan not
currently held by Zeder and by the Capespan
Management Team, excluding treasury shares, for the
following reasons –
2.1.1.1 Zeder and the Capespan Management Team hold
nearly 75% of the issued share capital of
Capespan and basically control Capespan;
2.1.1.2 Zeder has no intention to list Capespan in the
short to medium term; and
2.1.1.3 Zeder can improve cash management and various
operational initiatives throughout the larger
group for the benefit of all shareholders if it
owned all of the shares in Capespan.
2.1.2 Accordingly, Zeder wishes to implement the Scheme in
order to be fair to minority shareholders, reduce
the administrative and corporate burden of Capespan,
while at the same time maximising the financial
returns to all current Capespan and Zeder
shareholders.
2.2 Rationale for Capespan
2.2.1 The Capespan Board wishes to propose the Scheme for
the following reasons –
2.2.1.1 Capespan is basically controlled by Zeder and
the Capespan Management Team who together hold
approximately 75% of the issued share capital of
Capespan;
2.2.1.2 the administrative costs and corporate burden
associated with a very large group of fragmented
minority shareholders, who jointly do not exert
influence over Capespan, are not ideal or
sustainable;
2.2.1.3 Capespan shares historically traded through
Capespan’s over-the-counter (“OTC”) platform;
2.2.1.4 following the publication of the final directive
issued by the Financial Services Board (“FSB”)
on 11 July 2014 regarding the facilitation by
companies of trading in their shares, Capespan
initially decided to suspend its OTC platform as
well as all “over-the-counter” trading in
Capespan shares with effect from 31 July 2014
and has thereafter allowed trading on an amended
basis that complies with FSB regulations, but
with very little liquidity; and
2.2.1.5 Capespan wishes to find an attractive liquidity
mechanism or alternative for its minority
shareholders.
2.2.2 Accordingly, the Scheme will provide Capespan
shareholders with –
2.2.2.1 an opportunity to align themselves fully with
Zeder shareholders and benefit from group
synergies that may be derived;
2.2.2.2 an opportunity to convert their illiquid
investment in Capespan, at a substantial
premium, to a more liquid instrument in a listed
entity, Zeder; and
2.2.2.3 an opportunity to diversify their investment in
Capespan into a more diversified agri, food and
beverage portfolio.
2.2.3 The Independent Board’s opinion in connection with
the Scheme will be communicated to Capespan
shareholders in due course.
3. MECHANICS OF THE SCHEME
3.1 The Scheme will constitute an “affected transaction” as
defined in section 117(c) of the Companies Act, 2008
(“Companies Act”) and will be regulated by the
Companies Act, the Companies Regulations, 2011
(“Companies Regulations”) and the Takeover Regulation
Panel (“TRP”).
3.2 The Scheme will be implemented in terms of section 114
of the Companies Act and will be proposed by the
Capespan Board between Capespan and its shareholders
other than Zeder and the Capespan Management Team.
3.3 Subject to TRP approval, the Capespan management share
option scheme will run its course as same was only
recently introduced.
3.4 The Firm Intention Offer will be subject to the
conditions precedent set out in paragraph 4.2 below
("Firm Intention Offer Conditions").
3.5 The Scheme will be subject to the conditions precedent
set out in paragraph 5.1 below ("Scheme Conditions").
4. THE FIRM INTENTION OFFER
4.1 Material terms of the Firm Intention Offer
4.1.1 The Firm Intention Offer will be made on the basis
that –
4.1.1.1 Zeder will acquire all of the ordinary shares in
Capespan not already held by Zeder and the
Capespan Management Team, excluding treasury
shares (“Scheme Shares”);
4.1.1.2 following the implementation of the Scheme,
Capespan will be a wholly-owned subsidiary of
Zeder and the Capespan Management Team (Zeder
confirms that it will adhere to the provisions
of paragraph 10.21 of Schedule 10 of the JSE
Listings Requirements, in this regard);
4.1.1.3 once all the Firm Intention Offer Conditions and
the Scheme Conditions have been fulfilled and
the Scheme is implemented, Capespan shareholders
will receive the scheme consideration of 85
(eighty five) Zeder shares for every 100 (one
hundred) Scheme Shares disposed of in terms of
the Scheme, rounded to the nearest whole number
and credited as fully paid (“Scheme
Consideration”);
4.1.1.4 the Scheme Consideration will not have a cash
alternative; and
4.1.1.5 the Scheme Consideration will be issued on
market and will be listed on the main board of
the JSE.
4.1.2 On 31 March 2015, the 30-day volume weighted average
traded price ("VWAP") of Zeder was R7.64 per share,
valuing the offer for the Scheme Shares at R6.50 per
share or a premium of 65% to the 30-day VWAP of
Capespan of R3.95 per share, as at 31 March 2015.
4.1.3 On 31 March 2015, the share price of Zeder was R8.34
per share, valuing the offer for the Scheme Shares
at R7.09 per share or a premium of 79% to the 30-day
VWAP of Capespan of R3.95 per share, as at 31 March
2015.
4.2 Firm Intention Offer Conditions
4.2.1 The posting of the scheme circular to Capespan
shareholders, other than Zeder and the Capespan
Management Team, in relation to the Scheme ("Scheme
Circular") is subject to the fulfilment of the Firm
Intention Offer Conditions that, by no later than 30
June 2015 –
4.2.1.1 the independent expert appointed to advise the
Independent Board furnishes an opinion that the
terms and conditions of the Scheme are fair and
reasonable to Capespan shareholders; and
4.2.1.2 all requisite approvals have been received from
the JSE, the TRP and the Financial Surveillance
Department of the South African Reserve Bank for
the posting of the Scheme Circular, to the
extent required.
4.2.2 The Firm Intention Offer Condition in paragraph
4.2.1.1 may be waived by Zeder upon written notice
to Capespan, prior to the date for fulfilment of
that Firm Intention Offer Condition.
4.2.3 The Firm Intention Offer Condition in paragraph
4.2.1.2 cannot be waived.
4.2.4 Zeder will be entitled to extend the date for the
fulfilment of any of the Firm Intention Offer
Conditions by up to 30 days, in its own discretion,
upon written notice to Capespan, but shall not be
entitled to extend the date to a date later than the
aforesaid 30-day period without the prior written
consent of Capespan.
5. THE SCHEME CONDITIONS
5.1 The Scheme will be subject to (and will become
operative on the relevant operative date upon) the
fulfilment of the following conditions precedent on or
before 31 August 2015 –
5.1.1 that the Scheme be approved by the requisite
majority of Capespan shareholders, as contemplated
in section 115(2)(a) of the Companies Act, and, to
the extent required, by a High Court in terms of
section 115(2)(c) of the Companies Act, and, if
applicable, that Capespan does not treat the
aforesaid shareholder resolution as a nullity, as
contemplated in section 115(5)(b) of the Companies
Act;
5.1.2 that, in relation to any objections to the Scheme by
Capespan shareholders –
5.1.2.1 no Capespan shareholders give notice objecting
to the Scheme, as contemplated in section 164(3)
of the Companies Act and vote against the
resolution proposed at the general meeting to
approve the Scheme (“Scheme Meeting”); or
5.1.2.2 if Capespan shareholders give notice objecting
to the Scheme, as contemplated in section 164(3)
of the Companies Act, and vote against the
resolution proposed at the Scheme Meeting,
Capespan shareholders holding no more than 5% of
all Scheme Shares eligible to be voted at the
Scheme Meeting give such notice and vote against
the resolutions proposed at the Scheme Meeting;
or
5.1.2.3 if Capespan shareholders holding more than 5% of
all Scheme Shares eligible to vote at the Scheme
Meeting give notice objecting to the Scheme, as
contemplated in section 164(3) of the Companies
Act, and vote against the resolution proposed at
the Scheme Meeting, the relevant Capespan
shareholders do not exercise their appraisal
rights, by giving valid demands in terms of
sections 164(5) to 164(8) of the Companies Act
within 30 business days following the Scheme
Meeting, in respect of more than 5% of the
Scheme shares eligible to be voted at the Scheme
Meeting; and
5.1.3 that, in respect of the implementation of the Scheme
and only to the extent that same may be applicable,
the approval of the JSE, the TRP and any other
relevant regulatory authorities (either
unconditionally or subject to conditions acceptable
to Zeder) be obtained.
5.2 The Scheme Conditions in paragraphs 5.1.1 and 5.1.3
cannot be waived.
5.3 The Scheme Condition in paragraph 5.1.2 may be waived
by Zeder upon written notice to Capespan, prior to the
date for fulfilment of the relevant Scheme Condition.
5.4 Zeder will be entitled to extend the date for the
fulfilment of any of the Scheme Conditions, by up to 60
days, in its own discretion, upon written notice to
Capespan, but shall not be entitled to extend the date
to a date later than the aforesaid 60-day period
without the prior written consent of Capespan.
6. SHAREHOLDING IN CAPESPAN AND ACTING AS PRINCIPAL
6.1 Zeder and the Capespan Management Team currently hold,
directly and indirectly, 74.6% of the issued share
capital of Capespan.
6.2 Zeder confirms that it is the ultimate prospective
purchaser of the Scheme Shares and is acting alone and
not in concert with any party, save for the Capespan
Management Team.
7. VOLUNTARY GENERAL OFFER
7.1 To the extent that the Scheme fails due to the Scheme
Conditions set out in paragraph 5.1 not being fulfilled
or waived, as the case may be, then Zeder may extend a
voluntary general offer to all Capespan shareholders to
acquire their shares in Capespan in exchange for a
consideration equal to the Scheme Consideration
(“General Offer”).
7.2 Capespan shareholders may elect to accept the General
Offer in whole or in part.
7.3 The General Offer, if made, will be an affected
transaction as defined in section 117 of the Companies
Act. Therefore the General Offer will be regulated by
the Companies Act, the Companies Regulations and the
TRP.
8. AUTHORISED SHARE CAPITAL
Zeder confirms that it has sufficient authorised share
capital available to settle the Scheme Consideration shares
to be issued to Capespan shareholders in terms of the
Scheme.
9. PRO FORMA FINANCIAL EFFECTS ON CAPESPAN SHAREHOLDERS
9.1 The pro forma financial effects on Capespan
shareholders are the responsibility of the Capespan
directors and have been prepared for illustrative
purposes only to provide information about how the
Scheme may affect the financial position of the
Capespan shareholders. The pro forma financial effects
on Capespan shareholders have been calculated in
respect of 100 Capespan Scheme Shares held before the
Scheme and 85 Zeder shares held after the Scheme.
9.2 The pro forma financial effects are presented for
illustrative purposes only and, because of their
nature, may not fairly present the actual financial
effects of the Scheme on Capespan shareholders.
Pro forma
Before after
(cents)(1) (cents)(2) Change
Share price per share
(rand) 3.95 6.50 64.6%
The share price per share pro forma financial effect is the
most relevant metric for assessment of the Scheme and the
following pro forma financial effects do not present the
premium at which the offer is made
Net asset value per
share 462.3 416.9 (9.8%)
Tangible net asset value
per share 362.6 383.2 5.7%
Recurring headline
earnings per share 49.4 30.4 (38.5%)
Headline earnings per
share 30.3 18.6 (38.6%)
Attributable earnings
per share 33.7 17.8 (47.2%)
Notes and assumptions:
1. Extracted, without adjustment, from the audited results
of Capespan for the year ended 31 December 2014, except
for the ‘before’ share price which was Capespan’s 30-day
VWAP as at 31 March 2015, while the ‘after’ share price
was calculated using the ratio of 85 Zeder shares for
every 100 Capespan shares disposed of, and Zeder’s 30-
day VWAP of R7.64 as at 31 March 2015.
2. The “Pro forma after” column sets out the position of an
Capespan shareholder following implementation of the
Scheme, now owning Zeder shares. The financial
information is based on Zeder’s pro forma financial
effects pursuant to implementation of the Scheme
detailed below (for the year ended 28 February 2015),
multiplied by the ratio of 0.85 to provide the pro forma
financial effects for Capespan shareholders.
10. PRO FORMA FINANCIAL EFFECTS ON ZEDER SHAREHOLDERS
10.1 The pro forma financial effects on Zeder shareholders
are the responsibility of the Zeder directors and have
been prepared for illustrative purposes only to provide
information about how the Scheme may affect the
financial position of the Zeder shareholders.
10.2 The pro forma financial effects are presented for
illustrative purposes only and, because of their
nature, may not fairly present the actual financial
effects of the Scheme on Zeder shareholders.
Pro forma
Before after
(cents)(1) (cents)(2) Change
Net asset value per
share 494.0 490.5 (0.7%)
Tangible net asset value
per share 452.4 450.8 (0.4%)
Recurring headline
earnings per share 35.3 35.8 1.4%
Headline earnings per
share 22.0 21.9 (0.5%)
Attributable earnings
per share 20.6 20.9 1.5%
Notes and assumptions:
1. Extracted, without adjustment, from the audited results
of Zeder for the year ended 28 February 2015.
2. The pro forma results after the acquisition incorporates
the following financial effects:
a. The acquisition of 81 833 465 Capespan shares not
already held by Zeder or Capespan’s management (by
way of the Scheme) for a consideration of 69 558
445 Zeder shares.
b. The aforementioned Zeder shares being issued at the
closing share price of R8.31 as at 7 April 2015.
c. The transaction with non-controlling interest being
recognised directly in equity, together with the
estimated transaction costs of R4.4m.
d. With the exception of the adjustments set out in
(c) above, all adjustments are expected to have a
continuing effect.
e. The pro forma financial effects do not include any
adjustment to the performance fee that was paid to
PSG in terms of the management agreement for the
year ended 28 February 2015, due to the uncertain
nature thereof.
11. INDEPENDENT BOARD, OPINION AND RECOMMENDATIONS
11.1 In accordance with the Companies Regulations, the
Independent Board, comprised of independent non-
executive directors, has been appointed by the Capespan
Board to evaluate the Scheme.
11.2 The Independent Board will appoint an independent
expert acceptable to the TRP to provide the Independent
Board with external advice in connection with the
Scheme and to make appropriate recommendations to the
Independent Board for the benefit of Capespan
shareholders. The substance of the external advice and
the opinion of the Independent Board on the Scheme will
be detailed in the Scheme Circular.
12. FURTHER DOCUMENTATION AND SALIENT DATES
12.1 Further details of the Scheme will be included in the
Scheme Circular that will, subject to the fulfilment of
the Firm Intention Offer Conditions, be posted in due
course to Capespan shareholders. The Scheme Circular
will, inter alia, also contain a notice of the Scheme
Meeting, a form of proxy and a form of surrender and
transfer.
12.2 The Scheme will become effective and be implemented
following the fulfilment of the Firm Intention Offer
Conditions and the Scheme Conditions. The salient dates
in relation to the Scheme will be published in due
course.
13. INDEPENDENT BOARD RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the
information contained in this announcement which relates to
Capespan and confirms that, to the best of its knowledge
and belief, such information which relates to Capespan is
true and the announcement does not omit anything likely to
affect the importance of such information.
14. ZEDER BOARD RESPONSIBILITY STATEMENT
The board of directors of Zeder accepts responsibility for
the information contained in this announcement which
relates to Zeder and confirms that, to the best of its
knowledge and belief, such information which relates to
Zeder is true and the announcement does not omit anything
likely to affect the importance of such information.
Stellenbosch
8 April 2015
PSG Capital: Transaction Adviser and Sponsor to Zeder
Date: 08/04/2015 02:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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