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Transaction to acquire remaining 69% of Ilangabi Investments 12 (Pty) Limited, withdrawal of cautionary announcementnt
Brikor Limited
(Registration number 1998/013247/06)
JSE Share code: BIK ISIN: ZAE000101945
(“Brikor” or “the Company” or “the Group”)
TRANSACTION TO ACQUIRE THE REMAINING 69% OF ILANGABI INVESTMENTS 12 (PTY)
LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the announcement released on SENS on 30 November 2015 and
various cautionary announcements, the last of which was released on 10 June 2016.
2. Background
2.1. Ilangabi Investments 12 (Pty) Ltd (“Ilangabi”) holds various prospecting rights and a mining right
to which Brikor has access. The mining right is GP 30/5/1/2/2 (219) MR. The mining area
comprises of a portion of the remainder of the farm Vlakfontein 281 IR, situated in Gauteng
Magisterial/administrative District of Nigel, measuring 84.7579 hectares in extent.
2.2. Ilangabi provides brickmaking clay and low grade coal to Brikor’s operations and sells coal to coal
traders.
2.3. The late Garnett van Niekerk Parkin (“Parkin”) was the controlling shareholder of Brikor and also
held a 69% equity stake in Ilangabi.
2.4. In August 2010, the Board of Directors of Brikor initiated a process to acquire 100% of the Ilangabi
shareholding. On 31 August 2010, Brikor acquired 31% of the shares from two minority
shareholders.
2.5. An Option Agreement was signed by Brikor and Parkin on 30 September 2010, in terms of which
it was recorded that:
2.5.1. on 27 September 2010, Parkin granted an irrevocable option (“the Option”) to Brikor to
acquire the entire ordinary share capital held by Parkin in Ilangabi, comprising 69% of the
issued ordinary shares of Ilangabi (“the Shares”), together with Parkin’s loan account
claims against Ilangabi on the date of exercise of the Option (“the Claims”);
2.5.2. the Option was exercisable by Brikor at any time on or before 27 September 2015 by
written notice to Parkin;
2.5.3. the price payable by Brikor for the Shares was the sum of R1 200 000 and for the Claims
was an amount equal to their face value on the date of exercise of the Option, less the
aggregate of all amounts owed by Ilangabi to Brikor on 27 September 2010 and all
amounts owed by Parkin to Ilangabi on the date of exercise of the Option;
2.5.4. all economic rights and benefits derived from the mining rights held by Ilangabi vested
and were deemed to accrue for the benefit of Brikor on signature of the Option
Agreement;
2.5.5. the price was payable as follows:
2.5.5.1. any amounts owing by Parkin to Brikor would be set off against the amount payable
by Brikor;
2.5.5.2. the balance would be payable in cash within 10 days of the date of exercise of the
Option;
2.5.6. the parties undertook to sign a final sale of shares agreement containing normal terms
and conditions. Parkin furnished certain warranties and undertakings.
2.6. On 1 October 2010, Brikor announced the acquisition by it of 31% of the issued shares of Ilangabi
and the option to acquire the remaining 69% of the issued shares in Ilangabi.
2.7. On 20 July 2013 Brikor’s listing on the ALTx exchange of the JSE Limited (“JSE”) was suspended
as a result of an application for the liquidation of Brikor, which was launched by First Rand Group
(“FirstRand”).
2.8. On 17 January 2015 Parkin passed away.
2.9. On 5 June 2015 Brikor and FirstRand entered into a Memorandum of Agreement in terms of which
Brikor agreed to settle its indebtedness to FirstRand. This resulted in the lifting of the provisional
liquidation order on 2 October 2015.
2.10. The suspension of the Company’s listing on the JSE will only be lifted by the JSE once the
Company has met all the outstanding requirements of the JSE’s Listings Requirements. The most
important of these being the finalisation and publication of all the outstanding annual financial
statements for the financial years ended 28 February 2013, 2014, 2015 and 2016.
2.11. A Memorandum of Agreement was entered into between Brikor, Ilangabi, the Estate of the late
Parkin and Garnett Parkin junior, on 27 November 2015, recording inter alia the following:
2.11.1. that on 8 September 2015 it had been agreed that the date by which the Option was to
be exercised was extended to 15 November 2015; and
2.11.2. that Brikor was still unable, due to financial constraints, to exercise the Option.
2.12 On 27 November 2015 a Sale of Shares Agreement between the Estate of the Late Garnett
Parkin and Brikor was signed. This was announced on SENS on 30 November 2015.
2.13 The categorisation of the transaction was, at the time, uncertain.
3 Exercise of the Option
3.1 A number of issues have arisen in the past as to whether or not the Option had been exercised,
which issues have now been resolved pursuant to the emergence of new facts and information.
3.2 KPMG have established certain facts, in respect of which Brikor has obtained a legal opinion.
3.3 Pursuant to the opinion, the Executor of the Estate of the late Parkin and Brikor entered into an
agreement on 9 July 2016 in terms of which it was irrevocably and unconditionally recorded and
agreed that:
3.3.1 on or about 28 February 2011, Brikor had exercised the Option orally and/or by its conduct,
which exercise was accepted and agreed to by Parkin;
3.3.2 the purchase price for the Shares and Claims had been agreed upon in the sum of
R3 996 263;
3.3.3 Brikor had effected payment via loan account accrual of the total purchase price for the
Shares and Claims to Parkin on 28 February 2011;
3.3.4 Parkin and Brikor had agreed to implement the sale of the Shares and Claims;
3.3.5 due to an oversight, Parkin did not execute a share transfer form in respect of the Shares,
he did not deliver the share certificate in respect of the Shares to Brikor, nor did he execute
a deed of cession in respect of the Claims, which oversight does not affect the validity of
the sale of the Shares and Claims;
3.3.6 Brikor is the sole and beneficial owner of the Shares and Claims.
3.4 Contemporaneously with the signature of the aforementioned agreement, the share certificate in
respect of the Shares was delivered to Brikor, a share transfer form in respect of the Shares and
a deed of cession in respect of the Claims was executed by the Executor of Parkin’s estate.
4 Categorisation of transaction
4.1 Based on the number of Brikor’s shares in issue on 28 February 2011 and their market price on
that date of 8 cents per share, the value of the transaction divided by Brikor’s market capitalisation
on that date, resulted in the value of the transaction constituting 7.94% of Brikor’s then market
capitalisation.
4.2 As Brikor is an ALTx listed company the transaction did not constitute a related party transaction,
in that the abovementioned percentage was less than 10%. The transaction was a Category 2
transaction and accordingly shareholder approval was not required.
5 Impact on financial results
Ilangabi was fully consolidated in the 2012 Annual Financial Statements of Brikor as if it were a
wholly owned subsidiary.
The reviewed condensed consolidated provisional financial results for the financial year ended 28
February 2015 was published on SENS on 22 April 2016. It included results for the years ended 28
February 2013, 2014 and 2015, which included Ilangabi as a wholly owned subsidiary.
The value of the net assets which were the subject matter of the transaction was reflected in the
2015 financial results as being the sum of R16.8 million.
The profits attributable to the net assets acquired were reflected in the 2015 financial results as being
the sum of R7.2 million.
As required by section 9.16 of the JSE Listings Requirements, Brikor undertakes that nothing in the
Memorandum of Incorporation of Ilangabi will frustrate Brikor in any way from compliance with its
obligations in terms of the Listings Requirements, nor will it relieve Brikor from compliance with the
Listings Requirements.
6 Withdrawal of cautionary
The cautionary announcements in respect of this matter are hereby withdrawn.
Designated Advisor Attorneys to Brikor
Exchange Sponsors Fluxmans
13 July 2016
Johannesburg
Date: 13/07/2016 12:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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