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Firm Intention Of Varachia Investment Group Proprietary Limited (“Vig”) To Make An Offer To Acquire All The Ordinary
Morvest Group Limited
(previously Morvest Business Group Limited)
(Incorporated in the Republic of South Africa)
Registration Number: 2003/012583/06
Share Code: MOR
ISIN Code: ZAE000152567
(“Morvest”)
ANNOUNCEMENT OF THE FIRM INTENTION OF VARACHIA INVESTMENT GROUP PROPRIETARY
LIMITED (“VIG”) TO MAKE AN OFFER TO ACQUIRE ALL THE ORDINARY SHARES IN
MORVEST, EXCLUDING THOSE ORDINARY SHARES IN MORVEST HELD BY CONCERT PARTIES
OF VIG AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
1.1 Shareholders are hereby notified that VIG, a company controlled
by The MS Varachia Discretionary Family Trust (“MSV”) has
submitted to the board of directors of Morvest ("Morvest Board")
its firm intention to make an offer to acquire all ordinary
shares in Morvest excluding those held by MS Varachia Holdings
Company Proprietary Limited (“VHC”), and Mr F Varachia, the son
of Mr MS Varachia (“Varachia”)(collectively the “Concert
Parties”), (“Scheme Shares”) for a consideration of 25 (twenty
five) cents for every Morvest share held ("Offer"). The Offer
will be implemented by way of a scheme of arrangement ("Scheme")
in terms of the Companies Act, 2008 (as amended) (“Companies
Act”).
1.2 Morvest and its subsidiaries ("Morvest Group") is a globally
diversified investment holding group of companies with an
international footprint spanning Africa (South Africa,
Mozambique and Nigeria), India, UAE and USA. The Morvest Group's
investments are aligned into three key business segments:
Business and Industrial Services (including Professional
Services and Outsourcing Solutions), ICT Solutions and Retail
and Other Investments.
1.3 The purpose of this announcement is to advise Morvest
shareholders of the terms and conditions of the Offer.
2 RATIONALE FOR THE OFFER
2.1 Rationale for VIG
VIG is a company controlled by MSV. VHC a company also
controlled by MSV, currently holds indirectly in excess of 39%
of the issued shares in Morvest. VIG wishes to acquire all the
Scheme Shares. With Varachia being actively involved in the
Morvest Group's business and MSV being already indirectly a
significant shareholder in Morvest, VIG, through its sole
director, Varachia, is best positioned to understand such
business and its operational requirements whilst addressing the
sustainable BEE demands for the Morvest Group in line with the
new BEE codes. Acquisition of ownership by VIG of all the Scheme
Shares will also entail the delisting of Morvest from the JSE
Limited ("JSE").
2.2 Rationale for Morvest and the Morvest shareholders
VIG believes that implementation of the Scheme will be
beneficial to the Morvest shareholders, offering them an
opportunity to realise their investment in Morvest at a premium
of 27% to the 30 day volume weighted average price of a Morvest
ordinary share on the JSE as of the trading day prior to the
date of the Offer, given that such shares have been relatively
illiquid. The Scheme will also provide Morvest with a more
sustainable and long-term solution to its BEE challenges and de-
risk the sustainability of Morvest with a party that thoroughly
understands the business of the Morvest Group.
3 MECHANICS OF THE SCHEME
3.1 The Scheme will constitute an “affected transaction” as defined
in section 117(c) of the Companies Act and will be governed by
the provisions of the Companies Act, the regulations promulgated
under the Companies Act ("Companies Regulations") and will be
overseen by the Takeover Regulation Panel (“TRP”).
3.2 The Scheme will be implemented in terms of section 114 of the
Companies Act read with all the ancillary applicable provisions
of such Act and will be proposed by the Morvest Board between
Morvest and its shareholders holding Scheme Shares.
3.3 The Offer is subject to the conditions precedent set out in
paragraph 5 below (“Offer Conditions”).
3.4 The Scheme will be subject to the conditions precedent set out
in paragraph 6 below (“Scheme Conditions”).
4 THE OFFER
The Offer will be implemented by way of the Scheme in terms of which:
4.1 VIG will acquire all the Scheme Shares;
4.2 following the implementation of the Scheme, Morvest will be a
subsidiary of VIG; and
4.3 upon implementation of the Scheme, Morvest shareholders will
receive the scheme consideration of 25 (twenty five) cents for
every 1 (one) Scheme Share disposed of in terms of the Scheme
(“the Scheme Consideration”).
5 OFFER CONDITIONS
5.1 The Offer is subject to the fulfilment or waiver as the case may
be, by no later than 9 July 2015 of the following conditions
precedent:
5.1.1 the independent expert (appointed to advise the
independent board of Morvest) having furnished an
opinion that the terms and conditions of the Scheme are
fair and reasonable to Scheme Shareholders; and
5.1.2 all requisite approvals having been received from the
JSE, the TRP and the Financial Surveillance Department
of the South African Reserve Bank for the posting of
the circular prepared for Morvest shareholders (as
prescribed in the Companies Act read with the
provisions of the JSE Listing Requirements) in relation
to the Scheme ("Circular").
5.2 The Offer Condition referred to in paragraph 5.1.2 above cannot
be waived.
5.3 The Offer Condition referred to in paragraphs 5.1.1 above may
be waived by VIG by written notice to Morvest, prior to the
date for fulfilment of the Offer Conditions.
5.4 VIG will be entitled to extend the date for the fulfilment of
any of the Offer Conditions by up to 20 days, in its absolute
discretion, by written notice to Morvest prior to the expiry of
the prescribed time to fulfilment thereof, but shall not be
entitled to extend the date to a date later than the aforesaid
20 day period without the prior written consent of the Morvest
Board.
6 THE SCHEME CONDITIONS
6.1 The Scheme will be subject to (and will become effective on the
relevant prescribed operative date) the fulfilment or waiver of
the following conditions precedent on or before 31 August 2015:
6.1.1 that a special resolution approving the Scheme put to
the meeting of Morvest shareholders convened to
consider such resolution (“Scheme Meeting”) is not
withdrawn in terms of paragraph 6.1.2 below and is
adopted by the requisite majority of Morvest
shareholders, as contemplated in section 115(2)(a) of
the Companies Act, taking into consideration, to the
extent required, the approval of the implementation of
such resolution by a High Court in terms of section
115(2)(c) of the Companies Act, and, if applicable,
that Morvest does not treat such special resolution as
a nullity, as contemplated in section 115(5)(b) of the
Companies Act;
6.1.2 that, no Scheme Shareholder gives notice objecting to
the special resolution referred to in paragraph 6.1.1
above, as contemplated in section 164(3) of the
Companies Act, it being a fundamental term of the Offer
that, unless VIG otherwise agrees in writing, such
special resolution shall be withdrawn before being
voted upon at the Scheme Meeting in the event of a
Scheme Shareholder objecting to such resolution as
contemplated in section 164(3) of the Companies Act
and;
6.1.3 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, the Competition
Authorities in terms of the Competition Act, 1998, as
amended and any other relevant regulatory authorities
(either unconditionally or subject to conditions
acceptable to VIG) be obtained.
6.2 The Scheme Conditions referred to in paragraphs 6.1.1 and 6.1.3
above cannot be waived.
6.3 The Scheme Condition referred to in paragraph 6.1.2 above may
be waived by VIG by written notice to Morvest, prior to the
special resolution referred to in paragraph 6.1.1 above being
put to the vote at the Scheme Meeting.
6.4 VIG will be entitled to extend the date for the fulfilment of
any of the Scheme Conditions, by up to 30 days, in its
discretion, by written notice to Morvest, 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 Morvest.
7 SHAREHOLDING IN MORVEST AND ACTING AS PRINCIPAL
7.1 VIG currently does not hold, directly or indirectly, any of the
issued share capital of Morvest.
7.2 MSV holds indirectly 39% of the issued share capital in
Morvest.
7.3 Mr F Varachia holds 1.66% of the issued share capital in
Morvest.
7.4 VIG confirms that it is the ultimate prospective purchaser of
the Scheme Shares and is acting in concert with Varachia, Mr F
Varachia and MSV, for the purpose of the Scheme.
8 FUNDING OF THE SCHEME
The TRP has been provided with a bank guarantee from Nedbank Limited in
compliance with the Companies Regulation 111(4) and 111(5) for the Scheme
Consideration.
9 INDEPENDENT BOARD OPINION AND RECOMMENDATIONS
9.1 In accordance with the Companies Regulations, an independent
Morvest Board, comprised of independent non-executive
directors, being B Marx, NY Mhinga, PS Molefe and A
Mohammadali-Haji, has been appointed by the Morvest Board, to
evaluate the Scheme (“Independent Board”).
9.2 The Independent Board has appointed BDO Corporate Finance
Proprietary Limited as the independent expert acceptable to the
TRP to provide the Independent Board with external advice in
regard to the Scheme and to make appropriate recommendations to
the Independent Board for the benefit of the Morvest
shareholders. The substance of the external advice and the
opinion of the Independent Board on the Scheme will be detailed
in the Circular.
10 FURTHER DOCUMENTATION AND SALIENT DATES
10.1 Further details of the Scheme will be included in the Circular
that will, subject to the fulfilment of the Offer Conditions,
be posted to Morvest shareholders on or about 9 June 2015. The
Circular will, inter alia, also contain a notice of the Scheme
Meeting, a form of proxy and a form of surrender and transfer.
10.2 The Scheme will become effective and be implemented following
the fulfilment or waiver of the Offer Conditions and the Scheme
Conditions. The salient dates in relation to the Scheme will be
published in due course.
11 INDEPENDENT BOARD RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the information contained
in this announcement which relates to Morvest and confirms that, to the
best of its knowledge and belief, such information which relates to Morvest
is true and the announcement does not omit anything likely to affect the
importance of such information.
12 MORVEST BOARD RESPONSIBILITY STATEMENT
The Morvest Board accepts responsibility for the information contained in
this announcement which relates to Morvest and confirms that, to the best
of its knowledge and belief, such information which relates to Morvest is
true and the announcement does not omit anything likely to affect the
importance of such information.
13 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Morvest shareholders are referred to Morvest’s cautionary announcement
released on SENS on 5 May 2015, and are advised that, whereas the terms of
the Scheme have now been announced, caution is no longer required to be
exercised by shareholders when dealing in their Morvest shares.
Johannesburg
15 May 2015
PSG Capital: Transaction advisor and sponsor to Morvest
Date: 15/05/2015 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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