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Offer by Stellar to acquire 100% of the issued ordinary shares in Amecor and withdrawal of Amecor cautionary
Stellar Capital Partners Limited Amalgamated Electronic Corporation Limited
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number 1998/015580/06) (Registration number 1997/010036/06)
Share code: SCP Share Code: AER
ISIN: ZAE000198586 ISIN: ZAE 000070587
("Stellar") (“Amecor”)
ANNOUNCEMENT IN RELATION TO AN OFFER BY STELLAR TO ACQUIRE 100% OF THE ISSUED ORDINARY
SHARES IN AMECOR AND WITHDRAWAL OF AMECOR CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
Shareholders of Stellar and Amecor are advised that Stellar has submitted a letter (“Firm
Intention”) to the board of directors of Amecor (“Amecor Board”) on 10 August 2016, in terms of
which Stellar, or a subsidiary of Stellar, has offered to acquire all the Amecor ordinary shares
(“Amecor Shares”), being a total of 70 430 401 Amecor Shares which total excludes 7 554 936
treasury shares and excludes any right to receive the benefit of receipts of Amecor ("Secequip
Proceeds") from the Secequip Proprietary Limited loan receivable (“Secequip Loan") (“Offer”) for
a maximum purchase consideration of R267 635 524 (“Consideration”).
The purpose of this announcement is to advise Amecor shareholders of the terms and conditions
of the Offer, in compliance with Regulation 101 of Chapter 5 of the Companies Act 71 of 2008
(“Companies Act”) and Companies Regulations (“Takeover Regulations”) and to advise Stellar
shareholders of the terms and conditions of the Offer in compliance with the JSE Listings
Requirements.
2 OFFER AND MECHANICS
The Offer will be implemented by way of a scheme of arrangement to be proposed by the Amecor
Board between Amecor and its shareholders (the "Amecor Shareholders") (the "Scheme") in
terms of section 114 as read with section 115 of the Companies Act, subject to conditions as set
out in this announcement, such that Stellar, or a subsidiary of Stellar, will acquire 100% of the
Amecor ordinary shares in issue (excluding 7 554 936 treasury shares). Each Amecor Shareholder
will, on the date the Scheme becomes operative and with effect from such date, receive –
- at their election, either:
- a cash consideration of R3.80 per Amecor Share (“Cash Consideration”); or
- 2 new Stellar ordinary shares (“Stellar Shares”) for each Amecor Share held (“Share
Consideration”); or
- a combination of the Cash Consideration and Share Consideration.
Following the implementation of the Scheme, the existing Amecor Shareholders as at such date
will retain the right to receive dividends from the cash received by Amecor from the Secequip
Proceeds, further details of which are contained in paragraph 6 below.
Should the Offer not be implemented by 30 September 2016 then the Consideration will bear
interest at the prime rate from 1 October 2016 to the date on which the Offer becomes
unconditional.
Pursuant to implementation of the Scheme, Amecor will be delisted from the Johannesburg Stock
Exchange.
Amecor Shareholders who elect to accept the Cash or Share Consideration or a combination
thereof must do so in respect of all of their Amecor Shares. For the avoidance of doubt, pursuant
to the Scheme, Amecor Shareholders will, in exchange for all of their Amecor Shares, receive
either cash, or Stellar Shares or a combination thereof. Amecor Shareholders who made no
election will receive the Share Consideration in respect of all their Amecor Shares.
Cliffe Dekker Hofmeyr, attorneys acting on behalf of Stellar, have provided the Takeover
Regulation Panel (“TRP”) with the necessary confirmation in terms of Regulation 111(4)(b) of the
Takeover Regulations that sufficient cash is held with them in favour of the Amecor Shareholders
for the sole purpose of discharging the Cash Consideration.
Stellar confirms that it has sufficient authorised share capital to fulfil its obligations in terms of the
Share Consideration. As detailed in the JSE Listings Requirements Bulletin 1 of 2016 (effective from
8 April 2016), note that in respect of fractional entitlements that arise, all allocations of securities
will be rounded down to the nearest whole number resulting in allocations of whole securities and
a cash payment for the fraction. The weighted average traded price on the first business day after
the last date to trade less 10% will be used as the cash value.
The Cash Consideration results in a premium of 2.70% to the closing share price of an Amecor
Share as at the day before this announcement was published and a premium of 6.23%, 5.72% and
9.91% to the VWAP per Amecor Share traded on the JSE over the 30, 60 and 90 trading day period
respectively immediately preceding the day before this announcement was published (excluding
off-market trades, being transactions pursuant to which the Amecor Shares are traded other than
through the usual trading systems of the JSE but such transactions are settled through the JSE's
settlement systems).
3 DESCRIPTION OF AMECOR
Amecor is a JSE listed company that offers a range of exclusive technologies related to security and
electronics. Amecor’s core group activities comprise of:
- The manufacture and supply of sophisticated security transmission technology and
applications;
- A national distribution arm providing access to Amecor’s comprehensive suite of security
and electronic products; and
- A licensed Radio Frequency and GSM global network for data transmission and off site
equipment and /or security control.
4 RATIONALE
Amecor will benefit from a delisting from the Johannesburg Stock Exchange both from a cost
saving and operational focus perspective. In addition, it is envisaged that Amecor will be able to
collaborate effectively with Tellumat Proprietary Limited, an existing Stellar portfolio company.
In addition, the Offer will also provide a mechanism through which existing Amecor Shareholders
can realise their investment in cash or swap their investment in Amecor for an investment in a
more liquid and diversified investment holding company.
5 ADJUSTMENTS
If any liability is incurred by Amecor as a result of specific items identified by Stellar in its due
diligence (“Adjustments”) then the Secequip Proceeds will be reduced by an amount equal to the
Adjustments.
6 SECEQUIP LOAN
Pursuant to the Offer, existing Amecor Shareholders will continue to have the right to receive
dividends to be declared by Amecor from the Secequip Proceeds, not less frequently than bi-
annually. By not later than 15 April and 15 October of each year when Amecor receives Secequip
Proceeds, Amecor shall, subject to complying with the solvency and liquidity requirements of the
Companies Act, declare and pay to the existing Amecor Shareholders a dividend ("Secequip
Dividends") equal to the aggregate net proceeds of all payments made to Amecor under the
Secequip Loan during the relevant period plus interest accrued thereon at the overnight call
deposit rate quoted by First National Bank Limited from the date of receipt of such funds to the
date of payment, but after deduction of any Adjustments; any reasonable costs associated with
the recovery of payments under the Secquip Loan during the relevant period; as well as any other
reasonable costs associated with administering such Secequip Dividend, on the basis provided for
below.
Amecor shall appoint and contract such party/ies as the existing holders of the majority of the
Amecor Shares may designate, on such reasonable terms as they may designate, to –
- control and administer the collection of the Secequip Loan on behalf of Amecor, including
having the right to enforce any security rights if Secequip defaults on any repayments
and/or renegotiate and/or settle the Secequip Loan;
- administer the Secequip Dividends,
(“Secequip Loan Administrator”) and the costs of such designated party/ies will be paid out of the
Secequip Proceeds prior to any Secequip Dividend being declared; provided that if the Secequip
Loan Administrator materially breaches its obligations or the conduct of the Secequip Loan
Administrator is causing reputational harm to Amecor, then Amecor shall be entitled to terminate
such appointment and appoint a replacement Secequip Loan Administrator on terms approved of
in writing by the existing holders of the majority of the Amecor Shares, and provided further that
the aggregate costs of the Secequip Loan Administrator may not exceed the aggregate amount of
the Secequip Loan recovered.
7 CONDITIONS TO POSTING OF THE CIRCULAR
7.1 The combined offer circular to be posted to the Amecor Shareholders in terms of Regulation
106 of the Takeover Regulations in relation to the Offer (the "Circular") will be subject to the
fulfilment or waiver, as the case may be, of the following suspensive conditions, by no later
than 15 September 2016 (or such other date as Stellar and Amecor may agree to in writing,
with approval from the TRP):
7.1.1 the Independent Board confirming in writing that it recommends that Amecor Shareholders
vote in favour of the necessary resolutions required to implement the Offer;
7.1.2 in terms of section 114(2) of the Companies Act, the independent expert delivers to Amecor
and its shareholders its report providing an opinion on the fair and reasonableness of the
Offer;
7.1.3 Stellar has procured written irrevocable undertakings from Amecor Shareholders, in a form
acceptable to Stellar and Amecor, in terms of which Amecor Shareholders holding at least
75% of the total Amecor Shares, irrevocably and unconditionally undertake to vote, in favour
of the relevant resolutions to implement the Offer;
7.1.4 confirmation from the Amecor Board that the company shall not, and has not, declared
and/or paid any dividend or other distribution since 1 April 2016, other than the dividend
paid on 27 June 2016 and distributions in respect of payments received by Amecor under the
Secequip Loan from 1 April 2016, in respect of which an Adjustment has not been made and
which will be declared and paid immediately prior to the implementation of the Offer;
7.1.5 the Circular has been approved by the JSE, the TRP and any other applicable regulatory
authority; and
7.1.6 to the extent required, any Exchange Control approval which might be required by Amecor
from the Financial Surveillance Department of the South African Reserve has been obtained.
The condition in paragraph 7.1.3 is for the benefit of Stellar and Amecor and may be waived, in
whole or in part, by agreement in writing prior to the expiry of the time period set out in
paragraph 7.1.
The conditions in paragraphs 7.1.1 and 7.1.4 is for the benefit of Stellar and may be waived, in
whole or in part, by Stellar in its sole discretion by notice to Amecor in writing prior to the expiry
of the time period set out in paragraph 7.1.
The conditions in paragraphs 7.1.2, 7.1.5 and 7.1.6 are regulatory in nature and cannot be waived.
8 CONDITIONS TO THE IMPLEMENTATION OF THE OFFER
8.1 The Offer will be subject to the fulfilment or waiver, as the case may be, of the below
suspensive conditions on or before 30 November 2016 (or such other date as Stellar and
Amecor may agree to in writing), although Amecor and Stellar will use their reasonable
commercial endeavours to achieve a closing date of 31 October 2016:
8.1.1 the repurchase and cancellation of the 7 554 936 Amecor treasury shares;
8.1.2 approval by Amecor Shareholders of the Offer as is contemplated by section 114, read with
section 115, of the Companies Act. To the extent required, approval by a court of the
implementation of such resolution in terms of section 115(2)(c) and/or section 115(3) of the
Companies Act; and if applicable, Amecor not having treated the aforesaid resolution as a
nullity, as contemplated in section 115(5)(b) of the Companies Act;
8.1.3 if Amecor Shareholders holding more than 10% of all Amecor shares eligible to vote on the
Scheme give notice objecting to the Scheme (as contemplated in section 164(3) of the Act)
and vote against the resolutions proposed at the Scheme meeting, that the relevant
shareholders do not exercise their appraisal rights afforded to them in terms of section 164
of the Act, by giving valid demands in terms of sections 164(5) to 164(8) of the Act within 30
(thirty) business days following the Scheme meeting, in respect of more than 10% of the
shares eligible to be voted at the Scheme meeting;
8.1.4 the Offer receiving unconditional approval by the South African Competition Authorities, and
any other competition authority in respect of the relevant African jurisdictions or
conditionally approved on terms and conditions which Stellar and Amecor confirm in writing
(within 5 (five) business days of receipt of such conditional approval but in any event by not
later than the expiry of the time period set out in this paragraph) to be acceptable to them,
acting reasonably;
8.1.5 the TRP issuing a compliance certificate in respect of the Offer in terms of section 119(4)(b)
of the Companies Act, provided that if such compliance certificate is issued conditionally or
on terms, this condition shall not be regarded as having been fulfilled unless the party which
is or parties which are affected by such conditions or terms, confirm/s in writing (by not later
than the said date and time) that such conditions and terms are acceptable to it/them, acting
reasonably; and
8.1.6 unconditional approvals being received by all other relevant regulatory authorities, provided
that if any such approval is issued conditionally, this condition shall not be regarded as
having been fulfilled unless the party which is or parties which are affected by such
conditions or terms, confirm/s in writing (by not later than the said date and time) that such
conditions and terms are acceptable to it/them, acting reasonably.
8.2 The condition in paragraphs 8.1.1 and 8.1.3 are for the benefit of Stellar and may be waived, in
whole or in part, by agreement in writing prior to the expiry of the time period set out in
paragraph 8.1.
8.3 The conditions in paragraphs 8.1.2, 8.1.4, 8.1.5 and 8.1.6 cannot be waived.
9 SHAREHOLDER UNDERTAKINGS
To date, Stellar has procured written irrevocable undertakings from Amecor Shareholders holding
approximately 65.06% of Amecor’s issued share capital (excluding treasury shares) to vote in
favour of the relevant resolutions to be proposed at a meeting of the Amecor Shareholders to
implement the Offer:
Shareholder Number of Amecor % of Amecor Shares(1)
Shares
Westbrooke Capital Management (Pty) Ltd 15 826 082 22.5%
William Kirsh 9 143 800 13.0%
Integrated Capital Investments (Pty) Ltd 8 500 000 12.1%
Dereck Alexander 8 034 430 11.4%
Keith Viera 4 282 955 6.1%
Notes:
1. Based on an outstanding number of Amecor Shares in issue of 70 430 401
10 FINANCIAL INFORMATION RELATING TO AMECOR
As per Amecor’s audited annual financial statements as at 31 March 2016, Amecor had recorded
the following:
- Revenue of R131,280,000;
- Profit after tax of R29,274,000; and
- Net assets of R112,113,000.
11 PRO FORMA FINANCIAL EFFECTS ON AMECOR SHAREHOLDERS IF THE SHARE CONSIDERATION IS
ELECTED
The table below sets out the pro forma financial effects on an Amecor Shareholder in respect of 1
Amecor Share held before the Offer in the instance where the Share Consideration is elected. The
pro forma financial effects are the responsibility of the Amecor directors and are presented for
illustrative purposes only and, because of its nature, may not fairly present the actual financial
effects on an Amecor Shareholder.
Amecor Shares Stellar Shares % Change
held Before(1) held After(2)
Number of shares 1 2
Earnings (cents per share) 40 39.4 (1.46)%
Net Asset Value (cents per share) 158.2 157.6 (0.35)%
Notes and assumptions:
1. The Amecor financial effects “Before” are based on the financial information extracted,
without adjustment, from Amecor’s audited results for the year ended 31 March 2016
2. The Stellar financial effects “After” are based on the Amecor’s audited results for the year
ended 31 March 2016, as adjusted to take into account the following:
a. Transaction costs estimated to be approximately R826 000; and
b. All adjustments, other than transaction costs, are expected to have a continuing effect.
12 INDEPENDENT BOARD
The independent board of Amecor has been constituted in terms of the Takeover Regulations
(“Independent Board”) to consider the terms of the Offer.
13 INDEPENDENT EXPERT OPINION
The Independent Board will appoint an Independent Expert, as required in terms of section 114(2)
of the Companies Act and the Takeover Regulations, to issue a report on the matters set out in
section 114(3) of the Companies Act and to express an opinion on the fairness and reasonableness
of the Offer to Amecor shareholders.
The contents of the Independent Expert’s advice and opinion and the final views of the
Independent Board will be detailed in the Circular.
14 DOCUMENTATION AND SALIENT DATES
Details of the Offer together with a notice of meeting, a form of proxy and a form of election,
surrender and transfer will be contained in the Circular which is expected to be distributed to
Amecor Shareholders on or about 7 September 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.
15 CATEGORISATION
The Offer constitutes a Category 2 transaction for Stellar in terms of the JSE Limited Listings
Requirements. Accordingly, no Stellar shareholder approval is required to make the Offer.
16 RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the information contained in this announcement
to the extent that it relates to Amecor. To the best of its knowledge and belief, such information
contained in this announcement is true and nothing has been omitted which is likely to affect the
importance of such information.
The Stellar Board accepts responsibility for the information contained in this announcement to the
extent that it relates to Stellar. To the best of its knowledge and belief, such information contained
in this announcement is true and nothing has been omitted which is likely to affect the importance
of such information.
17 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Amecor Shareholders are referred to the cautionary announcement released by Amecor on 3 June
2016, and the renewal thereof on 18 July 2016, which cautionary is now withdrawn. Accordingly,
caution is no longer required to be exercised by shareholders when dealing in the Amecor Shares.
Johannesburg
11 August 2016
Financial Adviser and Sponsor to Stellar
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Sponsor to Amecor
Merchantec Capital
Transaction originator for Amecor
Westbrooke Capital Management
Advisors to certain shareholders of Amecor
Integrated Capital Management
Legal Adviser to Stellar
Cliffe Dekker Hofmeyr
Legal Adviser to Amecor
Werksmans
Date: 11/08/2016 11:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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