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Detailed announcement regarding the voluntary pro rata share repurchase
Combined Motor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1965/000270/06)
Share code: CMH ISIN: ZAE000088050
("CMH" or "the Company" or "the CMH Group")
DETAILED ANNOUNCEMENT REGARDING THE SHARE REPURCHASE BY THE COMPANY OF
A MAXIMUM OF 21 133 000 ISSUED SHARES FROM SHAREHOLDERS ON A VOLUNTARY PRO
RATA BASIS; IMPORTANT DATES AND TIMES, AND CONVENING OF A GENERAL MEETING
OF CMH
1. Introduction
1.1 Shareholders of CMH ("Shareholders") are referred to the cautionary announcement
released on SENS on 21 April 2015 and published in the press on 22 April 2015,
whereby, inter alia,it was announced that the Company intends making an offer to all
Shareholders to voluntarily tender for repurchase at R11,83 per share in cash ("Share
Repurchase Offer Consideration") all, or a portion only, of their holding of ordinary shares
("Shares") in the Company ("Share Repurchase Offer"). In accordance with the
'Important dates and times' indicated in paragraph 8 below, the Share Repurchase Offer
is expected to be made to all Shareholders registered as such on Friday, 3 July 2015
("Share Repurchase Offer Participants").
1.2 In accordance with sections 48(8), 114(e) and 115 (2)(a) of the Companies Act, 2008
(Act No. 71 of 2008), as amended ("Companies Act"), in order for the Share Repurchase
Offer to be made and implemented, the prior approval of Shareholders in general
meeting is required. In this regard, paragraph 9 below deals with the convening of the
necessary general meeting to be held on Thursday, 28 May 2015 ("General Meeting").
2. Rationale
2.1 The CMH Group currently has, and has had for a number of years, cash and near cash
equivalents surplus to its present and reasonably foreseeable requirements. Having
reviewed the CMH Group's cash flow projections, the Company's directors ("Directors")
do not anticipate that these resources will be required to be utilised in the near nor
medium term (1-2 years) future for either operational or other requirements.
2.2 Rather than earn a relatively low interest rate return on the surplus funds, the Directors
believe that optimal use thereof can better be made by returning the surplus funds to
Shareholders by way of the Share Repurchase Offer.
2.3 In proposing this course of action, the Directors have also considered the rather limited
trading of the Company's Shares on the JSE Limited ("JSE") and the challenges that this may pose for
larger Shareholders wishing to create a liquidity event in order to realise cash. By way of
illustration, during the year ended 28 February 2015, the average number of Shares
traded was 157 000 Shares per week.
2.4 Accordingly, the proposed Share Repurchase Offer has the ability to offer some of the
Company's larger Shareholders the opportunity to create such a liquidity event whilst
facilitating future benefits accruing to smaller Shareholders by virtue of the fact that post
the Share Repurchase Offer, as a result of the cancellation and restoration to authorised
but unissued shares in the Company, the reduced number of issued Shares will have the
effect of improving earnings and dividends per share for the remaining issued Shares. In
addition, the "free float", being the proportion of Shares held by public Shareholders, has
the potential to increase to 46% from its present 36%.
3. Salient terms of the Share Repurchase Offer
The coming into force and effect of the Share Repurchase Offer is subject to the fulfillment of
the conditions precedent listed in paragraph 4 below.
The salient terms of the Share Repurchase Offer are as follows:
3.1 CMH, by way of the Share Repurchase Offer, will offer all Share Repurchase Offer
Participants the opportunity to tender for repurchase all or a portion of such
Shareholders' holdings of Shares. Accordingly, Shareholders are being invited to
voluntarily tender to the Company for repurchase, as many Shares as they deem fit, or,
not to tender any Shares at all. On this basis, acceptance of the Share Repurchase
Offer is completely voluntary and free of any form of compulsory expropriation. For this
reason dispensation from the necessity for CMH to have prepared and included in a
circular to Shareholders ("Circular") a fairness opinion on the Share Repurchase Offer
was sought from the Takeover Regulation Panel ("TRP") and duly obtained subject to
CMH, in terms of Section 114(2) of the Companies Act, retaining an independent expert
to compile a report on the Share Repurchase in compliance with section 114(3) of the
Companies Act. In this regard, BDO Corporate Finance Proprietary Limited has been
appointed as the independent expert ("Independent Expert") and its report is contained in
the Circular which will be posted to Shareholders on Thursday, 30 April 2015. The
Circular also indicates where the ruling letter of the TRP may be inspected.
3.2 The Share Repurchase Offer is restricted to a maximum number of 21 133 000 Shares,
representing 22,6% of the Company's total present issued ordinary Shares.
3.3 Share Repurchase Offer Participants will receive R11,83 in cash per Share repurchased
by CMH. Accordingly, full take up of the Share Repurchase Offer will result in the
Company utilising R250 003 390, exclusive of costs.
3.4 The Maldwyn Zimmerman Investment Holding Company (Pty) Ltd ("HoldCo") holds a
total of 28 455 273 shares in CMH. All of the issued shares of HoldCo are owned by the
Maldwyn Zimmerman Children Trust ("the Trust"). As regards such holding of shares the
Company has been advised in writing by the Trust of the intention to tender for
acceptance of the Share Repurchase Offer not less than 28 455 273 Shares should the
Share Repurchase Offer be implemented. Maldwyn Zimmerman is a past director of the
Company. In view of such intention to tender, there will be in excess of 21 133 000
Shares tendered for repurchase. Consequently, the number of Shares to be repurchased
from each individual Share Repurchase Offer Participant will be determined, subject to
paragraph 3.5 below (but in any event no more than the number of Shares tendered by
the Share Repurchase Offer Participant), in accordance with the following ratio:
A = B/C x D
Where:
A = the number of Shares to be repurchased from the Share Repurchase Offer Participant
B = the number of Shares tendered by the Share Repurchase Offer Participant
for repurchase in terms of the Share Repurchase Offer
C = the total number of Shares tendered for repurchase by all Share Repurchase Offer
Participants in terms of the Share Repurchase Offer
D = the maximum number of Shares being repurchased by CMH, namely 21 133 000.
3.5 For administration and cost reasons, the number of Shares to be repurchased in terms of
the ratio will be rounded up or down to the nearest multiple of 50 Shares.
3.6 The Share Repurchase Offer Consideration will be paid, in full, in accordance with the
terms of the Share Repurchase Offer without regard to any lien, right of set-off,
counterclaim or other analogous right to which CMH may otherwise be, or claim to be,
entitled against any Share Repurchase Offer Participant.
3.7 It is expected that the Shares repurchased from the participating Share Repurchase
Offer Participants will be delisted from the JSE on or about Tuesday, 7 July 2015 and, in
terms of section 35(5) of the Companies Act, no longer form part of the issued Shares of
the Company.
4. Conditions Precedent
4. 1 Implementation of the Share Repurchase and the making of the Share Repurchase Offer
is subject to the fulfillment of the following conditions precedent:
4.1.1 the approval by Shareholders at the General Meeting of the Share Repurchase by
way of a special resolution to be passed in accordance with sections 48(8), 114(e)
and 115(2)(a) of the Companies Act ("Special Resolution"). In order for the
Special Resolution to be validly considered and passed, the required quorum of at
least 25% of all of the voting rights entitled to be exercised on the Special
Resolution must be present and the Special Resolution must be passed by at least
75% of all of the voting rights as are exercised on the Special Resolution;
4.1.2 the approval by Shareholders at the General Meeting of the authorising ordinary
resolution. In order for the ordinary resolution to be validly considered and passed,
the required quorum of at least 25% of all of the voting rights entitled to be
exercised on the ordinary resolution must be present and the ordinary resolution
must be passed by a majority of more than 50% of all of the voting rights as are
exercised on the ordinary resolution;
4.1.3 to the extent and if required, the approval of the implementation of the Special
Resolution by any South African court with competent jurisdiction to approve the
implementation of the Special Resolution pursuant to section 115 of the
Companies Act;
4.1.4 if applicable, CMH not treating the Special Resolution as a nullity, as contemplated
in terms of section 115(5)(b) of the Companies Act; and
4.1.5 the receipt of unconditional approvals, consents or waivers from all regulatory
bodies, including the TRP (in terms of a compliance certificate to be issued in
terms of the Companies Act) or to the extent that any such approvals, consents or
waivers are subject to conditions, such conditions being satisfactory to CMH.
4.2 Should all of the conditions precedent referred to in paragraph 4.1 above not have been
fulfilled or waived (if possible), as the case may be, following the conclusion of the
General Meeting on Thursday, 28 May 2015, or any adjournment thereof, or by such
other later date as may be determined by CMH and, subject to the approval of the TRP
and JSE (if necessary), the Share Repurchase and consequently the Share Repurchase
Offer will not become operative and shall be of no force or effect.
4.3 An announcement will be published on SENS and in the South African press as soon as
practicably possible advising on the fulfillment or otherwise of the above conditions
precedent and the ramifications and effects thereof.
5. Exemption of requirement for fairness opinion
As explained in paragraph 3.1 above, the TRP has granted dispensation for the need to have
prepared and included for Shareholders a fairness opinion pertaining to the Share Repurchase.
6. Opinions, recommendations and irrevocable undertakings
6.1 The Directors have carefully considered the terms, conditions and rationale for the Share
Repurchase and Share Repurchase Offer and are of the opinion that the Share
Repurchase and Share Repurchase Offer are fair, and accordingly recommend that
Shareholders vote in favour of the resolutions to be proposed at the General Meeting.
6.2 All of the Directors having material direct or indirect beneficial holdings in Shares,
representing some 64,36% of the Company's issued Shares, have signed irrevocable
undertakings to vote in favour of the resolutions to be considered at the General Meeting
to implement the Share Repurchase and the Share Repurchase Offer. The Circular
provides full details of such irrevocable undertakings.
6.3 The independent board of Directors of the Company, established in compliance with
regulation 108(9) of the Companies Regulations, 2011, as amended ("Companies
Regulations"), and comprising J T M Edwards, L C Z Cele and J S Dixon, being Directors
of CMH that the Company has indicated are independent as contemplated by regulation
108(8) of the Companies Regulations, having taken into account the report of the
Independent Expert referred to in paragraph 5 above, is unanimously of the opinion that
the terms and conditions of the Share Repurchase Offer are good for the Company and
Shareholders, and accordingly recommend that Shareholders vote in favour of the
Special Resolution at the General Meeting.
7. Tax implications for Shareholders who elect to participate in the Share Repurchase Offer
7.1 The Share Repurchase Offer Consideration of R11,83 per Share for each Share
repurchased, will comprise 21,8 cents, being a refund of contributed tax capital, and 1
161,2 cents, being a dividend distribution payment.
7.2 The dividend distribution payment element of the Share Repurchase Offer Consideration
will be subject to a dividend withholding tax ("DWT") at a rate of 15%, unless the
respective Shareholders who participate in the Share Repurchase Offer are exempt from
DWT in terms of section 64F of the Income Tax Act of South Africa, which will result in a
net dividend distribution per Share repurchased of 987,02 cents.
7.3 It is recommended that all Shareholders who intend to elect to participate in the Share
Repurchase Offer, prior to taking any action to accept the Share Repurchase Offer in the
manner and basis set out in detail in the Circular, should seek appropriate advice.
8. Important dates and times
The following are the important dates and times pertinent to the General Meeting and the Share
Repurchase Offer:
Action 2015
Notice of General Meeting released on SENS on Tuesday, 28 April
Notice of General Meeting published in the South African press on Wednesday, 29 April
Circular posted to Shareholders recorded as such in the register of
Shareholders of the Company ("Register") on Friday, 17 April 2015 on Thursday, 30 April
In terms of sections 59(1) and (2) of the Companies Act, last day to
trade CMH Shares in order to be recorded in the Register and thereby
be able to attend, participate in and vote at the General Meeting (see
note 4 below) on Friday, 15 May
In terms of sections 59(1)(b) and (2) of the Companies Act, record
date to be eligible to attend, participate in and vote at the General
Meeting, being the General Meeting Record Date, by close of
trade on Friday, 22 May
Completed forms of proxy to be lodged with the Company, c/o the
Company Secretary, at the Company's registered office,1 Wilton
Crescent, Umhlanga Ridge, Durban, 4319, South Africa (PO Box
1033, Umhlanga Rocks, 4320, South Africa), by 16:00 (see note 5 Wednesday, 27 May
below) on
Last date and time for Shareholders to give notice to CMH in
terms of section 164 of the Companies Act objecting to the
Special Resolution necessary to authorise the Share Repurchase
to be considered at the General Meeting (see note 3 below) by Thursday, 28 May
16:00 on
General Meeting held at 16:00 on Thursday, 28 May
Results of General Meeting as well as providing/confirming dates
pertinent to the Share Repurchase Offer published on SENS on Friday, 29 May
Results of General Meeting as well as providing/confirming dates
pertinent to the Share Repurchase Offer published in the South
African press on Monday, 1 June
Share Repurchase Offer Opening Date being the expected date
for the opening of the Share Repurchase Offer, at 09:00 on Monday, 1 June
Subject to the Share Repurchase being approved by
Shareholders at the General Meeting with sufficient voting
rights such that no Shareholder can require the Company to
obtain Court approval for the Special Resolution as
contemplated in section 115(3)(a) of the Companies Act:
End of 10 Business Day period during which Shareholders can
make application to the Court in terms of section 115(3)(b) of the
Companies Act on Thursday, 11 June
Last date for CMH to give notice of adoption of the Special
Resolution approving the Share Repurchase to Shareholders, if
any, objecting to the Special Resolution (see note 3 below) on Thursday, 11 June
If no Shareholders exercise their rights in terms of section
115(3)(b) of the Companies Act, then the following are the
anticipated relevant dates and times:
Finalisation announcement on SENS on Monday, 15 June
Share Repurchase Offer LDT, being the last day to trade in
Shares in order to be registered as a Shareholder in the Register
at the Share Repurchase Offer Record Date on Friday, 26 June
Shares trade "ex" the right to participate in the Share Repurchase
Offer on Monday, 29 June
Share Repurchase Offer Record Date, being the date by which a
Shareholder must be recorded as such in the Register in order to
be entitled to participate in the Share Repurchase Offer, on Friday, 3 July
Share Repurchase Offer Closing Date, being the expected date
for the closing of the Share Repurchase Offer at 12:00 on Friday, 3 July
Share Repurchase Offer Payment Date, being the expected date
for the settling of the Share Repurchase Offer Consideration on or Monday, 6 July
about
Expected date for the delisting from the JSE of the Shares
repurchased in terms of the Share Repurchase Offer from the
commencement of trading on the JSE on or about Tuesday, 7 July
Notes:
1. All of the above dates and times are subject to change following mutual agreement, as
required between CMH, the JSE and the TRP. The dates have been determined based on
certain assumptions regarding the date by which certain regulatory approvals will have been
obtained and that no Court approval or review of the Special Resolution approving the
implementation of the Share Repurchase Offer will be required. Any change in the dates and
times will be released on SENS and published in the South African press.
2. Although the salient dates and times are subject to change, such statement may not be
regarded as carte blanche consent or dispensation for any change to any relevant applicable
time period which may be required in terms of any regulations stipulated by the JSE/TRP
and/or Companies Act requirements and regulations, where applicable, and any such consent
or dispensation must be specifically applied for and approved by the relevant regulatory
authority.
3. Shareholders are advised that the Circular contains a summary of dissenting shareholders'
appraisal rights in terms of section 164 Companies Act as well as a summary of section 115
of the Companies Act regarding other rights afforded to shareholders, the exercise of any of
which may affect the above indicated important dates and times.
4. Shareholders should note that as transactions in shares are settled in the electronic
settlement system used by Strate, settlement of trades takes place five Business Days after
such trade. Therefore, persons who acquire Shares after the last day to trade in order to be
eligible to vote at the General Meeting, namely, Friday, 15 May 2015, will not be able to vote
thereat, but may, nevertheless, provided the Share Repurchase is approved and they acquire
the Shares on or prior to the Share Repurchase Offer LDT, expected to be Friday, 26 June
2015, participate in the Share Repurchase Offer.
5. A Shareholder may submit a proxy at any time before the commencement of the General
Meeting (or any adjournment of the General Meeting) or hand it to the chairman of the
General Meeting before the appointed proxy exercises any of the relevant Shareholders'
rights at the General Meeting (or any adjournment of the General Meeting), provided that
should a Shareholder lodge a form of proxy with the transfer secretaries of the Company less
than 24 hours before the General Meeting, a Shareholder will also be required to furnish a
copy of such form of proxy to the chairman of the General Meeting before the appointed proxy
exercises any of such Shareholder's rights at the General Meeting (or any adjournment of the
General Meeting).
6. If the General Meeting is adjourned or postponed, forms of proxy submitted for the initial
General Meeting will remain valid in respect of any such adjournment or postponement.
7. All times given in this Circular are local times in South Africa.
9. Notice of General Meeting and posting of Circular
The Circular, as approved by the JSE and TRP, providing full details of the Share Repurchase
and the Share Repurchase Offer, and containing a notice convening the General Meeting will be
posted to all Shareholders on Thursday, 30 April 2015.
The General Meeting will be held at the Company's registered office, 1 Wilton Crescent,
Umhlanga Ridge, Durban, South Africa at 16:00, on Thursday, 28 May 2015, for the purpose of
considering and, if deemed fit, of passing, with or without modification, the Special Resolution
and associated ordinary resolution.
10. Withdrawal of Cautionary
With regard to the cautionary announcement for the Share Repurchase referred to in paragraph 1
above, Shareholders are hereby advised that caution is no longer required to be exercised by
Shareholders when dealing in their securities.
28 April 2015
Sponsor and Corporate Advisor
PricewaterhouseCoopers
Corporate Finance (Proprietary) Limited
Independent Expert
BDO Corporate Finance Proprietary Limited
Independent Reporting Accountants and Auditors
PricewaterhouseCoopers Inc.
Date: 28/04/2015 05:41:00 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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