IMPERIAL HOLDINGS LIMITED - Intention to repurchase 100% of the preference shares in the issued share capital of Imperial

Release Date: 13/08/2018 07:30
Code(s): IPL IPLP
 
Wrap Text
Intention to repurchase 100% of the preference shares in the issued share capital of Imperial

Imperial Holdings Limited (“Imperial” or “the Company”)
Incorporated in the Republic of South Africa
Registration number: 1946/021048/06
Share code: IPL
ISIN: ZAE000067211

Imperial preference shares
Share code: IPLP
ISIN: ZAE000088076

     Announcement relating to the intention to repurchase 100% of the preference shares in the
              issued share capital of Imperial by way of a scheme of arrangement


1.     Introduction and rationale

       Shareholders are referred to the cautionary announcement, dated 21 June 2018, in relation to the
       proposed unbundling of Imperial’s automotive business housed in its wholly-owned subsidiary,
       Motus Holdings Limited (“Motus”) (“Unbundling”) and Imperial’s undertaking to engage with
       Imperial preference shareholders (“Eligible Shareholders” or “Preference Shareholders”) in
       relation thereto.

       Imperial is pleased to announce that, following consultation with selected Preference Shareholders
       and Imperial ordinary shareholders, the board of directors of Imperial (“Board”) has resolved to
       propose a repurchase of 100% of the outstanding non-redeemable, cumulative, non-participating
       preference shares in the issued share capital of Imperial (“Preference Shares” or “Scheme
       Shares”) by way of a scheme of arrangement (“the Scheme” or “the Repurchase”) in terms of
       section 114(c) of the Companies Act, No. 71 of 2008 (“the Companies Act”).

       Notwithstanding that Preference Shareholders are not entitled to participate in the Unbundling in
       accordance with the Imperial Memorandum of Incorporation (“MOI”), the Board is of the opinion
       that the Scheme will be an efficient means for:

       -   Imperial to simplify its capital structure (prior to the separation of Imperial’s combined
           operations, into Imperial Logistics and Motus); and
       -   Preference Shareholders to dispose of the Preference Shares in an orderly and effective
           manner.

       Implementation of the Scheme is subject to the fulfilment (or waiver, where appropriate) of the
       conditions precedent set out in paragraph 3 below, which conditions include, inter alia, that the
       Scheme must be approved by the requisite majority of Eligible Shareholders at a meeting of Eligible
       Shareholders and the associated Repurchase must be approved by the requisite majority of
       Preference Shareholders, ordinary shareholders and the deferred ordinary shareholder
       (collectively, “Shareholders”) entitled to vote on the relevant resolutions to be proposed at a
       general meeting.
       The Scheme constitutes an “affected transaction” as defined in section 117(1)(c)(iii) of the
       Companies Act, and as such, the Scheme is regulated by the Companies Act and applicable
       Takeover Regulations (contained in Chapter 5 of the Companies Regulations, 2011) (“Takeover
       Regulations”).
       In connection with proposing the Scheme and convening the relevant shareholder meetings to
       approve the relevant special resolutions required to approve implementation of the Scheme,
       Imperial has prepared a shareholder circular in accordance with the relevant disclosure
       requirements under the Listings Requirements of the JSE Limited (“Listings Requirements”), the
       Companies Act and the applicable Takeover Regulations, which circular incorporates notices
       convening the relevant shareholder meetings for purposes of proposing for approval at each of the
       meetings the relevant resolutions required to implement the Scheme, and providing Shareholders

                                                                                                        1
     with the necessary statutorily-required information regarding the Scheme (“the Scheme
     Circular”).

2.   Scheme consideration and arrangement

     The Scheme consideration shall compromise a ZAR cash consideration of (“Scheme
     Consideration”):

     -    a repurchase price offer of ZAR83.00 per Preference Share (“Offer Consideration”); plus
     -    a Preference Share dividend (calculated in terms of the MOI) amounting to ZAR2.53 per
          Preference Share for the period from 26 June 2018 up to (and including) the expected Scheme
          operative date (“Scheme Operative Date”) of 15 October 2018 (“the Pro Rata Preference
          Dividend”)). Should the actual Scheme Operative Date not be 15 October 2018, the Pro Rata
          Preference Dividend shall be calculated from 26 June 2018 up to (and including) the actual
          Scheme Operative Date, which adjustment will be published through the Stock Exchange
          News Service (“SENS”) of the JSE Limited (“JSE”).

     The Offer Consideration represents a premium of 29% to the closing price of ZAR64.29 of the
     Preference Shares as at 10 August 2018 (last trading date prior to this announcement) after
     adjusting for the accrued preference dividend reflected in such share price, and a 18% premium
     to the similarly adjusted volume weighted average price (“VWAP”) of ZAR70.31 of the Preference
     Shares traded on the JSE during the 30 trading days up to (and including) 10 August 2018.

     Furthermore, a Preference Share dividend of ZAR4.17 per Preference Share accrued for the
     Preference Share dividend period from 26 December 2017 up to (and including) 25 June 2018 (the
     “Accrued Preference Dividend”), shall be paid on 1 October 2018 to Preference Shareholders
     recorded in the Company’s share register as at the Accrued Preference Dividend record date as
     will be stipulated in the Scheme Circular.

3.   Implementation of the Scheme and conditions precedent

     The Scheme, if duly approved and implemented, will result in all Eligible Shareholders being
     deemed to have disposed of, and transferred, all of their Scheme Shares to Imperial, and Imperial,
     in turn, will be deemed to have repurchased all of the Scheme Shares, in exchange for the Scheme
     Consideration.

     As a consequence of the Scheme, in terms of paragraph 1.17(b) of the Listings Requirements,
     Imperial shall apply to the JSE for approval of the suspension and the delisting of the Preference
     Shares from the Main Board of the JSE, subject to the Scheme becoming operative.

     Implementation of the Scheme is subject to, amongst other conditions precedent to be set forth in
     the Scheme Circular:

     -    the Scheme being approved by way of the following Shareholder resolutions:

         (i)    a special resolution approved by the requisite majority of Eligible Shareholders in terms
                of section 114(1) read with section 115(2)(a) of the Companies Act (“the Scheme
                Resolution”); and

         (ii)   a special resolution approved by Shareholders (entitled to vote) (“the Repurchase
                Resolutions”):

                  o   in terms of paragraph 5.69(b) of the Listings Requirements and article 16.3 of the
                      MOI, to authorise the Scheme as a specific repurchase (“Special Resolution No.
                      1”); and

                  o   in terms of section 115(2)(a) of the Companies Act (as contemplated in sections
                      48(8) of the Companies Act), given that the Scheme would constitute the


                                                                                                       2
                      repurchase of more than 5% of the issued Preference Shares, to authorise the
                      Scheme (“Special Resolution No. 2”).

     -    no written notice from any Shareholder/s being received by the Company in terms of section
          164(3) of the Companies Act objecting to the relevant special resolutions. If any such objection
          notices are received by the Company, then the chairperson of the relevant Meeting may close
          the relevant Meeting without putting the relevant special resolutions to the vote;

     -    to the extent that the provisions of section 115(2)(c) of the Companies Act become applicable:

         (i)    the Scheme being approved by the relevant court unconditionally, or if subject to
                conditions, the person on whom such conditions are imposed approves such conditions
                and undertakes in writing to comply therewith; and

         (ii)   Imperial not treating the aforesaid special resolutions as a nullity in terms of section
                115(5)(b) of the Companies Act; and

     -    the receipt of unconditional approvals, consents or waivers from all applicable regulatory
          authorities as may be required in order to implement the Scheme or, to the extent that any
          such approvals, consents or waivers are subject to conditions, such conditions being
          acceptable to Imperial.

     A separate class general meeting of the Eligible Shareholders entitled to vote on the Scheme
     Resolution (“Eligible Shareholder General Meeting”) and a general meeting of Shareholders
     entitled to vote on the Repurchase Resolutions (“Combined General Meeting”) will be held on
     14 September 2018 (collectively, “the Meetings”) to consider the foregoing resolutions and notices
     convening these Meetings will be set out more fully in the Scheme Circular.

     Shareholders are advised to refer to the Scheme Circular for the full terms and conditions of the
     Scheme.

4.   Pro forma financial effects

     The table below sets out the unaudited and unreviewed pro forma financial effects of the
     Repurchase pursuant to the Scheme and has been prepared for illustrative purposes only, in order
     to enable Shareholders to assess the impact the Scheme would have if it was implemented on the
     dates indicated in the notes below. Although it does not form the subject of this announcement
     (and the Scheme Circular), the table below also sets out the pro forma financial effects of the
     Bonds redemption that has recently occurred, as described in notes 8, 9 and 10 below.

     Due to their pro forma nature, the pro forma financial effects may not fairly present the financial
     position or the effect on earnings, changes in equity or cash flows of Imperial following
     implementation of the Scheme and the redemption of the Bonds.

     The pro forma financial effects are presented in a manner that is consistent with the accounting
     policies of Imperial for the six months ended 31 December 2017, being International Financial
     Reporting Standards. For a full understanding of Imperial’s accounting policies, refer to Imperial’s
     audited annual financial statements for the year ended 30 June 2017, which can be found on
     Imperial’s    website       at    http://www.imperial.co.za/pdf/investor-relations/annual-financial-
     statements/2017/full-afs.pdf.

     The preparation of the pro forma financial effects is the responsibility of the Board. Consistent with
     the foregoing, the pro forma financial effects set out in the table below are based on available
     information and certain assumptions and estimates, which the Board believe, are reasonable. The
     pro forma figures below have been given no greater prominence than unadjusted financial figures,
     are presented in a manner consistent with both the format and accounting policies adopted in the
     historical financial information of Imperial and adjustments have been quantified on the same basis
     as would normally be calculated in preparing financial statements.



                                                                                                         3
   Scheme at             Unaudited      Adjustments        Adjustments        Pro Forma           %
  ZAR85.53 per            Interim         for the            for the            Interim         Change
Preference Share          Results1      Scheme2 3 4 5      redemption          Results
                                               67
                                                              of the             (After
                          (Before
                                                            Bonds8 9 10        Scheme)
                         Scheme)

Net Asset        Value       10,179                  31                 -5          10,205        0.3%
(“NAV”) 6     9    per
Ordinary         Share
(cents)

Tangible       NAV            5,546                  31                 -5           5,572        0.5%
(“NTAV”)6    9  per
Ordinary     Shares
(cents)

Earnings per share               671                 35                 -3                703     4.8%
(“EPS”)7 10 (cents)

Diluted     EPS7    10
                                 652                 34                 -3                683     4.8%
(cents)

Basic       Headline             717                 35                 -3                749     4.5%
EPS 7 10 (cents)


Diluted    basic                 698                 34                 -3                729     4.4%
Headline EPS7 10
(cents)

Weighted average              194.7                                                  194.7         0%
number of Ordinary
Shares (millions)

Weighted      diluted         200.2                                                  200.2         0%
number of Ordinary
Shares (millions)


Notes and assumptions:

1. The financial information, in the unaudited interim results (Before Scheme) column, has been based on
   the unaudited interim results for the six months ended 31 December 2017 without adjustment as
   published on SENS on 20 February 2018.

2. If the Scheme becomes operative, Preference Shares are bought back at ZAR85.53 per Preference
   Share.

3. Scheme costs of R2 million have been expensed for the Scheme. The transaction costs will have no
   continuing effect on the Company.

4. The Scheme Shares are treated as a financial liability for accounting purposes, due to the cumulative
   nature of dividends.

5. The settlement of the Scheme Consideration will be through existing debt facilities.

6. The NAV and NTAV includes the once-off profit on redemption (R64 million) and transaction costs (R2
   million), as though the Repurchase transaction took place effective 31 December 2017.

                                                                                                        4
      7. The Headline EPS and EPS includes the once-off profit on redemption (R64 million) and the reduced
         cost of the replacement funding, as though the Repurchase transaction took place effective 1 July 2017.

      8. Reference to ”Bonds” means the domestic medium term notes issued by Imperial Group Proprietary
         Limited and guaranteed by the Company. All of the Bonds that were in issue, amounting to R3.5 billion,
         were redeemed on 6 August 2018.

      9. The NAV and NTAV includes the after tax once-off loss on redemption of the Bonds (R13 million) and
         transaction costs (R1 million) as though the Bonds transaction took place effective 31 December 2017.

      10. The Headline EPS and EPS includes the once-off loss on redemption (R13 million), transaction costs
          (R1 million) and the reduced cost of the replacement funding (R7 million) as though the Bonds
          transaction took place effective 1 July 2017.

5.   Important dates and times
                                                                                                                  2018

Posting record date for the purposes of receiving the Scheme Circular                               Friday, 10 August

Scheme Circular posted to Shareholders                                                           Thursday, 16 August

Last day to trade in Preference Shares to be recorded in the register on                      Tuesday, 4 September
the Meetings record date

Record date for purposes of determining the Shareholders entitled to                             Friday, 7 September
attend, speak and vote at the Meetings

Last day and time to give notice to participate in the Meetings                               Monday, 10 September
electronically by 14:00

For administrative purposes, form of proxy (green) for Eligible Shareholder              Wednesday, 12 September
General Meeting and/or form of proxy (white) for Combined General
Meeting should be (but not required to be) received by 10h00 CAT (note
3)

Last day for a Shareholder to deliver a written notice to Imperial objecting                    Friday, 14 September
to the Scheme Resolution and/or the Special Resolution No. 2 in the
Notice of Combined General Meeting in accordance with section 164(3) of
the Companies Act before the relevant resolution is to be voted on at either
the Eligible Shareholder General Meeting or the Combined General
Meeting, respectively

Eligible Shareholder General Meeting held at 10h00 CAT                                          Friday, 14 September

Combined General Meeting at 10h30 CAT                                                           Friday, 14 September

Results of Eligible Shareholder General Meeting and Combined General                            Friday, 14 September
Meeting announced on SENS

Results of Eligible Shareholder General Meeting and Combined General                          Monday, 17 September
Meeting published in South African press

If the Scheme and Repurchase is duly approved by Shareholders at
the Meetings:

Last date for Shareholders who voted against the Scheme Resolution or                           Friday, 21 September
Special Resolution No. 2 in the Notice of Combined General Meeting to

                                                                                                              5
require Imperial to seek Court approval for the Scheme in terms of section
115(3)(a) of the Companies Act, if the requisite special resolutions in terms
of section 115 of the Companies Act were opposed by at least 15% of the
voting rights that were exercised

Last day to trade Preference Shares cum-Accrued Preference Dividend               Tuesday, 25 September

Preference Shares commence trading ex-Accrued Preference Dividend               Wednesday, 26 September

Accrued Preference Dividend record date                                             Friday, 28 September

Payment date for the Accrued Preference Dividend                                      Monday, 1 October

Last date for Shareholders who voted against the Scheme Resolution or                 Monday, 1 October
Special Resolution No. 2 in the Notice of Combined General Meeting to be
granted leave by a Court to apply for a review of the Scheme in terms of
section 115(3)(b) of the Companies Act

Last date for Imperial to give notice of adoption of the special resolutions          Monday, 1 October
(in terms of section 115 of the Companies Act) approving the Scheme and
the Repurchase in terms of section 164(4) of the Companies Act to
Shareholders who delivered written notices to the Company objecting to
the special resolutions in accordance with section 164 of the Companies
Act

If no Shareholders exercise their rights in terms of section 115(3) of
the Companies Act and all conditions precedent to the Scheme are
fulfiled:

Takeover Regulation Panel compliance certificate delivered in terms of                Tuesday, 2 October
section 121(b) of the Companies Act

Scheme finalisation date announcement published on SENS                               Tuesday, 2 October

Last day to trade Preference Shares on the JSE to be recorded in the                  Tuesday, 9 October
register on the Scheme record date to receive the Scheme Consideration

Suspension of listing of Preference Shares from the Main Board of the JSE         Wednesday, 10 October
at commencement of trading

Last day to deliver Form of Surrender (pink) and Documents of Title (in                Friday, 12 October
order to receive Scheme Consideration on the Scheme Operative Date) to
be recieved by the Transfer Secretaries, by 12:00
                                                                                       Friday, 12 October
Scheme record date, being the date and time on which Eligible
Shareholders must be recorded in the register to receive the Scheme
Consideration, by 17:00
                                                                                     Monday, 15 October
Scheme Operative Date
                                                                                     Monday, 15 October
Dematerialised Scheme participants to have their accounts (held at their
CSDP or broker) debited with the Scheme Shares and credited with the
Scheme Consideration
                                                                                     Monday, 15 October
Payment of the Scheme Consideration electronically or posted to
certificated Scheme participants (if the Form of Surrender (pink) and

                                                                                                6
Documents of Title received by the transfer secretaries on or before 12:00
CAT on the Scheme record date)
                                                                                          Tuesday, 16 October
Termination of listing of the Preference Shares on the Main Board of the
JSE at the commencement of trade


Notes:

1.   All times shown in this announcement are South African times, unless otherwise stated.
2.   The above dates and times are subject to amendment. Any material amendment will be announced on SENS
     and published in the South African press.
3.   Proxies may also be handed to the chairman at the commencement of the Meetings.

6. Independent Expert’s report, Independent Board and recommendations

     The Board has appointed PricewaterhouseCoopers Corporate Finance Proprietary Limited as the
     independent expert (“Independent Expert”) for purposes of preparing an opinion in respect of the
     Scheme and the Offer Consideration in accordance with sections 114(2) and 114(3) of the
     Companies Act and regulation 90 of the Takeover Regulations (“Independent Expert Report”).

     Having considered the terms and conditions of the Scheme and based upon and subject to the
     terms and conditions set out in the Independent Expert Report, the Independent Expert is of the
     opinion that the Scheme and Offer Consideration are fair and reasonable to Shareholders.

     Imperial has constituted an independent board (“Independent Board”), comprised of S.P. Kana,
     P. Cooper, G.W. Dempster, P. Langeni, M.V. Moosa, T. Skweyiya and R.J.A. Sparks, to consider
     the Scheme and Offer Consideration.

     The Independent Board, after due consideration of the Independent Expert Report, are of the
     opinion that the terms and conditions of the Scheme are fair and reasonable to Shareholders and
     recommend that Shareholders vote in favour of the relevant resolutions required to implement the
     Scheme. The full Independent Expert Report and the basis for its conclusions will be set out in the
     Scheme Circular.

7.   Cash guarantee

     Imperial has provided the Takeover Regulation Panel with an irrevocable, unconditional bank
     guarantee (in conformity with Regulations 111(4) and 111(5) of the Takeover Regulations) issued
     by Nedbank Limited in favour of Imperial, to satisfy, in full, the Scheme Consideration.

8.   Notice of Meetings and posting of Scheme Circular

     The Scheme Circular will be posted to Shareholders, and will contain the relevant notices to
     convene the Meetings to be held at 10h00 and 10h30, respectively, on Friday, 14 September 2018
     in the boardroom of Imperial, Imperial Place, Jeppe Quondam, 79 Boeing Road East, Bedfordview,
     Gauteng, for the purpose of considering and, if deemed fit, passing with or without modification,
     the relevant special resolutions required to implement the Scheme, as described in more detail in
     paragraph 3 above and in the Scheme Circular.

9.   Responsibility statement

     The Board and Independent Board accepts responsibility for the information contained in this
     announcement to the extent that it relates to Imperial, and certify, to the best of their knowledge
     and belief, that the information contained in this announcement is true and nothing has been
     omitted which is likely to affect the importance of the information.
                                                                                                       7
10. Cautionary announcement

    Further to the renewal of cautionary announcement dated 3 August 2018, Preference Shareholders
    are advised that they no longer need to exercise caution when dealing in the Preference Shares as
    the details of the Scheme (and the associated Repurchase) have been set out in this
    announcement.

    Imperial ordinary shareholders are advised to continue to exercise caution when trading in their
    securities until a further announcement in respect of the Unbundling and separate listing of Motus
    on the JSE is implemented.

Bedfordview
13 August 2018

Financial advisors and transaction sponsor
The Standard Bank of South Africa Limited

Legal advisors
Bowmans

Independent Expert
PricewaterhouseCoopers Corporate Finance (Pty) Limited

Independent Reporting Accountants
Deloitte & Touche

Sponsor
Merrill Lynch SA (Pty) Limited


DISCLAIMER

Nothing in this announcement constitutes (or forms part of) any offer for the sale of, or solicitation of any offer to
purchase or subscribe for, any securities of Imperial in any jurisdiction.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and
therefore persons in any such jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions. Failure to comply with the applicable restrictions
may constitute a violation of the securities laws of any such jurisdiction.

FORWARD-LOOKING STATEMENTS

This announcement contains statements about Imperial that are or may be forward-looking statements. All
statements, other than statements of historical fact, are, or may be deemed to be, forward-looking statements,
including, without limitation, those concerning: strategy; the economic outlook for the relevant business; cash costs
and other operating results; growth prospects and outlook for operations, individually or in the aggregate; liquidity
and capital resources and expenditure and the outcome and consequences of any pending litigation proceedings.
These forward-looking statements are not based on historical facts, but rather reflect current expectations
concerning future results and events and generally may be identified by the use of forward-looking words or phrases
such as “believe”, “aim”, “expect”, “anticipate”, “intend”, “foresee”, “forecast”, “likely”, “should”, “planned”, “may”,
“estimated”, “potential” or similar words and phrases.

Examples of forward-looking statements include statements regarding a future financial position or future profits,
cash flows, corporate strategy, estimates of capital expenditures, acquisition strategy, or future capital expenditure
levels, and other economic factors, such as, inter alia, interest rates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future. Imperial cautions that forward-looking statements

                                                                                                                      8
are not guarantees of future performance. Actual results, financial and operating conditions, liquidity and the
developments within the industry in which Imperial operates may differ materially from those made in, or suggested
by, the forward-looking statements contained in this announcement.

All these forward-looking statements are based on estimates and assumptions, all of which, although Imperial may
believe them to be reasonable, are inherently uncertain. Such estimates, assumptions or statements may not
eventuate. Many factors (including factors not yet known to Imperial, or not currently considered material) could
cause the actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied in those estimates, statements or assumptions.

Shareholders should keep in mind that any forward-looking statement made in this announcement or elsewhere is
applicable only at the date on which such forward-looking statement is made. New factors that could cause the
business of Imperial, or other matters to which such forward-looking statements relate, not to develop as expected
may emerge from time to time and it is not possible to predict all of them. Further, the extent to which any factor or
combination of factors may cause actual results to differ materially from those contained in any forward-looking
statement are not known. Imperial has no duty to, and does not intend to, update or revise the forward-looking
statements contained in this announcement after the date of this announcement, except as may be required by
law. Any forward-looking statements have not been reviewed nor reported on by the external auditors.




                                                                                                                    9

Date: 13/08/2018 07:30:00 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.

Email this JSE Sens Item to a Friend.

Share This Story