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Announcement of a Proposed Restructure of Shareholding in TCP
Transaction Capital Limited
(Incorporated in the Republic of South Africa)
Registration number: 2002/031730/06
JSE share code: TCP
ISIN: ZAE000167391
(“TCP” or “the company”)
ANNOUNCEMENT OF A PROPOSED RESTRUCTURE OF SHAREHOLDING IN TCP HELD BY
THE KIMBERLEY INVESTMENT TRUST ("KIT"), THE RUTLAND TRUST ("RT") AND THE
SUGAR TUBE TRUST ("STT") (COLLECTIVELY THE "JMR TRUSTS"), WAIVER OF A
MANDATORY OFFER AND A PROPOSED SPECIFIC ISSUE OF SHARES FOR CASH TO JMR
HOLDINGS PROPRIETARY LIMITED ("JMRH") (COLLECTIVELY THE "PROPOSED
TRANSACTION")
1. INTRODUCTION
TCP shareholders are advised as follows –
1.1. The JMR Trusts and the board of directors of TCP wish to effect a restructure that
will create control under a single legal entity, namely JMRH, for the benefit of TCP
and its stakeholders and increase the JMR Trusts' aggregate shareholding in TCP,
through JMRH, to 250 million ordinary no par value shares in TCP ("TCP Shares").
Accordingly –
1.1.1. subject to the fulfilment of certain suspensive conditions, the material
one of which is detailed in paragraph 2.3 below, the JMR Trusts and
JMRH will give effect to a restructure in terms of which each of the JMR
Trusts, will transfer all of the TCP Shares held by them to JMRH by way
of an exchange and in exchange for the allotment and issue of new
ordinary shares in JMRH to the JMR Trusts, ("Restructure"); and
1.1.2. subject to the fulfilment of certain suspensive conditions, the material
ones of which are detailed in paragraph 2.1 below, JMRH will subscribe
for 3 377 821 TCP Shares, and TCP shall allot and issue such TCP
Shares to JMRH as a specific issue of shares for cash in accordance
with the applicable requirements of the Listings Requirements ("Listings
Requirements") of the JSE Limited ("JSE") and the provisions of the
Companies Act 2008, as amended ("Companies Act") at a subscription
price of R11,65 per TCP Share, being the higher of (i) R11,65 per TCP
Share and (ii) the volume weighted average closing price per TCP Share
traded on the JSE over the 30 trading day period prior to 31 August 2016
(being the date on which the agreement in respect of the specific issue of
shares for cash was signed and the price envisaged therein agreed)
("Specific Issue of Shares for Cash").
The Restructure and the Specific Issue of Shares for Cash are conditional on and
indivisible with one another.
1.2. Jonathan Michael Jawno ("Jawno"), Michael Paul Mendelowitz ("Mendelowitz") and
Roberto Rossi ("Rossi") (collectively the "Founders") are the architects / founders of
the business of TCP, and are directors of TCP. Each of Jawno, Mendelowitz and
Rossi are in addition to the members of their respective families, discretionary
beneficiaries of their respective family trusts, namely, KIT (in the case of Jawno), RT
(in the case of Mendelowitz) and STT (in the case of Rossi). JMRH is beneficially
held by the JMR Trusts in equal shares.
1.3. Upon implementation of the Proposed Transaction, JMRH will hold 250 million TCP
Shares, representing approximately 43.48% of the entire issued share capital of TCP.
2. SUSPENSIVE CONDITIONS TO THE PROPOSED TRANSACTION
2.1. The Specific Issue of Shares for Cash is subject to the fulfilment of the following key
suspensive conditions which remain unfulfilled as at the date of this announcement:
2.1.1. the Restructure becoming unconditional in all respects;
2.1.2. valid shareholder approval for the waiver of a mandatory offer in
accordance with the regulations promulgated in terms of section 223 of
the Companies Act, as amended (the "Regulations") and, in particular,
Regulation 86(4) of the Regulations, and such other resolutions as are
required in terms of the Companies Act and the Listings Requirements
by virtue of the Specific Issue of Shares for Cash being an issue to
JMRH, being a non-public shareholder of, and a related party to, TCP
(including a resolution requiring support from TCP shareholders holding
at least 75% of the total number of votes exercised by TCP shareholders
present and eligible to vote on such resolution at the general meeting of
TCP shareholders, as envisaged in the Listings Requirements). In this
regard it is noted that the JMR Trusts and any of their associates will be
precluded from voting (where applicable) on the resolutions relating to
the Specific Issue of Shares for Cash, due to their participation in the
Specific Issue of Shares for Cash. The JMR Trusts and any of their
associates will also be precluded from voting on the waiver of mandatory
offer and the other resolutions in terms of the Companies Act;
2.1.3. approval by the Competition Authorities for the implementation of the
Proposed Transaction;
2.1.4. the grant of the waiver ruling envisaged in the TRP guideline 2/2011
which is required for the waiver of mandatory offer ("TRP Waiver
Ruling"); and
2.2. within 5 business days from the date TCP announces on SENS the results of the
TRP Waiver Ruling (or such longer period as may be allowed by the Takeover
Special Committee), no TCP shareholder/s requests the Takeover Special Committee
to review the TRP Waiver Ruling or if TCP shareholder/s requests the Takeover
Special Committee to review the TRP Waiver Ruling, the Takeover Special
Committee confirms the TRP Waiver Ruling, such that the TRP waiver proceedings
may then be regarded as complete.
2.3. The Restructure in turn is subject to the fulfilment of the following key suspensive
condition which remains unfulfilled as at the date of this announcement: the Specific
Issue of Shares for Cash becoming unconditional in all respects.
2.4. If the aforementioned suspensive conditions are fulfilled then there will be no
requirement for JMRH and, if applicable, any other party acting in concert with it to
make a mandatory offer to the holders of the remaining securities of TCP.
Conversely, if any of the aforementioned suspensive conditions are not fulfilled then
the Proposed Transaction will fail in its entirety and there will be no requirement for
JMRH and, if applicable, any other party acting in concert with it to make a mandatory
offer to the holders of the remaining securities of TCP.
3. RATIONALE FOR THE PROPOSED TRANSACTION
Upon implementation of the Proposed Transaction, TCP will, for the first time, have a single
shareholder of reference holding over 35% of TCP Shares. The Proposed Transaction will
result in the following benefits for TCP and all its stakeholders:
3.1. TCP is a financial services group and the stability and continuity of having a
committed shareholder of reference, owned by the JMR Trusts, will facilitate
continued confidence in TCP and particularly in its activities in the debt and equity
markets;
3.2. TCP's ratings and credit spreads are likely to be enhanced by the visible backing and
continuity of the Founders;
3.3. the clear effective control and continuity in the TCP group arising from the Proposed
Transaction should facilitate TCP's ability to attract and retain management talent and
skills;
3.4. at present, there are no agreements between the JMR Trusts. Post the
implementation of Proposed Transaction, if the circumstances of any of the individual
families in respect of the JMR Trusts change due to inheritances or otherwise, it is
likely that the JMRH structure will be unaffected - again facilitating continuity;
3.5. the subscription of TCP Shares by JMRH in terms of the Specific Issue of Shares for
Cash, not only adds to the capital of TCP but also signals the continued support of
the Founders and their perception of value at the current price levels; and
3.6. through the new JMRH structure, the board of directors of TCP will be able to interact
with a shareholder of reference with one voice on strategic and industry matters for
the benefit of TCP.
4. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION
The table below reflects the pro forma financial effects of the Proposed Transaction on a TCP
shareholder:
Before the After the
Specific Specific
Issue of Issue of
Shares for Shares for
1 2
Cash Cash
(cents) (cents) % change
Net asset value per share 477,2 480,9 0,8%
Tangible net asset value per share 434,3 438.30 0.9%
Headline earnings per share 37,0 37,0 0,0%
Basic earnings per share 37,0 37,0 0,0%
Diluted basic earnings per share 36,6 36,6 0,0%
Notes and assumptions:
1. The "Before the Specific Issue of Shares for Cash" column has been extracted, without
adjustment, from TCP's interim results for the six months ended 31 March 2016.
2. The "After the Specific Issue of Shares for Cash" column above reflect the pro forma effects
on the published interim results of TCP resulting from the Specific Issue of Shares for Cash.
3. The following adjustments have been applied and are reflected in the pro forma financial
effects:
- Proposed Transaction costs of R 2.19 million (including VAT) have been allocated to
the stated capital in accordance with IAS 32.
- The saving in interest expense has been calculated based on a R39 million cash
amount received less Proposed Transaction costs of R 2.19 million (including VAT)
applied to external debt at a pre-tax rate of 12.10% p.a.
- The Proposed Transaction has been assumed to have taken place at a fair market
value due to the subscription price of the Specific Issue of Shares for Cash taking
place at a subscription price of R11,65 per TCP Share. As a result, no discount or
option expense has been recognised in terms of IFRS 2.
- There are no other events after the reporting date which require inclusion in the pro
forma financial effects presented.
- Headline earnings is equal to the profit after tax for the period as there are no
headline earnings adjustments required.
4. TIMING REGARDING DISTRIBUTION OF CIRCULAR AND NOTICE OF GENERAL
MEETING
Further details pertaining to the Proposed Transaction will be included in a further
announcement setting out the salient dates and times in relation to the Proposed Transaction
which announcement will be released in due course. Full details pertaining to the Proposed
Transaction will be included in the combined circular to TCP shareholders regarding, inter
alia, the Specific Issue of Shares for Cash and a waiver of the requirement for JMRH and any
other party which may be acting in concert with it to make a mandatory offer to the holders of
the remaining securities of TCP ("Circular"). It is anticipated that the Circular will be posted
to TCP shareholders on or about 16 September 2016. The Circular will incorporate (i) a fair
and reasonable opinion in terms of Regulation 86(7) of the Regulations; (ii) a notice of general
meeting to be held on or about 17 October 2016 for the purpose of considering and, if
deemed fit, passing the resolutions required to implement the Proposed Transaction and (iii) a
form of proxy.
Dunkeld West, Johannesburg
1 September 2016
Enquiries:
Phillipe Welthagen - Investor Relations
Telephone: +27 (0) 11 049 6700
Sponsor:
Deutsche Securities (SA) Proprietary Limited
Date: 01/09/2016 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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