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Stellar / Cadiz - Joint announcement of the firm intention of Stellar to make an offer to acquire 100% of Cadiz
STELLAR CAPITAL PARTNERS LIMITED CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of (Incorporated in the Republic of
South Africa) South Africa)
(Registration number (Registration number
1998/015580/06) 1997/007258/06)
Share code: SCP Share code: CDZ
ISIN: ZAE000198586 ISIN: ZAE000017661
(“Stellar”) (“Cadiz”)
JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF STELLAR TO MAKE AN
OFFER TO ACQUIRE 100% OF CADIZ
1. INTRODUCTION
1.1 The boards of directors of Stellar and Cadiz are pleased to
announce that the board of directors of Cadiz has received
notification from Stellar, acting through a special purpose
vehicle to be incorporated as a wholly-owned subsidiary of
Stellar (“Bidco”) of its firm intention to make an offer to
acquire 100% of the total issued ordinary shares in Cadiz
(excluding 12 073 989 treasury shares held by a subsidiary of
Cadiz, which constitute approximately 4.91% of the total issued
ordinary share capital of Cadiz (“Treasury Shares”)), being 233
749 129 shares (the “Offer Shares”):
1.1.1 by way of a scheme of arrangement in terms of section
114(1)(c), read with section 115, of the Companies Act,
No. 71 of 2008, as amended (the "Companies Act"), to be
proposed by the board of directors of Cadiz between Cadiz
and all its shareholders (including, for the avoidance of
doubt, Stellar) (the "Offeree Shareholders") (the
"Scheme"); or
1.1.2 if the Scheme is not proposed or fails and Stellar so
elects, by way of an offer by Stellar to all the Offeree
Shareholders (other than Stellar) to acquire the Offer
Shares (the “General Offer”),
(collectively hereinafter referred to as the "Proposed Offer").
1.2 The Scheme, if implemented, will result in Bidco owning 100% of
the Offer Shares as well as the termination of Cadiz’ listing
on the Main Board of the JSE Limited (the “JSE”), as detailed
in paragraph 10 below (“Delisting”). Stellar’s percentage
interest in Bidco following the implementation of the Scheme
will be subject to the elections made by Offeree Shareholders,
as detailed in paragraph 1.4 below.
1.3 The Proposed Offer constitutes a firm intention by Stellar to
make an offer to Offeree Shareholders as contemplated in
Chapter 5 of the Companies Act and Chapter 5 of the Companies
Regulations, 2011, promulgated under the Companies Act (which
includes the Takeover Regulations issued pursuant to sections
120 and 223 of the Companies Act) (the “Companies
Regulations”).
1.4 Offeree Shareholders will, if the Scheme becomes operative,
receive new ordinary shares in Stellar (“Stellar Shares”) or
new ordinary shares in Bidco (“Bidco Shares”) on the basis that
-
- Offeree Shareholders which elect to receive Stellar Shares
will receive 5 Stellar Shares, to be issued at a price of
R2.00 per Stellar Share, for every 8 Offer Shares held,
which is the equivalent of R1.25 per Offer Share at the date
of this announcement; and
- Offeree Shareholders which elect to receive BidCo shares
will receive 1 Bidco Share for each Offer Share held, such
that they will retain their existing investment in Cadiz
indirectly through Bidco
(collectively hereinafter referred to as the “Offer
Consideration”).
1.5 Should the Scheme not be proposed or fail, and Stellar, in its
discretion, elects to make the General Offer, Cadiz shareholders
(other than Stellar) will receive the Stellar Shares (on the
basis referred in paragraph 1.4 above) for their Offer Shares.
1.6 If the Scheme is approved by the requisite majority of Offeree
Shareholders at a general meeting, each Offeree Shareholder will
be deemed to have sold their Offer Shares in return for Stellar
Shares or Bidco Shares, as applicable, such that Bidco will own
100% of the issued shares in Cadiz, and Cadiz will be delisted,
as detailed in paragraph 10 below.
1.7 As at the date of this announcement, Stellar has received
irrevocable undertakings from the Cadiz shareholders holding
47.21% of the voting rights entitled to be exercised in respect
of the Scheme to vote in favour of the Scheme. For the
avoidance of doubt, although Stellar will be an Offeree
Shareholder, it will not be entitled to vote in respect of the
Scheme in accordance with section 115(4) of the Companies Act.
1.8 Offeree Shareholders will be required to make the election in
respect of the Offer Consideration in whole and not in part in
respect of all their Offer Shares. Offeree Shareholders who do
not make an election will be deemed to have elected to receive
Stellar Shares as Offer Consideration. The total number of the
Stellar Shares and Bidco Shares to be issued pursuant to the
Scheme depends on the elections made by Offeree Shareholders.
Stellar will elect to receive its consideration in Bidco Shares.
1.9 For those Offeree Shareholders who elect to receive Stellar
Shares, the Offer Consideration represents a valuation, at the
date of this announcement, of Cadiz shares of R1.29 per share
(on a relative basis, based on the closing share price of R2.02
per Stellar share and R0.98 per Cadiz share on 18 June 2015),
representing a premium of:
1.9.1 31.46% to the closing price of the Offer Shares on the
securities exchange operated by the JSE as at 18 June 2015,
being the date immediately preceding the date of
publication of this announcement; and
1.9.2 24.09% to the volume weighted average price of the Offer
Shares on the securities exchange operated by the JSE for
the 30 trading days up to and including 18 June 2015, being
the date immediately preceding the date of publication of
this announcement.
1.10 Based on the audited financial results of Cadiz for the
year ended 31 March 2015, the pro forma net asset value per
Cadiz share is 176 cents and the tangible net asset value per
Cadiz share is 129 cents. Cadiz reported a loss per share of
111.4 cents and headline loss per share of 23 cents for the
reporting period then ended.
2. RATIONALE FOR THE PROPOSED OFFER
Cadiz is a financial services group that is primarily focused on
institutional and personal investments through its wholly-owned
subsidiary, Cadiz Asset Management Proprietary Limited (“Cadiz
Asset Management”). Founded in Cape Town 20 years ago as a
securities house, the group has been listed on the JSE since
1999. Over the past decade, Cadiz has shifted its focus away
from securities to asset management. Today, Cadiz Asset
Management is one of the largest independent fund managers in
South Africa with assets under management of R20.7 billion as at
Cadiz’s reporting date, 31 March 2015.
Stellar is a diversified investment holding company listed on
the JSE. Following the acquisition by Stellar of a 16.45%
interest in Cadiz, as announced on SENS on 8 April 2015, and an
assessment of the strategic options available, the board of
directors of Stellar believes that Cadiz would benefit from the
focus and flexibility of operating in the unlisted environment,
with the support of Stellar as a key shareholder. Benefits of
the Proposed Offer for Cadiz and its shareholders include:
- for Cadiz shareholders:
- a substantial premium to the current traded price of Cadiz
shares; and
- a mechanism to either realise their investment in Cadiz (by
acquiring shares in a more liquid investment) or
alternatively to participate in the turnaround strategy of
Cadiz in an unlisted environment;
- for Cadiz:
- reduced regulatory reporting requirements post-Delisting in
respect of Cadiz’ future corporate activity and ability to
respond swiftly and decisively to market opportunities;
- reduced costs associated with maintaining a listing and a
consolidation of head office functions and costs; and
- greater clarity and flexibility in respect of the intended
turnaround and growth strategy with a strong anchor
shareholder in Stellar.
3. MECHANICS OF THE PROPOSED OFFER
3.1 The Proposed Offer constitutes an "affected transaction" as
defined in section 117(1)(c) of the Companies Act. The
Proposed Offer will be implemented either by way of the Scheme
or, in the event that the Scheme is not proposed or fails and
Stellar so elects, by way of the General Offer, as detailed in
paragraph 3.4 below.
3.2 The Proposed Offer is subject to the suspensive conditions set
out in paragraph 4.1 below.
3.3 The implementation of the Scheme will be subject to the
suspensive conditions set out in paragraph 5.2 below (the
"Scheme Conditions"). In the event that the Scheme becomes
operative, the listing of Cadiz’ shares on the Main Board of
the JSE will be terminated, and Cadiz shareholders will be
deemed to have sold their Offer Shares for the Offer
Consideration, thereby constituting Cadiz as a wholly owned
subsidiary of BidCo. Bidco will in turn be owned by the
Offeree Shareholders who elect to receive Bidco Shares.
Stellar confirms that it will adhere to the provisions of
paragraph 10.21 of Schedule 10 of the Listings Requirements of
the JSE in this regard (to the extent required).
3.4 In the event that the Scheme is not proposed or fails, Stellar
may, at its election, make the General Offer to Offeree
Shareholders (other than Stellar), which General Offer will be
subject to the suspensive conditions set out in paragraph 6.1
below. To the extent that the General Offer is implemented,
only Offeree Shareholders (other than Stellar) who have
accepted the General Offer will sell their Offer Shares to
Stellar for the Stellar Shares (on the basis referred in
paragraph 1.4 above). Those Offeree Shareholders who do not
accept the General Offer will remain shareholders in Cadiz. If
the General Offer is implemented and the suspensive conditions
to the General Offer as set out in paragraphs 6.1.2 and 6.1.3
have been fulfilled, application will be made for the to the
JSE to terminate the listing of all the Cadiz shares from the
Main Board of the JSE.
4. OFFER CONDITIONS
4.1 The Proposed Offer, and accordingly also the posting of a
circular in respect of the Proposed Offer (the "Circular") is
subject to the fulfilment of the suspensive conditions that
(“Offer Conditions”), within 30 days from the date of this
announcement:-
4.1.1 the independent board of directors of Cadiz, being
those directors of Cadiz who act independently as
contemplated in the Companies Regulations, namely Messrs G
Fury, B Kent, G Matyumza and L Xate (the "Independent
Board"), has retained an appropriate external advisor
acceptable to the TRP and the JSE in terms of section
114(2) of the Companies Act and regulation 90 of the
Companies Regulations, for the purposes of providing
external advice in regard to the Scheme and the General
Offer, and such expert has prepared and issued a report in
terms of section 114(3) of the Companies Act on the Offer
Consideration and the fairness and reasonableness thereof;
4.1.2 the Independent Board recommends to the Cadiz
Shareholders to vote in favour of (i) the Scheme and (ii)
the Delisting (to the extent applicable) and (iii) to
accept the General Offer (if applicable);
4.1.3 to the extent applicable, all requisite regulatory
approvals have been obtained as may be necessary in
relation to the Proposed Offer from the JSE, the Takeover
Regulation Panel (the “TRP”) and the Financial Surveillance
Department of the South African Reserve Bank ("SARB") (to
the extent applicable), either unconditionally or subject
to conditions acceptable to Stellar; and
4.1.4 Cadiz has concluded unconditional agreements (save
for any condition requiring that the Scheme becomes
unconditional) –
4.1.4.1 with all holders of rights to acquire Cadiz
shares in terms of the Cadiz share appreciate rights
scheme, to waive all their rights to receive any
Cadiz shares in terms of such a scheme; and
4.1.4.2 to acquire any Cadiz A-Shares in issue from
the holders of such shares;
on such terms and conditions as may be acceptable to
Stellar and Cadiz, such that Stellar will not be required
to make a comparable offer in terms of the Companies
Regulations.
4.2. The conditions in paragraphs 4.1.1 and 4.1.3 above are
regulatory in nature and cannot be waived. Stellar and Cadiz
may, by agreement and to the extent they are permitted to do so
in terms of the Companies Act and the Companies Regulations,
extend the time period within which such conditions are to be
fulfilled by providing Cadiz with written notice thereof.
Stellar may, in its discretion, waive either or both of the
conditions set out in paragraph 4.1.2 and/or 4.1.4 above,
provided that, to the extent that Stellar elects to waive the
condition set out in paragraph 4.1.4 above, Stellar will make
such comparable offer as may be required by the TRP in terms of
the Companies Regulations.
5. THE SCHEME
5.1 Under the terms of the Proposed Offer, if the Scheme is
implemented, all Offeree Shareholders will receive the Offer
Consideration (on the basis referred in paragraph 1.4 above)
and Bidco will acquire all of the Offer Shares.
5.2 The implementation of the Scheme is subject to the
fulfilment or, if appropriate, waiver (in whole or in part), by
Stellar of the following suspensive conditions by no later than
30 September 2015 or such later date/s as may be agreed to
between Stellar and Cadiz:-
5.2.1 to the extent applicable, all requisite regulatory
approvals required for the Scheme have been obtained from
the South African competition authorities, the JSE, the TRP
and SARB (to the extent applicable), either unconditionally
or subject to conditions acceptable to Stellar;
5.2.2 the approval of the Scheme by the requisite majority
of Cadiz shareholders as contemplated in section 115(2)(a)
of the Companies Act (being not less than 75% of the votes
exercised by shareholders present and entitled to vote) at
the general meeting of Cadiz shareholders to be convened
for purposes of approving the Scheme (the “Cadiz General
Meeting”), and:
5.2.1.1 to the extent required, the approval of the
implementation of such resolution by a court in
terms of section 115(2)(c) and/or section 115(3) of
the Companies Act; and
5.2.1.2 if applicable, Cadiz not treating the
aforesaid resolution as a nullity, as contemplated
in section 115(5)(b) of the Companies Act;
5.2.3 the receipt of unconditional approval from the TRP
in terms of a compliance certificate or exemption to be
issued in terms of the Companies Act in relation to the
Scheme; and
5.2.4 in relation to any objections to the Scheme by Cadiz
shareholders:
5.2.4.1 no Cadiz shareholders give notice objecting
to the Scheme, as contemplated in section 164(3) of
the Companies Act, and vote against the resolutions
proposed at the Cadiz General Meeting; or
5.2.4.2 if Cadiz shareholders give notice objecting
to the Scheme, as contemplated in section 164(3) of
the Companies Act, and vote against the resolutions
proposed at the Cadiz General Meeting, Cadiz
shareholders holding no more than 10% of all Offer
Shares eligible to be voted at the Cadiz General
Meeting give such notice and vote against the
resolutions proposed at the Cadiz General Meeting;
or
5.2.4.3 if Cadiz shareholders holding more than 10%
of all Offer Shares eligible to vote at the Cadiz
General Meeting give notice objecting to the Scheme,
as contemplated in section 164(3) of the Companies
Act, and vote against the resolutions proposed at
the Cadiz General Meeting, the relevant Cadiz
shareholders do not exercise their appraisal rights
afforded to them in terms of section 164 of the
Companies Act, by giving valid demands in terms of
sections 164(5) to 164(8) of the Companies Act
within 30 (thirty) business days following the Cadiz
General Meeting, in respect of more than 10% of the
Offer Shares eligible to be voted at the Cadiz
General Meeting.
5.3 The Scheme Conditions in:
5.3.1 paragraphs 5.2.1, 5.2.2 and 5.2.3 above are
regulatory in nature and cannot be waived; and
5.3.2 paragraph 5.2.4 above have been inserted for the
benefit of Stellar, which will be entitled, in its sole
discretion, to waive fulfilment of such Scheme Conditions,
in whole or in part, on written notice to Cadiz.
5.4 An announcement will be published on SENS as soon as
practicable after all the Scheme Conditions have been fulfilled
or waived, as the case may be.
6. GENERAL OFFER
6.1 Should the Scheme not be proposed or fail, Stellar may (subject
to the fulfilment or waiver, where appropriate, of the Offer
Conditions), at its election, make an offer to the Offerree
Shareholders (other than Stellar) to acquire all of their Offer
Shares for the Stellar Shares (on the basis referred in
paragraph 1.4 above), subject to the fulfilment or waiver of
the following suspensive conditions (“Offer Conditions”) by no
later than 31 October 2015 or such later date/s as may be
agreed to between Stellar and Cadiz:
6.1.1 to the extent applicable, all requisite regulatory
approvals have been obtained from the JSE, the TRP and
SARB (to the extent applicable), either unconditionally or
subject to conditions acceptable to Stellar;
6.1.2 approval by the requisite majority of Cadiz shareholders
at the Cadiz General Meeting of the Delisting in
accordance with section 1.14(a) of the Listings
Requirements of the JSE (the “Delisting Resolution”);
6.1.3 approval by the board of directors of Cadiz of the
Delisting;
6.1.4 the receipt of unconditional approval from the TRP
in terms of a compliance certificate or exemption to be
issued in terms of the Companies Act in relation to the
General Offer; and
6.2 The conditions in paragraphs 6.1.1 to 6.1.4 above are
regulatory in nature and cannot be waived.
6.3 If the General Offer is made, Offeree Shareholders (other than
Stellar) will only be able to accept the General Offer in
respect of all of their Offer Shares.
6.4 As at the date of this announcement, Stellar has received
irrevocable undertakings from the Cadiz shareholders holding
56.34% of the voting rights entitled to be exercised in respect
of the Delisting Resolution. For the avoidance of doubt,
Stellar will be entitled to vote in respect of the Delisting
Resolution.
7. SHAREHOLDING IN CADIZ AND ACTING AS PRINCIPAL
7.1 Stellar currently beneficially and directly owns 40 451 754
Offer Shares, which constitute approximately 17.31% of the
total issued ordinary share capital of Cadiz (excluding
Treasury Shares) (“Stellar’s Cadiz Shares”).
7.2 Bidco, as a special purpose vehicle to be incorporated as a
wholly-owned subsidiary of Stellar, does not hold any direct or
indirect beneficial interest in Cadiz.
7.3 Stellar is acting as principal and not as agent in respect of
the Proposed Offer and it is not acting in concert with any
other parties for purposes of the implementation of the
Proposed Offer.
8. CONFIRMATION OF SUFFICIENT SECURITIES
As detailed in paragraph 1.8 above, the total number of the
Stellar Shares and Bidco Shares to be issued pursuant to the
Scheme depends on the elections made by Offeree Shareholders.
Stellar confirms that both Stellar and Bidco will have
sufficient authorised but unissued share capital available from
which to issue the Offer Consideration.
9. IRREVOCABLE UNDERTAKINGS
Stellar has received irrevocable undertakings from the
following Cadiz shareholders to vote in favour of the Scheme
and the Delisting Resolution, as may be applicable, in respect
of their entire shareholding in Cadiz, to the extent they are
permitted to do so in terms of the Companies Regulations and
the Listings Requirements of the JSE:
Delisting
Res-
Scheme olution
% of % of
% of issued issued
total share share
issued capital capital
share of Cadiz of Cadiz
capital prior to prior to
of Cadiz the the
Total prior to Proposed Proposed
Number of the Offer Offer
Cadiz Cadiz Proposed eligible eligible
shareholder shares held Offer* to vote* to vote*
Makana
Financial 14.72%
Services (Pty)
Ltd 34 416 502 17.80% 14.72%
Friedshelf 1638
(Pty) Ltd 56 829 612 24.31% 29.40% 24.31%
Stellar Capital
Partners
Limited 40,451,754 17.31% - 17.31%
Total 131 697 868 56.34% 47.21% 56.34%
* Excluding Treasury Shares
In terms of section 115(4) of the Companies Act, Stellar’s
Cadiz Shares will be excluded from voting on the resolution to
approve the Scheme at the Cadiz General Meeting.
10. TERMINATION OF CADIZ’ LISTING
In the event that the Scheme becomes operative or the General
Offer is implemented, and subject to the General Offer
Conditions in paragraphs 6.1.2 and 6.1.3 being fulfilled,
application will be made to the JSE to terminate the listing of
all of the Cadiz shares from the Main Board of the JSE.
11. OPINIONS AND RECOMMENDATIONS
11.1 In accordance with section 114(3) of the Companies
Act and regulation 90(1) of the Companies Regulations, the
Independent Board has appointed PSG Capital Proprietary Limited
as the independent expert (which meets the requirements set out
in section 114(2) of the Companies Act) (the “Independent
Expert”) for the purposes of providing an external independent
opinion in regard to the Scheme and the General Offer and to
make appropriate recommendations to the board of directors of
Cadiz for the benefit of Cadiz shareholders to advise them on
the Scheme and the General Offer. The substance of such
external advice and the views of the Independent Board in this
regard will be published on SENS and detailed in the Circular.
11.2 Similarly, in accordance with paragraph 1.14(d) of
the Listings Requirements of the JSE, the board of directors of
Cadiz has appointed the Independent Expert for the purposes of
providing an external independent opinion in regard to the
fairness of the Stellar Shares (on the basis referred in
paragraph 1.4 above) insofar as same relates to the termination
of Cadiz’ listing on the Main Board of the JSE, in the event
that the Scheme is not proposed or fails but the General Offer
is made. The substance of such external advice and the views
of the board of directors of Cadiz in this regard will be
published on SENS and detailed in the Circular.
12. CATEGORISATION
In terms of the Listings Requirements of the JSE, the Proposed
Offer is regarded as a Category 2 transaction and therefore
does not require approval by Stellar shareholders.
13. DOCUMENTATION AND SALIENT DATES
Further details of the Scheme and the General Offer will be
included in the Circular, which will contain, inter alia, a
notice of the Cadiz General Meeting, a form of proxy and a form
of acceptance, surrender and transfer. Each of the Scheme and
the General Offer will constitute a separate affected
transaction for purposes of the Companies Regulations and the
Circular will distinguish between them and accordingly contain,
inter alia, separate disclosures regarding each of the Scheme
and the General Offer. The Circular is expected to be posted
on or about 13 July 2015. The salient dates in relation to the
Scheme and the General Offer will be published on SENS and in
the press prior to the posting of the Circular.
14. RESPONSIBILITY STATEMENTS
14.1 The Independent Board
The Independent Board, insofar as any information in this
announcement relates to Cadiz, collectively and individually
accept responsibility for the information contained in this
announcement and confirm that, to the best of their knowledge
and belief, such information which relates to Cadiz is true and
the announcement does not omit anything likely to affect the
importance of such information.
14.2 Board of directors of Stellar
The board of directors of Stellar (all members of which are
deemed to be independent), insofar as any information in this
announcement relates to Stellar, collectively and individually
accept responsibility for the information contained in this
announcement and confirm that, to the best of their knowledge
and belief, such information which relates to Stellar is true
and the announcement does not omit anything likely to affect
the importance of such information.
Rosebank, Johannesburg
19 June 2015
Corporate Finance Adviser to Stellar:
Stellar Advisers Proprietary Limited
Sponsor to Stellar: AfrAsia Corporate Finance Proprietary Limited
Sponsor to Cadiz: Investec Bank Limited
Legal Advisers to Cadiz: DLA Cliffe Dekker Hofmeyr Incorporated
Independent Expert: PSG Capital Proprietary Limited
Date: 19/06/2015 01:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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