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Proposed restructuring of Distell’s multi-tiered ownership structure
Distell Group Limited
Incorporated in the Republic of South Africa
Registration Number: 1988/005808/06
ISIN: ZAE000028668
Share Code: DST
(“Distell" or "the Company")
Proposed restructuring of Distell’s multi-tiered ownership structure
1 Key highlights
This announcement sets out the proposed restructuring of Distell’s multi-tiered ownership structure,
which will result in it being replaced with a clearer and simpler shareholding structure (“the Proposed
Transaction”). If implemented, the Proposed Transaction will:
- dismantle the multi-tiered ownership structure above Distell;
- leave Distell shareholders with exactly the same economic interest in New Distell (as defined
below);
- increase the free float in New Distell on the stock exchange operated by the JSE Limited (“the
JSE”); and
- result in the control of New Distell vesting in Remgro Limited (via one or more of its subsidiaries,
hereinafter referred to collectively as “Remgro”) through the issuance of unlisted voting B
shares in New Distell to Remgro.
The Proposed Transaction has the support of the Public Investment Corporation SOC Limited (“PIC”),
and Coronation Asset Management Proprietary Limited acting on behalf of its clients (“Coronation”), as
detailed below. Remgro is also supportive of the Proposed Transaction, but will not be entitled to vote
on the Proposed Transaction.
2 Introduction
Distell currently has a multi-tiered ownership structure, in which Remgro and Capevin Holdings Limited
(“Capevin”) own a material interest via Remgro-Capevin Investments Proprietary Limited (“RCI”).
Remgro and Capevin each hold 50% in RCI, and RCI has a 52.8% direct interest in Distell.
Remgro currently has an effective economic interest of 31.4% in Distell, via its 50% shareholding in RCI
and its 19.0% shareholding in Capevin. Capevin’s 50% interest in RCI is Capevin’s only asset.
Distell shareholders are advised that the independent board of directors of Distell who are not conflicted
insofar as the Proposed Transaction is concerned (“Distell Independent Board”) has resolved, subject
to a number of conditions, to simplify the multi-tiered shareholding structure of Distell as detailed below.
The restructuring contemplated by the Proposed Transaction will be achieved through schemes of
arrangement pursuant to a number of inter-conditional steps, as set out in paragraph 3 below.
Distell shareholders are encouraged to also refer to the Remgro announcement and the Capevin
announcement released on the Stock Exchange News Service (“SENS”), which have been released
simultaneously with this announcement, setting out inter alia the impact of the Proposed Transaction
and the Capevin Scheme (as defined below) on Capevin shareholders.
3 Key Features of the Proposed Transaction
The Proposed Transaction involves a new entity, Business Venture Investments No 1997 Proprietary
Limited (“New Distell”), whose ordinary shares will be listed on the JSE (the “New Distell Listing”). Post
implementation of the Proposed Transaction, New Distell will be renamed Distell Group Limited.
Following discussions between Distell, Capevin and New Distell, the parties have agreed that Distell
will propose a scheme of arrangement between Distell and its shareholders and Capevin will propose
a scheme of arrangement between Capevin and its shareholders, in terms of section 114 of the
Companies Act, No 71 of 2008 ("Companies Act"), in terms of which New Distell will issue shares to all
the shareholders of Capevin (the “Capevin Scheme”) and all the shareholders of Distell other than RCI
(“Distell Minorities”) (the “Distell Scheme”) in exchange for their shares in Capevin and Distell,
respectively, with the result that New Distell will own all the ordinary shares in Distell via Capevin and
RCI, respectively. The issue of New Distell ordinary shares to all Capevin shareholders and Distell
Minorities will ensure that they retain their current effective economic interest in Distell.
Immediately prior to implementation of the Distell Scheme and Capevin Scheme, Remgro will exchange
all of its RCI shares for further shares in Capevin (such further Capevin shares referred to herein as the
“RCI-Related Capevin Shares”), resulting in Remgro holding 59.5% of Capevin (the “RCI Exchange”)
and, therefore, controlling Capevin and, indirectly through RCI, also Distell. Capevin shareholders other
than Remgro (“Capevin Minorities”) will be required to approve the issue of the RCI-Related Capevin
Shares to Remgro in terms of the RCI Exchange and will also have to approve the Capevin Scheme.
Further details of the Capevin Scheme are set out in the Capevin SENS announcement.
In addition, as a condition to the Distell Scheme and Capevin Scheme, the Distell Minorities and
Capevin Minorities will respectively be required, via separate whitewash resolutions each approved by
the Takeover Regulation Panel (the “TRP”), to waive their right to receive a mandatory offer from
Remgro pursuant to the RCI Exchange (“Mandatory Offer Requirement”).
Post its creation and listing, and prior to implementation of the schemes of arrangement referred to
above, New Distell will also issue unlisted voting shares (the “B Shares”) to Remgro. The B Shares will
have no economic rights, but will provide Remgro with the same level of voting rights in Distell as it held
pursuant to the RCI Exchange, namely 52.8%. The requisite number of B Shares will be issued to
Remgro (the “B Share Issuance”) and will be “stapled” (as detailed below) to those New Distell ordinary
shares that Remgro will receive in exchange for its RCI-Related Capevin Shares in terms of the Capevin
Scheme (the “Stapled Ordinary Shares”). The B Shares and accompanying Stapled Ordinary Shares
provide Remgro with a 52.8% voting interest in New Distell. In terms of the Capevin Scheme, Remgro
will also receive New Distell ordinary shares in exchange for its current 19.0% interest in Capevin,
however those New Distell ordinary shares will not be stapled to B Shares.
As stated above, subsequent to the aforementioned steps, Distell will become a wholly-owned
subsidiary of New Distell (via RCI and Capevin). As part of the Distell Scheme, Distell will be delisted
from the JSE (the “Distell Delisting”). Similarly, as part of the Capevin Scheme, Capevin will be delisted
from the JSE (the “Capevin Delisting”). The New Distell Listing will ensure that Distell shareholders are
able to trade their New Distell shares on the JSE Main Board, as they were previously able to trade
their Distell shares.
The RCI Exchange, Distell Scheme, Capevin Scheme, B Share Issuance, Distell Delisting, Capevin
Delisting and New Distell Listing collectively represent the Proposed Transaction, and are all inter-
conditional.
By agreement with the JSE and the TRP, (i) Remgro will not be entitled to vote on the resolutions to
approve the relevant inter-conditional steps of the Proposed Transaction, which will be proposed at the
Capevin Scheme meeting; and (ii) RCI will not be entitled to vote on the resolutions to approve the
relevant inter-conditional steps of the Proposed Transaction, which will be proposed at the Distell
Scheme meeting.
The PIC owning 27.7% of Distell and 12.9% of Capevin, and Coronation owning 20.5% of Capevin and
2.7% of Distell, have indicated support for the Proposed Transaction and confirmed their intention to
vote in favour of the proposals at the Distell Scheme meeting and Capevin Scheme meeting to be held
to approve the Proposed Transaction.
The tables below have been provided to give a summary of the current direct ownerships of Distell and
Capevin respectively, as well as the expected economic and voting interests in New Distell post the
Proposed Transaction:
Current direct ownership of Distell pre Proposed Transaction:
Shareholders Number of shares % Interest
RCI (50% Remgro / 50% Capevin) 117 348 000 52.8%
PIC 61 533 197 27.7%
Distell Minorities (excluding PIC) 43 501 159 19.5%
Total 222 382 356 100.0%
Current direct ownership of Capevin pre Proposed Transaction:
Shareholders Number of shares % Interest
Coronation1 180 135 944 20.5%
Remgro 167 645 356 19.0%
PIC 113 114 642 12.9%
Capevin Minorities (excluding PIC and Coronation) 419 207 323 47.6%
Total 880 103 265 100.0%
Note: 1. Representing clients of Coronation
Expected ownership of New Distell post Proposed Transaction:
Shareholders Number of % Economic Number of B % Voting
Ordinary Interest Shares Interest
Shares
Remgro1 58 674 000 26.4% 124 226 613 52.8%
Remgro2 11 176 442 5.0% - 3.2%
PIC 69 074 231 31.1% - 19.9%
Coronation (Capevin-related) 12 009 156 5.4% - 3.5%
Distell Minorities (excluding PIC)3 43 501 159 19.5% - 12.6%
Capevin Minorities4 27 947 368 12.6% - 8.0%
Total 222 382 356 100.0% 124 226 613 100.0%
Notes: 1. Issued to Remgro in relation to RCI-Related Capevin Shares
2. Issued to Remgro in relation to Capevin shares other than RCI-Related Capevin Shares
3. Distell Minorities includes shares representing 2.7% as previously held by Coronation in Distell
4. Excluding PIC and Coronation
4 Rationale for the Proposed Transaction
The Distell Independent Board believes that the Proposed Transaction will be beneficial to Distell and
its shareholders as, inter alia, it will:
- result in the elimination of the current multi-tiered ownership structure, leaving a single entry
point to investing in Distell;
- likely improve the demand, liquidity and marketability of the New Distell ordinary shares;
- simplify Distell’s capital structure and thereby likely improve Distell’s investment appeal to both
foreign and local investors;
- result in an increased free float of New Distell ordinary shares, which will enhance the weighting
thereof in stock market indices both on the JSE and internationally;
- simplify Distell’s ability to raise capital, should it need to do so to support its long-term growth
strategy; and
- retain the stability and continuity which follows as a result of Remgro remaining as an anchor
shareholder in New Distell.
Accordingly, the Distell Independent Board has resolved to submit the Distell Scheme to Distell
shareholders for their consideration.
5 Salient terms of the Proposed Transaction
5.1 Proposed Transaction exchange ratio
New Distell will, subject to the fulfilment of the conditions precedent set out in paragraph 6 below, issue
the New Distell ordinary shares to Distell shareholders in the entitlement ratio of 1 New Distell ordinary
share for every 1 Distell share held on Friday, 13 October 2017 (the “Record Date”).
5.2 Distell Delisting
Subject to the fulfilment of the conditions precedent detailed in paragraph 6 below, the shares of Distell
will be suspended from trading on the JSE at the commencement of business on Wednesday, 11
October 2017 and Distell will delist from the Beverages sector of the JSE, with effect from the
commencement of business on Thursday, 19 October 2017.
5.3 B Shares
The detailed B Share terms, together with the salient terms of the memorandum of incorporation of New
Distell, will be included in the circular and New Distell prospectus, to be posted to Distell shareholders
not later than Friday 4 August 2017.
The B Shares will, subject to the fulfilment of the conditions precedent set out in paragraph 6 below, be
issued to Remgro, on a once-off basis, at a ratio (“B Share Issue Ratio”) of 2.117 B Shares for every 1
New Distell ordinary share issued to Remgro (subject to applicable rounding provisions and stapling
method, to the extent required) in terms of the Capevin Scheme in exchange for Remgro’s RCI-Related
Capevin Shares, equating to up to 124,226,613 B Shares to be issued to Remgro in order to maintain
Remgro’s 52.8% voting rights in Distell held pursuant to the RCI Exchange.
5.3.1 Economic rights
The B Shares will be unlisted, non-convertible, non-participating, no par value shares. In addition, the
B Shares issued to Remgro will only be entitled to voting rights and will have no economic participation,
save for the right, if repurchased, to be repurchased at their issue price of R0.00001 per B Share and
the right, upon liquidation of New Distell, for their holders to be repaid their issue price of R0.00001 per
B Share before any liquidation payment or distribution is made to the ordinary shareholders of New
Distell. The B Shares will not be entitled to share in any dividends or distributions by New Distell.
5.3.2 Voting rights
The B Share Issuance simply confers RCI’s 52.8% voting rights in New Distell to Remgro following the
RCI Exchange, and do not confer any additional voting rights. The B Share Issuance will not lead to
any economic dilution for the minority shareholders of Distell or Capevin. The voting B Shares held by
Remgro may in certain circumstances be adjusted upwards or downwards to prevent undue accretion
/ dilution of the voting rights attaching thereto, following certain corporate actions undertaken by New
Distell.
Notwithstanding the fact that the economic interests of Distell shareholders will not be diluted by the
B Share issuance, their voting rights will be diluted. The dilution of Distell Shareholders from a voting
perspective, expressed as a percentage, will be 35.8% (after the implementation of the Proposed
Transaction).
Illustrated below is a Distell shareholder’s shareholding in Distell pre and post the Transaction:
Distell shareholder’s direct interest in Distell1 Before After
Direct economic interest in Distell 5.00% 5.00%
Direct voting interest in Distell 5.00% 3.21%
Note: 1. Calculations include non-voting treasury shares held by Distell
5.3.3 Salient terms of the B Shares (stapling and disposal)
The terms of the B Shares will provide for certain restrictions on their transferability and the cessation
of their voting rights, and the repurchase by New Distell of the relevant B Shares, upon the happening
of certain events. The terms attaching to the B Shares will be detailed in full in the circular sent to
shareholders regarding the Distell Scheme, but will include the following terms:
5.3.3.1 The B Shares are unlisted and may only be transferred on prior written notice to New Distell.
5.3.3.2 Upon the occurrence of an ‘Option Event’ (as detailed below), the voting rights attaching to
the relevant B Shares will immediately cease to be of force and effect and New Distell will be
entitled to repurchase the relevant B Shares at their issue price of R0.00001 per B Share.
5.3.3.3 The following constitute Option Events, namely:
5.3.3.3.1 Any transfer of B Shares without prior notice to New Distell;
5.3.3.3.2 Any disposal of B Shares without the accompanying Stapled Ordinary Shares
simultaneously being disposed of;
5.3.3.3.3 Any transfer of Stapled Ordinary Shares which is effected on-market (i.e. via the JSE’s
normal order book);
5.3.3.3.4 If, at any time, there is no holder of B Shares (“B Shareholder”) (whether individually or
together with such B Shareholder’s related and concert parties) which holds more than
25% of the total voting rights exercisable in New Distell, which for the avoidance of doubt
includes the voting rights attaching to the ordinary shares in New Distell (whether stapled
or not) and the voting rights attaching to the B Shares in New Distell (hereinafter referred
to as the “Total Voting Rights in New Distell”);
5.3.3.3.5 If, at any time, a particular B Shareholder (together with such B Shareholder’s related
and concert parties) ceases to hold more than 25% of the Total Voting Rights of New
Distell; and
5.3.3.3.6 The Option Event detailed in 5.3.3.4 below.
5.3.3.4 If, as a result of the disposal of any B Shares together with their accompanying Stapled
Ordinary Shares, both the transferor and the transferee (together with any other shareholders
related to or acting in concert with the transferor and transferee, respectively) each hold more
than 25% of the Total Voting Rights of New Distell, the transferee is entitled to offer to
purchase the ordinary shares in New Distell held by all ordinary shareholders of New Distell.
If the transferee does not make such an offer, this will constitutes an Option Event.
5.3.3.5 If New Distell undertakes an alteration of its capital structure or a corporate action, which
impacts the voting rights exercisable by the B Shareholders, the number of B Shares held by
the B Shareholders shall be increased or decreased (as the case may be) to maintain the B
Share Issue Ratio after implementation of such alteration of capital structure or corporate
action.
6 Conditions precedent
The Proposed Transaction is subject to the fulfilment or, if applicable, waiver of the following conditions
precedent, namely:
- the approval by Distell shareholders of the Distell Scheme and Distell Delisting;
- the approval by Capevin shareholders of the Capevin Scheme, RCI Exchange and Capevin
Delisting;
- as part of the RCI Exchange, respective waivers by the Distell Minorities and Capevin Minorities
of the Mandatory Offer Requirement;
- within the period prescribed by section 164(7) of the Companies Act, no demands, or valid
demands which in aggregate represent not more than 5% of Distell or Capevin shares, are
received by Distell or Capevin in accordance with section 115(8) of the Companies Act;
- the registration of the prospectus in relation to New Distell with the Companies and Intellectual
Property Commission;
- the registration of the special resolutions required to restructure New Distell's share capital, and
adopt the New Distell memorandum of incorporation; and
- the following regulatory approvals being obtained, namely:
- JSE approval (in respect of the Distell circular to shareholders in relation to the Distell
Scheme, the Capevin circular in relation to the Capevin Scheme, the prospectus in relation
to New Distell and the listing of the New Distell ordinary shares);
- approval from relevant competition authorities; and
- TRP approval (in respect of the Distell circular to shareholders in relation to the Distell
Scheme, the Capevin circular to shareholders in relation to the Capevin Scheme, and the
waiver of the Mandatory Offer Requirement).
The New Distell Listing and the Distell Delisting will only occur if the Proposed Transaction is
implemented, as all transaction steps are inter-conditional.
7 Financial information relating to the Proposed Transaction
As Distell shareholders will, in terms of the Distell Scheme, exchange their Distell shares for shares in
New Distell, their New Distell shares after the Distell Scheme will mirror the economics of the Distell
shares before the Distell Scheme. Accordingly, there will be no impact on the earnings and underlying
net asset value attributable to each shareholder of Distell as a result of the Proposed Transaction.
8 Salient dates
The salient dates and times applicable to the Proposed Transaction are set out below:
2017
Record date to determine which Distell shareholders are entitled to receive Friday, 28 July
the Distell circular
Circular posted to Distell shareholders and notice convening the Distell Friday, 4 August
Scheme meeting released on SENS
Last day for Distell Minorities to make representations to the TRP in respect Monday, 21 August
of the waiver of the Mandatory Offer Requirement
Last day to trade in order to be recorded in the Distell share register in order Tuesday, 22 August
to be eligible to attend and vote at the Distell Scheme meeting
Record date for Distell shareholders to be recorded in the Distell share Friday, 25 August
register in order to be eligible to attend and vote at the Distell Scheme
meeting
For administrative purposes, date by which Forms of Proxy for the Distell Wednesday, 30 August
Scheme meeting are to be lodged, by 09h00
Form of Proxy to be handed to the chairman of the Distell Scheme meeting, Friday, 1 September
at any time before the proxy exercises any rights of the shareholder at the
Distell Scheme meeting on
Distell Scheme meeting to be held at 10:00am, The House of JC Le Roux, Friday, 1 September
Devon Valley Rd, Stellenbosch, 7600, on
Results of the Distell Scheme meeting released on SENS Friday, 1 September
Results of the Distell Scheme meeting to be published in the press Monday, 4 September
Company to send any dissenting shareholders notice of the passing of the Monday, 4 September
special resolution approving the Distell Scheme, in terms of section 164(4) of
the Companies Act
If (i) all of the resolutions relating to the Proposed Transaction are passed by the requisite
majority of Distell shareholders at the Distell Scheme meeting, (ii) all of the resolutions
required to give effect to the Proposed Transaction are passed by Capevin shareholders at
the Capevin Scheme meeting
Last day for Distell shareholders who voted against the Proposed
Transaction to require Distell to seek court approval for the Proposed Friday, 8 September
Transaction in terms of section 115(3)(a) of the Companies Act
Last day to send notice of adoption of special resolutions to dissenting Distell
shareholders, in accordance with section 164 of the Companies Act Friday, 15 September
Last day for Distell shareholders who voted against the Proposed
Transaction to apply to court for leave to apply for a review of the Transaction Friday, 15 September
in terms of section 115(3)(b) of the Companies Act
Receive compliance certificate from the Takeover Regulation Panel Monday, 2 October
If all conditions relating to the Proposed Transaction are fulfilled or
waived (to the extent applicable)
Finalisation announcement expected to be released on SENS and published Monday, 2 October
in the press
Last day to trade in order to be recorded on the register on the Record Date Tuesday, 10 October
Distell shares expected to be suspended on JSE trading system Wednesday, 11 October
Distell shareholders can trade their entitlement to New Distell Ordinary
Shares Wednesday, 11 October
Expected Record Date on which Distell shareholders must be recorded in
the Register to participate in the Proposed Transaction Friday, 13 October
Implementation of RCI Exchange Friday, 13 October
Settlement of the Scheme consideration Monday, 16 October
Expected termination of the listing of Distell shares at commencement of
trade on the JSE Thursday, 19 October
Notes:
1. All times shown above are South African Local times
2. All dates and times in respect of the Proposed Transaction are subject to change. The above dates have been determined based
on certain assumptions regarding the Proposed Transaction. The above dates will change to the extent that the requisite
approvals of the relevant Competition Authorities are not obtained by Monday, 2 October 2017. If the relevant dates in respect of
the Proposed Transaction change and the dates above are impacted a change will be released on SENS and published in the
press
3. Distell will send the required notice to objecting Distell shareholders, if any, in terms of section 164(4) of the Companies Act on 4
September 2017, but the last day for sending this notice is ten business days after the date of the Distell Scheme meeting.
4. Certificated Distell shareholders whose Distell share certificates and duly completed Forms of Surrender and Transfer are received
by the Transfer Secretaries after 12:00 on Friday, 13 October 2017 will have their new share certificates for the New Distell shares
to them within 5 business days of such receipt.
5. Share certificates in Distell may not be dematerialised or rematerialised after 10 October 2017.
9 Independent Expert
The Distell Independent Board, has appointed Ernst & Young to act as Independent Expert, in terms of
section 114(2) of the Companies Act and Takeover Regulations as defined in the Companies Act, on
the Distell Scheme.
The report of the independent expert and the recommendation of the Distell Independent Board will be
included in the circular to be posted to shareholders as set out in paragraph 11 below.
10 Confirmation to the TRP
New Distell has confirmed with the TRP that it will have a sufficient number of authorised and unissued
New Distell ordinary shares and B Shares in order to fulfil its obligations on implementation of the Distell
Scheme.
11 Posting of the circular
Distell shareholders are advised that a circular containing the full details of the terms of the Proposed
Transaction and notice of the Distell Scheme meeting containing the necessary resolutions to be
approved by the Distell shareholders in order to implement the Proposed Transaction, which will be
accompanied by a prospectus in respect of New Distell, will be posted to Distell shareholders no later
than Friday, 4 August 2017.
12 Directors responsibility statement
In this firm intention announcement, the Distell Independent Board accepts responsibility for the
information contained in this announcement insofar as it relates to Distell and confirms that, to the best
of their knowledge and belief, such information which relates to Distell is true and correct and the
announcement does not omit anything which would make any statement in the announcement false or
misleading or omit anything likely to affect the importance of the information.
By order of the Board
Stellenbosch
22 June 2017
Financial Adviser, Merchant Bank and Transaction Sponsor to Distell and New Distell
Transaction Originator and Coordinator
Rand Merchant Bank, a division of FirstRand Bank Limited
Legal Adviser to Distell
Cliffe Dekker Hofmeyr Inc.
Independent expert to the Distell Independent Board
Ernst & Young Advisory Services Proprietary Limited
Legal Adviser to New Distell
Edward Nathan Sonnenbergs Inc.
Financial Adviser and Transaction Sponsor to Capevin
PSG Capital Proprietary Limited
Legal Adviser to Capevin
Cliffe Dekker Hofmeyr Inc.
Legal Adviser to the Capevin Independent Board
Cliffe Dekker Hofmeyr Inc.
Independent expert to the Capevin Independent Board
BDO Corporate Finance Proprietary Limited
Date: 22/06/2017 03:45:00 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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