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Firm intention offer by Greenbay to acquire Group Five's European assets and businesses and cautionary announcement
Group Five Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1969/000032/06)
Share code: GRF ISIN: ZAE000027405
("Group Five” or “the Company”)
ANNOUNCEMENT RELATING TO:
1. A FIRM INTENTION OFFER BY GREENBAY PROPERTIES LIMITED TO ACQUIRE GROUP
FIVE’S EUROPEAN ASSETS AND BUSINESSES; AND
2. CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders of Group Five (“Shareholders”) are hereby advised that on Friday,
13 October 2017, Greenbay Properties Limited (the “Offeror” or “Greenbay”), delivered to
the board of directors of Group Five (“the Board”) a letter (“Firm Intention Letter”),
indicating that the Offeror has a firm intention to acquire Group Five’s shares in and claims
against its European assets and businesses, comprising its European concession stakes,
Bulgarian assets and Intertoll Europe operations & maintenance contracts (“Target
Assets”) for an aggregated cash consideration of R1,600,000,000 (the “Offer”). The Offer
was unsolicited.
The purpose of this announcement is to set out the background to the Offer, and to advise
Shareholders of the terms and conditions of the Offer, in compliance with Regulation 101
of the Companies Regulations, 2011 (“Companies Regulations”).
2. INDEPENDENT BOARD
The Offer is for the greater part of the assets of Group Five, which constitutes an “affected
transaction” for purposes of section 117(1)(c) of the Companies Act, 2008 (the “Companies
Act”) and is accordingly regulated by the Companies Act and Companies Regulations, and
the Takeover Regulation Panel (the “TRP”).
Accordingly, in accordance with Regulation 108 of the Companies Regulations, Group Five
has constituted an independent board (the “Independent Board”) to consider the terms
and conditions, as well as the merits, of the Offer.
3. INFORMATION ON THE OFFEROR
Greenbay has a primary listing on the main board of the JSE Limited (“JSE”) and is listed in
the "Real Estate" - Real Estate Holdings and Development sector. Greenbay is also listed on
the Stock Exchange of Mauritius. It invests in global direct and listed real estate as well as in
listed infrastructure companies.
4. SALIENT TERMS OF THE OFFER
The Firm Intention Letter contemplates an Offer on the terms and conditions set out below:
4.1 Nature of Offer
Greenbay has indicated in the Firm Intention Letter that it intends to acquire the Target
Assets, which are directly or indirectly held by offshore companies (the “Target Entity”)
which companies are wholly owned by Group Five or a subsidiary of Group Five, by way of
an offer to purchase Group Five’s shares in and claims against the Target Entity for an
aggregate cash price of R1,600,000,000 (the “Offer Consideration”).
The Offer remains open for acceptance by Group Five until 17h00 on Friday, 20 October
2017. If the Offer has not been accepted by Group Five by that time, the Offer will lapse.
Greenbay has also sought certain warranties from the Company, including in relation to the
Target Assets and the various contractual arrangements relating thereto.
4.2 Conditions precedent
Greenbay has indicated in the Firm Intention Letter that in the event the Company accepts
the Offer (the “Proposed Transaction”), it shall be subject to the fulfillment of the following
suspensive conditions:
4.2.1 the satisfactory completion of due diligence investigation by the Offeror of the Target
Entity and the Target Assets (and the entities in which the Target Entity is directly or
indirectly interested (“Target Group”));
4.2.2 Greenbay having been provided with evidence that the Target Group has been released
from all guarantees and other liabilities in respect of the obligations of Group Five and
its subsidiaries which are not part of the Target Group;
4.2.3 necessary regulatory approvals required for the implementation of the Proposed
Transaction, including a compliance certificate issued by the TRP in terms of
section 121(b) of the Companies Act;
4.2.4 the relevant Group Five shareholder approvals being obtained (in this regard it should
be noted that if the Offer were to be accepted then it would be subject to approval by
Shareholders by way of a special resolution in terms of section 115 of the Companies
Act, and also subject to approval by the majority of the Shareholders as a Category 1
transaction in terms of the Listings Requirements of the JSE); and
4.2.5 no material adverse change occurring between 13 October 2017 and the day
immediately prior to the effective date, being on the tenth business day following the date
on which all the conditions precedent have been met.
4.3 Material adverse change
Shareholders should note that, in the context of paragraph 4.2.5 above, a material adverse
change means any fact, matter, circumstance, event, effect or state of affairs (or any
combination of them, and whether or not disclosed by the Company to Greenbay) which:
4.3.1 constitutes a contravention of any warranty; or
4.3.2 will, or could, prevent any business of the Target Group from continuing to be conducted
in the manner in which it is presently conducted; or
4.3.3 would be likely to affect the willingness of a reasonable purchaser to implement the
Proposed Transaction on it terms; or
4.3.4 has or is likely to have, whether directly or indirectly, a material adverse effect on (i) the
current or future value, market capitalisation, solvency margin or profits of any Reference
Party; (ii) the funding, or ability to raise funding, or the cost of funding of any Reference
Party; (iii) the legal status of any Reference Party or the Company or the ability of any
Reference Party or the Company to comply with its obligations in terms of the Proposed
Transaction; (iv) the effect or enforceability of any provision of the Proposed Transaction;
or (v) South African or international capital markets. “Reference Party” shall mean (a)
Greenbay and/or (b) the Target Group taken as a whole on a consolidated basis. Any
effect will be regarded as material if it results in a variation of 5% or more and, accordingly
and without limitation of the foregoing, any effect on value, market capitalisation,
solvency margin or profits of a Reference Party shall be “material” if the effect will be to
reduce value, market capitalisation, solvency margin or profits by an amount which is
equal to or greater than 5% of the Offer Consideration.
5. OTHER POTENTIAL CONDITIONS
Shareholders should also be aware that certain third parties have pre-emptive rights and tag-
along rights in respect of the Target Assets, and accordingly any transaction would be subject
to such parties waiving their respective rights.
6. CASH CONFIRMATION
Greenbay enclosed with the Firm Intention Letter a copy of a cash confirmation, delivered to
the TRP, in the form of a confirmation of cash held in escrow by Webber Wentzel Attorneys,
in terms of Regulations 111(4) and 111(5) of the Companies Regulations, in the amount of
R1,600,000,000, which amount meets the proposed Offer Consideration.
7. PROCESS AND PRELIMINARY OBSERVATION
Consistent with its fiduciary duties, the Companies Act and Companies Regulations, the
Independent Board will consider the merits of the Offer and respond to the Offeror in due
course, once the Independent Board has determined what course of action is in the best
interests of Group Five’s Shareholders.
The Independent Board will also appoint an independent expert ("Independent Expert"),
as contemplated in Regulation 110 (read together with Regulation 90) of the Companies
Regulations, to provide a fair and reasonable opinion in relation to the Offer.
As the Offer was received after close of business on Friday, 13 October 2017, the
Independent Board has not yet had an opportunity to fully consider the Offer or the opinion
of an Independent Expert. As communicated to the market on Friday, 6 October 2017, the
Company is formulating a revised strategy and optimal group structure which received in-
principle approval from the Board on Wednesday, 4 October 2017. The Board has
undertaken to revert to the market on this matter before the end of October 2017. In addition,
the Independent Board notes its views regarding the underlying value of the Target Assets,
in relation to other expressions of interest received. As a preliminary observation, the
Greenbay offer price of R1,600,000,000 substantially undervalues the Target Assets which
represent a fundamental portion of Group Five’s portfolio.
8. CATEGORISATION OF THE PROPOSED TRANSACTION AND CAUTIONARY ANNOUNCEMENT
In the event that the Offer were to be accepted by Group Five, it would be deemed a Category
1 transaction in terms of the Listings Requirements of the JSE and a further announcement
setting out full details of the Category 1 transaction would need to be made.
Shareholders are accordingly advised to exercise caution when dealing in securities of the
Company until such time as a further announcement is made.
9. RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the information contained in this firm
intention announcement to the extent that it relates to Group Five or reflects or summarises
the contents of the Firm Intention Letter, accepts full responsibility for the accuracy of such and
certifies that, to the best of its knowledge and belief, the information contained in this firm
intention announcement is true and nothing has been omitted which is likely to affect the
importance of the information.
Johannesburg
16 October 2017
Financial Advisor and Transaction Sponsor to Group Five
The Standard Bank of South Africa Limited
Legal Advisor to Group Five
Norton Rose Fulbright South Africa
Sponsor to Group Five
Nedbank Corporate and Investment Banking
Date: 16/10/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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