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Terms announcement re acquisition additional interest in Tellumat and Friedshelf
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”)
TERMS ANNOUNCEMENT REGARDING THE ACQUISITION OF ADDITIONAL
INTERESTS IN TELLUMAT (PTY) LTD (“TELLUMAT”) AND FRIEDSHELF
1678 LIMITED, THE HOLDING COMPANY OF CADIZ HOLDINGS LTD
(“CADIZ”)
1. The Tellumat Acquisition
1.1. Introduction
Stellar Capital currently holds a non-controlling 30% interest
in Tellumat, a diversified electronics and communications
company.
1.2. The Tellumat Acquisition
Stellar Capital has entered into agreements to acquire an
additional 63.14% of the ordinary issued shares of Tellumat for
an aggregate purchase consideration of R166,716,494 (“Tellumat
Acquisition”). This will increase Stellar Capital’s interest in
Tellumat to a total of 93.14%.
The vendors in the Tellumat Acquisition are Asgard Capital
Assets Ltd (“Asgard”) as to 58,056 ordinary shares representing
29.89% of Tellumat, and Makana Component Holdings (Pty) Ltd
(“MCH”) as to 64,583 ordinary shares representing 33.25% of
Tellumat.
The consideration payable by Stellar Capital is to be effected
in the following manner;
1.2.1. Payment of R95,000,000 in cash by Stellar Capital to
Asgard by no later than 3 May 2016;
1.2.2. Payment of R71,716,494 in cash by Stellar Capital on
behalf of MCH to third parties by no later than 3
August 2016;
The effective date of the Tellumat Acquisition is immediately,
with fulfilment of conditions precedent expected to occur no
later than 30 April 2016, unless the parties agree otherwise.
1.3. Conditions Precedent
Outstanding conditions precedent to the Tellumat Acquisition
are the following:
1.3.1. the rights, preferences and limitations of the "B"
ordinary shares in the Tellumat (“"B" Shares") are
amended as may be acceptable to the Company;
1.3.2. the "B" Shares are issued to all the ordinary
shareholders of Tellumat (other than to Stellar
Capital) pro rata to their shareholding in Tellumat;
1.3.3. Tellumat to repurchase shares in Tellumat held by the
non-employees of Tellumat on terms approved by the
Company;
1.3.4. a revised memorandum of incorporation of Tellumat is
adopted by shareholders incorporating the changes
contemplated in clause 1.3.1 and lodged with CIPC;
1.3.5. the Company enters into agreement with Makana
Financial Services (Pty) Ltd (“MFS”) to acquire the
balance of the ordinary shares in Bidco (defined
below) which it does not already own from MFS and that
such agreement becomes unconditional;
1.3.6. the individual sale agreements with each vendor become
unconditional;
1.3.7. approval from the boards of directors of the vendors;
1.3.8. the Company completes a due diligence investigation in
respect of the Tellumat share incentive trust;
1.3.9. the Takeover Panel exempts Asgard and MCH in terms of
the provisions of section 119(6) of the Companies Act
from compliance with Parts B and C of Chapter 5 of the
Companies Act and the Takeover Regulations; and
1.3.10. all approvals for the sale having been obtained from
the JSE, the South African competition authorities,
the South African Reserve Bank and the Takeover
Regulations Panel to the extent required.
Other than those conditions above that are of a regulatory
nature and cannot be waived, the parties may extend the time
period of the fulfilment of any of the aforementioned
conditions or waive the conditions.
1.4. Warranties in relation to the Tellumat Acquisition
Asgard and MCH have provided standard warranties in respect of
the Tellumat Acquisition.
1.5. Small Related Party Transaction
The purchase of Tellumat shares by Stellar Capital from Asgard
will constitute a transaction with a material shareholder in
Stellar Capital as per the JSE Listings Requirements and as
such renders the acquisition from Asgard a small related party
transaction as defined (“Related Party Transaction”). Under the
provisions of the JSE Listings Requirements:
1.5.1. the JSE has been informed in writing of the Related
Party Acquisition;
1.5.2. the JSE has been provided with written confirmation by
an independent professional expert acceptable to the
JSE that the terms of the Related Party Acquisition
are fair insofar as the shareholders of Stellar
Capital as concerned; and
1.5.3. a copy of the aforementioned fairness opinion is
available at Stellar Capital’s registered office, as
well as at the office of the sponsor of Stellar
Capital for a period of 28 days as from the date of
this announcement.
1.6. Nature of the business of Tellumat
Tellumat provides innovative technology solutions and services
in the ICT, defence, energy and transport sectors. Tellumat has
offices in Cape Town and Gauteng, with core capabilities in the
following 4 areas:
- Integrated ICT solutions;
- Defence and security;
- Air traffic management; and
- Advanced manufacturing.
1.7. Rationale for the Tellumat Acquisition
Stellar Capital is seeking to increase its shareholding in
Tellumat as it believes that the business has significant
potential and will benefit from a shareholder of reference that
is able to support its expansion plans.
1.8. Net Assets and Profits of Tellumat
The value of the net assets of Tellumat which are the subject
of the Tellumat Acquisition as at 30 September 2015 are
R251 538 000. As at the signing of the agreements effecting the
Tellumat Acquisition, there are no profits attributable to the
sale shares that are subject to the transaction.
1.9. Adherence to the JSE Listings Requirements
The memorandum of incorporation of Tellumat and any group
subsidiaries will not frustrate Stellar Capital in terms of its
compliance with its obligations under the JSE Listings
Requirements and the provisions of paragraph 10.21 of Schedule
10 will be complied with.
2. The Cadiz Acquisition
2.1. Introduction
Shareholders are referred to the finalization announcement
published on SENS on 15 October 2015 and the combined circular
to Cadiz shareholders dated 31 August 2015 regarding the 100%
acquisition of Cadiz by Stellar Capital, acting through
Friedshelf 1678 Limited (“Bidco”), by way of a scheme of
arrangement as per section 114(1)(c) of the Companies Act No.
71 of 2008 (“the Scheme Transaction”). Following the Scheme
Transaction, Stellar Capital holds a non-controlling 45.99%
interest in Bidco, which in turn holds the entire ordinary
shareholding of Cadiz.
2.2. The Cadiz Acquisition
Stellar Capital has entered into agreements to acquire an
additional 39.04% of the ordinary issued shares of Bidco not
already owned by Stellar Capital for an aggregate purchase
consideration of R114,057,643 (“Cadiz Consideration”)
increasing Stellar Capital’s interest in Bidco to a total of
85.03% (“Cadiz Acquisition”).
The vendors in the Cadiz Acquisition are Friedshelf 1638 (Pty)
Ltd (“Friedshelf”) as to 56,829,612 ordinary shares
representing 24.32% of Bidco, and Makana Financial Services
(Pty) Ltd (“Makana”), as to 34,416,502 ordinary shares
representing 14.72% of Bidco, representing a total additional
purchase by Stellar Capital of 39.04% of Bidco.
The Cadiz Consideration will be settled via a combination of
cash and the delivery of certain non-core assets held by Cadiz.
The effective date of the Cadiz Acquisition is immediately with
fulfilment of conditions precedent expected to occur no later
than 30 April 2016, unless the parties agree otherwise.
2.3. Conditions Precedent
Conditions precedent to the Cadiz Acquisition are the
following:
2.3.1. approval by the Board of Stellar Capital and Cadiz;
2.3.2. the shareholders of Friedshelf, Makana and Cadiz
Corporate Solutions (Pty) Ltd (“CCS”) respectively
having passed a special resolution required in terms
of section 112 read with 115 of the Companies Act;
2.3.3. Section 44 and/or 45 approvals are obtained from
shareholders and boards of directors of CCS, Cadiz and
Cadiz Special Projects (Pty) Ltd;
2.3.4. Cadiz Investment Holdings (Pty) Ltd (“CIH”)
distributes in specie certain assets to CCS as sole
shareholder of CIH;
2.3.5. Makana, Cadiz and Friedshelf have entered into a pre-
emptive agreement in terms of which Cadiz grants
Makana a right of first refusal to participate in a
black economic empowerment ("BEE") ownership
transaction in Cadiz, on terms no worse than those
offered to any other BEE investor in Cadiz, provided
that neither Makana nor any of its affiliates have
invested in, or agreed to invest in, any company which
competes with or operates in the same industry as
Cadiz; and
2.3.6. all approvals for the sale having been obtained from
the JSE, the South African competition authorities,
the Financial Services Board and the South African
Reserve Bank, to the extent required.
Other than those conditions above that are of a regulatory
nature and cannot be waived, the parties may extend the time
period of the fulfilment of any of the aforementioned
conditions or waive the conditions.
2.4. Warranties in relation to the Cadiz Acquisition
Friedshelf and Makana have provided standard warranties in
respect of the Cadiz Acquisition.
2.5. Nature of the business of Bidco
Bidco is a newly incorporated company which was established
specifically for purposes of acquiring and holding Cadiz as a
wholly-owned subsidiary pursuant to the aforementioned Scheme
Transaction.
Cadiz is a financial services group that is focused on
institutional and personal investments through its wholly-owned
subsidiary, Cadiz Asset Management (Pty) Ltd. Cadiz also
provides corporate finance advisory services through subsidiary
CCS.
2.6. Rationale for the Cadiz Acquisition
Stellar Capital believes that there is considerable upside in a
successful turnaround of Cadiz and the Cadiz Acquisition
provides the opportunity to increase the Company’s exposure to
this upside, while at the same time affording the opportunity
to dispose of various non-core assets at attractive valuations.
2.7. Categorisation of the Cadiz Acquisition
The Cadiz Acquisition is classified as a category 2 transaction
on an aggregated basis in terms of section 9 of the JSE Listing
Requirements.
2.8. Net Assets and Profits of Bidco
The value of the net assets of Cadiz which are the subject of
the Cadiz Acquisition as at 31 March 2015 are R396 505 000. As
at the signing of the agreements effecting the Cadiz
Acquisition, there are no profits attributable to the sale
shares that are subject to the transaction.
2.9. Indemnities by Friedshelf and Makana
Friedshelf and Makana have agreed to indemnify and hold Stellar
Capital harmless from any adverse consequences which may arise
relating from, inter alia, the litigation proceedings
instituted by Hudaco Industries Limited (“Hudaco”) (and its
group companies) against, inter alia, Cadiz, Cadiz group
companies and others as detailed in the SENS announcement
released by Hudaco on 10 November 2015.
2.10. Adherence to the JSE Listings Requirements
The memorandum of incorporation of Bidco, Cadiz and any group
subsidiaries will not frustrate Stellar Capital in terms of its
compliance with its obligations under the JSE Listings
Requirements and the provisions of paragraph 10.21 of Schedule
10 will be complied with.
Rosebank, Johannesburg
30 November 2015
Sponsor: Stellar Advisers (Pty) Ltd
Independent Expert: Questco (Pty) Ltd
Legal Adviser: Cliffe Dekker Hofmeyr Incorporated
Date: 30/11/2015 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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