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Proposed specific repurchase and specific issue of shares
Tradehold Limited
Incorporated in the Republic of South Africa
(Registration number 1970/009054/06)
JSE share code: TDH
ISIN: AE000152658
("Tradehold")
TERMS ANNOUNCEMENT RELATING TO THE PROPOSED SPECIFIC REPURCHASE AND SPECIFIC ISSUE OF
TRADEHOLD SHARES
1. Introduction and rationale
Shareholders are referred to the announcement released on the Stock Exchange News
Service ("SENS") of the JSE Limited ("JSE") on 3 June 2016 regarding the transaction
(the "Collins Transaction") entered into between Tradehold and Collins Property
Projects Proprietary Limited ("Collins") pursuant to which Tradehold and Collins
agreed that Tradehold will acquire a portfolio of commercial, industrial and retail
property assets in South Africa from Collins and its affiliates.
Pursuant to the Collins Transaction, Tradehold will, amongst other things, acquire
all the issued ordinary shares in Imbali Props 21 Proprietary Limited ("Imbali 21"),
which currently holds, amongst other investments, 7,433,346 (seven million four
hundred and thirty-three thousand three hundred and forty-six) ordinary shares in
Tradehold (“Tradehold Share/s”).
As a pre-condition, but as a distinct and separate transaction, to the Collins
Transaction, Tradehold shareholders are advised that Tradehold has agreed to enter
into a transaction (the "Transaction") with Imbali 21 in order to eliminate the cross
shareholding, pursuant to which:
- Tradehold will repurchase the 7,433,346 (seven million four hundred and thirty-
three thousand three hundred and forty-six) Tradehold Shares from Imbali 21
("Specific Repurchase"). The purchase consideration (the "Repurchase Price")
payable by Tradehold to Imbali 21 in respect of the Specific Repurchase shall
remain outstanding on loan account ("Loan Account") in favour of Imbali 21. Imbali
21 will be liable for the securities transfer tax payable in accordance with the
Securities Transfer Tax Act, No 25 of 2007 in respect of the Specific Repurchase
("Securities Transfer Tax" or “STT”);
- Imbali 21 shall –
- cede a portion of its rights under the Loan Account to a class of its
shareholders in settlement of various shareholder loans owing to such Imbali
21 shareholders (the "Imbali 21 Cession"); and
- distribute the balance of its rights under the Loan Account, less an amount
(the "STT Portion") equal to the Securities Transfer Tax payable in respect
of the Specific Repurchase, to the same class of Imbali 21 shareholders
("Imbali 21 Distribution");
- the Imbali 21 shareholders who are the recipients of the Imbali 21 Cession and
Imbali 21 Distribution will subscribe for 7,414,761 (seven million four hundred
and fourteen thousand seven hundred and sixty-one) new Tradehold Shares (the
"Specific Issue") and will contribute their respective portions of the Loan Account
received pursuant to the Imbali 21 Distribution and the Imbali 21 Cession to
Tradehold in settlement of the subscription price (the "Subscription Price") in
respect of the Specific Issue; and
- there will be set-off between the obligations of Tradehold to repay the remaining
balance of the Repurchase Price and the obligation of Imbali 21 to pay to Tradehold
the Securities Transfer Tax arising from the Specific Repurchase.
2. Transaction Steps
The Transaction steps are set out below. The Specific Repurchase and Specific Issue
will be implemented on the business day immediately preceding the first closing date
of the Collins Transaction (the "Implementation Date").
The Repurchase Price and Subscription Price per Tradehold Share is the 30-day volume
weighted average price ("VWAP") of a Tradehold Share calculated up to and including
the close of trading on the signature date ("Signature Date") of the repurchase
agreement entered into between Tradehold and Imbali 21 ("Repurchase Agreement"),
being, Friday, 30 September 2016.
2.1 Specific Repurchase
Tradehold repurchases 7,433,346 (seven million four hundred and thirty-three
thousand three hundred and forty-six) Tradehold Shares from Imbali 21 at the
Repurchase Price. As a result, Tradehold will cancel and delist the 7,433,346
(seven million four hundred and thirty three thousand three hundred and forty
six) Tradehold Shares repurchased as soon as possible following the
Implementation Date. Accordingly, the number of treasury shares held by
Tradehold following the Specific Repurchase will remain at nil Tradehold Shares.
The aggregate Repurchase Price will remain outstanding on loan account in favour
of Imbali 21.
2.2 Imbali 21 Cession
Imbali 21 cedes a portion of the Loan Account to a specified class of Imbali 21
shareholders ("Eligible Imbali 21 Shareholders") in equal proportions in part
settlement of existing shareholder loans owed by Imbali 21 to the Eligible
Imbali 21 Shareholders.
2.3 Imbali 21 Distribution
Imbali 21 distributes the remaining Loan Account from the Specific Repurchase
(less an amount equal to the Securities Transfer Tax) as a dividend in specie
to the Eligible Imbali 21 Shareholders.
2.4 Specific Issue
The Eligible Imbali 21 Shareholders each subscribe for 2,471,587 (two million
four hundred and seventy-one thousand five hundred and eighty-seven) Tradehold
Shares and contribute their respective portions of the Loan Account received
pursuant to the Imbali 21 Cession and the Imbali 21 Distribution in settlement
of the Subscription Price. As a result, Tradehold will issue and list, in
aggregate, 7,414,761 (seven million four hundred and fourteen thousand seven
hundred and sixty-one) new Tradehold Shares.
2.5 Repayment of the Loan Account and STT Portion
On the Implementation Date, Tradehold will be obliged to pay to Imbali 21 the
STT Portion and Imbali 21 will be obliged to pay to Tradehold the Securities
Transfer Tax. Accordingly, on the Implementation Date, there shall be set-off
between Tradehold's obligation to pay the STT Portion to Imbali 21 and Imbali
21's obligation to pay the Securities Transfer Tax arising from the Specific
Repurchase to Tradehold.
3. Conditions precedent
The implementation of the Transaction is subject to certain conditions precedent,
including the following:
- Imbali 21 delivering to the Company written confirmation of the release by
Nedbank Limited ("Nedbank") of the Tradehold Shares subject to the Specific
Repurchase from the pledge held by Nedbank over such Tradehold Shares in a form
and substance reasonably acceptable to Tradehold;
- Tradehold obtaining the necessary shareholder approval for the Transaction by
way of Tradehold shareholders approving the necessary resolutions required in
connection with the:
- Specific Repurchase;and
- Specific Issue,
such resolutions to be interdependent;
- Tradehold obtaining all such approvals as may be required for the delisting and
listing of the relevant number of Tradehold Shares on the JSE;
- the respective boards of directors of Imbali 21 and the Eligible Imbali 21
Shareholders approving the Specific Issue; and
- in respect only of the Specific Issue, following the fulfilment or waiver (as
applicable) of the last of the other conditions precedent of the Specific Issue,
the Specific Repurchase, the Imbali 21 Distribution and Imbali 21 Cession having
been completed.
Other than those conditions above that are of a regulatory nature and cannot be
waived, Tradehold, Imbali 21 and the Eligible Imbali 21 Shareholders, by agreement in
writing and to the extent they are permitted to do so, may extend the time period of
the fulfilment of any of the aforementioned conditions or waive the conditions.
4. Resolutive condition
The Specific Repurchase is subject to a resolutive condition that if the Specific
Issue has not occurred by 17:00 on 15 January 2017 (or such later date as Tradehold
may notify Imbali 21 on written notice prior to 17:00 on 15 January 2017), then the
Repurchase Agreement will automatically lapse and be of no further force and effect,
and the Parties shall be restored as near as possible to their position as if the
Repurchase Agreement was not entered into.
5. Financial effects of the Transaction
The pro forma financial effects of the Transaction have been prepared for illustrative
purposes only and due to the nature thereof, may not fairly present Tradehold's
financial position, changes in equity, results of operations or cash flows after
completion of the Transaction. The pro forma financial effects are the responsibility
of the directors and are based on the audited results for the year ended 29 February
2016.
The purpose of the pro forma financial effects is to illustrate the impact of the
Transaction, had it been implemented on the dates and on the assumptions set out
below. It does not purport to be indicative of what the financial results would have
been had the Transaction been implemented on a different date.
The effect on earnings, headline earnings, core headline earnings, net asset value
and net tangible asset value per Tradehold Share have been reflected below:
Audited Pro forma
29 February 2016 after Transaction
(Note 1) (Note 2)
GBP in 000s
Net asset value 160,214 160,195
Net tangible asset value 148,456 148,437
Number of shares ('000s) 188,240 188,221
Net asset value per share (pence) (Note 3) 0.85 0.85
Net tangible asset value per share (pence) (Note 3) 0.79 0.79
Earnings (Note 3) 14,280 14,280
Headline Earnings (Note 3) 9,629 9,629
Core Headline Earnings (Note 3) 12,108 12,108
Weighted average number of shares 186,818 186,799
Earnings per share (pence) (Note 3) 7.6 7.6
Headline earnings per share (pence) (Note 3) 5.2 5.2
Core headline earnings per share (pence) (Note 3) 6.5 6.5
Note 1 Extracted from Tradehold’s audited group results for the year ended 29 February 2016.
Note 2 Represents the pro forma financial effects after the Transaction.
Note 3 Net asset value, net tangible asset value, earnings, headline earnings and core headline
earnings per share adjustments are based on the following principal assumptions:
- the Transaction was effected on 1 March 2015 for purposes of calculating earnings,
headline earnings and core headline earnings per share and on 29 February 2016 for
purposes of calculating the net asset value and net tangible asset value per share.
- The effect of potential interest income losses resulting from the payment by Tradehold
of the STT Portion was considered and had a zero effect on earnings, headline earnings
and core headline earnings per share.
- the Specific Repurchase was done at the 30-day VWAP of Tradehold Shares on the
Signature Date being R22.78.
- the Specific Issue was done at the closing share price of Tradehold Shares on 30
September 2016 of R21.80.
- The proceeds of the Specific Issue will be set-off against a portion of the Repurchase
Price, with the balance set-off against the obligation of Imbali 21 to pay the
Securities Transfer Tax payable on the Specific Repurchase. All of these settlements
are anticipated to occur on the same day and no interest income or expense will be
incurred as a result of the Specific Repurchase and Specific Issue.
- The Eligible Imbali 21 Shareholders will fund all expenses relating to the
Transaction.
- A GBP/ZAR exchange rate of GBP1 : ZAR22,27, which was the same exchange rate as at
29 February 2016 used for purposes of the audited financial statements of Tradehold
for the 2016 financial year, was applied.
6. Related party transaction
The Specific Repurchase and the Specific Issue are each considered a related party
transaction in terms of section 10 of the JSE Listings Requirements, as Tradehold is
entering into transactions with entities who are Tradehold shareholders (“Related
Parties”) that, collectively, hold in excess of 10% ("Material") of the exercisable
voting rights in Tradehold, and who are deemed to be associates of one another by
virtue of the fact that their beneficial shareholders include immediate family
members. Consequently, for purposes of the JSE Listings Requirements only, the Related
Parties’ shareholdings are aggregated to determine whether their collective holding
is Material in respect of the Specific Repurchase and Specific Issue and hence results
in a related party transaction as defined in the JSE Listings Requirements.
The Specific Issue, however, is not at a discount to the 30-day VWAP of the Tradehold
Shares, calculated as at the Signature Date, and hence the board of directors of
Tradehold (“Board”) is not required to state whether the Specific Issue is fair
insofar as the Tradehold Shareholders (excluding the Related Parties) are concerned,
or to obtain a fairness opinion from an independent expert as would ordinarily be
required in terms of section 5.51(f) and in accordance with Schedule 5 of the JSE's
Listings Requirements respectively.
In addition, the Specific Repurchase is not at a premium to the 30-day VWAP of the
Tradehold Shares as at the Signature Date and hence the Board is not required to state
whether the Specific Repurchase is fair insofar as the Tradehold Shareholders
(excluding the Related Parties) are concerned, or to obtain a fairness opinion from
an independent expert as would ordinarily be required in terms of section 5.69(e) and
in accordance with Schedule 5 of the JSE's Listings Requirements respectively.
7. Circular
The terms and timetable relating to the implementation of the Specific Repurchase and
Specific Issue will be set out in the circular ("Circular") that is being prepared in
respect of the Collins Transaction, the posting date of which will be notified to
shareholders via SENS in due course.
A notice of general meeting setting out the resolutions to be considered and, if
deemed fit, approved by the Tradehold shareholders in order to implement the
Transaction, the Specific Repurchase and the Specific Issue, will be included in the
Circular.
Cape Town
3 October 2016
Tradehold Limited
Corporate Advisor
Mettle Corporate Finance Proprietary Limited
Legal adviser
Cliffe Dekker Hofmeyr Inc.
JSE sponsor
Bravura Capital Proprietary Limited
5
Date: 03/10/2016 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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