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Execution of debt standstill agreement
Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number 1984/007758/06
Share Code: BSR ISIN: ZAE000029781
("Basil Read" or "the Group")
EXECUTION OF DEBT STANDSTILL AGREEMENT
Shareholders are referred to Basil Read’s interim results announcement released on
SENS on 28 August 2017 wherein it was advised that Basil Read intends, inter alia,
to raise funds through a rights offer (“Proposed Rights Offer”) and to undertake a
restructuring of the Group (“Corporate Reorganisation”). The proceeds of the
Proposed Rights Offer and Corporate Reorganisation will be utilised to strengthen
Basil Read’s balance sheet, by reducing debt, increasing funds available for
working capital and provide the Group with a sustainable platform for its ongoing
operations.
In order to provide the Group with the opportunity to implement the Proposed
Rights Offer and Corporate Reorganisation, shareholders are hereby advised that
Basil Read Limited, a wholly owned subsidiary of Basil Read, and certain other
group companies have executed a standstill agreement (“The Standstill Agreement”)
with Aluwani Capital Partners Proprietary Limited (acting on behalf of SBSA ITF
Momentum Income Plus Fund)(“Aluwani”), Credit Guarantee Insurance Corporation of
Africa Limited (“CGIC”), The Industrial Development Corporation of South Africa
Limited (“IDC”), Investec Bank Limited (“Investec”), Lombard Insurance Company
Limited (“Lombard”) and Standard Chartered Bank Limited (“Standard Chartered”)
(collectively the “Standstill Creditors”).
The Standstill Creditors have, inter alia, agreed to refrain from taking any
action to –
- declare that any outstanding amount under any relevant financing documents
(“Relevant Financing Documents”) are immediately due;
- demand specific enforcement of any obligations under any Relevant
Financing Documents;
- take any steps to enforce any remedies or to enforce or perfect any
security interests created in favour of, or for the benefit of, any
Standstill Creditor;
- commence any legal proceedings or other formal procedure or step in
relation to the suspension of payments, winding-up, dissolution, business
rescue, administration or reorganisation of Basil Read Group Companies;
- exercise any right of netting or set-off in relation to any of the
Relevant Financing Documents;
- claim payment of any indemnity payments in terms of the Relevant Financing
Documents; or
- terminate or cancel, or give notice to terminate or cancel, any Relevant
Financing Documents or cancel any undrawn or unused amounts under any
Relevant Financing Documents (“Enforcement Action”),
against Basil Read Limited and certain Group companies during the standstill
period, being a period of 18 months from the date of signature of the Debt
Standstill Agreement , being 1 December 2017 to 31 May 2019 (“Standstill
Period”).
The short-term liquidity position of the Company has been strengthened
following the successful execution of the Debt Standstill Agreement.
The Debt Standstill Agreement affects certain of the existing material
contracts as disclosed in paragraph 11.3 of the circular to Basil Read
Shareholders dated 2 November 2017.
The Agreement became unconditional upon execution, as all the conditions
precedent were met prior to the signature date.
The amounts relating to each of the Standstill Creditors are listed in the
table below:
No. Name Capital lender Guarantees provided
1. Aluwani ZAR50 000 000
2. CGIC ZAR 372 098 783
3. IDC ZAR 290 000 000
4. Investec ZAR20 000 000
5. Lombard ZAR 464 000 000
6. Standard BWP 23 000 000 ZAR 217 958 860
Chartered
Basil Read Limited is required to obtain the prior written consent of not
less than 66.67% (“Super Majority”) of the Standstill Creditors for the
following matters:
- Disposal of major assets, being assets over R50 million, not identified
in the Debt Standstill Agreement;
- Payment of bonuses to senior executives in the Group;
- Material changes in the nature of business or new business in the
Group;
- Convene any meeting to commence the winding-up, dissolution, business
rescue, administration or reorganisation of the Group; or
- Creation of new security over any assets of the Group unless
contemplated in the Debt Standstill Agreement.
The Agreement does not restrict the ability of the Group to settle the
Standstill Creditors in full, at any time.
Basil Read Limited shall procure that the following milestones ("Milestones")
are achieved:
1. The implementation of the Rights Offer, on or before 31 May 2018, or
such date that the Super Majority of Standstill Creditors agree to;
2. In respect of the memorandum prepared by Basil Read regarding the
proposed corporate reorganisation of the Group, the achievement of
particular elements of such corporate reorganisation on or before each
date specified in the memorandum for the achievement of each such
element; and
3. On or before 28 February 2018, Basil Read Limited shall incorporate an
insolvency remote special purpose vehicle (“Security SPV”). The
Security SPV shall constitute the vehicle through which additional
security will be afforded to the Standstill Creditors, utilising
standard guarantee/counter indemnity mechanisms. The Group shall, as
part of the counter-indemnity mechanisms mentioned above, obtain one or
more special notarial bonds and / or covering mortgage bonds, as the
case may be, to be registered over construction equipment and other
identified assets.
If the Milestones are not achieved by the dates specified above, the
Standstill Creditors may call a meeting and, by Super Majority, cancel the
Debt Standstill Agreement. Similarly a Super Majority of Standstill Creditors
can cancel the Debt Standstill Agreement if the Basil Read group of companies
breach any of the warranties and obligations under the Agreement and do not
remedy such breach.
The Debt Standstill Agreement contains undertakings, representations and
warranties normal in an agreement of this nature.
Johannesburg
5 December 2017
Company Secretary
Andiswa T Ndoni
JSE Sponsor
Grindrod Bank Limited
Corporate Advisor and Sponsor to the Proposed Rights Offer
Tamela Holdings (Proprietary) Limited
Legal Advisor
Werksmans
Date: 05/12/2017 05:15:00 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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