Wrap Text
Proposed disposal of the Peregrine Securities business and withdrawal of cautionary announcement
PEREGRINE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/006026/06)
Share code: PGR ISIN: ZAE000078127
("Peregrine" or "the company")
PROPOSED DISPOSAL OF THE PEREGRINE SECURITIES BUSINESS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Further to the cautionary announcement published on 6 June 2018, the board of Peregrine has received a non-binding
proposal from Legae Holdings Proprietary Limited, an entity representing certain management of Legae Securities and
Peregrine Securities and a Black Economic Empowerment consortium, ("the Consortium" or "the Purchaser") to
acquire, as one indivisible transaction -
- from Peregrine SA Holdings Proprietary Limited ("Peregrine SA") its 65% shareholding in both Peregrine
Securities Proprietary Limited and in Peregrine Fund Platform Proprietary Limited (collectively "Peregrine
Securities"); and
- from Peregrine International Holdings Limited ("PIH") its 65% shareholding in Peresec International Limited
("Peregrine Securities International"),
(collectively, the "Proposed Transaction").
Peregrine Securities houses the Peregrine Group's equity broking, derivative broking and prime broking entities.
The Consortium will include Fatima Vawda, Paul Baloyi, Tshepo Maseko, Lester Bailey, James Stewart, Warren
Chapman, all the black Staff of both Legae Securities and Peregrine Securities and funders. If the Proposed
Transaction is concluded, Peregrine Securities will be majority black owned and controlled with meaningful women
ownership.
In considering the proposal the Peregrine board took account of the increasingly higher capital requirements and the
attendant risk profile of Peregrine Securities and Peregrine Securities International (collectively "Securities
business"). With both these considerations being out of kilter with the other core Peregrine businesses, and with the
offer being appropriately priced, the Peregrine board, at its board meeting held on 12 June 2018, decided to dispose of
the Securities business.
The effective date of the Proposed Transaction will be 1 October 2018 (the "Effective Date") and, if consummated,
the Proposed Transaction will be implemented on the fifth business day after the Proposed Transaction becomes
unconditional (the "Implementation Date").
The purchase price values –
- Peregrine SA's shareholding in Peregrine Securities at R760 million, and
- PIH's shareholding's in Peregrine Securities International at the ZAR equivalent of R150 million,
as may be adjusted upwards depending on the profits after tax earned by Peregrine Securities and Peregrine Securities
International for the period from 1 April 2018 up until 30 September 2018.
The purchase price, which will be adjusted upwards by an amount referenced to an agreed interest rate calculated from
the Effective Date up until the Implementation Date, will be settled in cash on the Implementation Date.
The Proposed Transaction price of R910 million translates to a PE ratio in excess of 9 times the Group's 65% share
(before accounting for Nala PGR SA Holdings Proprietary Limited's shareholding in Peregrine SA) of the Securities
business' profit after tax for the current reported financial year ended 31 March 2018.
The Proposed Transaction is subject to the execution of formal written agreements (the "Formal Agreements"). Prior
to executing the Formal Agreements the Consortium will be required to satisfy Peregrine SA that the Consortium has
secured funding (or guarantees in respect thereof) in order to be in a position to discharge the full purchase price
payable by the Consortium on implementation of the Proposed Transaction.
The Formal Agreements will only be conditional on the Purchaser securing required regulatory, administrative or
governmental authorities and material licences and/or permits necessary for the continued operation of the business.
The only representation and warranties (or indemnities) that Peregrine SA and PIH (the "Sellers") will furnish to the
Purchaser will be that the Sellers will be the registered and beneficial owners of the shares / interest which is / are
being sold to the Purchaser and will, on the Implementation Date, be able to give free and unencumbered title to such
shares / interest to the Consortium.
The Purchaser (and the Securities business) shall cease to and shall not use the name "Peregrine" or any derivative or
combination thereof within an agreed time period post the Implementation Date.
Peregrine has agreed to deal exclusively with the Consortium in connection with the Proposed Transaction up until
15 July 2018.
The Group's attributable share of the net asset value of the Securities business as at 31 March 2018 was R637 million
and the Group's attributable share of the net profit after tax for the year ended 31 March 2018 was R88.5 million. This
information is based on the reviewed condensed provisional financial statements of the Group for the year ended
31 March 2018, prepared in accordance with IFRS.
Shareholders will be updated on the Proposed Transaction (which remains subject to, inter alia, entering into of the
Formal Agreements and regulatory approvals) in due course.
If the Formal Agreements are executed, the resultant transaction will constitute a Category 2 transaction for the
purposes of the JSE Listings Requirements. This will necessitate the publication of a Category 2 transaction
announcement (in compliance with JSE Listings Requirements) but the implementation of the Proposed Transaction
will not require Peregrine shareholder approval.
As all material information known to Peregrine in respect of the Proposed Transaction has been set out in this
announcement, the Board is satisfied that any potentially price sensitive information relating to the Proposed
Transaction has (through this announcement) been disseminated in the market and as such shareholders are advised
that they no longer need to exercise caution when trading in their Peregrine shares. The cautionary announcement
issued on Wednesday, 6 June 2018 is withdrawn.
13 June 2018
Corporate advisor and joint sponsor
Java Capital
Joint sponsor
Deloitte & Touche Sponsor
Date: 13/06/2018 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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