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TRUSTCO GROUP HOLDINGS LIMITED - Acquisition of option to acquire a beneficial interest in Huso Investments (Pty) td

Release Date: 22/06/2015 17:14
Code(s): TTO     PDF:  
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Acquisition of option to acquire a beneficial interest in Huso Investments (Pty) td

TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
NSX Share Code: TUC
JSE Share Code: TTO
ISIN Number: NA000A0RF067
("the Company" or "Trustco")

VOLUNTARY ANNOUNCEMENT: ACQUISITION OF OPTION TO ACQUIRE A BENEFICIAL
INTEREST IN HUSO INVESTMENTS (PTY) LTD

1.     INTRODUCTION

1.1.   Shareholders are referred to the announcement published on 2 February 2015, in terms of
       which the Company advised shareholders, inter alia of its intention to pursue opportunities in
       the resources sector, particularly in Namibia.

1.2.   Shareholders are now further advised that Trustco has entered into an option agreement (“the
       Option Agreement”) with Quinton van Rooyen ( “the Grantor”) in terms of which the
       Company acquired an option to acquire the entire shareholding in Huso Investments (Pty) Ltd
       (“Huso”)of which the Grantor is the sole shareholder (“the Option”) via its wholly-owned
       subsidiary Trustco Resources (Pty) Ltd (“Trustco Resources”).

1.3.   Huso is the holding company of Northern Namibian Development Company (Pty) Ltd
       (“NNDC”), a diamond mining and exploration entity in Namibia and Morse investments (Pty)
       Ltd (“Morse”), a licensed diamond processing and polishing factory in Namibia. Huso is
       owned by the van Rooyen family who is also the majority shareholder of Trustco.

1.4.   In terms of the Option Agreement, no consideration is payable by Trustco to the Grantor in
       respect of the Option and the Option is exercisable in the sole and absolute discretion of
       Trustco.


1.5.   The Option Agreement route was specifically decided upon by the board of the Company in
       order to provide minority shareholders of Trustco with the opportunity to engage amongst
       themselves and the majority shareholder with regards to the envisaged transaction. The
       board of Trustco believes that this route is in the best interest of the Company and enhances
       transparency.


2.     RATIONALE

2.1.   Should the Company elect to exercise the Option, it will be beneficial to the shareholders of
       the Company for the following reasons:

       2.1.1.      It will create a natural foreign exchange hedge for the Company;
       2.1.2.      The authoritive Fraser Institute Annual Survey of Mining Companies: 2014 places
                                st
                   Namibia 1 in Africa as the most attractive mining investment destination. In
                                                  nd
                   2015 Namibia was placed 2 after Botswana.
       2.1.3.      Namibia is a participant of and fully compliant with the Kimberley Process
                   Certification Scheme.
       2.1.4.      Diamond market fundamentals are in support of price appreciation, as according
                   to analysis by De Beers insight report.debeersgroup.com, McKinsey &
                     Company www.mckinsey.com and Bain & Company www.bain.com indicate that
                     demand will outstrip supply with a considerable margin from 2019 onwards.
      2.1.5.         Namibia is one of the world’s largest producers of gem quality diamonds, with
                     about 98% of diamonds produced being gem quality as per the Diamond
                     Empowerment Fund: www.diamondempowerment.org.
      2.1.6.         Opportunities in the diamond sector are very scarce, especially a vertically
                     integrated business model within the diamond value chain, as established by the
                     Grantor.
      2.1.7.         It is expected to create shareholder value to the shareholders of the Company
                     and the Grantor will provide a guarantee to this effect.
      2.1.8.         More than 2500 Namibian shareholders in particular will benefit directly from the
                     exploitation of the natural resources of Namibia.
      2.1.9.         Local beneficiation will stimulate this sub-sector in Namibia due to the vertical
                     integrated model of Huso.
      2.1.10.        The transaction will unlock economic benefit in one of the most isolated regions
                     of Namibia in support of Government’s national development objectives.

      2.2       The exercise of the Option by the Company shall be subject to the conclusion of a
                share purchase agreement (“Share Purchase Agreement”) between the parties and
                the Company obtaining sufficient irrevocable undertakings to vote in favor of the
                transaction from remaining shareholders of Trustco. In terms of the Option
                Agreement such irrevocable undertakings must be received within 21 days of
                announcing the Option Agreement on SENS.

      2.3       A detailed information pack is available to shareholders at   http://j.mp/HusoSENS
                The information pack contains the following:

                2.3.1          a non- disclosure agreement
                2.3.2          the signed Option Agreement;
                2.3.3          a presentation on the transaction including the operations of Morse and
                               NNDC;
                2.3.4          a Competent Person’s Report;
                2.3.5          final draft Share Purchase Agreement;
                2.3.6          an Irrevocable Undertaking to vote in favor of the transaction.

3   CONDITIONS PRECEDENT

     3.1        Should the Option be exercised by the Company, the proposed Share
                Purchase Agreement will be subject to, inter alia the following conditions precedent:

                3.1.1           that NNDC is in possession of a valid Environmental Clearance
                                Certificate;
                3.1.2          that a competent person’s report acceptable to the JSE Limited
                               (“JSE”), NSX and the board of the Company is obtained;
                3.1.3          that an independent fairness opinion as per JSE and NSX
                               requirements is obtained;
                3.1.4           that shareholders’ approval pursuant to the distribution of a
                               shareholders circular in terms of JSE Listings Requirements and the
                               NSX Listing Requirements is obtained;
                3.1.5           that the JSE and NSX approve the fresh issues and listings of the
                                consideration shares of this transaction;
                3.1.6           that all regulatory requirements, including but not limited to, the
                               obtaining of licences and approvals before perfecting the Share
                               Purchase agreement are met; and
                3.1.7          that the Grantor guarantees a minimum positive contribution to
                                EBITDA after stock adjustment Per Share for the first three years after
                                the Share Purchase Agreement.
               3.18             Trustco shall have the right to cancel the Agreement at anytime within
                                the first three years from the Closing Date.

        3.2        The complete list of conditions precedent is contained in the final draft Share
                    Purchase Agreement.

4       CATEGORISATION OF THE OPTION

    4.1 In terms of paragraph 9.1(b) of the Listings Requirements of the JSE, where the right to
        exercise an option is solely at the issuer’s discretion and no premium or consideration is
        payable for the grant of the option, the transaction will only be categorized on exercise of the
        option, provided that the categorization upon exercise will be no less onerous than the
        classification determined at the date of the grant.

    4.2 Accordingly, as the Option is exercisable in the sole and absolute discretion of Trustco; and
        no consideration is payable by Trustco in respect of the acquisition of the Option, the
        transaction as contemplated in this announcement, will only be categorised in accordance
        with the JSE Listings Requirements, upon exercise of the Option by Trustco and this
        announcement is made on a voluntary basis.

    4.3 Should Trustco elect to exercise the Option, the resultant transaction will constitute a category
        1 transaction in terms of section 9 of the Listings Requirements of the JSE and shall require
        shareholder approval. In addition, the transaction will also be deemed to be a related party
        transaction as defined in terms of section 10 of the Listings Requirements of the JSE, as the
        Company will be transacting with a director and a material shareholder of the Company.

    4.4 Upon exercise of the Option by Trustco, a detailed terms announcement will be published by
        the Company and a circular detailing the terms of the transaction and a notice convening a
        general meeting of shareholders will be distributed to shareholders.


22 June 2015
Sponsor

Sasfin Capital
(a division of Sasfin Bank Limited)

Date: 22/06/2015 05:14:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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