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Category 1 Transaction Announcement: Proposed Acquisition by GPI of shares in Spur Corporation Limited
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/003548/06)
Share code: GPL
ISIN: ZAE000119814
(“GPI”)
CATEGORY 1 TRANSACTION ANNOUNCEMENT: PROPOSED ACQUISITION BY GPI OF
SHARES IN SPUR CORPORATION LIMITED AND CAUTIONARY ANNOUNCEMENT
1. Introduction
GPI is pleased to announce that it has entered into an agreement
with Coronation Fund Managers Limited ("Coronation") to purchase
between 16 380 620 and 19 465 119 ordinary shares in the issued
share capital of Spur Corporation Limited (“Spur”) for a purchase
consideration of R40 per share (“Proposed Transaction”).
GPI, through a wholly owned subsidiary, already holds
approximately 10% of the issued ordinary share capital of Spur
for which it subscribed in 2014. Following the implementation of
the Proposed Transaction, assuming that GPI acquires 19 465 119
ordinary shares in Spur, GPI will hold approximately 28.82% of
the issued ordinary share capital of Spur.
2. Description of the business carried on by Spur
Spur is a leading multi-brand restaurant franchisor,
headquartered in Cape Town, and listed in the travel and leisure
sector of the JSE Limited (“JSE”). Spur franchises five table
service sit down restaurant brands: Spur Steak Ranches, Panarottis
Pizza Pasta, John Dory’s Fish Grill Sushi, The Hussar Grill
Steakhouse and Roco Mama’s. Spur is also the franchisor of Captain
DoRego’s.
Spur also manufactures, bottles and distributes certain of the
sauces used in group restaurants. In addition, the group supports
franchisees by managing the procurement function between
suppliers, the group’s outsourced logistics service provider and
its franchisees.
3. Particulars of the Proposed Transaction
In terms of the Proposed Transaction GPI will purchase between
16 380 620 and 19 465 119 ordinary shares in the issued share
capital of Spur (“Spur Shares”) from Coronation, for a purchase
consideration of R40 per Spur Share which, assuming that GPI
acquires 19 465 119 Spur Shares, equates to a total purchase
consideration of R778 604 760 (“Purchase Consideration”).
Coronation holds the Spur Shares on behalf of its clients and as
such:
i. the total number of Spur Shares held by Coronation may include
shares which are encumbered by its clients and not capable
of sale to GPI; and
ii. Coronation may be required to dispose of a portion of the
Spur Shares should a client terminate its mandate after this
announcement.
If at any time on or before the date of the implementation of the
Proposed Transaction the number of Spur Shares held by Coronation
and capable of being sold to GPI is less than 16 380 620 Spur
Shares, GPI shall be under no obligation to purchase such lesser
number of Spur Shares or to proceed with the Proposed Transaction.
GPI may waive such right to not proceed with the Proposed
Transaction in its discretion at any time prior to the date of
implementation of the Proposed Transaction.
The Purchase Consideration will be settled in cash, funded from
a combination of cash reserves and debt.
If the Purchase Consideration is not paid by 1 January 2017, then
interest will accrue on such Purchase Consideration at the prime
rate of interest as published by the Standard Bank of South Africa
Limited, with effect from 1 January 2017.
4. Rationale for the Proposed Transaction
GPI has a track record of adding value to its investments and the
board believes that the Proposed Transaction represents an
attractive investment opportunity to increase its interest in
Spur. The Proposed Transaction is in-line with GPI’s strategy to
grow and diversify its investment portfolio beyond the gaming
sector, focussing on businesses that meet management’s target IRR
and other strategic objectives.
GPI has identified a number of advantages relating to the Proposed
Transaction which include, without limitation, the following:
i. the Proposed Transaction allows GPI to become a strategic
shareholder in a well-established, multi-brand restaurant
franchisor with solid growth prospects and a track record of
delivering value to shareholders;
ii. Spur has a resilient operating model, proven over time and
through difficult trading conditions;
iii. a potential opportunity to form a strategic partnership with
a leading franchise restaurant operator with extensive
experience across Africa; and
iv. the potential to exploit synergies between Spur’s operations
and certain of GPI’s existing businesses in the supply chain
and quick service restaurant market and related food sectors.
5. Condition precedent
The Proposed Transaction is subject to the fulfilment of the
condition precedent (“Condition Precedent”) that GPI obtains any
and all necessary statutory and regulatory approvals for the
implementation of the Proposed Transaction (including shareholder
approval in terms of the JSE Listings Requirements).
The Condition Precedent must be fulfilled by not later than
31 January 2017, which date may be extended by either party in
writing to the other party.
6. Effective date of the Proposed Transaction
Delivery and payment in respect of the Spur Shares shall take
place on the 1st business day following the date on which the
Condition Precedent is fulfilled.
7. Pro forma financial effects
As at the date of this announcement, the pro forma financial
effects of the Proposed Transaction in relation to GPI have not
yet been finalised and shareholders are hereby advised that the
pro forma financial information will be announced in due course.
8. Classification of the Proposed Transaction
As the value of the Proposed Transaction exceeds 30% of GPI’s
market capitalisation, it meets the definition of a category 1
transaction as contemplated in section 9 of the JSE Listings
Requirements.
As a result, a general meeting of GPI shareholders will be
convened and an ordinary resolution in respect of the Proposed
Transaction will be required to be approved by GPI shareholders
at the general meeting.
9. Circular
A circular containing the full details of the Proposed
Transaction, incorporating a notice convening the required GPI
general meeting, will be posted to shareholders in due course and
the date of the general meeting will be announced on SENS once
the circular is posted.
10. Cautionary
GPI shareholders are advised that, due to the fact that the pro
forma financial effects of the Proposed Transaction have not yet
been announced, to exercise caution when dealing in their
securities until such time as the pro forma financial information
of the Proposed Transaction have been announced.
Cape Town
31 October 2016
Sponsor & Transaction Adviser
PSG Capital Proprietary Limited
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