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METMAR LIMITED - Joint announcement of the firm intention by Traxys to make a cash offer to acquire all the issued shares of Metmar

Release Date: 30/04/2015 17:50
Code(s): MML     PDF:  
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Joint announcement of the firm intention by Traxys to make a cash offer to acquire all the issued shares of Metmar

 Traxys Africa Proprietary Limited                       Metmar Limited
 (Incorporated in the Republic of South Africa)          (Incorporated in the Republic of South Africa)
 (Registration number 1992/002255/07)                    (Registration number 1998/007269/06)
 ("Traxys")                                              JSE Share Code: MML ISIN: ZAE000078747
                                                         ("Metmar")




JOINT ANNOUNCEMENT OF THE FIRM INTENTION BY TRAXYS TO MAKE A CASH OFFER TO
ACQUIRE ALL THE ISSUED SHARES OF METMAR

1.      INTRODUCTION

        Further to the updated cautionary announcement released on 11 March 2015 ("Cautionary
        Announcement"), Metmar shareholders are advised that on 30 April 2015 (the “Signature
        Date”) Metmar entered into an implementation agreement with Traxys ("Implementation
        Agreement") in terms of which Traxys, inter alia, offered to acquire all the issued ordinary
        shares of Metmar ("Scheme Shares") (the "Proposed Transaction").

2.      MATERIAL TERMS OF THE PROPOSED TRANSACTION

2.1           Proposed Transaction mechanism

2.1.1                Traxys intends acquiring the Scheme Shares by way of a scheme of arrangement
                     in terms of section 114 of the Companies Act 71 of 2008, as amended,
                     ("Companies Act") (the "Scheme") to be proposed by the Metmar board of
                     directors ("Metmar Board") between Metmar and the holders of Scheme Shares
                     ("Shareholders").

2.1.2                The Scheme will be implemented as follows:

2.1.2.1                     The Scheme will be proposed by the Metmar Board between Metmar and
                            the Shareholders.

2.1.2.2                     The posting of the circular to Shareholders in respect of the Scheme (the
                            “Circular”) and the implementation of the Scheme will be subject to the
                            fulfilment of the conditions referred to in paragraphs 5 and 6 below,
                            respectively.

2.1.2.3                     The purchase price payable for the Scheme Shares, and the terms of
                            payment, will be as set out in paragraph 2.2 below.

2.2           Purchase consideration
2.2.1            In terms of the Scheme, Traxys will pay to the Shareholders a cash consideration
                 of R1.10 per Scheme Share ("Scheme Consideration"), which will result in a total
                 consideration payable by Traxys to Shareholders of R294 037 207.

2.2.2            If the Scheme has not been implemented by 15 September 2015, the Scheme
                 Consideration shall accrue interest at the prime overdraft lending rate (as
                 published by Nedbank Limited) from that date up to and including the operative
                 date of the Scheme, if the delay is caused solely and directly by a failure of Traxys
                 to comply with its obligations under the Implementation Agreement.

        The table below illustrates the Scheme Consideration premium:

                                       Prior to the
                                             Initial                       Prior to signing
                                       Cautionary                                     of the
                                   Announcement                            Implementation
                                      (30 October                               Agreement
                                             2014)          Premium         (30 April 2015)          Premium
                                                (R)               (%)                    (R)               (%)
                                                        1                                        5
             Market price                      1.09            0.92%                    0.70           57.14%
                                                        2                                        6
             30-day VWAP                       0.79           38.80%                    0.73           50.25%
                                                        3                                        7
             60-day VWAP                       0.88           25.49%                    0.76           44.91%
                                                        4                                        8
             90-day VWAP                       1.01            8.91%                    0.77           43.67%

        Notes:

        1.      Closing price of Metmar shares on the JSE Limited (“JSE”) on 29 October 2014, being the
                last trading day prior to the publication of the initial cautionary announcement on 30 October
                2014 ("Initial Cautionary Announcement").

        2.      Volume weighted average price (“VWAP”) at which Metmar shares traded on the JSE for the
                30 trading days up to and including 29 October 2014, being the last trading day prior to the
                publication of the Initial Cautionary Announcement.

        3.      VWAP at which Metmar shares traded on the JSE for the 60 trading days up to and including
                29 October 2014, being the last trading day prior to the publication of the Initial Cautionary
                Announcement.

        4.      VWAP at which Metmar shares traded on the JSE for the 90 trading days up to and including
                29 October 2014, being the last trading day prior to the publication of the Initial Cautionary
                Announcement.

        5.      Closing price of Metmar shares on the JSE on 29 April 2015, being the last trading day prior
                to signing the Implementation Agreement.

        6.      VWAP at which Metmar shares traded on the JSE for the 30 trading days up to and including
                29 April 2015, being the last trading day prior to signing the Implementation Agreement.

        7.      VWAP at which Metmar shares traded on the JSE for the 60 trading days up to and including
                29 April 2015, being the last trading day prior to signing the Implementation Agreement.
            8.   VWAP at which Metmar shares traded on the JSE for the 90 trading days up to and including
                 29 April 2015, being the last trading day prior to signing the Implementation Agreement.

3.    INFORMATION ABOUT TRAXYS

      Traxys is a physical commodity trader and merchant in the metals and natural resources
      sectors. Its logistics, marketing, distribution, supply chain management and trading activities
      are conducted by over 300 employees, in over 20 offices worldwide, and its annual turnover is
      in excess of $6 billion. Traxys is headquartered in Luxembourg. Traxys’ focus is primarily on
      the marketing and sourcing of base metals and concentrates, minor and alloying metals,
      industrial minerals and chemicals, and materials for steel mills and foundries, and the
      management of all parts of the supply chain, from producer to consumer, worldwide.

4.    BUSINESS RATIONALE FOR THE PROPOSED TRANSACTION

      In addition to the recommendation to Shareholders to vote in favour of the Proposed
      Transaction at the relevant meeting, as set out in paragraph 11.2 below, there exists a
      business imperative for the Proposed Transaction. The Proposed Transaction will have the
      following benefits for Metmar:

4.1         It will increase Metmar’s funding pool and reduce its cost of funding through economies
            of scale;

4.2         It will enhance Metmar’s access to both committed and uncommitted facilities available in
            a variety of major currencies;

4.3         It will improve diversification and access to international markets;

4.4         It will facilitate access to private equity funding to fund the development and operations
            of Metmar’s core investments;

4.5         It will increase the pool of trading and management skills; and

4.6         It will facilitate the consolidation of resources and result in synergistic benefits.

5.    CONDITIONS TO THE POSTING OF THE CIRCULAR

                                                                                            
      The posting of the Circular is subject to the receipt, by no later than the 18th day after the
      publication of this announcement, of all requisite approvals from the JSE, the Takeover
      Regulation Panel and the Financial Surveillance Department of the South African Reserve
      Bank for the posting of the Circular.

6.    MATERIAL CONDITIONS TO THE SCHEME

      The Scheme will be subject to the fulfilment or waiver of the following conditions:
6.1     by no later than the "Long Stop Date" as defined in the Implementation Agreement, being
        30 September 2015, subject to possible extension by Traxys to 30 October 2015 or
        extension by up to 15 business days to enable an expert to determine if a "Material
        Adverse Change" occurred as contemplated in paragraph 6.9 below, (the “Long Stop
        Date”) the approval of the Scheme by the requisite majority of the Shareholders, as
        contemplated in section 115(2) of the Companies Act; and

6.1.1         to the extent required in terms of section 115(3)(a) of the Companies Act, the
              approval of the special resolution approving the Scheme ("Scheme Resolution")
              by the court, and Metmar not treating the Scheme Resolution as a nullity, as
              contemplated in section 115(5)(b) of the Companies Act; or

6.1.2         if any person who voted against the Scheme applies to court for review of the
              Proposed Transaction in terms of section 115(3)(b) of the Companies Act: (i) no
              leave being granted to such person to apply to court for a review of the Proposed
              Transaction or (ii) if leave is so granted, the court not setting aside the Scheme
              Resolution; and

6.2     within 30 business days following the meeting at which the Scheme Resolution was
        approved ("Scheme Meeting"), Shareholders exercising their appraisal rights in terms of
        section 164 of the Companies Act, by giving valid demands in terms of section 164(7) of
        the Companies Act, in respect of no more than 5% of the issued Scheme Shares,
        provided that, in the event that Shareholders give notice objecting to the Scheme as
        contemplated in section 164(3) of the Companies Act and vote against the Scheme
        Resolution in respect of no more than 5% of the issued shares, this condition shall be
        deemed to have been fulfilled at the time of the Scheme Meeting; and

6.3     by no later than 31 May 2015, the delivery of the audited annual financial statements of
        the Metmar group for the year ended 28 February 2015 to Traxys by Metmar; and

6.4     by no later than the Long Stop Date, the receipt of the unconditional approval of the
        Proposed Transaction in writing of:

6.4.1         the South African competition authorities; and

6.4.2         the competition authorities in other jurisdictions, to the extent required by law
              (excluding COMESA),

        or, if any such approval is conditional, the parties (acting reasonably) confirming in
        writing that such conditions are acceptable to them; and

6.5     by no later than the Long Stop Date, the receipt of the approval in writing of the JSE, to
        the extent required, for the delisting of Metmar shares; and
6.6         by no later than the Long Stop Date, the issue of a compliance certificate by the
            Takeover Regulation Panel in relation to the Proposed Transaction;

6.7         by no later than the Long Stop Date, any litigation or arbitration to which any member of
            the Metmar group is a party (whether as of or at any time after the Signature Date)
            (“Pending Litigation”) having been finally concluded or settled, as contemplated in the
            Implementation Agreement and in any such event the final judgement awarded or the
            settlement agreed in any Pending Litigation, in total, does not result in a “Material
            Adverse Change” (this condition may be waived by Traxys in its sole discretion by notice
            in writing to Metmar with respect to any Pending Litigation, based on the facts and
            circumstances of any such Pending Litigation as made available to Traxys by Metmar, or
            for any other reason); and

6.8         by no later than the second business day after the "MAC Notice Deadline Date" (as
            defined in the Implementation Agreement) (the "MAC Termination Notice Deadline
            Date"), Traxys not having delivered a "MAC Termination Notice" (as defined in the
            Implementation Agreement) provided that if neither Party has delivered a "MAC Notice"
            (as defined in the Implementation Agreement) by the MAC Notice Deadline Date, then
            this condition will be deemed to have been fulfilled on the MAC Notice Deadline Date; or

6.9         if Traxys has delivered a MAC Termination Notice by the MAC Termination Notice
                                           
            Deadline Date, then by the 15th business day after the appointment of an expert
            ("Expert") to determine if a "Material Adverse Change" occurred , the parties having
            agreed in writing, or the Expert having determined in accordance with the
            Implementation Agreement, that no "Material Adverse Change" applicable in relation to
            that MAC Termination Notice has occurred, provided that if the Expert does not make a
            determination within the aforementioned 15 business day period, this condition will be
            deemed not to have been fulfilled.

      A "Material Adverse Change" in terms of the Implementation Agreement entails any of the
      following: (i) the termination or threatened termination, or material amendment to Metmar's
      detriment, of Metmar's “Offtake Agreement” (as defined in the Implementation Agreement); (ii)
      the occurrence of an insolvency event in respect of a member of the Metmar group; (iii) a
      refusal by a bank to provide financing to Metmar in excess of R25 million pursuant to breach of
      a financing agreement; (iv) a bank imposing accelerated repayment obligations on Metmar in
      excess of R25 million; (v) any fact, circumstance or event (or combination thereof) which results
      or is reasonably likely to result in a diminishing of the Metmar group's net asset value by more
      than 10%, the Metmar group's profit after tax: for the period from 1 April 2015 to 30 April 2015
      being less than (R9 400 000.00), for the period from 1 May 2015 to 31 May 2015 being less
      than (R1 900 000.00), for the period from 1 June 2015 to 30 June 2015 being less than
      R8 000 000.00, for the period from 1 July 2015 to 31 July 2015 being less than R7 900 000.00,
      for the period from 1 August 2015 to 31 August 2015 being less than R11 600 000.00, for the
      period from 1 September 2015 to 30 September 2015 being less than R12 500 000.00, for the
      period from 1 October 2015 to 31 October 2015 being less than R12 900 000.00 (if the Long
      Stop Date has been extended to 30 October 2015), for the period from 1 March 2015 to 29
      February 2016, being less than R102 000 000.00 or the Metmar group's financial indebtedness
      increasing by more than 10%; (vi) a material breach by Metmar of the Implementation
      Agreement; and (vii) the audited annual financial statements of Metmar for the year ended 28
      February 2015 reflecting an adverse discrepancy of more than 5%, when compared to the
      February 2015 management accounts, with respect to any of the net asset value, profit after tax
      or financial indebtedness of the Metmar group.

      The conditions in paragraphs 6.2, 6.3, 6.5, 6.7, 6.8 and 6.9 are for the benefit of Traxys and
      may be waived by it in its sole discretion by notice in writing to Metmar.

      If Traxys delivers a MAC Termination Notice to Metmar, Metmar may by written notice to
      Traxys given within three business days after delivery of such MAC Termination Notice, declare
      a dispute as regards whether a "Material Adverse Change" has occurred ("MAC Dispute"), in
      which case the MAC Dispute shall be referred for resolution to the Expert.

7.    BREAK FEE

      Without in any way limiting the right of Traxys to exercise any remedy available to it under law
      or the Implementation Agreement pursuant to a breach of the Implementation Agreement by
      Metmar, Metmar undertakes to pay to Traxys a break fee equal to 1% of the Scheme
      Consideration (the "Break Fee"), representing the anticipated costs incurred by Traxys, if, at
      any time after the publication of this announcement but prior to the Scheme Meeting, any of the
      following events occur:

7.1         the independent board of Metmar established to consider the Scheme and if deemed
            appropriate, to propose the Scheme, comprising Rob Still, Luigi Matteucci and Dawn
            Earp (the “Independent Board”) does not recommend the Scheme or if it withdraws or
            modifies or qualifies its recommendation of the Scheme, save in the event that the fair
            and reasonable opinion of the independent expert appointed to consider whether or not
            the Scheme is fair and reasonable to Shareholders (“Independent Expert”) does not
            reasonably justify or warrant such a recommendation or only justifies such a
            recommendation subject to such qualifications as may be identified in the fair and
            reasonable opinion;

7.2         Metmar or the Metmar Board approves or recommends and/or enters into an agreement
            to effect an “Alternative Proposal” (as that term is defined in the Implementation
            Agreement), including a “Superior Proposal” (as that term is defined in the
            Implementation Agreement), unless Traxys exercises its right to make a matching offer in
            terms of the Implementation Agreement;

7.3           the Metmar Board or the Independent Board determines not to implement the Scheme
              by:

7.3.1                refusing to take the required steps to obtain approval of the Scheme by the
                     requisite majority of Shareholders as contemplated in section 115(2) of the
                     Companies Act;

7.3.2                refusing to take the required steps to obtain approval of the court to implement the
                     Scheme Resolution in the circumstances contemplated in section 115(3) of the
                     Companies Act, unless it is requested by Traxys to treat the Scheme Resolution
                     as a nullity in terms of the Implementation Agreement;

7.3.3                treating the shareholder approval as a nullity, as contemplated in section 115(5)(b)
                     of the Companies Act, unless requested to do so by Traxys in terms of the
                     Implementation Agreement; or

7.3.4                any other breach of the Implementation Agreement by Metmar which causes the
                     Scheme to not become operative.

8.      FUNDING OF THE PROPOSED TRANSACTION

        Traxys will fund the full Scheme Consideration from its own cash resources. The Takeover
        Regulation Panel has been provided with a bank guarantee from Standard Chartered Bank in
        compliance with Takeover Regulation 111(4)(a) and 111(5).

9.      SHAREHOLDING OF TRAXYS IN METMAR

        As at the date of this announcement, Traxys does not hold or control (directly or indirectly) any
        shares or any options to acquire shares in Metmar.

10.     SHAREHOLDER SUPPORT

        Traxys has received irrevocable undertakings from certain Shareholders to, inter alia, vote or
        procure to vote of the stated number of Scheme Shares in favour of the Scheme and the other
        resolutions to be proposed at the Scheme Meeting, and not to dispose of or encumber such
        Scheme Shares. Details of the shareholdings of these Shareholders are set out below:

                                                                                               Effective
                                                                                          voting rights
                                                         Scheme                           in respect of
                                                 Shares subject         Percentage      the Scheme at
                                                 to undertaking      holding at the      the signature
                                                           at the    signature date              date of
                                                 signature date      of irrevocable         irrevocable
                                                  of irrevocable       undertaking         undertaking
         Shareholder                                undertaking                   %                   %
         GP Lotis                                     28 940 057              10.8%          10.8%
        PP Boshoff                                    28 880 055              10.8%          10.8%
        DJ Ellwood                                    26 880 391              10.1%          10.1%
        Borman Consulting & Investments
        (Pty) Ltd                                    18 438 540                6.9%           6.9%
        PK Gain                                      16 586 688                6.2%           6.2%
        PK Gain Investment Holdings Pty Ltd           1 851 852                0.7%           0.7%
        Zwarte Leeuw Investments Pty Ltd             18 163 337                6.8%           6.8%
        Total                                       139 740 920               52.3%          52.3%



11.    INDEPENDENT BOARD AND FAIR AND REASONABLE OPINION

11.1         The Proposed Transaction is classified as an affected transaction in terms of the
             Companies Act. Accordingly, Metmar has convened the Independent Board to consider
             the terms of the Proposed Transaction and the report of the Independent Expert on the
             Scheme.

11.2         Whilst the contents of the Independent Expert's report and the views of the Independent
             Board will be detailed in the Circular, the Independent Board has received a formal
             opinion from the Independent Expert confirming that the Scheme Consideration is fair
             and reasonable to Shareholders. Having considered the Proposed Transaction and the
             opinion received from the Independent Expert, the Independent Board recommends in
             principle that Shareholders vote in favour of the Proposed Transaction.

12.    POSTING OF THE CIRCULAR

       Subject to all the requisite approvals being received as contemplated in paragraph 5, it is
       estimated that the Circular will be posted to Shareholders on or about 1 June 2015, which will
       include the notice of the Scheme Meeting to be held on or about 30 June 2015 for the purpose
       of, inter alia, considering and, if deemed fit, passing the Scheme Resolution.

13.    WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

       Following the release of this announcement, the Cautionary Announcement is hereby
       withdrawn and caution is no longer required to be exercised by Metmar Shareholders when
       dealing in their Metmar shares.

14.    TRAXYS RESPONSIBILITY STATEMENT

       Traxys (to the extent that the information relates to Traxys) 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.

15.    INDEPENDENT BOARD RESPONSIBILITY STATEMENT
      The Independent Board (to the extent that the information relates to Metmar) 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.

Bryanston

30 April 2015


Investment bank, corporate advisor and Sponsor to Metmar: Nedbank
Legal advisor to Metmar: Webber Wentzel
Legal advisor to Traxys: Edward Nathan Sonnenbergs Incorporated

Date: 30/04/2015 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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