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
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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.