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Abridged revised listing particulars, posting of circular, revised listing particulars and notice of general meeting
EXTRACT GROUP LIMITED
(previously Eqstra Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/011672/06)
JSE share code: EXG ISIN: ZAE000223202
(“eXtract” or “the company”)
Abridged revised listing particulars and posting of circular, revised listing particulars and notice of general
meeting
1. Posting of circular, revised listing particulars and notice of general meeting
Shareholders are referred to the announcements released on SENS on 18 April 2017 and 21 June 2017 and are
advised that eXtract has, on Tuesday, 11 July 2017 posted:
- a circular to eXtract shareholders (the “circular”) relating to:
- the restructure and recapitalisation of eXtract (the “restructure”) including:
- the delegation by MCC Contracts Proprietary Limited (“MCC”) to enX Group Limited
(“enX”) of its debt owing to Eqstra Corporation Limited (“Eqstra Corporation”) under
the first mezzanine loan agreement entered into between MCC and Eqstra Corporation to
the value of R876 112 358 less an excluded amount of R250 000 000;
- the voluntary redemption by MCC of the MCC preference shares held by enX for
R600 million;
- the set-off of various inter-company loans between eXtract and MCC through the issue of
1 002 234 000 new MCC shares equal in value to R501 117 000;
- the subscription by enX for MCC shares to the value of R1 877 585 979 and the set-off of
MCC's aggregate indebtedness to enX against the subscription price payable by enX for
such MCC shares;
- the exchange by enX of all of the MCC shares held by it for 3 755 171 958 new eXtract
shares at 50 cents per eXtract share;
- the unbundling and distribution by enX of 3 861 041 279 eXtract shares to enX
shareholders in the ratio of 21.39799 eXtract shares for every one enX share held (the
“unbundling”);
- the approval of a waiver in terms of Regulation 86(4) of the Takeover Regulations requiring enX to
make a mandatory offer to the remaining eXtract shareholders;
- the authorisation to increase the authorised but unissued shares of eXtract (the “authorised share
increase”);
- the consolidation of eXtract’s shares in the ratio of 200 to 1 (the “consolidation”); and
- the disposal by eXtract of the excess assets over a period of 24 months to third parties (the “excess
asset disposal”); and
- revised listing particulars in respect of eXtract, prepared on the assumption that the restructure, excess
asset disposal, authorised share increase and consolidation will be implemented and, as a result, eXtract
will issue new shares in excess of 50% of its current share capital to implement the restructure.
The circular contains a notice convening a general meeting of eXtract shareholders to be held at 10:00 on
Thursday, 10 August 2017 at the company’s registered office (61 Maple Street, Pomona, Kempton Park, 1619)
for the purpose of considering and, if deemed fit, passing with or without modification, the resolutions required
to approve, inter alia, the restructure, the authorised share increase, the consolidation and excess asset disposal.
Copies of the circular are available on the company’s website at www.eXtractgroup.com and may also be
obtained from the offices of eXtract, situated at 61 Maple Street, Pomona, Kempton Park, 1619 during normal
office hours until 10 August 2017.
2. Salient dates and times
2017
Record date to receive circular (together with the notice convening the general
meeting) Friday, 30 June
Circular (together with the notice convening the general meeting) posted Tuesday, 11 July
Announcement relating to the issue of the circular (together with the notice
convening the general meeting) released on SENS Tuesday, 11 July
Announcement relating to the issue of the circular (together with the notice
convening the general meeting) published in the press Wednesday, 12 July
Last day to trade in order to be eligible to vote at the general meeting Tuesday, 25 July
Voting record date Friday, 28 July
Last day forms of proxy should be lodged with the transfer secretaries for the
general meeting (by 10:00), failing which forms of proxy may be handed to the
chairman at any time Monday, 7 August
General meeting held at 10:00 Thursday, 10 August
Results of the general meeting released on SENS Thursday, 10 August
Special resolutions and CIPC documents for eXtract relating to the consolidation
and the authorised share increase submitted to CIPC on Friday, 11 August
Expected date special resolution for eXtract relating to the consolidation and the
authorised share increase filed by CIPC Friday, 25 August
Expected date the restructure is implemented Monday, 28 August
Expected date the consolidation finalisation announcement is published on SENS
by 11:00 on Tuesday, 12 September
Expected last day to trade in existing eXtract shares prior to the consolidation Tuesday, 19 September
Expected date trading in consolidated eXtract shares under new ISIN
ZAE000246013 commences Wednesday, 20 September
Expected date the price for fractional entitlements is announced on SENS by 11:00
on Thursday, 21 September
Expected record date for the consolidation at close of business on Friday, 22 September
Expected date dematerialised shareholders will have their accounts at their CSDP or
broker updated to reflect the consolidated eXtract shares Tuesday, 25 September
Expected date of issue of new replacement share certificates to certificated
shareholders, provided that the old share certificates have been lodged by 12:00 on
Friday, 22 September 2017 (share certificates received after this time will be posted
within 5 business days of receipt) Tuesday, 25 September
Notes:
1. All dates and times in this announcement are local dates and times in South Africa.
2. The above dates and times are subject to change. Any changes will be released on SENS and, if required, published in the press.
3. Shareholders should note that as transactions in eXtract shares are settled in the electronic settlement system used by Strate,
settlement of trades takes place three business days after such trade. Therefore, shareholders who acquire eXtract shares after
Tuesday, 25 July 2017 will not be eligible to vote at the general meeting.
4. In order to ensure an orderly arrangement of affairs at the general meeting, forms of proxy should be lodged with the transfer
secretaries by 10:00 on Monday, 7 August 2017, failing which forms of proxy may be handed to the chairman at any time.
5. If the general meeting is adjourned or postponed, forms of proxy submitted for the initial general meeting will remain valid in
respect of any adjournment or postponement of the general meeting.
3. Overview of eXtract
The eXtract group comprises mainly MCC's contract mining and plant rental division. MCC is a provider of
opencast contract mining services including drilling, blasting, load hauling and rehabilitation. This business has
one of the largest open-cast contract mining equipment fleets in South Africa. The plant rental and leasing
component of the business provides customised short and long term rental and leasing of heavy earth moving
equipment within the mining sector.
4. Overview of enX
enX is a diversified industrial group that provides quality branded industrial, petrochemical, and fleet
management and logistics products and services. enX is organised into three business segments as follows:
4.1. enX Equipment (“Equipment”):
- EIE provides distribution, rental and value added services for industrial and materials handling
equipment in South Africa, other African countries, the United Kingdom (“UK”) and Ireland.
EIE in South Africa is the market leader in materials handling and the sole distributor of Toyota
Forklifts, BT warehousing equipment and Konecranes heavy duty forklifts and container
handling equipment in Sub-Sahara Africa. Its UK operation, Impact, is the exclusive distributor
for Cat Lift Trucks and Konecranes heavy duty forklifts and container handling equipment in
the UK and Ireland (“EIE”);
- New Way Power manufactures, installs and maintains diesel generators as well as provides
temporary power through Genmatics. It distributes a range of industrial and marine engines and
components through PowerO2 which is the sole distributor of John Deere and Mitsubishi
industrial engines in South Africa (“Power”); and
- Austro Proprietary Limited, a wholly-owned subsidiary of enX, distributes professional
woodworking equipment, tooling, edging and provision of associated services such as blade
sharpening and equipment maintenance. It is the sole distributor of Biesse equipment and Leitz
tooling in South Africa (“Wood”).
4.2. enX Fleet (“Fleet”):
Eqstra Fleet Management and Logistics business provides a full spectrum of passenger vehicle services
including leasing, fleet management, outsourcing solutions, maintenance, warranty management and
vehicle tracking solutions. It also provides fleet management solutions for commercial vehicle fleet
owners and logistics solutions. Its footprint is in South Africa and sub-Saharan Africa. The commercial
vehicle operations are supported by a nationwide network of workshops and panel repair shops
(“EFML”).
4.3. enX Petrochemicals (“Petrochemicals”):
- Centlube and African Group Lubricants produce and market oil lubricants in South Africa.
They are the sole distributors of ExxonMobil lubricants (excluding marine and aviation); and
- West African International and enX Polymers distribute plastics, polymers, rubber and
speciality chemicals into Southern African. They are the sole agents and distributors of
ExxonMobil chemicals in South Africa.
enX has a proven track record of acquiring quality industrial assets that have strong market positions,
represent leading global brands with committed customer partnerships. enX instils entrepreneurial
management to drive returns through the disciplined allocation of capital. enX was founded in 2007,
operates in fourteen countries and has over 2400 employees.
5. Prospects and strategy of eXtract
Following the Eqstra transaction, the operating environment for contract mining has been difficult, with the
eXtract group continuing to report operational losses at key operations.
The contract mining business has been under pressure due to several factors, notably the decline in commodity
prices in 2015 resulting in mining companies reducing production and in a highly competitive market resulting
in lower contract mining rates, wherein the pricing power resides with the mining company and the risks of the
operations often reside with the contract miner. During the fourth quarter of 2016, the negative impact was
further felt by the opencast mining contract with Boteti Mining Proprietary Limited in Botswana being
terminated (as announced on SENS on 5 December 2016). Together with the PPM contract proving to be
suboptimal and Tharisa notifying the eXtract group of its intention to pursue an owner operator model.
The remaining contracts currently operate under a satisfactory model and will be continued until the contracts
expire, are terminated by mutual agreement, or the assets within such remaining contracts are disposed of as a
going concern, whereby, in management’s view, the value realised by sale is greater than the value of ongoing
operations. These elements naturally led to the board of directors and management of eXtract performing a
strategic review of the group's business model and contractual arrangements in order to align the eXtract group's
capital allocations with the current mining environment. eXtract will look to allocate capital to areas where the
eXtract board of directors believe eXtract can deliver appropriate returns and create shareholder value.
Pursuant to this strategic review process, a number of key outcomes, as detailed below, have been identified and
eXtract is currently engaging with various stakeholders in this regard. Key outcomes of the strategic review
include:
- the termination of non-profitable contracts and transitioning the counterparties to such contracts to an
owner/operator model where the contracts and underlying assets are sold by eXtract (or, where
appropriate, MCC) to such counterparties as a going concern;
- the disposal of the excess assets;
- significantly reducing the eXtract group's overhead costs, including a reduction in headcount;
- changes to the management of eXtract;
- significantly restructuring eXtract group's debt levels; and
- exploring a funding model for potential future investments.
The approval by the board of this strategy has resulted in the eXtract group impairing a material amount of the
value of leasing assets, assets held for sale and inventory as the plan is to realise the majority of its assets
through sale as opposed to continuing use. As part of the strategic review, the enX board has agreed to convert
the designated debt into equity in eXtract to facilitate this strategy and ensure the ongoing solvency and
liquidity of eXtract. It is the intention of management to apply proceeds received from the excess asset disposal
to repay its banking and remaining enX debts over the next 12 to 24 months.
It is further the intention of management, led by Bernard Swanepoel and Clinton Halsey, to reposition eXtract
as a diverse investment company. This new strategy is as a result of the consensus amongst the management
team that there may be opportunities whereby the listed nature of eXtract could be used to unlock value. The
eXtract board is open to considering any opportunity, on a case-by-case basis, and smaller fund-like
investments will have certain parameters and hurdle expectations before cash is invested.
6. eXtract shares
As at the date of the revised listing particulars there are:
- 1 500 000 000 authorised eXtract ordinary shares of no par value;
- 506 902 997 issued eXtract shares of no par value; and
- no shares held in treasury.
Pursuant to the restructure, authorised share increase and consolidation there will be:
- 50 000 000 authorised eXtract ordinary shares of no par value;
- 21 310 374 issued eXtract ordinary shares of no par value; and
- no shares held in treasury.
7. Directors of eXtract
There will be no change to the board of directors of eXtract pursuant to the restructure or excess asset disposal.
Set out below are the names and business addresses of the eXtract directors.
Directors Business address
Bernard Swanepoel (Executive chairman) 61 Maple Street, Pomona, Kempton Park, 1619
Clinton Halsey (Interim chief executive officer) 61 Maple Street, Pomona, Kempton Park, 1619
David Chadinha (Financial director) 61 Maple Street, Pomona, Kempton Park, 1619
Octavia Matloa* 1090 Arcadia Street, Hatfield, Pretoria, 0001
Khetiwe McClain* 6 Linroy Street, Steeldale, Johannesburg South
Sipho Nkosi* 61 Maple Street, Pomona, Kempton Park, 1619
Jannie Serfontein# 61 Maple Street, Pomona, Kempton Park, 1619
# Non-executive director
* Independent non-executive director
11 July 2017
Joint corporate advisor and sponsor Joint corporate advisor Legal advisor to eXtract
Java Capital BSM Black enS Africa
Independent reporting accountants Independent expert in respect of the restructure Independent expert in respect of the
excess asset disposal
Deloitte & Touch KPMG BDO
Date: 11/07/2017 04:03:00 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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