ECSPONENT LIMITED - Cautionary announcement: group rationalisation and proposed rights offer

Cautionary announcement: group rationalisation and proposed rights offer

ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
("the Company" or "Ecsponent")


CAUTIONARY ANNOUNCEMENT: GROUP RATIONALISATION AND PROPOSED RIGHTS OFFER

1.    Introduction

      Shareholders are advised that the Company has entered into negotiations with various parties
      to rationalise the group’s operations and investments, aimed at focussing the group’s
      operations on its core business going forward and is involved in negotiations regarding an
      acquisition and certain disposals (collectively, the “Transactions”).

2.    Rights offer

      Shareholders are hereby advised that, in order to provide the group with additional working
      capital and funding for potential future investment opportunities, Ecsponent intends to raise a
      maximum of R50 million by way of a partially underwritten renounceable rights offer (“the
      Rights Offer”) of 333 333 292 new Ecsponent ordinary shares (“Rights Offer Shares”) to
      qualifying shareholders at a subscription price of 15 cents per Rights Offer Share, in the ratio of
      35.80346 Rights Offer Shares for every 100 Ecsponent ordinary shares held on the Rights
      Offer record date.

      The subscription price of 15 cents per share represents a discount of 11.8% to the prevailing
      share price of Ecsponent as at the date of this announcement, being 17 cents per share and a
      discount of 3.4% to the 30-day volume weighted average traded price of Ecsponent’s ordinary
      shares, being 15.53 cents per share.

3.    Underwriting

      Ecsponent has entered into an agreement with Mason Alexander Proprietary Limited (“Mason
      Alexander”), which currently holds 34.9% of the shares in Ecsponent, in terms of which Mason
      Alexander (the “Underwriter”) will, subject to receipt of approval for the Waiver and the Issue as
      defined in paragraphs 4 and 5 below, underwrite the Rights Offer up to a maximum amount of
      R20 million.

      Depending on the outcome of the Rights Offer, there is a possibility that the underwrite could
      result in the Underwriter holding 35% or more of the Ecsponent ordinary shares and being
      required to make a mandatory offer (“the Mandatory Offer”) in terms of section 123 of the
      Companies Act, 2008 (“the Act”). Accordingly, independent Ecsponent shareholders, being the
      Ecsponent shareholders other than the Underwriter, will be asked to waive a Mandatory Offer
      (the “Waiver”) in terms of Regulation 86(4) of the Companies Regulations.

4.    Approval of the issue of shares

      The shares to be issued pursuant to the Rights Offer represent 35.8% of the Ecsponent shares
      currently in issue (assuming that the Rights Offer is fully subscribed). In terms of section 41(3)
      of the Companies Act, an issue of shares requires approval by the shareholders by special
      resolution if the voting power of the class of shares that are issued or issuable as a result of the
      transaction will be equal to or exceed 30% of the voting power of all the shares of that class
      held by shareholders immediately before the transaction (the “Issue”).

5.    Circular and further announcement

      A circular setting out details of the Waiver and the Issue, and convening a general meeting to
      consider, and, if deemed fit, approve the Waiver and the Issue, will be distributed to
      shareholders in due course.

      A further announcement relating to the Transactions and the Rights Offer will be made in due
      course.

6.    Cautionary announcement
 
      Shareholders are hereby advised to exercise caution when dealing in the Company’s securities
      until a further announcement is made providing all relevant details in respect of the
      Transactions.


Pretoria
10 October 2016

Corporate Advisor and Sponsor
Questco (Pty) Ltd

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