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NIVEUS INVESTMENTS LIMITED - Proposed Disposal By Niveus Of Certain Gaming Businesses And Unbundling Of Gameco

Release Date: 14/03/2017 07:05
Code(s): NIV     PDF:  
Wrap Text
Proposed Disposal By Niveus Of Certain Gaming Businesses And Unbundling Of Gameco

NIVEUS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1996/005744/06)
Share code: NIV
ISIN: ZAE000169553
(“Niveus” or “the Company”)

PROPOSED DISPOSAL BY NIVEUS OF CERTAIN GAMING BUSINESSES AND UNBUNDLING OF
GAMECO

1.   INTRODUCTION

     Shareholders are referred to the announcement released on the Stock Exchange News Service of
     the JSE (“SENS”) by Niveus on 14 December 2016 (“Initial Announcement”), in which Niveus
     announced its intention to sell of all its interests in Vukani Gaming Corporation Proprietary Limited
     (“Vukani”) and Galaxy Gaming and Entertainment Proprietary Limited (“Galaxy”) and all their
     associated entities, trusts and businesses (collectively the “Gaming Businesses”) to Tsogo Sun
     Holdings Limited (“Tsogo”) (“Discontinued Transaction”).

     Pursuant to discussions with various Niveus shareholders after the publication of the Initial
     Announcement, the Company believes that it is appropriate to provide Niveus shareholders with
     the opportunity to separately retain, dispose of or increase their interest in the Gaming Businesses
     in a more direct manner without affecting their current interest in the other assets held by Niveus.
     Niveus and Tsogo have therefore agreed that the Discontinued Transaction will not be
     implemented in the manner proposed in the Initial Announcement.

     Niveus’ interests in the Gaming Businesses are currently held via its wholly-owned subsidiary,
     Niveus Invest 19 Limited (“Gameco”). The assets of Gameco include the entire issued share
     capital of Vukani, Galaxy and Niveus Invest 1 Proprietary Limited, and loan claims against the
     aforementioned subsidiaries. Niveus holds 460,000,100 ordinary shares in Gameco.

     Niveus has elected to rather distribute certain of its shares in Gameco to its shareholders, pro rata
     to their shareholding in Niveus, subject to the terms set out below.


2.   GAMECO UNBUNDLING

     Subject to the fulfilment of certain conditions, Niveus will distribute 93,75% of its shareholding in
     Gameco to its shareholders pro rata to such shareholders’ shareholding in Niveus as at the record
     date of the unbundling (“Unbundling”), subject to applicable laws.

     It is anticipated that Niveus shareholders will receive 3.62 Gameco shares for every 1 Niveus share
     held on the record date of the Unbundling, provided that the ratio may change if the number of
     Niveus or Gameco shares in issue changes prior to the record date of the Unbundling. The final
     ratio will be disclosed in the circular to be issued to Niveus shareholders in due course.

3.   CONDITIONS PRECEDENT TO THE UNBUNDLING

     The Unbundling will be subject to the fulfilment (or waiver by Niveus to the extent legally permitted)
     of certain conditions precedent, which would include the following:

     -   that Niveus shareholders approve the Unbundling in terms of the listings requirements of the
         JSE (“JSE Listings Requirements”);
     -   that the Niveus board of directors approve the Unbundling in accordance with section 46 of
         the Companies Act, 2008 (“Act”) and the JSE Listings Requirements;
     -   that Niveus obtains any and all required statutory and regulatory approvals for the
         implementation of the Unbundling on such conditions as are acceptable to Niveus, including
         specifically the JSE and the Takeover Regulation Panel (“TRP”);
     -   that the Niveus board is satisfied that the terms of the agreement to be concluded between
         Hosken Consolidated Investments Limited (“HCI”) and Tsogo (as more fully described in 6
         below) are binding on Tsogo, that Tsogo is obliged make an offer to minority shareholders of
         Gameco (including Niveus) pursuant to the completion of the Tsogo Transaction and that the
         terms of that offer provides Gameco shareholders with the Cash Based Alternative as detailed
         in 6;
     -   the fullfilment of the conditions precedent to the Tsogo transaction in 8 below, save for the
         condition precedent requiring that the Unbundling is implemented.

     Any of the above conditions precedent may be waived by Niveus (to the extent legally permissible).
     The full list of conditions precedent will be included in the circular to be distributed to Niveus
     shareholders in due course.

4. RATIONALE FOR THE UNBUNDLING OF GAMECO

     The rationale for the proposed unbundling of Gameco to the current Niveus shareholders is to offer
     Niveus shareholders the opportunity to separately retain, dispose of or increase their interest in
     the Gaming Businesses without affecting their current interest in the other assets held by Niveus.
     The Unbundling grants Niveus shareholders more flexibility with regard to the management of their
     interests in Niveus and Gameco and a more direct interest in the Niveus gaming assets.


5.   CLASSIFICATION

     The Unbundling is regarded as a specific payment to shareholders in terms of paragraph 5.85 of
     the JSE Listings Requirements and requires the approval of the Niveus shareholders by an
     ordinary resolution.

     The Unbundling may also constitute the disposal of the greater part of the assets or undertaking
     of Niveus in terms of section 112 of the Act and require the approval of shareholders by a special
     resolution and the TRP in compliance with the provisions of section 115 of the Act. The board of
     directors of Niveus has retained the right to make the Unbundling conditional on a maximum
     threshold of shareholders that exercise their appraisal rights in accordance with section 164 of the
     Act. The threshold will inter alia be determined by the cash resources available to the group to
     satisfy any claims under section 164.


6.   PROPOSED TSOGO TRANSACTION

     Shareholders are also advised that Niveus’ majority shareholder and holding company, HCI and
     Tsogo have reached an in principle agreement subject to conditions, regarding the terms upon
     which Tsogo will acquire HCI’s entire interest in Gameco post the Unbundling, which as at the date
     hereof is estimated to be 225 445 352 Gameco shares, in exchange for ordinary shares in Tsogo
     at a ratio of 1 Tsogo share for every 2,875 Gameco shares disposed of by HCI (“Tsogo
     Transaction”).

     Subject to fulfilment of the conditions precedent to the Tsogo Transaction in 8 below, Tsogo has
     furthermore agreed with HCI to make a voluntary offer to all shareholders of Gameco (other than
     HCI) (“Minority Shareholders”) to acquire their shareholding in Gameco, which as at the date
     hereof is estimated to be 234 554 748 Gameco shares, in exchange for Tsogo shares (“Minority
     Offer” or “Share Based alternative”) at a ratio of 1 Tsogo share for every 2.875 Gameco shares
     disposed of by Minority Shareholders.

     Tsogo will also provide a “Cash Based Alternative” to the Minority Shareholders, other than Niveus,
     in terms of which such shareholders will be entitled to elect to dispose of their Gameco shares for
     a cash consideration of R9.74 per Gameco share (as opposed to receiving Tsogo shares), which
     equates to a floor price of R28 per Tsogo share. Tsogo has limited the maximum aggregate
     consideration payable in respect of Gameco shareholders electing the Cash Based Alternative to
     R1,2 billion, equating to the 123 214 286 Gameco shares sold. Tsogo will require irrevocable
     commitments to be provided by Minority Shareholders in respect of 111 340 436 shares, who will
     agree not to accept the Cash Based Alternative if applications are received electing the Cash
     Based Alternative in respect of 123 214 286 GameCo shares or more.
     Minority Shareholders who wish to accept the Cash Based Alternative will be required to make
     their election within 30 days of the posting of the offer circular, or such other reasonable time period
     as may be stated in the offer circular (as agreed with the TRP), provided that the date of election
     will not be earlier than 14 days of the publication of the Tsogo results. Minority Shareholders who
     make the election to accept the Cash Based Alternative will not be able to change such an election
     to accept the Cash Based Alternative, which election shall be irrevocable.

     The Company and Gameco will require that Tsogo undertakes to make application to the JSE to
     list Gameco within a 12 month period after the closing date of the Minority Offer if not less than
     20% of the issued shares of Gameco is held by shareholders other than Tsogo pursuant to the
     completion of the Minority Offer.


7.   CLAWBACK OFFER

     The 28 750 006 shares in Gameco which are not distributed by Niveus in terms of the Unbundling
     will be sold to Tsogo in terms of the Minority Offer, in exchange for Tsogo shares. Should the
     Minorty Offer be implemented, Niveus shall grant Tsogo the right to clawback the Tsogo shares
     received by Niveus in terms of the Minority Offer in the event that the requisite regulatory approvals
     required to operate electronic bingo terminals in the KwaZulu Natal province are not obtained by
     the Gambling Businesses by 31 March 2020 (“Clawback Offer”). The remaining terms of the
     Clawback Offer are yet to be finalized with Tsogo.

8.   CONDITIONS PRECEDENT TO THE TSOGO TRANSACTION

     The Tsogo Transaction is subject to the fulfilment (or waiver by the parties, to the extent legally
     permitted) of conditions precedent, including the following (“Conditions Precedent”):

     -   the completion of the Unbundling;
     -   that Tsogo concludes, and is satisfied with the results of a due diligence investigation in respect
         of the Gameco, particularly including a review of the earnings of Gameco for the financial year
         ended 31 March 2017, which due diligence investigation is expected to be concluded by no
         later than 31 May 2017;
     -   that the Tsogo Transaction be approved by a subcommittee of independent directors of Tsogo;
     -   the independent expert appointed by Gameco to assess the Minority Offer, confirms that the
         Minority Offer is fair and reasonable to Minority Shareholders;
     -   the independent board appointed by Gameco to assess the Minority Offer, confirms that the
         Minority Offer is fair and reasonable to Minority Shareholders and recommends that Minority
         Shareholders accept the offer;
     -   that final formal written transaction agreements are concluded between Tsogo and HCI in
         relation to the Tsogo Transaction;
     -   that Tsogo and Niveus conclude a written agreement recording the terms of the Clawback
         Offer;
     -   Irrevocable undertakings from shareholders representing not less than 73.21% of the shares
         in Gameco are obtained in terms of which such shareholders elect to receive shares (as
         opposed to the Cash Based Alternative) in the event that aggregate consideration payable to
         shareholders who elect the Cash Based Alternative in terms of the Minority Offer would exceed
         R1,2 billion; and
     -   that the parties obtain any and all required statutory and regulatory approvals for the
         implementation of the Tsogo Transaction on such conditions as are acceptable to HCI and
         Tsogo to the extent applicable.

     The Conditions Precedent must be fulfilled by not later than 31 July 2017, which date may be
     extended by mutual consent between the parties.

9.   EFFECTIVE DATE

     The effective date of the Unbundling and Tsogo Transaction will be the 1st business day of the
     month following the date on which the last of the Conditions Precedent is fulfilled or waived.
     Gameco shall be entitled to distribute all profits and net cashflow of GameCo to Niveus (in its
     capacity as the sole shareholder of Gameco) for the period up to the effective date.


10. CIRCULAR

    A circular containing the full details of the Unbundling, incorporating a notice convening the
    required Niveus general meeting, will be posted to shareholders in due course and the salient
    dates and times of the Unbundling, including the date of the general meeting, will be announced
    on SENS once the circular has been posted.


Cape Town
14 March 2017

Sponsor: PSG Capital

Legal adviser: ENSafrica

Date: 14/03/2017 07:05:00 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,
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