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Proposed listing of Sea Harvest Holdings Proprietary Limited and a simultaneous capital raising
Brimstone Investment Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/010442/06)
ISIN Number : ZAE000015277 Share Code : BRT
ISIN Number : ZAE000015285 Share Code : BRN
("Brimstone” or “the Company”)
PROPOSED LISTING OF SEA HARVEST HOLDINGS PROPRIETARY LIMTED (“SEA HARVEST”) (THE “PROPOSED
LISTING”) AND A SIMULTANEOUS CAPITAL RAISING
1. Introduction and background
Shareholders of Brimstone are referred to the Sea Harvest Intention to Float announcement released on
the Stock Exchange News Service (“SENS”) of the JSE Limited (“JSE”) today and are advised as follows:
1.1. Brimstone has been invested in Sea Harvest since 1998, when it acquired an initial shareholding. In
1999 it increased its shareholding to 10.76%. In 2004, Brimstone increased its interest to 21.52% and,
when Tiger Brands Limited announced its intention to exit Sea Harvest in 2009, Brimstone led a
consortium in the largest broad-based black economic empowerment (“BBBEE”) transaction in the
fishing industry and acquired control of Sea Harvest, creating one of South Africa’s first black industrial
companies. Today, Brimstone holds 85% of Sea Harvest, with management and staff holding the
remaining 15%.
1.2. Since taking control in 2009, Brimstone has invested a further c.R776 million in Sea Harvest through a
combination of additional capital and reinvested profits. This growth has taken the form of organic
growth whereby Sea Harvest invested considerably in upgrading its operations, and acquisitive growth
whereby Sea Harvest acquired control of Mareterram Limited (“Mareterram”), a public company
registered and incorporated in Australia and listed on the Australian Stock Exchange and in which Sea
Harvest holds a 55.9% controlling interest.
1.3. Brimstone has tasked management at Sea Harvest to continue on this growth strategy and in order to
do this, Sea Harvest requires capital. In order to facilitate this, Brimstone, together with the other
shareholders in Sea Harvest, has resolved to proceed with a separate listing of Sea Harvest on the main
board of the JSE by the end of March 2017. A capital raising of up to R1.5 billion (“Private Placement”)
will be undertaken by Sea Harvest simultaneously with the Proposed Listing.
1.4. Sea Harvest is one of the first black industrial companies to be listed on the JSE, a strong confirmation
that transformation works in South Africa.
1.5. Importantly, Brimstone remains committed and supportive of Sea Harvest and does not intend
disposing of any of the ordinary shares of Sea Harvest held by it (“Sea Harvest Ordinary Shares”) in the
Proposed Listing. Brimstone intends retaining control of Sea Harvest post the Proposed Listing.
1.6. As a result of the Proposed Listing, and the simultaneous Private Placement of up to R1.5 billion,
Brimstone’s 85% interest in Sea Harvest will be diluted to approximately 52%.
2. Description of Sea Harvest
2.1. Sea Harvest is a leading, internationally recognised vertically integrated fishing and food business with
operations in South Africa and Australia, servicing retail and foodservice customers in 22 countries.
Established in 1964 on the Atlantic West Coast of South Africa, Sea Harvest has become a household
brand and market leader in the fish category. In the 2016 Icon Brands Survey, Sea Harvest was rated
as the 7th most iconic brand in South Africa and the highest scoring seafood brand.
2.2. Sea Harvest’s principal South African business is fishing for Cape hake, processing of the catch into
frozen and chilled seafood, and the packaging, distribution and marketing of these products, locally
and internationally.
2.3. Sea Harvest expanded its operations internationally in 2015 and, through 100% owned subsidiary Sea
Harvest International Proprietary Limited, it owns a controlling stake in Mareterram, an Australian
listed agri-business that fishes, processes and packs king and tiger prawns and other by-catch for the
Australian domestic and international markets, and operates a nationwide foodservice sales and
distribution business.
2.4. Both Sea Harvest and Mareterram have achieved the “gold” standard in sustainable fishing, the Marine
Stewardship Council certification in their respective fisheries. This is a key component for the
sustainability of not only products, but indeed the companies.
3. Details of the Proposed Listing
3.1. Rationale for the Proposed Listing
3.1.1 The Proposed Listing will strengthen Sea Harvest’s balance sheet by enabling it to repay third-
party debt and providing Sea Harvest with the additional capital to support growth both
organically and acquisitively. It is envisaged that with part of the proceeds of the Private
Placement, Sea Harvest will be:
- repaying all its third-party debt of c.R303 million; and
- raising cash of c.R480 million which will supplement a revolving credit facility of up to
R450 million, allowing Sea Harvest to contribute c.R930 million of capital to growth
opportunities.
Sea Harvest has identified a number of growth opportunities, which include:
3.1.1.1 Organic growth - improving efficiencies and enhancing margins through further
investment in vessels, plant, operations and markets;
3.1.1.2 Acquisitive growth, including:
- diversifying into other products/species within the South African fishing sector.
Sea Harvest’s excellent BBBEE credentials will allow it to play a consolidating role
in the sector where BBBEE is an important part of the operating environment;
- diversifying into other local food sectors, where Sea Harvest’s expertise in
processing, branding and marketing can be utilised; and
- geographically in Australia via Mareterram. Mareterram has a stated ambition
of growing in the agri-business sector.
3.1.2 Brimstone has invested substantial capital in supporting Sea Harvest’s growth to date, and the
Proposed Listing allows Brimstone the opportunity to release some of the capital it has
contributed to Sea Harvest’s growth by redeeming the class B and class C cumulative
preference shares (“Sea Harvest Preference Shares”) and the loans granted by Brimstone to
Sea Harvest (“Sea Harvest Shareholder Loans”), in total c.R575 million.
3.1.3 The Proposed Listing will provide Sea Harvest with ongoing access to capital markets in order
to support its growth strategy.
3.1.4 The Proposed Listing will also allow Sea Harvest to attract and retain management and staff
through the use of tradeable instruments. This will align the interests of management and staff
with those of Sea Harvest’s shareholders.
3.2. Impact of the Proposed Listing
3.2.1. Brimstone currently holds 828 242 000 Sea Harvest Ordinary Shares, which represents an
interest of 85% in the ordinary share capital of Sea Harvest. In addition, Brimstone has provided
funding to Sea Harvest amounting to approximately R575 million, in the form of the Sea
Harvest Preference Shares and the Sea Harvest Shareholder Loans.
3.2.2. It is Brimstone’s intention to retain all its Sea Harvest Ordinary Shares. In anticipation of the
Private Placement, all the Sea Harvest Preference Shares are to be redeemed, resulting in
Brimstone receiving a payment of approximately R520 million, as well as R55 million as a result
of the repayment of the Sea Harvest Shareholder Loans.
3.2.3. Following the Private Placement and the consolidation of Sea Harvest Ordinary Shares in a 1:6
ratio, Brimstone will hold 138 040 333 Sea Harvest Ordinary Shares, representing an interest
of approximately 52% in Sea Harvest.
3.2.4. Brimstone intends to continue to control Sea Harvest and, at a minimum, retain a 50.1%
shareholding in Sea Harvest post the Proposed Listing.
3.2.5. Brimstone intends to reduce its debt funding with the proceeds received from the redemption
of the Sea Harvest Preference Shares and the repayment of the Sea Harvest Shareholder Loans.
3.2.6. The Proposed Listing and the simultaneous Private Placement is regarded as a Category 1
transaction in terms of the JSE Listings Requirements, requiring Brimstone shareholder
approval. Details of the general meeting for Brimstone shareholders (“General Meeting”) to
approve the requisite resolutions are set out in paragraph 6 below.
3.3. The Private Placement
3.3.1. The Private Placement is expected to comprise an offer for subscription by Sea Harvest of new
ordinary shares.
3.3.2. Full details of the Private Placement will be disclosed in a pre-listing statement to be issued by
Sea Harvest (“Sea Harvest PLS”) in due course and will also be made available on Sea Harvest’s
website at www.seaharvest.co.za. In addition, the details of the Private Placement will also be
released on SENS under Brimstone’s share code and a copy of the Sea Harvest PLS will be
available on Brimstone’s website (www.brimstone.co.za) at the appropriate time.
4. Conditions
The Proposed Listing is subject to the following conditions:
4.1. approval by the requisite majority of Brimstone shareholders of the ordinary resolutions contained in
a notice of general meeting forming part of a circular to be dispatched to Brimstone shareholders (“the
Circular”);
4.2. the requisite approval by the JSE for the Proposed Listing having been obtained; and
4.3. obtaining any other regulatory consents to the extent required.
5. Value and profits attributable to the net assets
The value of the net assets of Sea Harvest as at 30 June 2016, the last reported date, is R214.076 million
and the profits attributable to the net assets of Sea Harvest for the six months ended 30 June 2016 are
R36.945 million.
6. Circular and salient dates and times
The Circular containing full details of the Proposed Listing, accompanied by a notice of General Meeting will
be dispatched to Brimstone shareholders today. The salient dates and times are as follows:
2017
Circular posted to Brimstone shareholders on Wednesday, 8 February
Last day to trade to be entitled to vote at, and participate in the Tuesday, 28 February
General Meeting
Record date to be entitled to vote at, and participate in the Friday, 3 March
General Meeting
Forms of proxy to be received by 11:00 on Tuesday, 7 March
General Meeting to be held at 11:00 on Thursday, 9 March
Results of General Meeting to be released on SENS on Friday, 10 March
1. These dates and times are subject to amendment. Any such amendment will be released on SENS.
Cape Town
8 February 2017
Investment Bank, Corporate Advisor and Sponsor to Brimstone
Nedbank Corporate and Investment Banking
Sole Financial Advisor, Sole Global Co-ordinator, Sole Bookrunner and Sole Transaction Sponsor to Sea Harvest
The Standard Bank of South Africa Limited
Independent Reporting Accountants to Brimstone and Sea Harvest
Deloitte & Touche
Legal Advisor to Brimstone and Sea Harvest
Cliffe Dekker Hofmeyr Incorporated
Date: 08/02/2017 07:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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