To view the PDF file, sign up for a MySharenet subscription.

STELLAR CAPITAL PARTNERS LIMITED - Potential sale of shares in Digicore to Novatel and posting of Notice of General Meeting

Release Date: 05/08/2015 17:15
Code(s): SCP     PDF:  
Wrap Text
Potential sale of shares in Digicore to Novatel and posting of Notice of General Meeting

STELLAR CAPITAL PARTNERS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/015580/06)
Share code: Stellar ISIN: ZAE000198586
(“Stellar Capital” or the “Company”)



ANNOUNCEMENT REGARDING THE POTENTIAL SALE OF SHARES IN DIGICORE TO NOVATEL AND
POSTING OF NOTICE OF GENERAL MEETING


1.    INTRODUCTION AND TERMS OF THE TRANSACTION

On 19 June 2015, one of Stellar Capital’s investee companies, Digicore Holdings Limited (“Digicore”),
published a joint firm intention announcement (“FIA”) regarding an offer that had been made by
Novatel Wireless Inc. (“Novatel”) to acquire all the ordinary shares in Digicore (other than the treasury
shares and shares held by Digicore Share Trust) (“Offer Shares”), by way of a scheme of arrangement
(“Scheme”) in accordance with sections 114 and 115 of the Companies Act, No. 71 of 2008 (the “Act”)
for a Scheme consideration of R4.40 per Digicore share (“Offer Price”), failing which Novatel will make a
general offer to all Digicore shareholders to acquire the Offer Shares at the Offer Price (the “Substitute
Offer”).The sale of Digicore by way of a Scheme or Substitute Offer is referred to herein as the “Digicore
Disposal”.

Currently, Stellar Capital holds 47 692 770 shares in Digicore (“Existing DGC Shares”), representing
approximately 19.26% of Digicore’s issued share capital. The Digicore Disposal, to the extent
implemented, would result in Stellar Capital receiving an amount of R209 848 188 in cash, subject to the
required Adjustment detailed in paragraph 5 below.

On 31 July 2015, Digicore and Novatel posted a circular to Digicore shareholders detailing the terms of
the Digicore Disposal and convening a Digicore shareholders meeting (“Digicore Meeting”). The Scheme
requires approval from at least 75% of Digicore shareholders who are eligible and present to vote at the
Digicore Meeting. Stellar Capital has provided an irrevocable undertaking to Digicore and Novatel to
vote in favour of the Scheme. The irrevocable undertaking is a legally binding contract, however from a
JSE Listings Requirements perspective, the voting of the irrevocable undertaking requires approval from
Stellar Capital shareholders.

The effective date of the Digicore Disposal is expected to be on or about 19 October 2015.


2.    THE BUSINESS OF NOVATEL (THE PURCHASER)

Novatel is a leader in the design and development of M2M wireless solutions based on 3G and 4G
technologies. Novatel delivers Internet of Things (IoT) and Cloud SaaS services to carriers, distributors,
retailers, OEMs and vertical markets worldwide. Product lines include MiFi Mobile Hotspots, USB
modems, Expedite and Enabler embedded modules, Mobile Tracking Solutions and Asset Tracking
Solutions. Novatel is incorporated in the State of Delaware, USA, headquarters are in San Diego,
California and Novatel’s securities are listed on the NASDAQ exchange.

Novatel is not a related party to Stellar Capital.


 3.   THE BUSINESS OF DIGICORE (THE SALE TARGET)

 Digicore, a company established in 1985 and which is listed under the “Electronics & Electrical” sector on
 the JSE, provides its global client base with advanced mobile asset-tracking and management solutions.
 Digicore’s end-to-end research, design, development, manufacturing, sales and support of tailored
 solutions for customers is serviced by a global network of staff and team members in over 50 countries.
 The company’s technology and electronics division designs and develops a robust range of asset
 management and monitoring systems using GPS, GSM cellular communication systems and other
 advanced communication and sensory technologies. Products and services are sold to the market under
 the CTrack brand.

 Digicore is not a related party to Stellar Capital.


 4.   RATIONALE FOR THE DIGICORE DISPOSAL

 The Digicore Disposal presents Stellar Capital with an opportunity to exit its Digicore investment at a
 substantial premium to its entry price of R2.50 (the “Entry Price”). Taking into account the Adjustment
 as detailed in paragraph 5 below, the Offer Price represents a 14.34% premium for Stellar Capital to the
 Entry Price and an approximate premium of 9.10% to Digicore’s 30-day VWAP of R2.62 per Ordinary
 Share as at the date of Digicore’s initial cautionary announcement (being 7 May 2015) and an
 approximate discount of 15.68% to the 30-day VWAP of R3.39 per Ordinary Share as at the date of the
 FIA (being 19 June 2015).


 5.   ADJUSTMENT AND SALE PROCEEDS

 As detailed in paragraph 5.4.3 of the acquisition circular posted to Stellar Capital shareholders on 15
 December 2014, which detailed the terms of the acquisition of the Existing DGC Shares by Stellar Capital,
 an upward purchase price adjustment is required for 38 692 770 of the Existing DGC Shares, in the event
 an irrevocable offer is made to acquire the Existing DGC Shares at a price above the Entry Price pursuant
 to an offer for the shares in Digicore on or before 16 July 2015 (the “Adjustment”). The Digicore Disposal
 will give rise to the Adjustment. The Adjustment would in such event be settled through the issue of
 36 758 132 additional SCP shares at an issue price of R2.00 per Stellar Capital share.

 The proceeds from the Digicore Disposal, if implemented, will in part be used to settle the cash portion of
 the acquisition of shares in Torre Industries Limited to the amount of R130 218 397, as announced on
 SENS on 6 July 2015 and 21 July 2015, with the remainder to be deployed towards Stellar Capital’s stated
 investment strategy.


 6.   CONDITIONS PRECEDENT

The implementation of the Digicore Disposal will be subject to the Scheme being implemented, or if the
Scheme fails, that the Substitute Offer be implemented. As mentioned in paragraph 7 below, the
Digicore Disposal is a category 1 disposal and accordingly in order for Stellar Capital to comply with the
JSE Listings Requirements, it must obtain shareholder approval by way of an affirmative vote in excess of
50% of Stellar Capital shareholders eligible and entitled to vote at the General Meeting. Stellar Capital
has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the General
Meeting from Stellar Capital shareholders holding in excess of 51% of the total issued shares in Stellar
Capital as detailed in paragraph 9 below.


 7.   FINANCIAL INFORMATION OF DIGICORE

 As per Digicore’s latest unaudited interim results for the period ended 31 December 2014, released on
 SENS on 26 February 2015, Digicore had reported year to date:

 -    revenue of R450 747 000;
 -    earnings before interest, impairments, taxation, depreciation, amortisation and capital items of
      R64 466 000;
 -    profit after tax of R26 124 000; and
 -    net asset value of R575 083 000.


 8.   CATEGORISATION AND DOCUMENTATION

 As mentioned in paragraph 6 above, the Digicore Disposal is a category 1 disposal under the JSE Listings
 Requirements and consequently requires approval from Stellar Capital shareholders.

 A summary circular, detailing the terms of the Digicore Disposal as outlined in this announcement,
 including a notice of general meeting (“Notice of General Meeting”) has been posted to shareholders
 today with a detailed circular, including pro forma financial effects, to be posted to Stellar Capital
 shareholders on or about 18 August 2015.


 9.   IRREVOCABLE UNDERTAKINGS

 Stellar Capital has obtained irrevocable undertakings from its shareholders holding 52.97% of the votes
 exercisable and entitled to vote, to vote in favour of the Digicore Disposal and related resolutions to be
 proposed at the general meeting in respect of its entire shareholding in Stellar Capital.

 Details of these shareholders are as follows:

 Shareholder                                                                          Percentage Holding

 VRE Investments (Pty) Ltd                                                                         10.51%
 Thunder Securities (Pty) Ltd                                                                      10.00%
 Asgard Capital Assets                                                                              8.89%
 Cream Magenta 140 (Pty) Ltd                                                                        4.95%
 Metcap 14 140 (Pty) Ltd                                                                            4.95%
 Wikalox Investments (Pty) Ltd                                                                      4.95%
 Greentree Investments 306 (Pty) Ltd                                                                4.68%
 AfrAsia Special Opportunities Fund                                                                 4.04%

 Total                                                                                             52.97%


10. POSTING OF NOTICE OF GENERAL MEETING AND SALIENT DATES

As mentioned in paragraph 8 above, a Stellar Capital posted a Summary Circular including a Notice of
General Meeting today enabling Stellar Capital shareholders to vote on the Digicore Disposal prior to the
Digicore Meeting. The salient dates as contained in the Notice of General Meeting are as follows:

                                                                                                     2015
Record date in order to be eligible to receive the notice of General Meeting              Friday, 24 July

Notice of General Meeting posted to shareholders on                                   Wednesday, 5 August

Last date to trade in Stellar Capital shares in order to be recorded in the
register to vote at the general meeting on                                              Friday, 21 August

Voting Record Date by close of trade on                                                 Friday, 28 August

Last date to lodge forms of proxy in respect of the general meeting by 08:30
on                                                                                      Monday, 31 August

Stellar Capital general meeting to be held at 08:30 on                             Wednesday, 2 September

Results of general meeting released on SENS on                                     Wednesday, 2 September

Digicore Meeting to be held at 10:00 on                                            Wednesday, 2 September

Effective Date of the Digicore Disposal                                                Monday, 19 October



 Notes
 1. All times indicated in this announcement are local times in South Africa.
 2. The dates and times indicated in the table above are subject to change. Any such changes will be
    released on SENS.
 3. Share certificates in the name of Stellar Capital will not be able to be rematerialised or
    dematerialised between Monday, 21 August 2015 and Friday, 28 August 2015 both days inclusive.
 4. To be valid, the completed forms of proxy must be lodged with the Transfer Secretaries by no later
    than Monday, 31 August 2015 at 08:30, alternatively, such forms of proxy may be handed to the
    company secretary or chairperson of the Company at the meeting until the commencement of the
    General Meeting.


11. RESPONSIBILTY STATEMENT

The Board accepts responsibility for the information contained in this announcement. To the best of its
knowledge and belief, the information contained in this announcement is true and nothing has been
omitted which is likely to affect the importance of the information included.



Rosebank, Johannesburg
5 August 2015


Corporate Finance Adviser and Sponsor: Stellar Advisers Proprietary Limited

Independent Sponsor: Questco Proprietary Limited

Date: 05/08/2015 05:15:00 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.

Share This Story