Wrap Text
Abridged pre-listing statement
Waco International Holdings Limited
(Formerly Waco International Holdings (Proprietary) Limited)
(Incorporated in the Republic of South Africa on 6 January 2012)
(Registration number 2012/002104/06)
JSE share code: WIH ISIN: ZAE000208518
(The “Company”, with its consolidated subsidiaries “Waco” or the “Group”)
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE
UNITED STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of the Company's issued ordinary shares (“Ordinary
Shares”) in the “General Industrials – Diversified Industrials” sector of the main board of the exchange
operated by the JSE Limited ("JSE"), with effect from the commencement of business on Friday, 23 October
2015.
The information in this abridged pre-listing statement has been extracted from the full pre-listing statement
issued by the Company on Monday, 5 October 2015 (“PLS”). This abridged pre-listing statement is not
complete and does not contain all of the information that readers of this abridged pre-listing statement
should consider before subscribing for, or purchasing, Offer Shares (as defined below). Investors should
read the PLS in its entirety.
This abridged pre-listing statement does not constitute an offer to the public for the sale of or subscription
for, or the solicitation or advertising of an offer to buy or subscribe for shares in Waco, but is issued in
compliance with the Listings Requirements of the JSE (“Listings Requirements”) for the purpose of
providing information with regards to Waco to selected persons.
1. Offer particulars
This abridged pre-listing statement relates to a private placement by way of an offer for sale by the selling
shareholders named in the PLS (the “Selling Shareholders”), and concurrently an offer for subscription by
the Company, subject to certain conditions (the “Offer”), to selected persons in South Africa who fall within
one of the specified categories listed in section 96(1)(a) of the South African Companies Act, 71 of 2008, as
amended and to selected persons in other jurisdictions, to whom the Offer will specifically be addressed,
and by whom the Offer will be capable of acceptance, of 78,565,326 Ordinary Shares in the issued share
capital of the Company (the “Offer Shares”). The Offer Shares consist of up to 35,344,363 existing Ordinary
Shares to be sold by the Selling Shareholders and 43,220,963 new Ordinary Shares to be issued by the
Company, comprising an aggregate of 57.5% of the total issued ordinary share capital of the Company at
Listing (as defined below). The over-allotment shareholders named in the PLS (the “Over-allotment
Shareholders”) have granted the stabilisation manager, on behalf of each of the Joint Global Coordinators,
an option (the “Over-allotment Option”) pursuant to which the stabilisation manager, on behalf of each of
the Joint Global Coordinators, may require the Over-allotment Shareholders to sell at the Offer Price
(described in the paragraph below) in the aggregate up to 7,856,532 additional Ordinary Shares held by
them, comprising up to 10% of the total number of Offer Shares to be sold in the Offer (the “Over-allotment
Shares”) for the purpose of covering short positions resulting from over-allotments or from sales of Offer
Shares on or before the end of the stabilisation period. The Over-allotment Option is exercisable on one or
more occasions during the stabilisation period on the relevant date on which the Over-allotment Shares are
to be purchased. On Listing, all of the Ordinary Shares constituting the issued ordinary share capital of the
Company subsequent to the Offer are expected to be listed on the exchange operated by the JSE. Offer
Shares rank pari passu with all of the other Ordinary Shares in issue in all respects.
It is estimated that the price at which the Offer Shares will be offered for subscription or sale pursuant to the
Offer (the “Offer Price”) will be between R36.00 and R45.00 per Offer Share (the “Offer Price Range”).
However, the Offer Price may be outside the Offer Price Range.
Subject to certain conditions (including the JSE’s minimum free float requirement, as set out in the Listings
Requirements, being attained), a listing of all the Company’s issued Ordinary Shares (assuming an Offer
Price at the mid-point of the Offer Price Range) has been granted by the JSE (the “Listing”) in the “General
Industrials – Diversified Industrials” sector of the exchange operated by the JSE under the abbreviated
name “Waco”, symbol “WIH” and ISIN ZAE000208518.
On the date of Listing (the “Listing Date”), the ordinary share capital of the Company will comprise
1,000,000,000 authorised Ordinary Shares and 136,556,167 issued Ordinary Shares (assuming an Offer
Price at the mid-point of the Offer Price Range). On 25 September 2015, the preference share capital of the
Company comprised 1,000,000,000 authorised and 229,048,300 issued A Preference Shares,
1,000,000,000 authorised and 303,335,611 issued B Preference Shares, 1,000,000,000 authorised and
588,367,934 issued C Preference Shares, one authorised and issued D Preference Share (collectively, the
“Preference Shares”) and one authorised and issued A Deferred Share. The A Deferred Share and the D
Preference Share will be repurchased and all of the other issued Preference Shares will be redeemed by the
Company with the proceeds of the Offer and using the cash resources of the Company contemporaneously
with the Listing. Accordingly, there will be no other class of shares in issue on the Listing Date other than the
Ordinary Shares.
2. Overview of the business of Waco
Waco is a diversified equipment hire and industrial services business operating in the following key
geographies: South Africa; other sub-Saharan Africa (sub-Saharan Africa excluding South Africa);
Australasia (Australia and New Zealand); the United Kingdom; and Chile. The Group has core product
offerings in forming, shoring and scaffolding, which includes suspended platforms and value-added services
such as insulation, cladding, painting, asbestos abatement and blasting (together, “FSS”); as well as
relocatable modular buildings (“R&MB”); and portable sanitation (“PS”); and it has a growing business in
integrated hygiene solutions (“IHS”). The Group’s hire fleet comprises approximately 100,000 tonnes of
scaffolding, approximately 44,000 tonnes of formwork, in excess of 3,750 relocatable modular buildings and
approximately 24,000 portable toilets. The Group’s business operates through a network of more than 100
branches, from which it services over 14,000 customers, including a significant number of “blue chip”
multinational and national companies and government agencies in a wide variety of industries, such as
industrial maintenance, infrastructure, mining and resources, oil and gas, power generation, construction
and engineering, education, healthcare and events.
Waco provides a range of products and services across its FSS, R&MB, PS and IHS business lines, as set
out below:
FSS
- the hire, manufacture and sale of forming, shoring and scaffolding and other access equipment;
- specialist and high-technology formwork systems and solutions complemented by design,
technical advice and support;
- the erection and dismantling of scaffolding and other access equipment;
- suspended platforms and hydraulic lifts;
- marine scaffolding and offshore personnel supply;
- the hire of seating facilities, platforms and related infrastructure products for events; and
- value-added industrial services, such as painting, asbestos abatement, corrosion protection,
insulation and cladding.
R&MB
- the design, manufacture, hire and sale of relocatable modular buildings, including specialist,
temporary and long-term accommodation solutions; and
- project management services relating to modular building contracts.
PS
- the hire and servicing of portable chemical toilets and septic tank pumping.
IHS
- integrated hygiene services including the hire and servicing of hygiene products, contract cleaning
and pest control services.
3. Key Strengths
Waco believes that the following key strengths contribute to its success and distinguish it from its
competitors in the various markets in which it operates:
- A market leader, according to management estimates, with established brands, significant
scale and geographic reach, which create high barriers to entry
Waco’s market presence and the scale and geographic reach of its operations give it a clear
advantage relative to smaller, local competitors. Waco also has an extensive geographic network
comprising over 100 branches located throughout South Africa, other sub-Saharan Africa,
Australasia and the United Kingdom from which it serves long-standing, established customers in
key sectors. The strategic positioning of the Group’s branches, in close proximity to its
customers, allows Waco to serve its customers more efficiently and at a lower cost, which is a
significant competitive advantage. In certain locations, Waco’s business units share branches
allowing for significant cross-selling and cost-reduction opportunities.
In addition to providing a platform for growth, the scale of Waco’s hire fleet combined with its
extensive branch network create a high barrier to entry for potential entrants into the markets in
which the Group operates, as such entrants would need to make significant capital investment in
both hire fleet and property before being able to compete with the Group for major projects.
- Diversified equipment hire and industrial services business model
Waco’s equipment hire and industrial services business is diversified across products,
geographies and end markets, supporting reduced earnings volatility through economic cycles.
Its business model is scalable and flexible, affording Waco the ability to move its hire fleet
between geographies in response to demand in order to maximise returns. Diversification across
geographies, industries and clients enables the Group to be flexible and responsive to market
opportunities in the geographies in which it operates, to balance businesses that are cyclical and
to benefit from a presence in geographies that are exposed to different economic cycles. Waco’s
hire and services business model also provides it with growing and predictable cash flows
underpinned by low risk, long-term contracts, as well as an asset base with a long lifespan, which
generates attractive returns on capital.
- Successful track record of profitable growth
For the three financial years ended 30 June 2015, Waco achieved Adjusted EBITDA (profit for the
year before income tax, net finance (expense)/income, depreciation and amortisation, excluding
items expensed or earned that Waco believes are not in the ordinary course of business for the
particular business unit in which they occur) growth at a compound annual growth rate of 39%
and its Adjusted EBITDA margin increased from 13% in the 2013 financial year to 17% in the
2015 financial year. Waco’s ability to manage its capital expenditure, its focus on minimum
profitability standards at its branches, and its ability to share its fixed cost base across the
business, has enabled it to improve profitability. The majority of Waco’s manufacturing costs are
variable, and can be altered to match demand. This flexible cost base, in combination with other
cost-managing initiatives and Waco’s significant investment in hire equipment and value-
enhancing acquisitions, have been key drivers of the growth in income and profitability, and have
supported an increase in RONAM (Adjusted EBIT divided by the monthly average net assets
managed (excluding intangible assets) for the financial year) from 17% to 27% over the last three
financial years.
- Established and experienced management team committed to continued growth
Waco’s senior and operational management have extensive industry experience and a proven
track record of successfully leading numerous organic and acquisitive growth initiatives, both
locally and internationally. Members of management are invested in the business which means
their interests are fully aligned with those of the Company’s Shareholders.
- Significant operational advantages
The Group’s operations benefit from significant advantages over its competitors as a result of its
business model. These include:
- Extensive branch network: Waco maintains over 100 branches across the geographies in
which it operates. Waco’s business units share the use of branches in certain locations,
which facilitates the expansion of businesses in geographies where Waco already has an
existing branch network;
- Successful track record of innovation and growth: Waco has a proven ability to innovate in
order to capture new business opportunities and revenue streams;
- Active management of hire fleet: A key differentiator of Waco is the scale and diversity of
its hire fleet, which is spread across a range of geographies. This enables it to move
skilled personnel and equipment efficiently between businesses, markets and locations in
order to respond to favourable market conditions; and
- Standardisation and flexibility of product range: Waco focuses on maintaining a
standardised, yet versatile, product range which can be easily modified to meet specific
customer requirements and thereby increase utilisation, while retaining the capability to
provide unique solutions to customer needs through in-house design expertise.
- Well-positioned to capitalise on established and future growth markets
As a result of the strengths highlighted above, management believes that Waco is well-positioned
to capture significant growth opportunities across its geographies. The distribution of Waco’s
network of branches and sites across South Africa and other sub-Saharan Africa is expected to
enable Waco to take advantage of growth in these geographies by providing equipment and
services to future projects and developments. In South Africa, the planned growth in
infrastructure, construction, sanitation, education and power generation spending, in combination
with ongoing industrial maintenance at a number of major plants and underpinned by government
investment, represents a significant opportunity for the Group. In the fast-growing economies of
sub-Saharan Africa, the potential for major development in infrastructure, mining, and oil and gas
represents a further growth opportunity.
In Australia, the sustained growth in industrial maintenance in the resources sector and the
recovery in the commercial and high-rise residential markets represent significant growth
opportunities for the Group. Similarly, the Group is well placed to capitalise on the growth in
construction in New Zealand that has resulted from increased demand for housing and from the
rebuilding of the city of Christchurch on the South Island after the February 2011 earthquake.
Management believes that Waco is similarly well-positioned to take advantage of strong
underlying conditions in the UK residential construction sector, particularly in London, as well as
in education and healthcare services, in order to grow the business.
Waco’s operational expertise and efficiency, which enable it to improve profitability while growing
the business, high revenue visibility from long-term contracts and the revenue predictability
offered by its hire businesses further strengthen its ability to grow.
4. Current Trading and Prospects
Since 30 June 2015, the Group has continued to perform in line with management’s expectations. Between
30 June 2015 and 31 August 2015, the Group’s Adjusted EBITDA increased in comparison to the
corresponding period in 2014 primarily due to improved profitability in the Group’s international operations
segment as a result of the implementation of the Group’s restructuring plans.
Between 30 June 2015 and 31 August 2015, the Group’s net capital expenditure increased in comparison to
the corresponding period in 2014, primarily due to increased utilisation at Premier necessitating an increase
in the size of the hire fleet.
Looking ahead, management believes that the strong growth rate achieved over the last three financial
years will moderate as a result of the Group’s higher profit base. In the short- to medium-term, management
is targeting a sustainable organic revenue growth rate in the high single-digit to low double-digit range,
which could be bolstered by future acquisitions. Management also believes that the proportional increase in
the Group’s revenue from other sub-Saharan Africa, the continued turnaround of the Group’s international
operations and the Group’s emphasis on lowering the cost to serve should support incremental margin
expansion in the short to medium term.
Any forecast financial information contained herein has not been reviewed and reported on by the
Company’s external auditors.
5. Directors
The details of the directors of the Company on the Listing Date are set out below:
Occupation /
Name , age and nationality Business Address
function
Royden Thomas Vice (68) 24 Suikerbossie Chairperson
(South African) 80 Mount Street (non-executive)
Bryanston
South Africa
Stephen John Michael Goodburn (52) Building No 2, Harrowdene Office Park Chief Executive Officer
(South African) 128 Western Service Road (executive)
Woodmead
South Africa
Eben Davel le Roux (42) Building No 2, Harrowdene Office Park Chief Financial Officer
(South African) 128 Western Service Road (executive)
Woodmead
South Africa
Alan Markham Schlesinger (65) Ground Floor North Lead Independent
(South African) 19 West Street Director
Houghton Estate (non-executive)
Johannesburg
South Africa
Geoffrey Keith Everingham (66) 8 Syfret Road Independent Director
(South African) Rondebosch (non-executive)
South Africa
Nicholas Burton Hudson (41) 1 Merchant Place Director
(South African) Corner Fredman Drive and Rivonia (non-executive)
Road
Sandton
South Africa
Tasneem Abdool-Samad (41) c/o Company Secretary Independent Director
(South African) Building No 2, Harrowdene Office Park (non-executive)
128 Western Service Road
Woodmead
South Africa
Mahlape Sello (53) Duma Nokwe Group of Advocates Independent Director
(South African) Fountain Chambers (non-executive)
81 Maude Street
Corner Gwen Lane
Sandton
South Africa
Jos Tertius van Zyl (44) 35 Fricker Road Director
(South African) Illovo (non-executive)
Sandton
South Africa
6. Salient dates and times
2015
Opening date of the Offer: 09:00 on Monday, 5 October
Expected last date for indication of interest for the purposes of the 12:00 on Thursday, 15 October
bookbuild:
Publication date of the final Offer Price and final number of Offer Shares Friday, 16 October
on SENS:
Successful applicants advised of allocations: Friday, 16 October
Expected Listing Date: 09:00 on Friday, 23 October
7. Copies of the PLS
The PLS is only available in English and copies thereof may be obtained during normal business hours from
Monday, 5 October 2015 until Thursday, 15 October 2015 from Waco, Rand Merchant Bank (a division of
FirstRand Bank Limited) and Computershare Investor Services Proprietary Limited (“Computershare”), at
their respective physical addresses which appear below:
The registered office of Waco: The office of Rand Merchant Bank:
No. 2 Harrowdene Office Park 1 Merchant Place
128 Western Service Road Cnr Rivonia Road and Fredman Drive
Woodmead 2148 Sandton 2196
Johannesburg Johannesburg
South Africa South Africa
The office of Computershare:
Ground Floor
70 Marshall Street
Johannesburg 2001
South Africa
The Pre-listing Statement will also be available on the Company’s website at www.wacointernational.co.za
from 5 October 2015 until 15 October 2015
Johannesburg
5 October 2015
Joint bookrunners and joint global coordinators
Rand Merchant Bank, a division of FirstRand Bank Limited
Morgan Stanley & Co. International plc
The Standard Bank of South Africa Limited
Transaction sponsor and stabilisation manager
Rand Merchant Bank, a division of FirstRand Bank Limited
Legal advisers
Webber Wentzel, South African legal adviser to the Company
Linklaters LLP, U.S. and English legal adviser to the Company
White & Case LLP, U.S., English and South African legal adviser to the joint global coordinators
Independent reporting accountants and auditors
KPMG Inc.
DISCLAIMER:
This announcement is not for distribution, directly or indirectly, in or into the United States (including its
territories and possessions, any State of the United States and the District of Columbia), Australia, Canada
or Japan. These materials do not constitute or form a part of any offer or solicitation to purchase or
subscribe for securities in the United States, Australia, Canada or Japan. The securities mentioned herein
(the “Shares”) have not been, and will not be, registered under the United States Securities Act of 1933, as
amended (the “Securities Act”). The Shares may not be offered or sold in the United States except pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
There will be no public offer of securities in the United States, Canada, Australia and Japan.
This announcement does not constitute or form a part of any offer or solicitation or advertisement to
purchase and/or subscribe for Shares in South Africa, including an offer to the public for the sale of, or
subscription for, or the solicitation of an offer to buy and/or subscribe for, shares as defined in the South
African Companies Act, No. 71 of 2008 (as amended) or otherwise (the “Act”) and will not be distributed to
any person in South Africa in any manner that could be construed as an offer to the public in terms of the
Act. These materials do not constitute a prospectus registered and/or issued in terms of the Act.
This announcement does not constitute an offer of securities to the public in the United Kingdom. This
communication is directed only at (i) persons who are outside the United Kingdom or (ii) 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 (the “Order”), (iii) high net worth entities,
and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order
and (iv) persons to whom an invitation or inducement to engage in an investment activity (with the meaning
of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any
securities of the Company or any member of its group may otherwise lawfully be communicated or caused
to be communicated (all such persons in (i) to (iv) above being referred to as “relevant persons”). Any
investment activity to which this communication relates will only be available to, and will only be engaged
with, relevant persons. Any person who is not a relevant person should not act or rely on this document or
any of its contents.
Any offer of securities to the public that may be deemed to be made pursuant to this communication in any
EEA Member State that has implemented Directive 2003/71/EC, as amended, (together with any applicable
implementing measures in any Member State, the “Prospectus Directive”) is only addressed to qualified
investors in that Member State within the meaning of the Prospectus Directive.
Copies of this announcement are not being made and may not be distributed or sent into the United States,
Canada, Australia or Japan.
This announcement is not a prospectus and the Offer referred to herein will not be open to the public.
This announcement may include statements that are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements may be identified by the use of forward-looking terminology,
including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”
or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions
of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often
do differ materially from actual results. Any forward-looking statements reflect the Company’s current view
with respect to future events and are subject to risks relating to future events and other risks, uncertainties
and assumptions relating to the Company’s business, results of operations, financial position, liquidity,
prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.
Each of the Company, RMB, Morgan Stanley and Standard Bank and their respective affiliates expressly
disclaims any obligation or undertaking to update, review or revise any forward looking statement contained
in this announcement whether as a result of new information, future developments or otherwise.
None of RMB, Morgan Stanley and Standard Bank or any of their respective directors, officers, employees,
advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or
warranty, express or implied, as to the truth, accuracy or completeness of the information in this
announcement (or whether any information has been omitted from the announcement) or any other
information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a
visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising
from any use of the announcement or its contents or otherwise arising in connection therewith.
Each of RMB, Morgan Stanley and Standard Bank is acting exclusively for Waco and no-one else in
connection with the Offer. They will not regard any other person as their respective clients in relation to the
Offer and will not be responsible to anyone other than Waco for providing the protections afforded to their
respective clients, nor for providing advice in relation to the Offer, the contents of this announcement or any
transaction, arrangement or other matter referred to herein.
In connection with the Offer, each of RMB, Morgan Stanley and Standard Bank and any of their respective
affiliates, acting as investors for their own accounts, may subscribe for or purchase shares and in that
capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such shares and
other securities of Waco or related investments in connection with the Offer or otherwise. Accordingly,
references in the preliminary listing statement, once published, to the shares being issued, offered,
subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or
subscription, acquisition, placing or dealing by any of RMB, Morgan Stanley and Standard Bank and any of
their respective affiliates acting as investors for their own accounts. In addition, RMB, Morgan Stanley and
Standard Bank may enter into financing arrangements and swaps in connection with which they or their
affiliates may from time to time acquire, hold or dispose of shares. None of RMB, Morgan Stanley and
Standard Bank nor any of their respective affiliates intend to disclose the extent of any such investment or
transactions otherwise than in accordance with any legal or regulatory obligations to do so.
Date: 05/10/2015 08:00:00 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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