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Announcement relating to restructuring, results of general meeting, rights offer and withdrawal of cautionary
ELLIES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2007/007084/06)
JSE share code: ELI ISIN: ZAE000103081
(“Ellies” or the “company”)
ANNOUNCEMENT RELATING TO:
- THE CORPORATE RESTRUCTURING,
- THE DEBT RESTRUCTURING,
- THE RESULTS OF THE GENERAL MEETING,
- THE DECLARATION OF A RIGHTS OFFER,
- THE PROVISION OF FINANCIAL ASSISTANCE, AND
- WITHDRAWAL OF CAUTIONARY
1. Introduction
Shareholders are referred to the announcement dated 4 May 2015 in terms of which shareholders were advised of,
inter alia, the Corporate Restructuring, provided with information regarding the Debt Restructuring and a further
proposed Rights Offer (the “Rights Offer”). Shareholders are also referred to the announcement dated 19 May 2015
in terms of which shareholders were advised that a notice of general meeting had been posted to shareholders.
2. Corporate Restructuring
Ellies Proprietary Limited (a wholly owned subsidiary of the company, which will be renamed Megatron SA
Proprietary Limited in due course) (“Ellies Opco”) and Ellies Electronics Proprietary Limited (a wholly owned
subsidiary of Ellies Electronics Holdings Proprietary Limited, which in turn is a wholly owned subsidiary of the
company) (“Ellies Electronics”) have concluded an agreement in terms of which, inter alia, with retrospective effect
from 1 May 2015, Ellies Opco sells to Ellies Electronics which purchases the Consumer division of Ellies Opco, so
that the Consumer division is now held by Ellies Electronics and the Infrastructure division remains in Ellies Opco
on a stand-alone basis. In terms of that agreement, Ellies Electronics has assumed the liabilities of the Consumer
division (including a pro rata portion of the debt owing by Ellies Opco to The Standard Bank of South Africa
Limited (“Standard Bank”) in an amount of circa R168.5 million, leaving circa R95 million of debt owing to
Standard Bank in Ellies Opco.
Pursuant to the Corporate Restructuring, the company’s interests in Ellies Properties Proprietary Limited (“Ellies
Propco”), Ellies Namibia, Ellies Botswana, Ellies Swaziland, In-toto Solutions Proprietary Limited and SkyeVine
Proprietary Limited have also been transferred into Ellies Electronics Holdings Proprietary Limited. In addition the
investments held by Ellies Opco in Ellies Industries Proprietary Limited (formerly Archsat Investments (Gauteng)
Proprietary Limited) (“Ellies Industries”) and African Solar Power Proprietary Limited have been transferred to
Ellies Electronics.
3. Debt Restructuring
In line with the Corporate Restructuring, Ellies Opco, Ellies Electronics and Standard Bank have concluded formal
written agreements allowing for each of Ellies Opco and Ellies Electronics to ultimately be funded on a stand-alone
basis, thereby allowing each of the businesses to optimise its debt arrangements to meet its specific cash-flow
requirements and funding needs.
In this regard bridge facility agreements have been entered into between –
- Standard Bank and Ellies Electronics in respect of the Ellies consumer bridge facility comprising:
- an overdraft facility of up to R200 million advanced by Standard Bank to Ellies Electronics which bears
interest at the prime rate; and
- a bridge loan of approximately R168.5 million advanced by Standard Bank to Ellies Electronics which
bears interest at the prime rate,
(collectively the “Ellies consumer bridge facility”); and
- Standard Bank and Ellies Opco in respect of the Megatron bridge facility, comprising a bridge loan of
approximately R95 million advanced by Standard Bank to Ellies Opco which bears interest at the prime rate
(the “Megatron bridge facility”).
These bridge facility agreements are in substitution of the relevant term loan agreements governing for that financial
indebtedness.
In addition to the Ellies consumer bridge facility, the loan of R40 million advanced by Standard Bank to Ellies
Propco which bears interest at the prime rate (the “Ellies property loan”) remains in place (the outstanding balance
as at 31 May 2015 is R30.4 million).
Upon the successful implementation of the Rights Offer, R150 million of the proceeds of the Rights Offer will be
used in part settlement of the loans advanced by Standard Bank to Ellies Electronics.
Subsequent to the implementation of the Rights Offer, the Megatron bridge facility, the Ellies consumer bridge
facility and the Ellies property loan will be substituted with the following loan facilities as part of the second phase of
the Debt Restructuring.
The Megatron loan facility will comprise the Megatron bridge facility of R95 million advanced by Standard Bank to
Ellies Opco plus any interest accrued thereon from 1 May 2015 to the date the Megatron bridge facility is converted
into the Megatron loan facility, subject to the following terms:
- the capital amount shall be repayable in one lump sum at the end of the 5 year term of the loan;
- interest shall be payable quarterly in arrears. Ellies Opco may elect to capitalise interest up to an amount equal
to 10% of the capital balance at any time and provided that the total amount outstanding may not exceed R100
million at any time. The facility is not available for redraw to the extent prepaid and accordingly the amount
of interest capitalisation will be measured with reference to the reduced outstanding capital balance;
- interest shall be calculated at the rate of 3-month JIBAR plus a margin;
- save for the proceeds from the sale of assets relating to the Infrastructure division’s South African
manufacturing business and a tax refund of approximately R30 million, the proceeds of any sale of assets or
tax proceeds of R1 million in aggregate, shall be offered to Standard Bank as prepayment of the facility;
- a percentage of the excess free cash flow of the Infrastructure division will be offered to Standard Bank as
prepayment of the facility.
The Ellies consumer facility will comprise:
- an overdraft facility of up to R200 million advanced by Standard Bank to Ellies Electronics which bears
interest at the prime rate;
- a property loan of R45 million, advanced by Standard Bank to Ellies Propco, comprising:
- a R22.5 million 5 year amortising loan facility which bears interest at 3-month JIBAR plus a margin;
- a R22.5 million bullet loan facility, repayable after 5 years which bears interest at 3-month JIBAR plus
a margin,
to be used for refinancing certain term facilities of circa R30 million and to provide Ellies Electronics funding
of circa R15 million to refinance its bridge facility to Standard Bank of circa R15 million after the
implementation of the Rights Offer.
Pursuant to the Corporate Restructure, the short-term credit facilities of Ellies Opco with Blue Strata Trading
Proprietary Limited (“Blue Strata”) have been transferred from Ellies Opco to Ellies Electronics. To this end, the
company has guaranteed the payments and obligations of Ellies Electronics and Ellies Opco to Blue Strata.
4. Results of general meeting
Shareholders are referred to the notice of general meeting posted to shareholders on 18 May 2015 and are advised
that at the general meeting held on 17 June 2015, all resolutions proposed thereat were passed by the requisite
majority of shareholders.
Details of the results of voting at the general meeting are as follows:
- total number of Ellies shares that could have been voted at the general meeting: 453 057 398
- total number of Ellies shares that were present/represented at the general meeting (including abstentions)
261 405 080 being 57.70% of the total number of Ellies shares that could have been voted at the general
meeting.
Special resolution number 1: Authority to issue shares in terms of section 41(3) of the Companies Act
Shares voted* For Against Abstentions^
261 323 580 261 256 580, being 99.97% 67 000, being 0.03% 81 500, being 0.02%
Ordinary resolution number 1: Placing authorised but unissued ordinary shares under the control of directors
Shares voted* For Against Abstentions^
261 353 580 261 256 580, being 99.97 % 67 000, being 0.03% 81 500, being 0.02%
Ordinary resolution number 2: Authority of directors
Shares voted* For Against Abstentions^
261 323 580 261 256 580, being 99.97% 67 000, being 0.03% 81 500, being 0.02%
* excluding abstentions.
^ in relation to total shares in issue.
5. The Rights Offer
5.1 Salient terms of the Rights Offer
Ellies is undertaking a partially underwritten Rights Offer to Ellies shareholders in order to raise
approximately R200 million. The Rights Offer serves as a mechanism to enable the company to reduce the
company’s interest bearing liabilities, fund working capital and ensure Ellies is adequately positioned to take
advantage of business opportunities.
Ellies shareholders will be entitled to subscribe for approximately 181 818 182 Ellies shares (“rights offer
shares”) at an issue price of 110 cents per share in the ratio of 40.13138 rights offer shares for every
100 Ellies shares held by them on the initial record date, being Friday, 3 July 2015.
The JSE has granted listings for the letters of allocation and the rights offer shares as follows:
- letters of allocation in respect of 181 818 182 rights offer shares will be listed from the commencement
of business on Monday, 29 June 2015 to close of business on Friday, 10 July 2015, both days inclusive,
under the JSE code: ELIN and ISIN: ZAE000205746; and
- approximately 181 818 182 new Ellies shares will be listed with effect from the commencement of
business on Monday, 13 July 2015.
5.2 Irrevocable undertakings and underwriting commitment
The following Ellies shareholders have irrevocably undertaken to follow their rights in terms of the Rights
Offer, as set out below, and will not be paid any fee or commission for doing so.
Name of shareholder Number of rights Value of rights Percentage of total
taken up taken up Rights Offer
ER Salkow 37 323 281 R30 000 000 20.53
Mazi Capital Proprietary Limited 36 234 520 R39 857 971 19.93
RE Otto 9 372 029 R10 309 231 5.15
82 929 830 R80 167 202 45.61
In addition, Mazi Capital Proprietary Limited (“Mazi”) has agreed to partially underwrite the issue of the
rights offer shares, up to a maximum aggregate subscription price of R105 million, in consideration for an
underwriting fee of R3.15 million (an amount equal to 3% of Mazi’s underwriting commitment on the rights
offer shares). The effect of these irrevocable undertakings and the underwriting commitment is that the Rights
Offer is partially underwritten up to a maximum of R185 million. The Rights Offer is however not conditional
on a minimum subscription. Following the general meeting of Ellies shareholders referred to above and the
approval of all resolutions proposed thereat, Mazi’s underwriting commitment is now unconditional.
5.3 Excess shares application
Ellies shareholders will have the right to apply for any excess rights offer shares not taken up by other
shareholders subject to such rights being transferable upon renunciation of the letters of allocation, and any
such excess shares will be attributed equitably, taking cognisance of the number of shares and rights held by
the shareholder just prior to such allocation, including those taken up as a result of the Rights Offer, and the
number of excess rights offer shares applied for by such shareholder.
If you are a certificated shareholder and you wish to apply for excess rights offer shares you must complete the
enclosed form of instruction in accordance with the instructions contained therein. If you are a dematerialised
shareholder and you wish to apply for excess rights offer shares you must instruct your CSDP or broker as to
the number of excess rights offer shares for which you wish to apply.
5.4 Salient dates and times
2015
Last day to trade in Ellies shares in order to participate in the Rights Offer Friday, 26 June
Listing and trading of letters of allocation on the JSE under JSE code: “ELIN” and
ISIN: ZAE000205746 Monday, 29 June
Ellies shares commence trading on the JSE ex-Rights Offer entitlement Monday, 29 June
Rights offer circular and form of instruction posted to certificated shareholders Tuesday, 30 June
Record date for determination of shareholders entitled to participate in the Rights
Offer (initial record date) Friday, 3 July
Dematerialised shareholders will have their accounts at their CSDP or broker
automatically credited with their entitlement Monday, 6 July
Certificated shareholders on the register will have their entitlement credited to an
electronic account held at the transfer secretaries Monday, 6 July
Rights offer opens at 09:00 Monday, 6 July
Rights offer circular posted to dematerialised shareholders (where applicable) Tuesday, 7 July
Last day to trade letters of allocation on the JSE Friday, 10 July
Maximum number of rights offer shares listed and trading therein commences on
the JSE Monday, 13 July
Rights offer closes at 12:00 Friday, 17 July
Record date for letters of allocation (final record date) Friday, 17 July
New Ellies shares issued Monday, 20 July
Dematerialised shareholders’ accounts updated and debited by CSDP or broker
(in respect of entitlements to rights offer shares) Monday, 20 July
Certificates posted to certificated shareholders (in respect of the rights offer shares)
on or about Monday, 20 July
Results of Rights Offer announced on SENS Monday, 20 July
Results of Rights Offer announced in the press Tuesday, 21 July
Refunds (if any) to certificated shareholders in respect of unsuccessful excess
share applications made and share certificates posted to certificated shareholders in
respect of successful excess share applications Wednesday, 22 July
Dematerialised shareholders’ accounts updated and debited by their CSDP or
broker (in respect of successful excess share applications) Wednesday, 22 July
Notes:
1. All references to dates and times are to local dates and times in South Africa.
2. Dematerialised shareholders are required to inform their CSDP or broker of their instructions in terms
of the Rights Offer in the manner and time stipulated in the agreement governing the relationship
between the shareholder and its CSDP or broker.
3. Share certificates may not be dematerialised or rematerialised between Monday, 29 June 2015 and
Friday, 3 July 2015, both days inclusive.
4. Dematerialised shareholders will have their accounts at their CSDP or broker automatically credited
with their rights and certificated shareholders will have their rights credited to their accounts at Link
Market Services South Africa Proprietary Limited.
5. CSDPs effect payment in respect of dematerialised shareholders on a delivery-versus-payment method.
5.5 Foreign shareholders
Introduction
Foreign shareholders may be affected by the Rights Offer, having regard to prevailing laws in their relevant
jurisdictions. Such foreign shareholders should inform themselves about and observe any applicable legal
requirements of such jurisdiction in relation to all aspects of the circular that may affect them, including the
Rights Offer. It is the responsibility of each foreign shareholder to satisfy himself as to the full observation of
the laws and regulatory requirements of the relevant foreign jurisdiction in connection with the Rights Offer,
including the obtaining of any governmental, exchange or other consents or the making of any filing which
may be required, the compliance with other necessary formalities and the payment of any issue, transfer or
other taxes or other requisite payments due in such jurisdiction. The Rights Offer is governed by the laws of
South Africa and is subject to applicable laws and regulations, including the Exchange Control Regulations.
Affected foreign shareholders
Any Ellies shareholder who is in doubt as to his position with respect to the Rights Offer in any jurisdiction,
including, without limitation, his tax status, should consult an appropriate independent professional advisor in
the relevant jurisdiction without delay. Foreign shareholders are reminded that they may dispose of their
Ellies shares on or prior to the last day to trade, in which case they will not participate in the Rights Offer.
Foreign shareholders accordingly must take their own advice on whether they are entitled, after the Rights
Offer, to continue beneficially to hold any Ellies shares distributed to them and take the appropriate action in
accordance with that advice.
Note to U.S. shareholders
The Rights Offer shares will not be registered with the U.S. Securities and Exchange Commission (“SEC”)
under the U.S. Securities Act of 1933, as amended, or any U.S. state securities laws. Neither the SEC nor any
U.S. federal or state securities commission has registered, approved or disapproved the Rights Offer shares or
passed comment or opinion upon the accuracy or adequacy of the circular to be issued by Ellies in respect of
the Rights Offer. Any representation to the contrary is a criminal offence in the U.S.
Ellies shareholders who are citizens or residents of the U.S. are advised that the Rights Offer shares have not
been and will not be registered under the U.S. Securities Exchange Act of 1934, as amended.
Sale of letters of allocation
It is the responsibility of any person outside the common monetary area (including, without limitation,
nominees, agents and trustees for such persons) wishing to take up rights offer shares under the Rights Offer,
to satisfy themselves as to full observance of the applicable laws of any relevant territory, including obtaining
any requisite governmental or other consents, observing any other requisite formalities and paying any issue,
transfer or other taxes due in such territories.
If a premium can be obtained over the expenses of the sale, the rights of Ellies shareholders in the jurisdictions
in which it is illegal to make an offer will be sold by the transfer secretaries on the JSE for the benefit of such
Ellies shareholders, in accordance with this section. Any premium over the expenses of the sale of the rights
of Ellies shareholders in these jurisdictions (including applicable taxes, brokerage fees and commissions) shall
be remitted to such Ellies shareholders.
None of Ellies, the transfer secretaries or any broker appointed by them or Ellies, will have any obligation or
be responsible for any loss or damage whatsoever in relation to, or arising out of, the timing of such sales or
the remittance of the net proceeds of such sales.
5.6 Circular
Further details of the Rights Offer will be set out in the circular to Ellies shareholders (the “rights offer
circular”) which is expected to be posted to certificated shareholders on Tuesday, 30 June 2015 and to
dematerialised shareholders on Tuesday, 7 July 2015. The rights offer circular will be made available on the
company’s website www.elliesholdings.com from Monday, 29 June 2015.
6. Notification in terms of section 45(5) of the Companies Act, 2008 (the “Act”)
Notice is hereby given that, in terms of the provisions of section 45(5) of the Act and pursuant to the special
resolution passed at the annual general meeting of the company held on 2 December 2014, authorising the company
to provide direct or indirect financial assistance to related or inter-related parties, the company’s board of directors
(the “board”) has resolved in terms of section 45(2) of the Act to authorise Ellies to provide financial assistance to
Ellies Opco, Ellies Electronics, Ellies Industries and Ellies Propco and all wholly owned subsidiaries of Ellies,
which financial assistance exceeds one-tenth of one percent of the company’s net worth.
The company has granted financial assistance to:
- Ellies Opco, Ellies Electronics, Ellies Industries and Ellies Propco (the “Standard Bank debtors”), by
binding itself in favour of Standard Bank by jointly and severally guaranteeing the payment and discharge of
all of the obligations of the Standard Bank debtors to Standard Bank and indemnifying Standard Bank against
any cost, loss or liability suffered by Standard Bank as a result of or pursuant to any transactions being
concluded between Standard Bank and any of the Standard Bank debtors;
- Ellies Electronics and Ellies Opco, by binding itself in favour of Blue Strata by providing an irrevocable and
unconditional guarantee for the payment and discharge of all obligations of Ellies Electronics and Ellies Opco
to Blue Strata
In accordance with section 45 of the Act, the board is satisfied and acknowledges that:
- immediately after providing such financial assistance, the company would satisfy the solvency and liquidity
test as provided in section 4 of the Act; and
- the terms under which such financial assistance is to be given are fair and reasonable to the company.
7. Withdrawal of cautionary
Following the publication of the information in respect of the Corporate Restructuring, the Debt Restructuring and
the Rights Offer, as set out in this announcement, shareholders are advised that caution is no longer required to be
exercised by shareholders when dealing in the company’s securities.
17 June 2015
Joint corporate advisor, joint transaction sponsor and sponsor
Java Capital
Joint corporate advisor and joint transaction sponsor
Standard Bank
Legal advisor
Cliffe Dekker Hofmeyr
Underwriter to the Rights Offer
Mazi Capital
Date: 17/06/2015 05:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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