Investment into preference shares issued by VSS Financial Services (Pty) Ltd
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
INVESTMENT INTO PREFERENCE SHARES ISSUED BY VSS FINANCIAL SERVICES PROPRIETARY LIMITED
1. INTRODUCTION AND CLASSIFICATION OF THE TRANSACTION
The board of directors of Ecsponent (“the Board”) hereby advises shareholders that the Company has resolved
to invest up to R100 million in cumulative perpetual preference shares (“Preference Shares”) issued by VSS
Financial Services Proprietary Limited (“VSS”) (“the Transaction”).
The Company expects to invest into the Preference Shares in tranches, the first of which will be R30 million
and is expected to be completed on or about today, 3 January 2018.
2. RATIONALE FOR THE TRANSACTION
One of the Company’s strategic directives is the investment into private equity investments. The Board has
identified VSS as a value-adding investment. The anticipated dividend yield on the investment will further
enhance Ecsponent’s after tax returns.
3. OVERVIEW OF VSS
VSS is 100% held by MyBucks SA Proprietary Limited (“MyBucks”). VSS currently provides group information
technology and related administrative services to the MyBucks group of companies and is the entity through
which the MyBucks group undertakes its information technology development.
VSS invested significantly in developing its service offering which has resulted in the company securing
profitable contracts during 2017. VSS will be rebranded as a financial technology (“Fintech”) entity, geared
toward the provision of artificial intelligence and information technology support services to both the
MyBucks group and the Ecsponent group, as well as to external Fintech related entities, such as mobile
network operators and smaller financial services groups.
4. FINANCIAL INFORMATION OF VSS
VSS reported net loss after tax of R17 million for the financial year ended 30 June 2017, and net deficit of R15
million as at 30 June 2017, being the latest financial year-end of VSS.
The above financial information is based on the audited historic financial information of VSS, calculated in
accordance with International Financial Reporting Standards and the Companies Act of South Africa.
5. KEY TERMS OF THE TRANSACTION
The terms of the Preference Shares may not be modified, altered, varied, added to or abrogated without the
prior written consent of the holders of the Preference Shares. Key terms of the Preference Shares are as
Each Preference Shares will entitle the holder to share in a preferential dividend, determined at the sole
discretion of the board of directors of VSS (“VSS Board”), after taking into account the distributable profits,
budget and cash flows of VSS, and subject to the terms and conditions as determined by the VSS Board.
Any payment due to holders of Preferences Shares will rank in priority to any payment due to any other class
of shares of VSS.
Preference Shares may be redeemed or converted into any other class of shares in VSS at the option of VSS,
as determined by the VSS Board.
5.4. Voting rights
Holders of Preference Shares are entitled to vote on any resolution which is proposed which affects the rights
and privileges attached to the Preference Shares or interest of the holder of Preference Shares, including:
- the creation or allotment of further classes of shares in VSS which rank in some or all respects pari
passu or in priority to the Preference Shares;
- the winding-up of VSS or commencement of business rescue proceedings;
- the reduction of VSS’ capital or a change in the dividend policy of VSS;
- the authorisation of any event which requires the consent of holders of the Preference Shares in terms
of the VSS Memorandum of Incorporation or any variation of any matter in respect of which the
holders of Preference Shares have previously given consent;
- the entering into any transaction by VSS contemplated in Chapter 5 of the Companies Act of 2008;
- any other resolution proposed in terms of which Preference Shares are entitled to vote in terms of the
VSS Memorandum of Incorporation.
At any meeting where Preference Shareholders are entitled to vote, upon a poll, the holder of a Preference
Share will be entitled to 1 (one) vote for every Preference Share held.
6. CONDITIONS PRECEDENT
The Transaction is not subject to any conditions precedent.
7. EFFECTIVE DATE
The effective date of the Transaction is expected to be on or about today, 3 January 2018, which is when the
first tranche of investment in Preference Shares will be made.
8. CATEGORISATION OF THE TRANSACTION
Based on the maximum investment value of R100 million, the Transaction is a Category 2 transaction in terms
of the JSE Listings Requirements and accordingly is not subject to approval of shareholders by the Company.
3 January 2018
Sponsor and Corporate Advisor
Questco Corporate Advisory Proprietary Limited
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