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PETMIN LIMITED - Firm intention announcement proposed delisting and withdrawal of cautionary

Release Date: 19/12/2016 07:30
Code(s): PET     PDF:  
Wrap Text
Firm intention announcement proposed delisting and withdrawal of cautionary

PETMIN LIMITED
Incorporated in the Republic of South Africa
Registration Number 1972/001062/06
Share Code JSE: PET
ISIN: ZAE000076014
("Petmin" or the "Company")


JOINT FIRM INTENTION ANNOUNCEMENT IN RESPECT OF AN OFFER BY BIDCO TO 
ACQUIRE ALL OR A PORTION OF THE ISSUED ORDINARY SHARES IN PETMIN, EXCLUDING 
TREASURY SHARES, PROPOSED DELISTING AND WITHDRAWAL OF CAUTIONARY 
ANNOUNCEMENT

1 Introduction

Shareholders of Petmin ("Shareholders") are advised that on 15 December 2016, Petmin 
entered into an implementation agreement ("Implementation Agreement") with Capitalworks 
Private Equity SP GP Proprietary Limited ("Capitalworks"), acting in its capacity as the general 
partner of the Special Purpose Acquisition Partnership I and a special purpose vehicle, CorpVent 
100 Limited ("Bidco"), in terms of which Bidco will make two separate but concurrent offers to 
acquire all or a portion of the issued ordinary shares in Petmin ("Petmin Shares"), excluding the 
Petmin Shares held by Petmin's subsidiaries ("Offer Shares"), (collectively, the "Offer").

The Offer will be implemented by way of:

* a scheme of arrangement in terms of sections 114(1)(c), 114(1)(d) and 114(1)(f), read with 
  section 115, of the Companies Act, No. 71 of 2008, as amended ("Companies Act") and 
  paragraph 1.16(b) of the JSE Limited Listings Requirements ("Listings Requirements"), 
  between Petmin and the holders of Petmin Shares ("Shareholders"), ("Scheme"); and

* a general offer by Bidco to the holders of the Offer Shares ("Eligible Shareholders") in 
  terms of section 117(1)(c)(v) of the Companies Act and paragraph 1.14(c) of the Listings 
  Requirements, subject to the Scheme not becoming operative ("Standby Offer").
 
The Scheme and the Standby Offer will be proposed concurrently on the basis that the Standby 
Offer will only be implemented if the Scheme does not become operative.

The Offer, if implemented, will be settled, at the election of each relevant Eligible Shareholder, 
either (i) in cash at a price of R1.55 per Offer Share ("Cash Consideration") or (ii) through the 
issue by Bidco of a linked share ("Bidco Linked Share"), comprising 1 Bidco ordinary share 
("Bidco Ord") and 1 Bidco preference share ("Bidco Pref"), priced at R1.60 per Offer Share 
("Share Consideration"), ("Offer Consideration"). Further details of the Offer Consideration are 
set out in paragraph 5.3 below.

Simultaneously with the Offer, the delisting of the Petmin Shares from the main board of the 
securities exchange operated by JSE Limited ("JSE") will be proposed to Shareholders 
("Delisting").

The Offer and the Delisting (collectively or individually as the context may require, the 
"Transaction") will be subject to the fulfilment or waiver of the conditions precedent as set out in 
paragraph 6 below. 

As of the date of this announcement, irrevocable undertakings in support of the Offer 
representing 34.07% of the Offer Shares, have been obtained. This includes the support of all of 
the current executive directors of Petmin who collectively hold 7.74% of the Offer Shares and 
who will serve as the Chief Executive Officer, Financial Director and Business Development 
Director of Bidco going forward, thereby ensuring continuity in the ongoing management of 
Petmin. Additionally, no changes will be made to the senior members of the Petmin management 
team ("Petmin Management") following the implementation of the Transaction.

The Independent Board (as defined in paragraph 11 below) and the board of directors of Petmin 
("Petmin Board") are in unanimous support of the Transaction (as more fully described in 
paragraph 11 below).

2 Rationale for the Transaction

Capitalworks and the Independent Board (as defined in paragraph 11 below) believe the 
following benefits can be achieved through the implementation of the Offer and the Delisting:

* Petmin and Reinvesting Shareholders (as defined in paragraph 5.4 below) will benefit from 
  the support of Capitalworks, through Bidco, as a key shareholder.
* Eligible Shareholders are afforded an opportunity to realise their investment in Petmin 
  through an exit / partial exit at a premium to the current volume weighted Petmin Share 
  price.
* Reinvesting Shareholders are provided with an attractive yield in the form of the Bidco 
  Prefs, as part settlement of the Offer Consideration.
* Minority shareholder protections will be extended to all Reinvesting Shareholders.
* Through the Petmin Management Share Issue (as defined in paragraph 8 below), Petmin 
  Management will be aligned to drive value for all stakeholders of Petmin and Bidco.
* The costs associated with maintaining a listing on the JSE will be eliminated.

3 Information about Capitalworks

Capitalworks is a leading mid-market private equity business based in Johannesburg. 
Capitalworks operates on an independent basis and has approximately USD500 million of private 
equity funds under its management from leading international and domestic investors. Investors 
include domestic and international institutional investors, commercial banks, insurance 
companies, pension funds, family offices and high net worth individuals.

Capitalworks invests in a diversified range of equity investments in mid-market companies 
operating principally in South Africa on behalf of its investors. Capitalworks' philosophy is centred 
on building exceptional businesses through partnering with leading entrepreneurs and 
management teams. Capitalworks generates value for its stakeholders over the medium to long-
term by investing in niche opportunities. The active involvement, strategic input, operational 
support and extensive relationships of the Capitalworks team are directed, as appropriate, 
towards maximising the potential of its investee businesses and thereby benefiting all 
stakeholders.  

4 Information about Bidco

Bidco is a newly incorporated public company and has not conducted any business since 
incorporation. It is a special purpose vehicle through which the Offer will be implemented and its 
primary purpose will be to house the Offer Shares acquired pursuant to the Offer for the benefit 
of Bidco's shareholders. Post implementation of the Transaction, it is proposed that Bidco will be 
converted into a private company. Bidco's directors will include nominees from Capitalworks and, 
following the implementation of the Transaction, the current executive directors of Petmin.    

5 Salient terms of the Offer 

The Scheme and the Standby Offer each constitutes an "affected transaction" as defined in 
sections 117(1)(c)(iii) and 117(1)(c)(v) of the Companies Act, respectively, and, as such, the 
Offer is regulated by the Companies Act and the Companies Regulations, 2011 ("Regulations").  
The salient terms and conditions of the Offer and other information pertaining to the Offer are set 
out below.

 5.1 Scheme
    The Scheme will be proposed by the Petmin Board, between Petmin and the 
    Shareholders.
    In the event the Scheme becomes operative, the listing of all the Petmin Shares on the 
    JSE will be terminated and each Eligible Shareholder, excluding those Shareholders that 
    validly exercise their appraisal rights in accordance with section 164 of the Companies Act 
    ("Appraisal Rights") as a consequence of the approval of the Scheme 
    ("Dissenting Shareholders") and whose shareholder rights have not been reinstated as 
    envisaged in sections 164(9) and 164(10) of the Companies Act or who have not been 
    ordered by the court to withdraw their demands in terms of section 164(15)(v)(aa) of the 
    Companies Act ("Scheme Participants"), will be deemed to have disposed of all of their 
    Offer Shares in exchange for the Offer Consideration, such that Bidco will own all of the 
    Offer Shares previously held by the Scheme Participants.

    The Scheme will be subject to the fulfilment or waiver of the conditions precedent set out 
    in paragraph 6.1 below.

 5.2 Standby Offer
    Simultaneously with the Scheme, Bidco will make a general offer to all Eligible 
    Shareholders, whereby each Eligible Shareholder will be entitled to elect whether or not to 
    dispose of all or a portion of their Offer Shares to Bidco in exchange for the Offer 
    Consideration.

    Implementation of the Standby Offer will be conditional on, inter alia, the Scheme not 
    becoming operative.

    If Eligible Shareholders wish to dispose of all or a portion of their Offer Shares in terms of 
    the Standby Offer, they will be required to accept the Standby Offer and tender such Offer 
    Shares to Bidco ("Tender").

    Eligible Shareholders who do not wish to accept the Standby Offer in respect of any of the 
    Offer Shares held by them will continue to hold their Offer Shares ("Remaining 
    Shareholders").

    The Standby Offer will be subject to the fulfilment or waiver of the conditions precedent set 
    out in paragraph 6.2 below.

    If the Scheme does not become operative and the Standby Offer is implemented and the 
    Standby Offer becomes wholly unconditional, then the listing of all the Petmin Shares on 
    the JSE will be terminated and each Eligible Shareholder that has accepted the Standby 
    Offer and Tendered Offer Shares held by them ("Standby Offer Participants") will receive 
    the Offer Consideration in exchange for the Offer Shares Tendered and disposed of, such 
    that Bidco will acquire all of the Offer Shares Tendered by the Standby Offer Participants. 

    In the event that the Standby Offer is implemented and is accepted by Standby Offer 
    Participants holding at least 90% of the Offer Shares, Bidco will, at its election, invoke the 
    provisions of section 124 of the Companies Act, to compulsorily acquire all the Offer 
    Shares held by the Remaining Shareholders. 

 5.3 Offer Consideration
    The consideration that will be offered in terms of the Offer will be:
    * the Cash Consideration of R1.55 per Offer Share; or
    * the Share Consideration priced at R1.60 per Offer Share, settled through the issue 
      by Bidco of a Bidco Linked Share, comprising:
      - 1 Bidco Ord; and
      - 1 Bidco Pref. The Bidco Prefs will be issued with a face value of 159.9 cents 
         per share, will be cumulative redeemable preference shares with a nominal 
         annual compounded monthly coupon rate equal to the prevailing South African 
         prime interest rate, from time to time, ("Prime Rate") plus 2% and will be 
         redeemed on the 10th anniversary of the issue date. 

    In the event that the Scheme becomes operative, the Scheme Participants, alternatively, if 
    the Standby Offer is implemented, the Standby Offer Participants (collectively the "Offer 
    Participants"), will be entitled to elect to receive either the Cash Consideration or the 
    Share Consideration, or a combination thereof in respect of their Offer Shares. The Share 
    Consideration election will be subject to the Deemed Cash Election (as detailed in 
    paragraph 5.4 below).

    The Share Consideration will be issued in certificated form only and will not be listed on 
    the JSE or any other securities exchange.

    The table below illustrates the Offer Consideration premium:

                                 Prior to the 
                                 Cautionary         Cash              Share 
                                 Announcement       Consideration     Consideration 
                                 (23 June 2016)     premium           premium

    Market price (Note 1)          R1.08             43.52%            48.15%

    30 day VWAP (Note 2)           R1.13             37.17%            41.59%


                                 As at             Cash              Share
                                 14 December       Consideration     Consideration
                                 2016              premium           premium

    Market price (Note 3)          R1.35           14.81%             18.52%

    30 day VWAP (Note 4)           R1.34           15.67%             19.40%


   Notes:
   1. The "market price" represents the closing price of Petmin Shares on the JSE on 
      23 June 2016, being the last trading day prior to the publication of the cautionary 
      announcement on the Stock Exchange News Service operated by the JSE ("SENS") 
      on 24 June 2016 ("Cautionary Announcement").

   2. The "30 day VWAP" represents the volume weighted average price ("VWAP") at 
      which a Petmin Share traded on the JSE for the 30 trading days up to and including 
      23 June 2016, being the last trading day prior to the publication of the Cautionary 
      Announcement.

   3. The "market price" represents the closing price of Petmin Shares on the JSE on 
      14 December 2016.

   4. The "30 day VWAP" represents the VWAP at which a Petmin Share traded on the 
      JSE for the 30 trading days up to and including 14 December 2016.
      The tax implications of the Offer are dependent on the individual circumstances of the 
      Offer Participant concerned and the tax jurisdiction applicable to such Offer Participant. It 
      is recommended that the Offer Participants seek appropriate advice in this regard.

 5.4 Deemed Cash Election
    
    In the event that:
 
    * Offer Participants elect to receive the Share Consideration ("Reinvesting 
      Shareholders") in respect of a number of Offer Shares that would result in 
      Capitalworks acquiring less than 45% of the total issued ordinary shares in Bidco 
      (following the implementation of the Offer and the Petmin Management Share Issue, 
      as envisaged in paragraph 8 below) ("Minimum Post Offer Shareholding"), then the 
      number of Offer Shares in respect of which Reinvesting Shareholders have elected to 
      receive the Share Consideration will be reduced pro rata and such Reinvesting 
      Shareholders will be deemed to have elected the Cash Consideration in respect of 
      the balance of the Offer Shares, such that Capitalworks will acquire the Minimum Post 
      Offer Shareholding; 
   
    * an Offer Participant fails to or does not make a valid election in respect of the Offer 
      Consideration, such Offer Participant shall be deemed to have elected the Cash 
      Consideration; or

    * it would be unlawful for Bidco to offer the Share Consideration to Shareholders 
      resident or otherwise situated outside of South Africa ("Foreign Shareholders") or 
      unlawful for Foreign Shareholders to accept the Share Consideration without Bidco 
      complying with any foreign regulatory filings or obtaining any approvals or consents 
      from any authorities in any foreign jurisdiction or otherwise pursuant to an applicable 
      exemption from, or in a transaction not subject to, the registration requirements of the 
      applicable foreign jurisdiction, then Foreign Shareholders shall be precluded from 
      electing the Share Consideration and Foreign Shareholders who are Offer 
      Participants shall be deemed to have elected the Cash Consideration,

      (collectively the "Deemed Cash Election").

 5.5 Funding the Cash Consideration

    In order to enable Bidco to settle the Cash Consideration payable to Offer Participants, 
    Capitalworks will capitalise Bidco by:

    * advancing a loan ("Loan") of up to R150 million; and

    * subscribing for Bidco Ords and Bidco Prefs, at an aggregate subscription price of 
      R1.60 for every coupled Bidco Ord and Bidco Pref ("Capitalworks Subscription").

    The Loan and the Capitalworks Subscription will be funded from Capitalworks' existing 
    cash resources. 

    It is Bidco's intention that, after implementation of the Offer, Bidco will propose that the 
    Company make a R150 million distribution to its Shareholders, including Bidco, by way of 
    a cash dividend. Bidco will utilise the amount received by it solely for purposes of repaying 
    the whole or part of the Loan.

 5.6 Cash Guarantee

    In accordance with Regulations 111(4) and 111(5), FirstRand Bank Limited, acting through 
    its Rand Merchant Bank Division has issued an irrevocable, unconditional bank guarantee 
    to the Takeover Regulation Panel ("TRP") for the maximum Cash Consideration payable to 
    Offer Participants, amounting to R758 798 990.80. This amount was derived by taking into 
    account the Cash Consideration and 489 547 736 Offer Shares, being the maximum 
    number of Offer Shares in respect of which the Cash Consideration may be elected. In this 
    regard, certain Shareholders have provided irrevocable undertakings to elect to receive 
    the Share Consideration in respect of their Offer Shares. Further details of such 
    irrevocable undertakings are set out in paragraph 10 below.

 5.7 Confirmation of sufficient securities to settle the Share Consideration 

   Capitalworks confirms that Bidco has sufficient authorised but unissued Bidco Ords and 
   Bidco Prefs in order to settled the Share Consideration to Offer Participants. 


6 Conditions precedent

 6.1 Scheme

     Implementation of the Scheme will be subject to the fulfilment or waiver of, inter alia, the 
     following salient conditions precedent ("Scheme Conditions"):

     6.1.1 the approval of the special resolution pertaining to the Scheme ("Scheme 
           Resolution"), by the requisite majority of Shareholders at the general meeting of 
           Shareholders convened for purposes of considering and, if deemed fit, approving 
           the resolutions required to approve the Transactions and the Delisting ("General 
           Meeting"), as contemplated in section 115(2)(a) of the Companies Act, and in 
           the event of the provisions of section 115(2)(c) becoming applicable:

           6.1.1.1 the High Court of South Africa approving the implementation of 
                   the Scheme Resolution; and 

           6.1.1.2 if applicable, the Company not treating the Scheme Resolution 
                   as a nullity as contemplated in section 115(5)(b) of the Companies 
                   Act; 

      6.1.2 with regards to Shareholders exercising their Appraisal Rights (if any), 
            either:

           6.1.2.1 Shareholders give notice objecting to the Scheme as 
                   contemplated in section 164(3) of the Companies Act and vote 
                   against the Scheme Resolution at the General Meeting, in respect of 
                   1% or less of all of the Offer Shares; or

           6.1.2.2 if Shareholders do give notice objecting to the Scheme and 
                   vote against the Scheme Resolution in respect of more than 1% of all 
                   of the Offer Shares in issue (excluding treasury shares), then, within 
                   30 business days following the General Meeting, Dissenting 
                   Shareholders have not exercised Appraisal Rights, by giving valid 
                   demands in terms of sections 164(5) to 164(8) of the Companies Act, 
                   in respect of more than 1% of all the Offer Shares; and

     6.1.3 the receipt of all approvals, consents or waivers from those South African 
           regulatory authorities as may be necessary to implement the Transaction 
           ("Regulatory Consents").

 6.2 Standby Offer

     The Standby Offer will be subject to the fulfilment or waiver of, inter alia, the following 
     salient conditions precedent ("Standby Offer Conditions"):

     6.2.1 the Scheme conditions precedent envisaged in paragraph 6.1.1 and 6.1.2 
           above are not timeously fulfilled or waived; 

     6.2.2 the approval of the ordinary resolution pertaining to the Delisting ("Delisting 
           Resolution"), by the requisite majority of Shareholders at the General Meeting;

     6.2.3 Shareholders accept the Standby Offer in respect of so many Offer Shares 
           as will result in Bidco acquiring at least 45% of all of the Petmin Shares in issue 
           (excluding treasury shares); and

     6.2.4 the receipt of the Regulatory Consents.

    The Scheme Conditions and the Standby Offer Conditions envisaged in paragraphs 6.1 and 6.2 
    above shall collectively hereinafter be referred to as the "Offer Conditions".

 6.3 Waiver of the Scheme Conditions and the Standby Offer Conditions
     Capitalworks shall be entitled, subject to the approval of the TRP, to waive fulfilment of the 
     Offer Condition envisaged in paragraph 6.2.3 upon written notice to Petmin and Petmin 
     and Capitalworks shall be entitled to waive fulfilment of the Offer Conditions envisaged in 
     paragraphs 6.1.2 and 6.2.2 by agreement. The Offer Conditions envisaged in paragraphs 
     6.1.1, 6.1.3 and 6.2.1 shall not be capable of waiver.

7 Termination Events

The Scheme and/or the Standby Offer will terminate with immediate effect, inter alia, upon the 
occurrence of the following events:

* If all the Offer Conditions have not been fulfilled or waived on or before the relevant date/s 
  for fulfilment or waiver.

* Upon written notice by Petmin, Capitalworks or Bidco to another party ("Defaulting Party") 
  if the Defaulting Party commits a breach of certain specified material provisions of the 
  Implementation Agreement and fails to remedy such breach within 5 business days of 
  receipt of a notice by the Defaulting Party from another party requesting such remedy.

* Subject to certain requirements, on the 5th business day following a written notice by 
  Capitalworks in the event that a Material Adverse Change occurs. A "Material Adverse 
  Change" means: 

  - any circumstance, fact or event (including any change in law) ("Event"), actual or 
    which might reasonably be expected to arise which, alone or together with any other 
    Event, actual or which might reasonably be expected to arise, which has, or is 
    reasonably likely to have, the effect of being materially adverse with regard to the 
    operations, continued existence, business, condition, assets and / or liabilities of the 
    Petmin group ("Group"). In this regard, to be material, the Event, at the time of the 
    assessment thereof, must have or must reasonably be likely to:

    * adversely affect the Group's consolidated earnings before interest, tax, 
      depreciation and amortisation by more than 15% compared to the earnings before 
      interest, tax, depreciation and amortisation of the Group as set out in the 
      consolidated audited annual financial statements for the Group for the financial 
      year ending 30 June 2016 ("AFS 2016"); or

    * result in a loss by the Company equivalent to 10% or more of the consolidated 
      net asset value of the Group, compared to the consolidated net asset value of the 
      Group as set out in the AFS 2016; or
 
- the JSE All Share Index closing price, or any equivalent or replacement thereof, falls 
  and remains below the JSE All Share Index closing price on the business day prior to 
  the signature date of the Implementation Agreement, multiplied by 75% (the JSE All 
  Share Index closing price will be as published on the applicable Bloomberg screen 
  (JALSH Index HP)) for 5 or more consecutive trading days at any time after the 
  signature date of the Implementation Agreement.

8 Petmin Management Share Issue

Petmin Management will be retained after implementation of the Offer. 

Capitalworks recognises the importance of a motivated, aligned and engaged management team 
in order to achieve growth and shareholder satisfaction. Accordingly, to appropriately incentivise 
Petmin Management to create value for the shareholders of Bidco, following the implementation 
of the Offer, Bidco will issue B ordinary shares in Bidco ("Bidco B Ords") to Petmin Management 
at a nominal subscription price ("Petmin Management Share Issue"). 

The Bidco Ords and Bidco B Ords will rank pari passu in all respects, save that the Bidco B Ords 
will (i) receive any distributions declared by Bidco during the first 4 years after the issue of the 
Bidco B Ords on a deferred, staggered basis and (ii) have a stepped economic participation in 
the first 4 years following the issue of the Bidco B Ords (i.e. 25% after year 1, 50% after year 2, 
75% after year 3 and 100% after year 4), in the event of Bidco being liquidated or wound up.

Assuming that the Scheme becomes operative, or the Standby Offer is implemented, following 
the Petmin Management Share Issue, the Bidco B Ords will represent approximately 3.34% of 
the aggregate number of Bidco ordinary shares in issue, subject to the stepped economic 
participation stated above.

9 Delisting

The listing of all the Petmin Shares on the JSE will be terminated pursuant to (i) the Scheme 
becoming operative or (ii) the Standby Offer being implemented.

10 Irrevocable undertakings

Shareholders and the holder of an option to purchase Petmin Shares ("Option"), who collectively 
hold or will hold, subject to the exercise of the Option, 180 764 671 Petmin Shares, representing 
34.07% of the Offer Shares, and who are or will be, subject to the exercise of the Option, eligible 
to vote at the General Meeting, have irrevocably undertaken to inter alia: 
 
* attend the General Meeting and vote in favour of all the resolutions required to approve the 
  Transaction; and

* accept the Standby Offer (subject to the Scheme not becoming operative),
 (collectively, the "Irrevocables").

The support above includes the support of all of the executive and non-executive directors of 
Petmin who are Shareholders as well as support from existing black economic empowerment 
Shareholders. Further to the above, Shareholders who collectively hold 41 495 924 Petmin 
Shares, representing 7.82% of the Offer Shares, have irrevocably undertaken to, in the event the 
Scheme becomes operative or the Standby Offer is implemented, elect to receive the Share 
Consideration in respect of all the Offer Shares held by them.

11 Independent Board, Independent Expert opinion and recommendations

Petmin has convened an independent board ("Independent Board"), comprised of Mr. T.D. 
Petersen, Mr. E. Greyling, Ms. K Kalyan and Mr. M. Arnold, to consider the Offer and the Offer 
Consideration. 

The Independent Board and the Petmin Board have appointed Ernst & Young Advisory Services 
Proprietary Limited as the independent expert ("Independent Expert") for purposes of preparing 
an opinion in respect of the Offer and the Offer Consideration in accordance with Regulation 90, 
as read with sections 114(2) and 114(3) of the Companies Act, and paragraph 1.14(d), as read 
with Schedule 5, of the Listings Requirements ("Independent Expert Report").

Having regard to the Independent Expert Report:

* the Independent Board and Petmin Board are of the opinion that the Offer and the Offer 
  Consideration are fair and reasonable; and 

* the Petmin Board is of the opinion that the Transaction is fair in so far as the Shareholders 
  are concerned.

The Independent Expert Report will be included in the Circular (as envisaged in paragraph 13 
below).

The Independent Board and the Petmin Board unanimously recommend that Shareholders vote 
in favour of the Scheme Resolution, the Delisting Resolution and that they accept the Standby 
Offer. 

Each of Messrs J du Preez, B Doig and B Tanner (each having a personal financial interest in 
the Offer) and Ms L Mogotsi (having a potential conflict of interest), recused themselves from 
participating in the aforementioned resolutions of the Petmin Board.

12 Pro forma financial information

The table below sets out the pro forma financial effects of the Offer on an Offer Participant who 
receives the Share Consideration.

The pro forma financial effects have been prepared for illustrative purposes only in order to 
provide information on how the Offer may affect the financial performance and position of an 
Offer Participant who receives the Share Consideration, by illustrating the effect thereof on the 
basic and diluted earnings per share ("EPS"), basic and diluted headline earnings per share 
("HEPS"), net asset value ("NAV") and tangible net asset value ("TNAV") of an Offer Share that 
an Offer Participant will be exchanging for the EPS, HEPS, NAV and TNAV per Bidco Linked 
Share, comprising 1 Bidco Ord and 1 Bidco Pref.

The pro forma financial effects have been prepared to illustrate the effect of the Offer on an Offer 
Participant who receives the Share Consideration, had the Offer been implemented on 1 July 
2015 for purposes of EPS and HEPS and on 30 June 2016 for purposes of NAV and TNAV.
The pro forma financial effects set out below are the responsibility of the directors of Petmin and 
Bidco, are provided for illustrative purposes only and because of their nature, may not fairly 
represent the financial performance and position of an Offer Participant after the implementation 
of the Offer. The pro forma financial effects have been prepared in accordance with International 
Financial Reporting Standards ("IFRS"). 

The following assumptions have been made for purposes of the presenting the pro forma 
financial effects of the Offer:

* Bidco acquires all Offer Shares from Eligible Shareholders.

* Offer Participants elect to receive the Share Consideration in respect of 25% of the total 
  Offer Shares, resulting in the issue of 132.65 million Bidco Linked Shares to Offer 
  Participants.

* Offer Participants elect to receive the Cash Consideration in respect of 75% of the total 
  Offer Shares, resulting in a total Cash Consideration payable of R617 million to Offer 
  Participants.

* For purposes of capitalising Bidco in order to enable the settlement of the Cash 
  Consideration of R617 million by Bidco, Capitalworks will provide a Loan of R150 million to 
  Bidco and, through the Capitalworks Subscription, Capitalworks will subscribe for 291.76 
  million Bidco Linked Shares. The Loan is repayable in 1 year and shall accrue interest at the 
  Prime Rate.

* Bidco will issue 14.67 million Bidco B Ords to Management in terms of the Petmin 
  Management Share Issue.

* Estimated once-off transaction costs amounting to R20 million was expensed. Capitalworks 
  will provide a loan to fund these transaction costs. The loan is repayable in 2 years and shall 
  accrue interest at the Prime Rate.

* Bidco will be treated as an investment entity in terms of IFRS 10 and accounts for its 
  investment in Petmin at fair value through profit or loss. The fair value of the investment is 
  considered to be the consideration paid by Bidco for the Offer Shares.

* Bidco Prefs are classified as a debt instrument.

* There are no post balance sheet events which require adjustment.

* All adjustments, with the exception of the once-off transaction costs, are expected to have 
  a continuing effect.

                            Before the 
                             Offer                        After the Offer
                                                  
                                                  Bidco     Bidco      Bidco      
                                                   Ord       Pref      Linked     Percentage
                                                                        Share       change

Basic EPS (cents)              2.07               (21.99)    20.19      (1.80)      (187%)

Diluted EPS (cents)            2.07               (21.99)    20.19      (1.80)      (187%)

Basic HEPS (cents)            23.66               (21.99)    20.19      (1.80)      (108%)

Diluted HEPS (cents)          23.66               (21.99)    20.19      (1.80)      (108%)

NAV per share (cents)        246.95                (4.45)    159.9      155.45       (37%)

TNAV per share (cents)       246.95                (4.45)    159.9      155.45       (37%)

Weighted average number 
of shares in issue ('000)    534 431              439 095   424 429     424 429      (21%)

Number of shares in issue 
('000)                       530 615              439 095   424 429     424 429      (20%)

Notes:
1. The financial information in the "Before the Offer" column has been derived from Petmin's 
   reviewed condensed consolidated preliminary financial results for the year ended 
   30 June 2016. 

2. The financial information included in the "After the Offer" column has been derived by 
   taking the Bidco pro forma financial effects pursuant to the Offer (based on Bidco's 
   unaudited financial statements as at incorporation, adjusted for the Offer) and multiplying 
   these results by the exchange ratio of 1 Bidco Linked Share for every 1 Offer Share, to 
   provide the pro forma financial effects of the Offer on an Offer Participant who receives the 
   Share Consideration. The individual components of the Bidco Linked Share, being the Bidco 
   Ord and the Bidco Pref, have been presented separately and then aggregated.

   2.1 The financial information included in the "Bidco Ord" column has been derived by 
       utilising the number and weighted number of Bidco ordinary shares in issue, inclusive 
       of the Bidco B Ords.

   2.2 The financial information included in the "Bidco Pref" column is not presented in 
       terms of IFRS and has been presented for illustrative purposes only and to provide 
       Shareholders with additional information. The EPS and HEPS have been calculated 
       by dividing the finance charge accrual on the Bidco Prefs by the weighted average 
       number of Bidco Prefs in issue. The NAV and TNAV reflects the issue price of the 
       Bidco Pref.

   2.3 The financial information included in the "Bidco Linked Share" column is not 
       presented in terms of IFRS and has been presented for illustrative purposes only and 
       to provide Shareholders with additional information. This column represents the 
       aggregate of the "Bidco Ord" and "Bidco Pref" columns. The number and weighted 
       average number of shares in issue represents the Bidco Linked Shares only, 
       excluding the Bidco B Ords.
3. The "Percentage change" column compares the "Bidco Linked Share" column included in 
   the "After the Offer" column with the "Before the Offer" column.

For the avoidance of doubt, the "Before the Offer" column illustrates a direct interest in Petmin, 
which represents consolidated operating results of Petmin and its subsidiaries, whereas the 
"After the Offer" column illustrates an indirect interest in Petmin through Bidco, an investment 
entity that accounts for its investment in Petmin at fair value through profit and loss i.e. the 
operating results of Petmin and its subsidiaries are not reflected in the financial results of Bidco. 

The pro forma financial effects have not been reviewed or reported on by the reporting 
accountants and auditors of Petmin. Following the review by the reporting accountants and 
auditors of Petmin, if there are any adjustments required to these published pro forma financial 
effects, a subsequent announcement will be published on SENS including the revised pro forma 
financial effects.

13 Circular and prospectus
   Petmin and Bidco will issue a combined offer circular to Shareholders, as contemplated in 
   Regulation 102, setting out the full terms and conditions of the Scheme and the Standby Offer 
   and including the notice convening the General Meeting ("Circular"). The Circular will be 
   accompanied by a prospectus to be issued by Bidco in accordance with section 99 of the 
   Companies Act and registered with the Companies and Intellectual Property Commission, the 
   purpose of which is to give Shareholders information regarding Bidco for purposes of the Offer 
   ("Prospectus").

The Circular, accompanied by the Prospectus, is expected to be posted on or about 
20 February 2017, subject to the approval of an extension by the TRP. 

14 Other important information
   Further details relating to the Transaction and the related salient dates and times will be 
   published on SENS in due course.

15 Withdrawal of Cautionary Announcement
   Further to the Cautionary Announcement dated 24 June 2016, and the renewal thereof on 
   8 August 2016, 20 September 2016 and 1 November 2016, Shareholders are advised that 
   caution is no longer required to be exercised when dealing in the Company's securities.

16 The Independent Board responsibility statement
   The Independent Board (to the extent that the information relates to Petmin) collectively and 
   individually accept responsibility for the information contained in this announcement and certify 
   that, to the best of their knowledge and belief, the information contained in this announcement 
   relating to Petmin is true and this announcement does not omit anything that is likely to affect the 
   import of such information.

17 Capitalworks and Bidco board responsibility statement
   Capitalworks and the board of directors of Bidco (to the extent that the information relates to 
   Capitalworks and Bidco) collectively and individually accept responsibility for the information 
   contained in this announcement and certify that, to the best of their knowledge and belief, the 
   information contained in this announcement relating to Capitalworks and Bidco is true and this 
   announcement does not omit anything that is likely to affect the import of such information.

Johannesburg
19 December 2016

Corporate advisor to Capitalworks and Bidco
One Capital Advisory (Proprietary) Limited

Attorneys to Capitalworks and Bidco
Cliffe Dekker Hofmeyr Inc.

Attorneys to Petmin
Cliffe Dekker Hofmeyr Inc.

Sponsor and corporate advisor to Petmin
River Group 

Independent Expert 
Ernst & Young Advisory Services Proprietary Limited

Disclaimer
This announcement shall not constitute an offer to sell or the solicitation of an offer to buy securities, 
nor shall there be any sale of the securities described herein, in any jurisdiction, in which such offer, 
solicitation or sale would be unlawful prior to registration or qualification under the securities laws of 
such jurisdiction or without an exemption from the registration or qualification requirements under the 
securities laws of such jurisdiction.

This announcement shall not constitute an offer to sell or the solicitation of an offer to buy securities in 
the United States. Securities may not be offered or sold in the United States or to or for the account or 
benefit of a person located in the United States absent registration under the Securities Act of 1933, 
as amended ("Securities Act") or pursuant to an exemption from, or in a transaction not subject to, 
registration. The securities to which this announcement relates have not been, and will not be, 
registered under the Securities Act, or the securities laws of any state of the United States or other 
jurisdiction. There will be no public offering of securities in the United States or any other jurisdiction.

This announcement and any other material in relation to the securities described herein is only 
directed at, and any investment or investment activity to which this announcement relates is available 
only to, and will be engaged in only with, persons (i) outside the United Kingdom; or (ii) having 
professional experience in matters relating to investments who fall within the definition of "investment 
professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) 
Order 2005 ("Order"); or (iii) who are high net worth entities falling within Article 49(2)(a) to (d) of the 
Order (all such persons together being referred to as "relevant persons").  Persons who are not 
relevant persons should not take any action on the basis of this announcement and should not act or 
rely on it.

This announcement does not constitute an offer of securities to any person with a registered address 
in, or who is resident in, Australia, Canada or Japan. No securities have or will be registered under 
the relevant laws of any state, province or territory of Australia, Canada or Japan.

The distribution of this announcement in certain jurisdictions may be restricted by applicable law and 
therefore persons in such jurisdictions into which this announcement is released, published or 
distributed should inform themselves about and observe such restrictions.

Forward-looking statements

The statements contained in this announcement that are not historical facts are "forward-looking" 
statements. These forward-looking statements are subject to a number of substantial risks and 
uncertainties, many of which are beyond the Company's and Capitalworks' control and actual results 
and developments may differ materially from those expressed or implied by these statements for a 
variety of factors. These forward-looking statements are statements based on the Company's and 
Capitalworks' current intentions, beliefs and expectations about among other things, the Company's 
results of operations, financial condition, prospects, growth, strategies and the industry in which the 
Company operates.  By their nature, forward-looking statements involve risks and uncertainties 
because they relate to events and depend on circumstances that may or may not occur in the 
future. Many of these risks and uncertainties relate to factors that are beyond the Company's and 
Capitalworks' ability to control or estimate precisely, such as changes in taxation, future market 
conditions, currency fluctuations, the actions of governmental regulators and other risk factors. Such 
risks and uncertainties could cause actual results to vary materially from the future results indicated, 
expressed or implied in such forward-looking statements. The forward-looking statements contained 
in this announcement speak only as of the date of this announcement and the Company and 
Capitalworks undertake no duty to update any of them publicly in light of new information or future 
events, except to the extent required by applicable law or the Listings Requirements. 

No statement in this announcement is intended as a profit forecast or a profit estimate and no 
statement in this announcement should be interpreted to mean that earnings per Petmin Share for the 
current or future financial years would necessarily match or exceed the historical published earnings 
per Petmin Share. Prices and values of, and income from, shares may go down as well as up and an 
investor may not get back the amount invested. It should be noted that past performance is no guide 
to future performance. Persons needing advice should consult an independent financial adviser.





Date: 19/12/2016 07:30:00 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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