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STELLAR CAPITAL PARTNERS LIMITED - Terms announcement re acquisition additional interest in Tellumat and Friedshelf

Release Date: 30/11/2015 17:30
Code(s): SCP     PDF:  
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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'). 
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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