DATACENTRIX HOLDINGS LIMITED - Joint announcement - firm intention offer by Pinnacle, through its subsidiary, DCT Holdings Proprietary Limited (DC

Release Date: 10/11/2016 16:46
Code(s): DCT PNC
 
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Joint announcement - firm intention offer by Pinnacle, through its subsidiary, DCT Holdings Proprietary Limited (“DC

                                                    Pinnacle Holdings Limited
Datacentrix Holdings Limited                        Incorporated in the Republic of South Africa
Incorporated in the Republic of South Africa        Registration number 1986/000334/06
(Registration number: 1998/006413/06)               Share Code: PNC
Share code: DCT                                     ISIN: ZAE000184149
ISIN: ZAE000016051                                  (“Pinnacle”)
(“Datacentrix”)

JOINT ANNOUNCEMENT - FIRM INTENTION OFFER BY PINNACLE, THROUGH ITS
SUBSIDIARY, DCT HOLDINGS PROPRIETARY LIMITED (“DCT HOLDINGS”) TO ACQUIRE
ALL OF THE ISSUED SHARE CAPITAL OF DATACENTRIX, EXCLUDING TREASURY
SHARES AND SHARES THAT DCT HOLDINGS ALREADY OWNS, (“OFFER”) AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. Introduction

   The respective boards of directors of Pinnacle and Datacentrix are pleased to announce that Pinnacle,
   through DCT Holdings, has made an offer ("Offer") to Datacentrix to acquire 100% of the issued
   ordinary share capital of Datacentrix excluding treasury shares and shares that DCT Holdings already
   owns (“Offer Shares”). The Offer will be implemented by way of a scheme of arrangement (“Scheme”)
   in terms of section 114(1)(c) of the Companies Act 71 of 2008, as amended, (the "Companies Act"),
   to be proposed by the board of directors of Datacentrix ("Datacentrix Board") between Datacentrix and
   the holders of Datacentrix Shares (“Datacentrix Shareholders”), or

   If the Scheme fails and Pinnacle and DCT Holdings so elects, a Standby General Offer by Pinnacle,
   through DCT Holdings, to Datacentrix Shareholders to acquire the Offer Shares (“the Standby General
   Offer”),
   (collectively, the “Proposed Transaction”).

   The Scheme will be subject to the fulfilment of the suspensive conditions set out in paragraph 4 below
   (“Scheme Conditions”) and the Standby General Offer will be subject to the fulfilment of the
   suspensive conditions set out in paragraph 8 below (“Standby General Offer Conditions”).

   In the event that:
       .  the Scheme becomes operative, the listing of all of Datacentrix’s Shares on the Main Board of the
           JSE will be terminated, and Datacentrix Shareholders will be deemed to have disposed of all of
           the Offer Shares for the Scheme Consideration, as defined below, thereby constituting
           Datacentrix as a wholly-owned subsidiary of DCT Holdings; or

      .   the Standby General Offer is made, following approval of the delisting resolution contemplated
          in paragraph 8.1.3 below (“Delisting Resolution”) and only Datacentrix Shareholders who
          accept the Standby General Offer will sell their Offer Shares to DCT Holdings for the Offer
          Consideration, as defined below. Those Datacentrix Shareholders who do not accept the
          Standby General Offer will remain shareholders in Datacentrix, which will become an unlisted
          subsidiary of DCT Holdings if the Delisting Resolution is passed.

   In this regard, Pinnacle through DCT Holdings, has submitted a firm intention offer letter to Datacentrix
   dated 7 November 2016 (“Firm Intention Offer letter” or “Offer letter”) in relation to the Proposed
   Transaction.

   The purpose of this joint firm intention announcement (“Firm Intention Announcement”) is to advise
   Datacentrix Shareholders and Pinnacle Shareholders of the terms and conditions of the Proposed
   Transaction.

2. Salient terms of the Offer

   If the Scheme becomes unconditional, the consideration payable by DCT Holdings to Datacentrix
   Shareholders in terms of the Scheme will be R6.65 per Datacentrix Share to be settled in cash,
   representing approximately R541 million in total (the “Scheme Consideration” or “Offer
   Consideration”). A comparable offer is also being made to the Datacentrix option holders (“option
   holders”), as contemplated in Section 125(2) of the Companies Act read with Regulation 87(2) of the
   Companies Regulations, 2011 (“Regulations”), and in accordance with the Datacentrix option scheme,
   implemented by Datacentrix Holdings Share Trust (“Share Trust”), subject to the successful
   completion of the Proposed Transaction (“Comparable Offer”). Further details are set out in paragraph
   12 below.

   On completion of the Proposed Transaction, Datacentrix will become a wholly owned subsidiary of
   DCT Holdings and be delisted from the JSE Limited (“JSE”).

   The Scheme Consideration compared to the Datacentrix share price is as follows:

                                                     Before                    Premium %
          30 day VWAP (cents) (Note 1)               613 cents                 8.5
          Closing price (cents) (Note 2)             621 cents                 7.1
          30 day VWAP (cents) (Note 3)               589 cents                 12.9
          Closing price (cents) (Note 4)             650 cents                 2.3

      Notes:
      1. The 30 day VWAP of a Datacentrix share traded on the JSE up to Friday, 4 November 2016,
         being the last business day immediately prior to the date of the Offer letter.
      2. The closing price of a Datacentrix share traded on the JSE as at Friday, 4 November 2016,
         being the last business day immediately prior to the date of the Offer letter.
      3. The 30 day VWAP of a Datacentrix share traded on the JSE up to Monday, 11 October 2016,
         being the last business day immediately prior to the date when the joint cautionary
         announcement was released.
      4. The closing price of a Datacentrix share traded on the JSE as at Monday, 11 October 2016,
         being the last business day immediately prior to the date when the joint cautionary
         announcement was released.

   The Scheme Consideration is determined on the basis that Datacentrix will not issue any further
   shares, any rights to any shares or any share appreciation rights or declare any dividends or
   distributions after the date of this Firm Intention Announcement, without the prior written consent of
   Pinnacle and DCT Holdings. If Datacentrix should implement any such issue without the prior written
  consent of Pinnacle and DCT Holdings, the Scheme Consideration will be adjusted pro rata per
  Datacentrix Share.

3. Rationale for the Scheme

  Pinnacle and Datacentrix believe that the Proposed Transaction will produce opportunities for the
  benefit of all Pinnacle and Datacentrix stakeholders, including:
  . Datacentrix Shareholders receiving a premium for their Datacentrix Shares;
  . greater penetration into large corporate clients and the ability to better service the existing client
     base of Datacentrix and Pinnacle; and
  . enhanced career prospects for staff in the enlarged Pinnacle Group and an opportunity to
     incentivise and retain top talent.

  Pinnacle intends that Datacentrix will continue to operate the business in the same manner as it has
  done in the past. Pinnacle intends to retain the existing executive directors of Datacentrix, but does not
  intend to retain the non-executive directors on the Datacentrix Board as Datacentrix will, after the
  successful implementation of the Scheme, become a wholly-owned subsidiary of DCT Holdings.
  The offer will assist Pinnacle in achieving significant value creation for Pinnacle Shareholders through
  inter alia:
         . the consolidation of platforms (where possible) such as back office, warehousing and
              logistics;
         . the opportunity for Datacentrix to participate in larger and more comprehensive revenue
              earning opportunities, including access to Pinnacle’s footprint in Sub-Saharan Africa
              comprising high growth markets such as Mozambique, Botswana, Zimbabwe and Zambia;
              and
         . superior cost management.

4. Conditions precedent to the implementation of the Scheme


  In terms of the Offer, the Scheme will be subject to, inter alia, the fulfilment, or waiver (in whole or in
  part) by Pinnacle and DCT Holdings, at their sole discretion, of the following conditions within 120
  days of the date of the publication of this firm intention announcement:
    4.1 the approval of the Scheme by the requisite majority of Datacentrix Shareholders, as
        contemplated in section 115(2) of the Companies Act, and:
                             . to the extent required, the approval of the implementation of such
                                resolution by the court; and

                             . if applicable, Datacentrix not treating the aforesaid resolution as a nullity,
                                 as contemplated in section 115(5)(b) of the Companies Act;
    4.2 Datacentrix Shareholders not having exercised appraisal rights by giving valid demands to this
        effect to Datacentrix, in terms of section 164(7) of the Companies Act, in respect of more than
        10% of the Datacentrix Shares within 30 business days following the Datacentrix Shareholders’
        meeting convened to approve the Scheme (“the General Meeting”), provided that, in the event
        that any Datacentrix Shareholders give notice objecting to the Scheme, as contemplated in
        section 164(3) of the Companies Act, and those Datacentrix Shareholders vote against the
        resolution proposed at the General Meeting to approve the Scheme, but do so in respect of no
        more than 10% of the Datacentrix Shares, this condition shall be deemed to have been fulfilled
        at the time of the General Meeting;
    4.3 the receipt of unconditional approvals, consents or waivers from all regulatory bodies necessary
        to implement the Offer including, but not limited to the Takeover Regulation Panel (“TRP”) (in
        terms of the compliance certificate to be issued in terms of the Companies Act in relation to the
        Offer); and
    4.4 by the date on which each of the above-mentioned conditions are fulfilled or waived, no material
        adverse change, being an event, fact or circumstance which will have an adverse impact of
        more than 10% on the net asset value of Datacentrix, will have occurred.

    The Conditions set out in paragraphs 4.2 and 4.4 above are for the benefit of Pinnacle and DCT
    Holdings and may be waived by Pinnacle and DCT Holdings in their sole discretion by notice in
    writing to Datacentrix. The Conditions set out in paragraphs 4.1 and 4.3 are of a regulatory nature
    and cannot be waived.

5. Conditions precedent to the posting of the circular (“Circular”) to Datacentrix Shareholders
   The posting of the circular to Datacentrix Shareholders in relation to the Proposed Transaction will be
   subject to the fulfilment, or waiver (in whole or in part), by Pinnacle and DCT Holdings in writing, of
   the following conditions precedent:

       .   the independent expert confirming in its report in terms of section 114 (3) of the Companies
           Act that the Scheme Consideration is fair and reasonable;

       .   the Datacentrix Independent Board and the Datacentrix Board unanimously recommending
           to Datacentrix Shareholders that they vote in favour of the resolutions relating to the
           Proposed Transaction; and

       .   all requisite approvals being received from the JSE, the Financial Surveillance Department of
           the South African Reserve Bank (acting through an authorised dealer) and the Takeover
           Regulation Panel for the posting of the Circular.

6. Key shareholder support

   Pinnacle and DCT Holdings have received the irrevocable undertakings from the following
   Datacentrix Shareholders to vote in favour of the Scheme or to accept the Standby General Offer (as
   per paragraph 8), which shareholders hold 72.05% of the Offer Shares:
                                                                      Percentage of Offer Shares
                                                                     beneficially held or controlled
      Datacentrix Shareholder             Offer Shares held                  (directly or indirectly)
       36One Asset Management
       (Pty) Ltd                        25 056 658                                          30.81%

       Sentio Capital Management
       (Pty) Ltd                        33 535 264                                          41.24%

             Total                      58 591 922                                          72.05%


7. Guarantees and confirmations to the Takeover Regulation Panel (“TRP”)
  Pinnacle and DCT Holdings have delivered to the TRP an irrevocable, unconditional bank guarantee
  issued by ABSA Bank Limited, for the maximum possible Scheme Consideration in compliance with
  regulations 111(4) and 111(5) of the regulations published in terms of sections 120 and 223 of the
  Companies Act.


8. Standby General Offer

   Pinnacle and DCT Holdings will (if they so elect), as a Standby General Offer, in terms of
   s117(1)(c)(v) of the Companies Act, if the Scheme is not approved, offer to acquire from all the
   Datacentrix Shareholders, who wish to accept the offer, all of their Datacentrix Shares on the same
   terms and conditions as would have been applicable on approval of the Scheme. If the Standby
   General Offer proceeds, the beneficiaries of the Share Trust will, in accordance with the Share Trust,
   receive the same amount as determined in paragraph 12 below, and the options will be deemed to
   have been cancelled.

   8.1 As indicated above, the Standby General Offer will (if Pinnacle and DCT Holdings so elect) only
       be made if the Scheme fails. Shareholders will be kept informed in this regard. The
       implementation of the Standby General Offer is subject to the fulfilment or waiver, as applicable,
       of the following conditions by no later than 9 January 2017, or such later date as Datacentrix,
       Pinnacle and DCT Holdings agree on in writing on or before such date:

   8.1.1 an independent expert, appointed by the Datacentrix Independent Board, provides a “fair and
         reasonable opinion” in relation to the Proposed Transaction in compliance with the Companies
         Act and the Takeover Regulations, which states, among other things, that the Offer
         Consideration is fair and reasonable to Datacentrix Shareholders;

   8.1.2 the Datacentrix Independent Board making a written unanimous recommendation to
         Datacentrix Shareholders to vote in favour of all the resolutions in respect of the Proposed
         Transaction;

   8.1.3 approval of an ordinary resolution to be proposed by the Datacentrix Board to approve the
         delisting of Datacentrix shares from the Main Board of the JSE in terms of section 1.14(a) of
         the JSE Listings Requirements, if the Standby General Offer is made;

   8.1.4 all clearances required to effect the Standby General Offer are granted, including without
         being limited to:
         (i) the approval of the documents related to the Proposed Transaction by the TRP and the
               issue by the TRP of a compliance certificate with respect to the Standby General Offer in
               terms of section 121(b) of the Companies Act;
         (ii) approval of the South African Reserve Bank in terms of the South African Exchange
               Control Regulations; and
         (iii) approval of the JSE, including, approvals required from the JSE in connection with the
               termination of the listing of the Shares, if the Delisting Resolution has been passed;

          provided that if any such clearance is granted subject to any condition or qualification, then
          Pinnacle and DCT Holdings shall be entitled to consent to the imposition of the condition or
          qualification, in which event the clearance will be regarded as having been granted; provided
          further that if such clearance is granted subject to any condition or qualification which is of a
          material nature, then, notwithstanding the foregoing, Datacentrix, Pinnacle and DCT Holdings
          must agree to the imposition of such condition or qualification if the clearance is to be
          regarded as having been granted.

          8.2 Waiver of Standby General Offer Conditions

          Pinnacle and DCT Holdings shall be entitled to waive (in whole or in part) in writing the
          Standby General Offer Conditions stipulated in paragraphs 8.1.1, 8.1.2 and 8.1.3. The
          Standby General Offer Conditions in paragraph 8.1.4 is not capable of waiver.

9. Termination of the Datacentrix listing

   Following implementation of the Proposed Transaction, application will be made to the JSE to
   terminate the listing of the Datacentrix Shares on the JSE.

10. Shareholdings, acting as principal and concert parties

    DCT Holdings (who acts in concert with Pinnacle) is the beneficial owner of 108 311 512 Datacentrix
    ordinary shares, which represents 57.1% of the ordinary share capital of Datacentrix.

    DCT Holdings is the proposed purchaser of all of the Datacentrix ordinary shares and acting in
    concert with Pinnacle.

11. Firm Intention Offer letter

    The Firm Intention Offer letter contains provisions relating to the implementation of the Proposed
    Transaction and certain undertakings of Datacentrix.

    In this regard Datacentrix undertakes that during the period from date of the Offer letter until the date
    of the General Meeting, (“the Offer Period”), Datacentrix will not (and it will procure that certain other
    persons related to it will not) directly or indirectly:

       11.1     solicit, initiate or encourage any expression of interest, enquiry, proposal or offer
                regarding, inter alia, any merger, share acquisition or exchange, business combination,
                sale or other disposition of all or substantially all of its assets, recapitalisation,
                reorganisation, liquidation, material sale or issue of securities or rights therein or thereto
                or any type of similar transaction or series of transactions or which could reasonably be
                considered to be likely to preclude or frustrate the Scheme or its implementation (an
                “Alternative Proposal”);

       11.2    participate in any discussion or negotiations regarding any Alternative Proposal, unless
               the Datacentrix Board, acting pursuant to its fiduciary duties, determines in good faith that
               it constitutes a bona fide written Alternative Proposal which would, if consummated in
               accordance with its terms, result in the aggregate value of the consideration payable in
               terms of such Alternative Proposal being at least 10% greater than the aggregate value of
               the Scheme Consideration taking into account, inter alia, the nature of the consideration,
               the likelihood of such a transaction being completed within a reasonable period of time
               and the financing risks relating thereto ("Superior Proposal");
       11.3     agree to, approve or recommend an Alternative Proposal, unless it constitutes a Superior
                Proposal; or

       11.4     enter into any agreement relating to an Alternative Proposal, unless it constitutes a
                Superior Proposal, save where the Datacentrix Board concludes that such action is
                necessary to ensure compliance with its directors' fiduciary duties and/or obligations in
                terms of the Companies Act.

      Datacentrix will, during the Offer Period, promptly notify Pinnacle and DCT Holdings of any
      Alternative Proposal which is made and which the Datacentrix Board considers to be serious and/or
      the Datacentrix Independent Board intends to pursue. Such notice shall include, to the extent that
      Datacentrix is permitted to do so, a description of the material terms and conditions of any such
      Alternative Proposal and the reasons why the Datacentrix Independent Board considers the
      Alternative Proposal to be a Superior Proposal. Datacentrix undertakes to promptly provide Pinnacle
      and DCT Holdings with the same information and level of information made available to the person
      making such Alternative Proposal.

      Should an Alternative Proposal constitute a Superior Proposal, then, prior to the Datacentrix Board
      approving or recommending and/or entering into an agreement in respect of the Superior Proposal,
      Datacentrix shall provide Pinnacle and DCT Holdings with a copy of the document in which the
      Superior Proposal is made and afford Pinnacle and DCT Holdings 10 Business Days to amend the
      Offer on financial and/or other terms equivalent to, or more favourable than, those contained in the
      Superior Proposal.


12.    The Share Trust

       In terms of, and as contemplated in the Share Trust, the beneficiaries who have not exercised
       options, will on approval of the Scheme, receive from DCT Holdings, the Comparable Offer. In
       terms of the Comparable Offer, the Scheme Consideration payable to beneficiaries, via the Share
       Trust, will be based on the notional number of Datacentrix Shares, to which a beneficiary would
       have been entitled on the exercise of the option, multiplied by the Scheme Consideration, less the
       purchase price which would have been payable by the beneficiary for such notional number of
       Datacentrix Shares (purchase price being calculated as the number of unexercised options
       multiplied by the relevant strike price), on the exercise of the option.

       In consideration for that payment by DCT Holdings to the Share Trust, and by the Share Trust in
       turn to the beneficiary, the relevant option will be deemed to have been cancelled, and the
       beneficiary will have no right to exercise such option.

       If the Standby General Offer proceeds, the beneficiaries of the Share Trust will, in accordance with
       the Share Trust, receive the same amount as determined in the paragraph above, and the options
       will be deemed to have been cancelled.

13.    Recommendations and fair and reasonable opinion

       Datacentrix has convened its Independent Board, comprised of its independent non-executive
       directors Ms Nolitha Fakude, Mr Alwyn Martin and Ms Dudu Nyamane (“Datacentrix Independent
       Board”), to consider the terms and conditions of the Proposed Transaction and the Comparable
      Offer. The Datacentrix Independent Board has appointed Mazars Corporate Finance Proprietary
      Limited as the independent expert ("Independent Expert"), as required in terms of section 114(2) of
      the Companies Act and as contemplated in Regulation 87(5) of the Regulations, to provide it with
      external advice in relation to the Proposed Transaction and the Comparable Offer respectively and
      to make appropriate recommendations to the Datacentrix Independent Board in the form of a fair
      and reasonable opinion.

      Whilst the contents of the Independent Expert's advice and opinion and the final views of the
      Datacentrix Independent Board will be detailed in the Circular, the Datacentrix Independent Board,
      together with the Independent Expert, has formed an initial view that the Scheme Consideration,
      the Offer Consideration and the Comparable Offer are fair and reasonable to Datacentrix
      Shareholders and option holders respectively.

      The Datacentrix Independent Board intends, based on the information currently available to it, to
      make a recommendation to Datacentrix Shareholders to vote in favour of the resolutions to be
      proposed at the General Meeting and to accept the Standby General Offer, if made, provided that
      the Datacentrix Independent Board receives a final opinion from the Independent Expert to the
      effect that the Scheme Consideration, Offer Consideration and Comparable Offer are fair and
      reasonable to Datacentrix Shareholders and option holders respectively.

14.   Documentation

      Details of the Scheme and the Standby General Offer will be included in the Circular, which will
      contain, inter alia, details of the Proposed Transaction, a notice of the General Meeting, a form of
      proxy, a form of surrender and transfer and Standby General Offer form. The Circular is expected
      to be posted to Datacentrix Shareholders on or about 5 December 2016.

      The salient dates and times pertaining to the Proposed Transaction will be released on SENS and
      published in the press at time of posting of the Circular.

      In terms of the JSE Listings Requirements, the Proposed Transaction is classified as a Category 2
      transaction for Pinnacle and accordingly does not require Pinnacle Shareholder approval. The net
      asset value of Datacentrix as at 30 June 2016 was R728,596 million and the profit after tax for the
      4 months ended 30 June 2016 was R41,135 million.


15.   Withdrawal of cautionary announcement

      Following the release of this Firm Intention Announcement, the cautionary announcement
      published on 12 October 2016 is hereby withdrawn and caution is no longer required to be
      exercised by Datacentrix Shareholders and Pinnacle Shareholders when dealing in their respective
      shares.

16.   Datacentrix responsibility statement

      The Datacentrix Independent Board accepts responsibility for the information contained in this Firm
      Intention Announcement to the extent that it relates to Datacentrix. To the best of their knowledge
      and belief, the information contained in this Firm Intention Announcement is true and nothing has
      been omitted which is likely to affect the importance of the information.

17.   Pinnacle and DCT Holdings responsibility statement

      The board of directors of Pinnacle and DCT Holdings accept responsibility for the information
      contained in this Firm Intention Announcement to the extent that it relates to Pinnacle and DCT
      Holdings. To the best of their knowledge and belief, the information contained in this Firm Intention
      Announcement is true and nothing has been omitted which is likely to affect the importance of the
      information.

Johannesburg
10 November 2016

Sponsor to Pinnacle and Transaction Sponsor to Datacentrix
Deloitte & Touche Sponsor Services Proprietary Limited




Legal Adviser to Pinnacle and Datacentrix
TWB




Independent Expert
Mazars Corporate Finance Proprietary Limited

Date: 10/11/2016 04:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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