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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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