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Declaration announcement relating to an odd-lot offer & specific repurchase, posting of circular & notice of meeting
ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
("the Company" or "Ecsponent")
DECLARATION ANNOUNCEMENT RELATING TO AN ODD-LOT OFFER AND SPECIFIC REPURCHASE,
DISTRIBUTION OF A CIRCULAR TO SHAREHOLDERS AND NOTICE OF A GENERAL MEETING
1. RELATED PARTY ACQUISITION
Shareholders are referred to an announcement dated 1 December 2015 which contained the terms of
a related party acquisition by Ecsponent Development Fund (Pty) Ltd, a subsidiary of Ecsponent, of
the business of Ecsponent Investment Holdings (Pty) Ltd, a subsidiary of Ecsponent Capital (RF)
Limited (“Ecsponent Capital”), Ecsponent’s holding company, as a going concern (‘the Acquisition”).
The Acquisition requires the approval of shareholders of Ecsponent, excluding Ecsponent Capital and
its associates.
A circular (in English) to shareholder setting out, inter alia, the terms and conditions of the Acquisition,
and which incorporates a fairness opinion and a notice of general meeting (“the Circular”), will be
posted to shareholders registered as such on 24 March 2016 on 31 March 2016.
2. SPECIFIC ISSUE OF SHARES FOR CASH
2.1 Issue of Class G Preference Shares
Ecsponent‘s business model requires continuous funding to grow its financial assets. The issuance of
preference shares is considered an optimal source of funding for these ongoing business needs and
accordingly the Company has registered a preference share programme with the JSE Limited (“JSE”)
under which various classes of preference shares can be issued to the public in multiple tranches on
a regular basis.
During the annual general meeting held on 25 August 2015, shareholders approved the creation of an
additional class G preference share, which contains provisions for the conversion into ordinary shares
on certain default events.
The Company will seek specific approval from shareholders for the specific issue of the preference
shares for cash under its R5 billion preference share programme (‘the Preference Share Issue”).
2.2 Issue of ordinary shares
The Company’s remuneration committee approved a decision to partially settle future directors’ fees
for the non-executive directors and directors’ salaries for executive directors through the issue of
ordinary shares to the directors in lieu of a cash settlement of the fees (“the Directors Issue”).
This provides the Company with an opportunity to manage cash flow resources and provides for an
appropriate mechanism to align the directors’ interests with those of the Company.
In terms of the provisions of the JSE Listing Requirements (“Listing Requirements”) and the
Companies Act, Act 71 of 2008, as amended (“the Act”), shareholders are required to approve the
issue of shares to directors of the Company.
Details of the Preference Share issue and the Directors’ Issue are set out in the Circular.
3. ODD LOT OFFER AND SPECIFIC REPURCHASE (“THE OFFERS”)
3.1 Rationale
Shareholders are advised that the directors of Ecsponent propose to undertake an odd-lot offer and a
specific repurchase of ordinary shares in order to reduce the ongoing administration costs associated
with the Company’s large minority ordinary shareholder base. In this regard the following offers will be
made to ordinary shareholders:
- an odd-lot offer to repurchase the ordinary shares of shareholders holding equal to or less
than 532 ordinary shares on Friday, 10 June 2016 (“the Offer record date”)(“the Odd-Lot
Offer”); and
- a specific offer to repurchase the ordinary shares of shareholders holding more than 532
ordinary shares and equal to or less than 10 000 ordinary shares on the Offer record date
(“the Specific Repurchase”).
In terms of the Odd-Lot Offer, qualifying shareholders (“Odd-Lot shareholders”) will be given the
opportunity to:
- sell their Odd-Lot shareholding; or
- retain their Odd-Lot shareholding.
Odd-Lot shareholders who do not make an election will automatically be regarded as having chosen
to sell their shares and will receive the cash consideration.
The Offers will be made at a price of 20.55 cents per share, based on the 30 day volume weighted
average share price at 10 March 2016 (“Offer Price”).
3.2 Financial impact of the Offers
3.2.1 The Odd-Lot Offer
Assuming a 100% acceptance of the Odd-Lot Offer at the Offer Price, the impact of the Odd-
Lot Offer on earnings per ordinary share (“EPS”) and diluted earnings per ordinary share
(“DEPS”) will be:
- a decrease in earnings by the allocated costs of R104 754 associated with the Odd- and
- a decrease in the number of shares in issue (by approximately 59 692 ordinary shares).
The effect of the Odd-Lot Offer on net asset value (“NAV”) per ordinary share and on tangible
net asset value (“TNAV”) per ordinary share will be:
- a decrease in cash resources in the amount of R131 718, resulting in a decrease in the
NAV and TNAV;
- a decrease in the number of shares in issue (by approximately 59 692 ordinary shares).
3.2.2 The Specific Repurchase
Assuming a 100% acceptance of the Specific Repurchase at the Offer Price, the impact of the
Specific Repurchase on EPS and DEPS will be:
- a decrease in earnings by the allocated costs of R104 754 associated with the Specific
Repurchase; and
- a decrease in the number of shares in issue (by approximately 7 693 729 ordinary
shares).
The effect of the Specific Repurchase on NAV per ordinary share and on TNAV per ordinary
share will be:
- a decrease in cash resources in the amount of R1 704 434, resulting in a decrease in the
NAV and TNAV; and
- a decrease in the number of shares in issue (by approximately 7 693 729 ordinary
shares).
3.2.3 Sources of funds
Ecsponent’s existing cash resources will be utilised to satisfy any cash requirements arising
out of the Offers.
4. AMENDMENT OF THE MEMORANDUM OF INCORPORATION (“MOI”)
In order for Ecsponent to expropriate ordinary shares from Odd-Lot shareholders who do not make an
election to either retain or sell their shares pursuant to the Odd-Lot Offer, the Listing Requirements
require that the Company’s MOI specifically allow for the said expropriation. Accordingly, the Company
proposes certain amendments to its MOI in order to ensure that the Odd-Lot Offer accomplishes its
intended objectives (“the Amendment”).
5. CONDITIONS PRECEDENT
Details of the Odd-Lot Offer, the Specific Repurchase and the Amendment are set out in the Circular.
The Acquisition, the Preference Share Issue, the Directors’ Issue, the Offers and the Amendment are
conditional upon obtaining the requisite shareholders’ approval.
6. EXCHANGE CONTROL
The Offers are not being made in any jurisdiction in which it may be illegal to make such offers.
Shareholders who believe they may fall into this category should consult their professional advisers to
determine whether any governmental or other consent is required or other formalities needed to allow
them to accept the Offers.
Any proceeds arising from the Offers in respect of non-residents and/or emigrants must be deal with
in terms of the Exchange Control Regulations of South Africa issued under the Currency and
Exchanges Act No. 9 of 1933, as amended.
7. DISTRIBUTION OF THE CIRCULAR AND NOTICE OF GENERAL MEETING
The Circular setting out the details of the Acquisition, the Preference Share Issue, the Directors Issue,
the Offers and the Amendment, and which incorporates a notice of general meeting containing the
ordinary and special resolutions set out below, will be posted to shareholders registered as such on
24 March 2016 on 31 March 2016. The Circular will also be available on the Company’s website:
www.ecsponentlimited.com.
7.1 Ordinary resolution number 1 - to approve the Acquisition
7.2 Ordinary resolution number 2 - to approve the Preference Share Issue
7.3 Ordinary resolution number 3 - to approve the Directors’ Issue
7.4 Special resolution number 1 - to approve the Amendment
7.5 Special resolution number 2 - to approve the Odd Lot Offer
7.6 Special resolution number 3 - to approve the Specific Repurchase
7.7 Special resolution number 4 - to approve the Directors’ Issue in terms of section 41(1) of
the Act
7.8 Special resolution number 5 - To approve the issue of ordinary shares pursuant to the
Conversion, in terms of section 41(3) of the Act.
7.9 Ordinary resolution 4 – to authorise any director or the company secretary of Ecsponent
to do all things and sign all documents required to give effect to the ordinary and special
resolutions detailed above.
8. NOTICE OF GENERAL MEETING
Notice is hereby given that a general meeting of shareholders will be held at 09:30 on Tuesday, 3 May
2016 at the Company’s registered office, Acacia House, Green Hill Village Office Park, on Lynwood
Road, Cnr Botterklappler and Nentabos Streets, The Willows, Pretoria, to consider the ordinary and
special resolutions detailed in paragraph 7 above.
9. EXPECTED TIMETABLE FOR THE GENERAL MEETING AND DECLARATION DATA RELATING
TO THE OFFERS
The salient dates and times are set out below:
2016
Last day to trade in order to be eligible to vote in respect of the general Friday, 15 April
meeting
General meeting record date in order to vote Friday, 22 April
Last day to lodge forms of proxy for the general meeting by 09:30 on Thursday, 28 April
General meeting to be held at 09:30 on Tuesday, 3 May
Lodge Amendment for registration with the Companies and Intellectual Wednesday, 4 May
Property Commission (“CIPC”) on
Expected receipt of CIPC confirmation of filing* Friday, 20 May
Expected finalisation announcement published on SENS and Offers Monday, 23 May
become unconditional on*
Last day to trade in order to participate in the Offers* Friday, 3 June
Offers record date. Offers close at 12:00 on* Friday 10 June
Results of the Offers released on SENS on* Monday, 13 June
Payment date – accounts at CSDP or broker updated* Monday, 13 June
Cancellation and termination of listing of shares repurchased in terms Monday, 13 June
of the Offers*
Results of the Offers published in the press on* Tuesday, 14 June
*These dates are subject to change and are dependent upon when the Amendment is filed with CIPC. The
above therefore reflects estimated times and dates and a further announcement will be released in due course
confirming or amending such dates.
Notes:
1. Certificated shareholders who complete the relevant Form of Election and Surrender incorporated
in the Circular in respect of the Odd-Lot Offer and/or the Specific Repurchase and who choose to
dispose of their shares for a cash consideration, will be paid either by:
- electronic funds transfer into the bank accounts of such shareholders on or about Monday,
13 June 2016 if such shareholders’ banking details have been provided in the relevant Form
of Election and Surrender; or
- by cheque which will be posted at the risk of the shareholder on or about Monday, 13
June 2016 if such shareholders’ banking details have not been provided in the relevant Form
of Election and Surrender.
2. Dematerialised Odd-Lot shareholders are requested to notify their duly appointed CSDP or broker
of their election by the cut-off time stipulated in terms of their contract with their CSDP or broker.
This will be a date earlier than the closing date of the Offers.
3. In respect of the Odd-Lot Offer, shareholdings may not be dematerialised or rematerialised
between Monday, 6 June 2016 and Friday, 10 June 2016, both days inclusive.
Pretoria
31 March 2016
Sponsor and Independent Expert
Questco (Pty) Ltd
Reporting Accountants
Nexia SAB&T
Date: 31/03/2016 11:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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