MORVEST GROUP LIMITED - Firm Intention Of Varachia Investment Group Proprietary Limited (Vig) To Make An Offer To Acquire All The Ordinary

Release Date: 15/05/2015 13:00
Code(s): MOR
 
Wrap Text
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

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