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Acquisition of 25% plus one share of the issued share capital of SAAB Grintek Defence Proprietary Limited
African Equity Empowerment Investments Limited
(Formerly Sekunjalo Investments Limited)
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: AEE
ISIN: ZAE0000195731
("AEEI" or “the Company”)
CATEGORY 2 TRANSACTION: ACQUISITION OF 25% PLUS ONE SHARE OF THE
ISSUED SHARE CAPITAL OF SAAB GRINTEK DEFENCE PROPRIETARY LIMITED
1. THE TRANSACTION
Shareholders of the Company are hereby advised that the Company,
Investec Bank Limited (“IBL”), SAAB South Africa Proprietary
Limited (“Saab”) and SAAB Grintek Defence “Proprietary” Limited
(“SGD”) (hereinafter collectively referred to as “the Parties”)
have entered into an agreement (“the Agreement”) in terms of
which:
1.1 the Company will dispose of its entire shareholding in
Saab, comprising 313 “B” shares and 59 “C” shares (“the
Disposal”), being an effective 5% shareholding in Saab;
and
1.2 a ring-fenced special purpose vehicle (“AEEI Newco”), a
consortium that is 60% owned by AEEI, will acquire 25%
plus one share (“the Subject Shares”) of the issued share
capital of SGD, which shares are “A” shares (“the
Acquisition”),
hereinafter referred to as “the Transaction”.
2. EFFECTIVE DATE
The effective date of the Acquisition shall be no later than 26
June 2015, subject to paragraph 6.2 and 6.3 below.
3. CATEGORISATION
The Acquisition is a Category 2 transaction for the Company as
contemplated in the Listings Requirements of the JSE Limited,
while the Disposal is an uncategorised transaction for the
Company.
4. RATIONALE FOR THE TRANSACTION
AEEI is firmly established as the pre-eminent empowerment group
in South Africa. Our current partnership with Saab has enabled
us to increase our indirect shareholding to a 25% plus one share
in their operating subsidiary, SGD.
The Acquisition is in line with the Company’s strategy to
becoming the partner of choice to multinationals in key sectors
including civil security and defence by adding value, job
creation, alleviating poverty and finding solutions in South
Africa and the continent.
There is no doubt that this partnership is set to increase
AEEI’s shareholder value and is in line with our strategic focus
to grow within Africa and abroad.
5. PURCHASE CONSIDERATION
The purchase consideration in respect of the Disposal is
R20 000 000.00 (twenty million Rand), payable in cash to AEEI on
the date of closing of the Disposal.
The purchase consideration in respect of the Acquisition is
R120,000,000 (one hundred and twenty million Rand), payable
partly in cash by AEEI Newco and partly through a preference
share funding arrangement in terms of which IBL will subscribe
for preference shares in AEEI Newco (“IBL Preference Shares”).
The majority of the purchase consideration received by AEEI in
respect of the Disposal shall be utilised for the Acquisition.
6. CONDITIONS PRECEDENT
The Transaction is subject to the following conditions
precedent:
6.1. The Parties entering into transaction agreements,
incorporating the terms of the Agreement and including the
usual provisions required for a transaction of this nature
and the Transaction is subject to such agreements becoming
unconditional; and
6.2. The Acquisition being approved (if required) by the
relevant competition authorities, the fulfilment of the
necessary requirements in terms of the Companies Act, No.
71 of 2008 (as amended) (“the Companies Act”) and the
closing of the Disposal.
7. SIGNIFICANT TERMS
The significant terms of the Transaction include, inter alia,
the following:
7.1. AEEI Newco is a private company that is 60% owned by AEEI.
For a period of 5 years from the closing date of the
Acquisition, AEEI and any of the other consortium members
may not dispose of, or encumber, any of their shares in
AEEI Newco and AEEI Newco may not dispose of, or encumber,
any of the Subject Shares;
7.2. AEEI Newco must retain at least 51% black ownership status
as of the date of the Acquisition as long as it is a
shareholder in SGD;
7.3. SGD will, subject to the provisions of the Companies Act,
commit to a guaranteed annual dividend of R18 000 000.00
(eighteen million Rand) in respect of the Subject Shares
during the first five full financial years of AEEI Newco’s
ownership of the Subject Shares, the first of which shall
be paid within 12 months after the implementation of the
Acquisition;
7.4. Saab and SGD shall grant to AEEI Newco a put option in
terms of which AEEI Newco can put the Subject Shares (all
and not a part) to Saab and SGD. Such put option shall be:
7.4.1. exercisable after the date being 66 months from
the date of implementation of the Acquisition
but by no later than 90 days thereafter;
7.4.2. for a consideration equal to the higher of the
agreed market value of the Subject Shares and
the redemption consideration in respect of the
IBL Preference Shares; and
7.5. Saab shall have a call option to purchase the Subject
Shares (subject to the Listing Requirements of the JSE
Limited, where applicable):
7.5.1. if AEEI Newco is in default of the shareholders
agreement to be entered into in respect of SGD,
or if AEEI Newco experiences a direct change of
control or if AEEI Newco is not at least 51%
black owned, in which case the price for the
Subject Shares shall be an amount equal to the
redemption consideration in respect of the IBL
Preference Shares; or
7.5.2. at any time, at the higher of an amount equal to
the redemption consideration in respect of the
IBL Preference Shares and the fair market value.
8. DESCRIPTION OF THE BUSINESS OF SGD
SGD is a leading civil and defence security company in Africa
and has capabilities ranging from electronic warfare, sensor
technology, command and control systems, training systems, radio
communication, aviation and support solutions.
9. FINANCIAL EFFECTS IN RESPECT OF THE ACQUISITION
The value of the net assets of SGD attributable to the
Acquisition is R219m and the profit attributable to SGD for the
year ended December 2014 was R71m.
The financial information contained in this announcement has not
been reviewed or reported on by the Company’s auditors.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are further referred to the renewal of cautionary
announcement released on SENS on 16 April 2015 and advised that
as full details of the Transaction have been disclosed in this
announcement, caution is no longer required to be exercised by
shareholders when dealing in their securities.
Cape Town
19 May 2015
Sponsor and corporate adviser
PSG Capital Proprietary Limited
Legal adviser
Webber Wentzel
Date: 19/05/2015 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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