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TORRE/STELLAR - Joint firm intention announcement by Stellar to acquire all the issued ordinary shares in Torre
Stellar Capital Partners Limited Torre Industries Limited
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number 1998/015580/06) (Registration number 2012/144604/06)
Share code: SCP Share Code: TOR
ISIN: ZAE000198586 ISIN: ZAE000169322
("Stellar" or “Offeror”) (“Torre” or “the Company”)
JOINT FIRM INTENTION ANNOUNCEMENT BY STELLAR TO MAKE A MANDATORY OFFER TO ACQUIRE
ALL THE ISSUED ORDINARY SHARES IN TORRE NOT ALREADY HELD BY STELLAR
1 INTRODUCTION
Shareholders are advised that Stellar has increased its shareholding in Torre from 33.86% to
35.46% through the acquisition on 22 June 2016 of a further 8 368 102 Torre ordinary shares (the
“Acquired Shares”). Stellar has issued an aggregate of 10 460 127 new ordinary Stellar shares,
representing 1.25 Stellar ordinary shares for each Acquired Share, and now holds 186 022 378
Torre ordinary shares.
Consequently, in terms of section 123 of the Companies Act, No. 71 of 2008, as amended (the
"Companies Act") read with Chapter 5 of the Companies Regulations, 2011 (the "Companies
Regulations"), Stellar is obliged to make a mandatory offer to all Torre shareholders to acquire all
of the ordinary shares of Torre that Stellar does not already own (the “Offer Shares”), on the terms
and conditions as set out below (the “Offer”). This announcement also serves as the notice to
Torre shareholders required in terms of section 123(3) of the Companies Act.
Stellar as the offeror in terms of the Offer, is the ultimate proposed purchaser of all the Offer
Shares and is not acting in concert with or as agent or broker for, any other party.
Stellar has notified the board of directors of Torre of its increased interest in Torre shares in terms
of section 122 of the Companies Act and its obligation to proceed with the Offer.
The purpose of this announcement is to advise Torre shareholders of the terms and conditions of
the Offer, in compliance with Regulation 101 of Chapter 5 of the Companies Regulations.
2 THE OFFER
2.1 Terms of the Offer
Stellar shall offer to acquire all of the Offer Shares in exchange for the issue of 1.25 new Stellar
shares (“Stellar Shares”) for each Offer Share held (“Offer Consideration”). It is anticipated the
Offer will close and be settled after the record date for participation in any final dividend declared
for the year ending 30 June 2016, such that the Offer Shares are acquired ex-such final dividend, if
any. Torre shareholders may elect to accept the Offer in whole or in part. The Offer Consideration
effectively values each Offer Share at R2.25 at the last practicable date prior to the date of this
announcement, being 21 June 2016 (the “Last Practicable Date”).
The Offer Consideration represents a slight premium of 2.3% to the closing price of a Torre share
traded on the Johannesburg Stock Exchange (“JSE”) as at the Last Practicable Date.
Stellar is of the view that it is not obliged to make a comparable offer (and accordingly will not
make an offer) for the existing awards made in terms of the share appreciation awards and bonus
share plans. These awards will continue to be governed under their existing plans. Further details
in this regard will be included in the Circular referred to in paragraph 8 below.
2.2 Offer period
The Offer is expected to open for acceptance from 09:00 on or about 25 July 2016, being one day
after the posting of the combined offer circular to be distributed to Torre shareholders in respect
of the Offer (“Combined Offer Circular”), for a minimum period of 30 business days (the “Initial
Offer Period”). As disclosed in paragraph 4 below, the Offer is subject to the approval of the
Competition Authorities, to the extent that such approval is required. In this regard, Torre
shareholders are advised of the following process:
- If, at the end of the Initial Offer Period, the number of acceptances of the Offer is such
that the approval of the Competition Authorities is not required, the Offer will be declared
unconditional and the Offer will be implemented to the extent of such acceptances.
- If, at any time during the Initial Offer Period, it becomes apparent that the approval of the
Competition Authorities is required, an announcement will be made, on the Stock
Exchange News Service (“SENS”) and in the press that the Offer is so subject to such
approval being obtained and that the Initial Offer Period will be extended in order to allow
for the requisite application to be made to the Competition Authorities (“Extended Offer
Period”).
- If, at any time during the Extended Offer Period, the approval of the Competition
Authorities is received, or Torre shareholder acceptances of the Offer are withdrawn such
that the approval of the Competition Authorities is no longer required, the Offer will be
declared unconditional and, after remaining open for a further 10 business days, will be
implemented to the extent of such acceptances.
- If, at any time during the Extended Offer Period, the approval of the Competition
Authorities is declined or not obtained, the Offer will not be implemented.
2.3 Offer Consideration
Stellar confirms that it has sufficient authorised share capital to fulfil its obligations in terms of the
Offer.
2.4 Offer not made where unlawful
The Offer shall not constitute an offer to purchase or the solicitation of an offer to sell any Torre
ordinary shares in any jurisdiction in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the laws of such jurisdiction.
3 RATIONALE FOR THE OFFER
Stellar is increasing its holding in Torre at a relatively attractive valuation.
As a consequence of Stellar’s acquisition of the Acquired Shares, Stellar’s shareholding in Torre has
increased to more than 35% obliging it to make a mandatory offer to Torre shareholders for the
Offer Shares at the highest price paid by Stellar for an ordinary Torre shares in the six months
preceding the Last Practicable Date.
Stellar does not anticipate any change to the nature of Torre’s business nor its board of directors
following implementation of the Offer. Stellar anticipates that Torre will remain listed on the JSE
following the completion of the Offer, subject to Torre continuing to meet the public shareholder
spread and related requirements of the JSE Limited Listings Requirements.
4 CONDITIONS PRECEDENT TO THE OFFER
The Offer is subject to the fulfilment of the following condition precedent on or before 30
September 2016 or such later date as required and extended by Stellar:
4.1 The approval of, inter alia, the Takeover Regulation Panel (“TRP”), the South African
Competition Authorities and the Competition Authorities in other relevant jurisdictions in
which Torre operates and which costs hereto will be borne by Stellar (together, the
“Competition Authorities”), and any special resolutions that may be needed in connection
with the Offer being passed by the requisite majority of Torre shareholders, to the extent
these approvals are required.
5 PRO FORMA FINANCIAL EFFECTS ON TORRE SHAREHOLDERS
The table below sets out the pro forma financial effects on an Independent Torre Shareholder in
respect of 100 Torre Shares held before the Offer. The pro forma financial effects are the
responsibility of the Torre directors and are presented for illustrative purposes only and, because
of its nature, may not fairly present the actual financial effects on an Independent Torre
Shareholder.
Torre Shares held Stellar Shares % Change
Before(See Note 1) held After(See Note 2)
Number of shares 100 125
Earnings (cents per share) 28.00 27.85 (0.55)%
Net Asset Value (cents per share) 264.95 264.84 (0.04)%
Notes and assumptions:
1. The Torre financial effects “Before” are based on the financial information extracted,
without adjustment, from Torre’s audited results for the year ended 30 June 2015
2. The Stellar financial effects “After” are based on the Torre’s audited results for the year
ended 30 June 2015, as adjusted to take into account the following:
a. Transaction costs estimated to be approximately R760 000; and
b. All adjustments, other than transaction costs, are expected to have a continuing
effect.
6 INTERESTS OF STELLAR AND ITS DIRECTORS’ INTERESTS IN TORRE SHARES
As at the date of this announcement, Stellar holds 186 022 378 (35.46%) of the Torre ordinary
shares in issue.
As at the Last Practicable Date, the following directors of Stellar have a direct, beneficial interest in
Torre. No director of Stellar has any indirect, beneficial interest in Torre.
Direct Total
Charles Pettit 1,101,663 1,101,663
Peter Van Zyl 96,240 96,240
Charl de Villiers 40,522 40,522
Total 1,238,425 1,238,425
7 RECOMMENDATION AND INDEPENDENT EXPERT OPINION
An independent sub-committee of the Torre board of directors comprising a minimum of 3
members (the “Independent Board”) has been formed for the purposes of considering the Offer in
accordance with the Companies Regulations.
The Independent Board will be required to appoint an independent expert, acceptable to the TRP,
to provide it with independent, external advice in relation to the Offer and to make appropriate
recommendations to the Independent Board for the benefit of Torre shareholders.
The contents of the independent expert’s advice and opinion and the final views of the Torre
independent board will be detailed in a combined offer circular (“Circular”) to Torre shareholders.
8 DOCUMENTATION AND SALIENT DATES
Full details of the Offer will be included in a Circular, which will include a form of acceptance,
surrender and transfer. The Circular is expected to be distributed to Torre shareholders on or
about 25 July 2016.
The salient dates pertaining to the Offer will be released on SENS and published in the press prior
to the distribution of the Circular.
9 RESPONSIBILITY STATEMENT
The Stellar Board accepts responsibility for the information contained in this announcement. To
the best of its knowledge and belief, such information contained in this is true and nothing has
been omitted which is likely to affect the importance of such information.
The Torre Independent Board accepts responsibility for the information contained in this
announcement. To the best of its knowledge and belief, such information contained in this is true
and nothing has been omitted which is likely to affect the importance of such information.
Johannesburg
23 June 2016
Financial adviser and sponsor to Stellar
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Sponsor to Torre
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal Adviser to Stellar
Cliffe Dekker Hofmeyr
Legal Adviser to Torre
ENSafrica
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