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ECSPONENT LIMITED - Declaration announcement relating to an odd-lot offer & specific repurchase, posting of circular & notice of meeting

Release Date: 31/03/2016 11:12
Code(s): ECS     PDF:  
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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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