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Proposed Specific Repurchase Of Deneb Shares From The Southern African Clothing And Textile Workers’ Union
DENEB INVESTMENTS LIMITED
Registration number: 2013/091290/06
(Incorporated in the Republic of South Africa)
JSE share code: DNB ISIN: ZAE000197398
(“Deneb” or the “Company”)
PROPOSED SPECIFIC REPURCHASE OF DENEB SHARES FROM THE SOUTHERN AFRICAN
CLOTHING AND TEXTILE WORKERS’ UNION
1. INTRODUCTION
Shareholders are hereby advised that Deneb has concluded an agreement
with the Southern African Clothing and Textile Workers’ Union (“SACTWU”)
dated 13 June 2016 (“Agreement”) in terms of which Deneb will acquire
133,507,226 Deneb ordinary shares (“Deneb Shares”) from SACTWU, subject
to the terms and conditions set out in paragraph 3 below, at a price of
R2.00 per Deneb Share (“Repurchase”).
2. TERMS OF THE REPURCHASE
The Repurchase price of R2.00 per Deneb Share represents a premium of:
– 21.2% to the closing price on Friday, 10 June 2016 of R1.65; and
– 19.0% to the 30 day volume weighted average price (“VWAP”) of R1.68 as
at Friday, 10 June 2016, being the date prior to Deneb and SACTWU
concluding the Agreement.
The Repurchase price will be paid to SACTWU in cash on the effective date
as set out in paragraph 4 below.
The shares repurchased will be cancelled and will revert to the authorised
but unissued share capital of Deneb. Deneb will hold no treasury shares
after the Repurchase.
3. CONDITIONS PRECEDENT
The Repurchase is subject, inter alia, to the fulfilment or waiver of the
following conditions precedent on or before 10 December 2016:
3.1 the receipt of the necessary approvals from the JSE;
3.2 the board of directors issuing a statement that the price is fair
and that the board has been so advised by an independent expert
acceptable to the JSE;
3.3 the shareholders of Deneb adopting such resolutions as may be
required, by way of a specific authority, to acquire the Deneb Shares
in accordance with section 5.69 of the JSE Listings Requirements and
/ or sections 48, 46, 114 and 115 of the Companies Act;
3.4 the National Executive Committee and / or the National Office Bearers
of SACTWU adopting such resolutions as may be required in terms of
SACTWU’s constitution to approve the Repurchase;
3.5 the Takeover Regulation Panel, to the extent required, either issuing
a compliance certificate or exempting the Company from the
requirement to obtain a compliance certificate, in accordance with
the provisions of the Companies Act, No 71 of 2008, as amended;
3.6 the Company’s board approving the requisite resolutions to implement
the Repurchase, in accordance with sections 46 and 48 of the Companies
Act and section 5.69 of the JSE Listings Requirements; and
3.7 the Company’s funders unconditionally approving the Repurchase.
4. EFFECTIVE DATE OF REPURCHASE
The Repurchase will take place on the 3rd business day after the
fulfilment or waiver of the last of the conditions precedent set out in
paragraph 3 above. If such effective date falls within a prohibited period
as defined in paragraph 3.67 of the JSE Listings Requirements, the
Repurchase will take place on the 3rd business day after the end of the
applicable prohibited period.
5. RATIONALE
Deneb is an investment holding company and the board considers the
Repurchase an appropriate allocation of capital taking into account that
the Repurchase is at a 42% discount to net asset value (“NAV”) per share
(based on the Company’s NAV per share of R3.47 as at 31 March 2016) and
is earnings enhancing to shareholders on a total comprehensive income
basis.
In addition, the Repurchase will have the effect of increasing the
proportion of “public shareholders” of the Company from 11.2% to 14.7%.
6. FUNDING OF THE REPURCHASE
The Repurchase will be funded from Deneb’s existing cash and / or debt
facilities.
7. EXPLANATION ON FINANCIAL INFORMATION
The cost of the Repurchase will be approximately R267.7 million. This is
inclusive of transactional costs of approximately R1.1 million comprising
Securities Transfer Tax and costs of the independent expert, JSE fees,
legal and sponsor fees.
The additional cost of funding is estimated to be R19.4 million (after
tax) per annum, dependent on changes in the prime interest rate. This
effect is expected to be of a continuing nature.
A total of 133 507 226 Deneb shares will be cancelled after the
Repurchase.
As noted in paragraph 5 above, the Repurchase is at a 42% discount to NAV
per share (based on the Company’s NAV per share of R3.47 as at 31 March
2016) and is earnings enhancing to shareholders on a total comprehensive
income basis.
8. REGULATORY
The Deneb Shares which are the subject of the Repurchase constitute 23.78%
of Deneb’s issued share capital. In addition, in terms of the Listings
Requirements SACTWU is a related party to the Company and the Repurchase
constitutes a specific repurchase.
Consequently in terms of the Listings Requirements, in order to implement
the Repurchase transaction a special resolution of the shareholders of
the Company (excluding SACTWU and its associates) must be passed by Deneb
shareholders.
Furthermore, as the repurchase price of R2.00 per Deneb Share is at a
premium to the 30 day VWAP, a fairness opinion is required in terms of
section 5.69 of the JSE Listings Requirements.
An independent expert acceptable to the JSE will be appointed to prepare
the fairness opinion. The fairness opinion will be included in the
circular to shareholders and will be available for inspection at Deneb’s
registered office for the required period once the report has been
finalised.
An independent expert will be appointed to prepare the independent expert
report required in terms of sections 48(8) read together with sections
114 and 115 of the Companies Act, in respect of the Repurchase.
9. CIRCULAR TO SHAREHOLDERS
A circular, including a notice of general meeting, detailing the terms
of the Repurchase and actions required by shareholders will be posted to
shareholders in due course.
Cape Town
14 June 2016
Sponsor and corporate advisor
PSG Capital
Legal advisor
Bowman Gilfillan
Date: 14/06/2016 11:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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