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SOVEREIGN FOOD INVESTMENTS LIMITED - Adjournment of the New General Meeting and court order

Release Date: 29/03/2016 17:39
Code(s): SOV     PDF:  
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Adjournment of the New General Meeting and court order

SOVEREIGN FOOD INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration Number 1995/003990/06
JSE Code: SOV
ISIN Number: ZAE000009221
(“Sovereign” or the “Company”)



ADJOURNMENT OF THE NEW GENERAL MEETING AND COURT ORDER

Unless otherwise indicated, capitalised words and terms contained in this announcement shall bear the
same meanings ascribed thereto in the circular to Sovereign shareholders (“Shareholders”), dated 24
February 2016.

On 16 March 2016 persons directly related to the controlling shareholder/s of Country Bird Holdings
(Pty) Ltd, a direct competitor of Sovereign (collectively or individually, the “Country Bird Group”)
brought an urgent application (“Urgent Application”) in the High Court of South Africa, Eastern Cape
Division, Port Elizabeth (“High Court”). In terms of the Urgent Application the Country Bird Group inter
alia sought an order declaring that the Scheme approved at the Previous General Meeting never
became operative and that Appraisal Rights have accordingly lapsed, and interdicting the Company
from proposing the New Resolutions (the “Disputed Matters”). The hearing of the Urgent Application
by the High Court was timed by the Country Bird Group so as to be on the last business day prior to the
New General Meeting, giving the High Court a single business day to hear and consider the various
legal submissions.

Shareholders are advised that the High Court today handed down an order in terms of which the
Company was ordered not to allow the New Resolutions to be considered or voted on at today's New
General Meeting, pending the High Court's judgment on the Disputed Matters (the “Court Order”). For
the avoidance of doubt, it is noted that the High Court did not deliver a judgment on the merits of the
Disputed Matters.

Given the provisional nature of the Court Order, and in order to allow the High Court time to deliver its
judgment on the Disputed Matters, a motion was unanimously supported at the New General Meeting
that the New General Meeting be adjourned until 10h00 on 29 April 2016 at the Sun International
Boardwalk Hotel, Beach Road, Summerstrand, Port Elizabeth.

Prior to bringing the Urgent Application, the Country Bird Group actively approached certain
Shareholders in order to purchase more Sovereign Shares with the express intention of acquiring
sufficient Shares to block the New Resolutions. In light of this conduct Sovereign approached the
Competition Tribunal so as to prevent the Country Bird Group from acquiring negative control over
Sovereign without the change of control first being approved by the Competition Authorities. In its
papers before the Competition Tribunal, the Country Bird Group subsequently confirmed that it had not
managed to acquire additional Shares by the last day to trade in order to be entitled to attend and vote
at the New General Meeting (the “LDT”).

Faced with the prospects of overwhelming Shareholder support for the Revised Transactions and after
failing to acquire additional Shares, the Country Bird Group changed tack by then alleging in the Urgent
Application that the Appraisal Rights no longer exist (“New Strategy”). This New Strategy by the
Country Bird Group is in contrast to its earlier strategy to frustrate the Previous Transactions by
exercising Appraisal Rights and threatening the Company with court proceedings in the event that
Sovereign failed to pay the Country Bird Group R8.50 per Share. Importantly, the Country Bird Group



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disclosed the New Strategy on the LDT, only once it became clear that it had failed in its efforts to
acquire sufficient Shares to block the New Resolutions.

It remains apparent that the Country Bird Group’s sole objective is to interfere with the legitimate
business interests of Sovereign and in so doing, cause damage to Sovereign and Shareholder value.

The Board emphasises the support for the Revised Transactions by the overwhelming majority of
Shareholders. Before the commencement of today's New General Meeting, Shareholders holding
approximately 98% of the Shares to be represented at the New General Meeting by way of proxies or
letters of representation, had indicated a desire to vote in favour of the New Resolutions to approve the
Revised Transactions. As a direct result of the actions of the Country Bird Group, the Company has
been prejudiced due to Shareholders being prevented from casting their votes at today's New General
Meeting and Sovereign being prevented from duly implementing the Revised Transactions. Had the
vote proceeded and had the Country Bird Group and all Dissenting Shareholders voted their Shares
against the New Resolutions at today's New General Meeting, the Revised Transactions would
nevertheless have been approved by Shareholders holding approximately 84% of the total number of
votes cast.

The Board remains committed to opposing the frustrating actions undertaken by the Country Bird Group
and its continued attempts to prevent Sovereign from implementing a BEE transaction and a bona fide
voluntary share buy-back from Shareholders at a premium to the current trading price.

A key allegation by the Country Bird Group which has been perpetuated in the Urgent Application, the
Competition Tribunal proceedings and in the press is the notion that the BEE Transaction has been
designed in such a manner so as to create a circa 27% control block in the hands of Exco. The Board
once again wishes to dispel this allegation.

Notwithstanding the fact that the Exco Members will fund a large portion of the BEE Transaction by
contributing their personal capital and Shares to the BEE Trust in order to inter alia decrease the
quantum of the Notional Funding to be provided by the Company to implement the BEE Transaction
and to directly align the interests of Exco with that of Shareholders –

    -   the Exco Members are not entitled to vote the underlying Shares held by the BEE Trust; and
    -   only the BEE Parties are entitled to vote the underlying Shares held by the BEE Trust by
        instructing the Trustees of the BEE Trust how a portion of the Sovereign Shares held by the
        BEE Trust are to be voted at a general meeting of Sovereign, which portion is calculated by
        reference to the proportion of a BEE Party's interest in the BEE Trust.

The only exception to this position is in the event of an offer being made to Shareholders which would
result in a change of control of Sovereign. In such an event, each individual Exco Member will be entitled
to vote alongside the BEE Parties in accordance with their respective proportionate interests in the BEE
Trust. This places the Exco Members in the same position as the BEE Parties and, ultimately, all
Shareholders, bearing in mind that the Exco Members have invested their personal capital and Shares
into the BEE Trust.

There is no voting pool agreement or similar agreement/s in place between:
   - the Exco Members amongst themselves; and/or
   - the Exco Members and the various BEE Parties; and/or
   - the various BEE Parties amongst themselves.




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The BEE Trust will never cast a combined vote and there is no control block of any kind under any set
of circumstances. Save for the exception mentioned above, the Exco Members have agreed to forfeit
all of their voting rights on their personal capital and Share investment.

Shareholders are also referred to the SENS announcement released by Sovereign on 4 February 2016,
wherein Shareholders were informed of a revision to the Previous Transactions timetable. Shareholders
are further notified that following the revision to the Previous Transactions timetable, the date for
fulfilment or waiver (where possible) of the conditions precedent to the Previous Repurchase (and the
Scheme) and the BEE Transaction, was extended to 17:00 on 3 May 2016.

The Company will provide Shareholders with further information as soon as practically possible.

Port Elizabeth
29 March 2016

Corporate Advisor and Sponsor
One Capital


Attorneys to Sovereign
Cliffe Dekker Hofmeyr Inc.




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Date: 29/03/2016 05:39:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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