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Acquisition and Withdrawal of cautionary of the AMR Group
Insimbi Refractory and Alloy Supplies Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2002/029821/06)
Share code: ISB ISIN: ZAE000116828
(“Insimbi” or “the Company”)
ACQUISITION BY INSIMBI OF THE AMR GROUP
1. Introduction
Shareholders are referred to the cautionary announcements released on 22 June 2016 and 26 July
2016 wherein the Company announced that a binding memorandum of understanding had been
concluded between the Company and the AMR Group in which it was proposed that Insimbi would
acquire all of the shares in the AMR Group (“the Acquisition”).
The AMR Group includes Amalgamated Metals Recycling Proprietary Limited (“AMR”), Amalgamated
Metals Recycling SA Proprietary Limited (“AMRSA”), Amalgamated Metals West Rand Proprietary
Limited (“AMRWR”) and the entities that are the registered holders of the properties from which the
business operates, being Spring Lights 1135 Proprietary Limited and its subsidiary, Zamsaf Properties
Proprietary Limited (“the Properties” or “the Property Companies”).
The AMR Group is ultimately owned by the CC Investment Trust, LSC Investment Trust, the JCCD
Investment Trust, the CC Share Trust, the LSL Share Trust and The JCCD Share Trust represented
by Christiaan Coombs, Herman Steenkamp and Christiaan Combrink, respectively (collectively, “the
Vendors”).
Insimbi’s shareholders are advised that, on 13 September 2016, the Company and the Vendors
concluded a share sale and subscription agreement (“the Agreement”) setting out the comprehensive
terms and conditions of the Acquisition.
2. Nature of the business of the AMR Group
The business conducted by the AMR Group is that of the aggregation, processing, recycling and sale
of scrap metal, which business is conducted from three facilities on the Properties located at Devland,
Roodepoort and Booysens.
3. Rationale for the Acquisition
The rationale for the Acquisition is to create a larger, more diversified company with increased liquidity
in the Company’s shares and to become a more significant player in the recycling arena. The
combined group will have significantly enhanced cash flow and profit generation capability, whilst at
the same time providing shareholders with a significant rand hedge.
4. Salient terms of the Transaction
4.1 Purchase Consideration
The purchase price for the AMR Group is an aggregate amount of R284 million (“AMR
Purchase Price”), which includes the purchase price for the Properties of R34 million
(“Property Purchase Price”)
4.2 Payment and funding of the Acquisition
4.2.1 R234 million of the AMR Purchase Price will be payable in cash, sourced via a
combination of senior debt, mezzanine finance and the placement of new Insimbi
shares.
4.2.2 R50 million will be settled by way of Insimbi issuing shares to the Vendors at an
issue price equal to the lower of:
4.2.2.1 R1.00 per Insimbi share, provided that, if the 30 day VWAP of the Insimbi
shares as at the day before this announcement is published is greater
than R1.10 or smaller than 90c, then such higher or lower 30 day VWAP
shall prevail; or
4.2.2.2 the lowest price at which Insimbi issues shares as part of its fundraising
for the Acquisition.
The final number of Insimbi shares issued to the Vendors will be reduced if and to
the extent that the AMR Group fails to achieve a net profit after tax target of R90
million during the period ending on the last day of the 36th calendar month, after the
implementation date of the Acquisition.
4.3 Conditions Precedent
In terms of the Agreement, the Acquisition is conditional upon the conclusion of suspensive
conditions that are customary for a transaction of this nature, and includes the following
material suspensive conditions:
4.3.1 The approval in writing of the applicable competition authorities, in terms of the
Competition Act, 1998;
4.3.2 The conclusion of executive employment agreements between the AMR Group and
the Vendors;
4.3.3 All approvals as may be required in terms of the JSE Listings Requirements (“LR”);
and
4.3.4 Finalisation of the relevant Insimbi funding arrangements.
4.4 Net assets acquired and profits attributable to those assets
The combined net asset value of the AMR Group is approximately R186 million and the profit
after taxation associated with the AMR Group is R61 million for the year ended 29 February
2016.
5. Categorisation of the Transaction
The Acquisition is classified as a reverse take-over in terms of the LR and thus requires Insimbi
shareholder approval.
The JSE will therefore evaluate the continued listing of Insimbi as if the Company was a new
applicant. Shareholders are accordingly advised as to the uncertainty of whether or not the JSE will
allow the listing to continue following the Acquisition.
6. Effective date
The effective date of the Acquisition shall be the date on which the Acquisition is implemented, which
the parties expect to be late November or early December 2016. A finalisation announcement will be
made when the Acquisition becomes unconditional.
7. Memorandum of Incorporation
Insimbi undertakes that the Memorandum of Incorporation of the AMR Group will conform to
Schedule 10.21 of the LR, as required.
8. Circular to Shareholders
A circular relating to the Acquisition incorporating revised listing particulars, a notice of General
Meeting and form of proxy will be sent to shareholders in compliance with paragraph 9.20 (b) of the
LR.
9. Withdrawal of cautionary announcement
Following the release of this announcement, the cautionary announcement published by Insimbi on
26 July 2016 is hereby withdrawn and caution is no longer required to be exercised when dealing in
the Company’s shares.
Wadeville
14 September 2016
Corporate Advisor and Sponsor: Bridge Capital Advisors Proprietary Limited
Legal Advisor for Insimbi: Falcon & Hume Incorporated Attorneys
Legal Advisor for the AMR Group: Chris Boulle Incorporated
Date: 14/09/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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