Wrap Text
Exchange offer and consent solicitation
for any and all of its outstanding
€425,000,000 Senior Notes due 2019
Edcon Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2007/003525/06)
Company code: BIEDC1
(“Issuer” or “Edcon”)
PRESS RELEASE
Edcon announced exchange offer and consent solicitation
for any and all of its outstanding
€425,000,000 133?8% Senior Notes due 2019
ISIN Reg S XS0982713173,
ISIN Rule 144A XS0982712878
This announcement is for informational purposes only, and does not constitute or form part of any offer
or invitation to sell or issue, or any solicitation of an offer to purchase or subscribe for, any securities of
the Edcon Group. This announcement is not for distribution or release in or into any jurisdiction in
which offers or sales would be prohibited by applicable law.
New York, June 30, 2015. Edcon Holdings Limited and its subsidiaries (the “Group”) announced today that
Edcon Holdings Limited (the “Issuer”) and an affiliate have launched an exchange offer for the Issuer’s
€425,000,000 133?8% Senior Notes (the “Notes”) due 2019.
Highlights:
? Holders are invited to exchange each €1,000 of their Notes for the consideration set forth in either or a
combination of the following options:
o €400 of new super senior 8% PIK notes issued by Edcon Limited (which includes a €50 early
consent payment); and/or
o €150 of new super senior 8% PIK notes issued by Edcon Limited (which includes a €50 early
consent payment), €150 of new senior secured 9.75%/12.75% PIK-toggle notes issued by
Edcon Limited and warrants to purchase shares of the Issuer and one of its affiliates.
? A successful exchange offer will:
o significantly decrease the Group’s cash interest expense due to a reduction in the overall debt
level and the ability to PIK (pay in kind rather than cash settlement of interest);
o enhance the Group’s near term working capital and liquidity situation; and
o facilitate an amendment, extension or refinancing of other Group indebtedness that will
mature in the near term.
? The Group is seeking to use the Exchange Offer to stabilize its capital structure and preserve value.
? The exchange offer has already received the support of holders of approximately 48.6% in aggregate
principal amount of Notes, and has a minimum participation condition of 50%.
Exchange Offer
The exchange offer with respect to the Notes announced today (the “Exchange Offer”) is jointly made by the
Issuer and Edcon Bondco Limited (the “Bondco”) to certain eligible holders of the Notes (the “Noteholders”)
pursuant to an offering memorandum, mutual release and consent solicitation statement (the “Offering
Memorandum”). Apart from the securities set forth below, the Offering Memorandum also offers Noteholders to
become party to a mutual release and to amend the indenture governing the Notes to remove substantially all of
the operative covenants and solicits certain consents. If more than 90% of the aggregate principal amount of
Notes are tendered in the Exchange Offer, these consents will also reduce the aggregate principal amount of the
Notes by 72.5%, change the interest on the Notes from 13 3?8% p.a. cash interest to 5% p.a. payable-in-kind
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interest and extend the Notes’ maturity date to June 30, 2022. Additionally, Noteholders are asked to support the
Group’s restructuring on a broader basis which undertaking will extend to other debt instruments held by such
Noteholders and include supporting a potential exchange compromise procedure pursuant to Section 155 of the
South African Companies Act No. 71 of 2008 and a conversion of the cash interest payment due on the Notes on
June 30, 2015.
Available Options
Each Noteholder electing to participate in the Exchange Offer (a “Participating Noteholder”) can select one of
the following two options, provided that each Participating Noteholder must exchange all and not just part of its
Notes. Noteholders may elect either option or a combination of both options in whatever proportion they
choose. Both options entail a two-step exchange of securities, with the first exchange to occur upon settlement
of the exchange offer (the “Settlement Date”) and the second to occur on or prior to December 31, 2015 (the
“Conversion Date”).
Early Consent Consideration
Noteholders who validly tender their Notes and consent to the Proposed Amendments (as defined below) prior
to July 14, 2015 and who do not validly withdraw such tender and consent prior to such date will receive for
each €1,000 in principal amount of Notes tendered the early consent consideration of €50 payable in Super
Senior Notes (as defined below).
Option A
On the Settlement Date, the Issuer will exchange each €1,000 in principal amount of its Notes (with accrued and
unpaid interest thereon since December 31, 2014 up to, but not including, June 30, 2015, being deemed to be
additional principal) for €1,000 in principal amount of its new Option A senior 13.375% PIK notes (the “Option
A Notes”). On the Conversion Date, Bondco will call for exchange all or a portion of the Option A Notes, and
each €1,000 in principal amount of such Option A Notes will be exchanged for €350 in principal amount of new
super senior 8% PIK notes (the “Super Senior Notes”) of Edcon Limited (the “Super Senior Issuer”).
Option B
On the Settlement Date, the Issuer will exchange each €1,000 in principal amount of Notes (with accrued and
unpaid interest thereon since December 31, 2014 up to, but not including, June 30, 2015, being deemed to be
additional principal) for €1,000 in principal amount of new Option B senior 13.375% PIK notes (the “Option B
Notes”). On the Conversion Date, Bondco will call for exchange all or a portion of the Option B Notes, and each
€1,000 in principal amount of such Option B Notes will be exchanged for (i) a pro rata portion of warrants
exercisable for up to 30% of the equity in the Issuer, (ii) €100 in Super Senior Notes and (iii) €150 in new senior
secured 9.75%/12.75% PIK-toggle notes (the “Senior Secured Notes”). However, the Super Senior Issuer may,
at its sole discretion, elect to increase the quantum of Super Senior Notes and, in an equal amount, decrease the
quantum of Senior Secured Notes issued to Participating Holders pursuant to Option B. If less than 90% of the
Notes are exchanged on the Settlement Date, Holders of Option B Notes will additionally receive a pro rata
portion of warrants exercisable for equity in Edcon Bondco 2 Limited.
Conversion Date
The Issuer expects to exchange all Option A Notes and Option B Notes for the consideration described above in
November 2015, based on its historical borrowing base. However, the portion of Option A Notes and Option B
Notes that Bondco will be able to exchange depends on the available borrowing capacity permitted by the
Group’s indebtedness covenants on the Conversion Date and is also subject to liquidity requirements and
compliance with applicable fiduciary duties and other legal requirements. In the event that there should be a lack
of capacity under the Group’s indebtedness covenants, Option A Notes that cannot be exchanged on the
Conversion Date may be converted as if they were Option B Notes.
Supporting Noteholders
Noteholders of approximately 49% of the aggregate principal amount of the outstanding Notes have
contractually agreed to tender their Notes into the Exchange Offer and agree to all the other transactions,
agreements, waivers, instructions, undertakings and mechanics outlined herein.
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Conditions Precedent
Consummation of the Exchange Offer is subject to a number of conditions, including the valid tender of at least
a majority in aggregate principal amount of the Notes prior to the expiration of the Exchange Offer, certain
approvals and the absence of certain adverse legal and other developments. The Issuer is entitled to terminate
the Exchange Offer and Consent Solicitation in its sole discretion if the failure of any condition makes it
inadvisable to proceed with it.
Eligibility to Participate
The Offering Memorandum is being made, and the new securities are being offered and issued, only (a) in the
United States, to holders of the Notes who are “qualified institutional buyers” (as that term is defined in Rule
144A under the U.S. Securities Act) and institutional “accredited investors” (as that term is defined in Rule
501(a)(1), (2), (3) or (7) under the U.S. Securities Act), in each case, transacting in a private transaction in
reliance upon an exemption from the registration requirements of the U.S. Securities Act, and (b) outside of the
United States, to holders that are not “U.S. persons” (as that term is defined in Rule 902 under the U.S.
Securities Act) and that are also “non-U.S. qualified offerees” (as defined below) in reliance on Regulation S
under the U.S. Securities Act. We refer to the holders of Notes who have certified to the Company that they are
eligible to participate in the Offering Memorandum pursuant to at least one of the foregoing conditions as
“eligible holders.” Only eligible holders are authorized to participate in the Offering Memorandum. “Non-U.S.
qualified offerees” means (i) any legal entity in a Relevant Member State (as defined in the Offering
Memorandum) which is a qualified investor as defined in the Prospectus Directive (as defined in the Offering
Memorandum); (ii) legal entities in any Relevant Member State fewer in number than 150 natural or legal
persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the existing notes trustee; (iii) any other legal entity in a
Relevant Member State that in any other circumstances falls within Article 3(2) of the Prospectus Directive; and
(iv) any entity outside the United States and the European Economic Area to whom the offers related to the new
securities may be made in compliance with any applicable laws and regulations.
If any holder of Notes does not meet the eligibility requirements to qualify as a Noteholder eligible to participate
in the Exchange Offer, it should contact the Issuer to determine whether it can participate in the Consent
Solicitation.
Timing
The Exchange Offer will expire at 11:59 P.M., New York City time, on July 28, 2015, unless extended or
terminated by the Issuer.
The Offering Memorandum, dated as of today, will be distributed to Noteholders and available to Noteholders
through the exchange and information agent, Lucid Issuer Services Limited, Leroy House, 436 Essex Road,
London N1 3QP United Kingdom, Attn: Sunjeeve Patel and Paul Kamminga, Telephone: +44 (0) 20 7704 0880
Facsimile: +44 (0) 20 7067 9098, Email: edcon@lucid-is.com. If you have any questions about tendering your
Notes, you should contact Lucid Issuer Services Limited.
Additional Terms
This press release is a summary of the Offering Memorandum only. It highlights selected information contained
in the Offering Memorandum and does not contain all of the information that you should consider before
making a determination in respect of the Exchange Offer. The Offering Memorandum sets forth full details of
the transactions summarized in this press release and holders of the Notes are urged to read the Offering
Memorandum in its entirety.
******************
The new securities to be issued in connection with the Exchange Offer have not been approved or recommended
by any U.S. federal, state or foreign jurisdiction or regulatory authority. Furthermore, those authorities have not
been requested to confirm the accuracy or adequacy of the Offering Memorandum. Any representation to the
contrary is a criminal offence. The new securities will not be registered under the U.S. Securities Act of 1933, as
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amended (the “U.S. Securities Act”), or any state or foreign securities laws. Accordingly, the new securities will
be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted
under the U.S. Securities Act and other applicable securities laws, pursuant to registration or exemption
therefrom. Eligible holders of the Notes should be aware that they may be required to bear the financial risks of
this investment for an indefinite period of time.
The Offering Memorandum is only addressed to and only directed at persons in member states of the European
Economic Area who are Qualified Investors (within the meaning of the Prospectus Directive). In addition, in the
United Kingdom, the Offering Memorandum is being distributed only to and is directed only at Qualified
Investors: (1) who are persons who have professional experience in matters relating to investments falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as
amended (the “Order”); or (2) who are high net worth entities falling within Article 49 of the Order, and other
persons to whom it may otherwise lawfully be communicated under the Order (all such persons together
referred to as “relevant persons”). Any investment or investment activity to which the Offering Memorandum
relates is available only to: (i) in the United Kingdom, relevant persons and (ii) in any member state of the
European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with
such persons. In the case of any securities being offered to a financial intermediary as that term is used in Article
3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented,
acknowledged and agreed that the securities acquired by it in such offer have not been acquired on a non-
discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, any person in
circumstances which may give rise to an offer of such securities to the public other than their offer or resale in a
relevant member state to Qualified Investors as so defined. Neither the new securities nor the Offering
Memorandum has been approved by an authorized person in the United Kingdom. The securities may not be
offered or sold other than to persons whose ordinary activities involve these persons in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is
reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the
purposes of their businesses where the issue of the securities would otherwise constitute a contravention of
Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) by us. In addition, no person may
communicate or cause to be communicated any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the
securities other than in circumstances in which Section 21(1) of the FSMA does not apply to us.
Holders of the Notes must make their own decision with regard to participating in the Exchange Offer. Holders
of the Notes are urged to consult with their own legal and financial advisors as to the appropriateness of
participating in the Exchange Offer based on their individual circumstances.
This press release includes forward-looking statements within the meaning of the securities laws of certain
applicable jurisdictions. By their nature, the forward-looking events described in this press release may not be
accurate or occur at all. Accordingly, you should not place undue reliance on these forward-looking statements,
which speak only as of the date on which the statements were made.
30 June 2015
Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
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