SABVEST LIMITED - Proposed Specific Repurchase of Sabvest N Ordinary Shares and Repurchase of Sabvest Treasury Shares

Release Date: 10/09/2018 14:58
Code(s): SBV SVN
 
Wrap Text
Proposed Specific Repurchase of Sabvest ‘N’ Ordinary Shares and Repurchase of Sabvest Treasury Shares

SABVEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003753/06)
Ordinary share code: SBV and ISIN: ZAE000006417
N ordinary share code: SVN and ISIN: ZAE000012043
(“Sabvest” or “the Company”)

PROPOSED SPECIFIC REPURCHASE OF SABVEST ‘N’ ORDINARY SHARES AND REPURCHASE OF
SABVEST TREASURY SHARES


1.   INTRODUCTION

     On 25 July 2018, two of Sabvest’s long-standing, passive offshore shareholders, Valderoma Investments SA and
     Caraway Group Inc. (the “Sellers”), announced the offer for sale of up to 16,650,276 Sabvest ‘N’ ordinary shares
     at R34.60 per ‘N’ ordinary share (the “Offer”). On 16 August 2018, it was announced that the Sellers had
     successfully placed 13,178,674 Sabvest ‘N’ ordinary shares.

     In order to facilitate a complete and timely disposal of the Sabvest ‘N’ ordinary shares for the Sellers, Rand
     Merchant Bank, a division of FirstRand Bank Limited (“RMB”), separately agreed to acquire the balance of
     3,471,602 Sabvest ‘N’ ordinary shares held by Valderoma Investments on 10 September 2018 for R34.60 per
     Sabvest ‘N’ ordinary share.

     Subject to the approval of Sabvest shareholders (“Shareholders”) in general meeting, the Company has agreed
     to repurchase and cancel up to 3,471,602 Sabvest ‘N’ ordinary shares (the “Repurchase Shares”) held by RMB
     (the “Specific Repurchase”). The final number of Repurchase Shares will be the total shares held by RMB two
     days prior to the posting of the Circular (as defined below) to Shareholders.

     In addition, the Sabvest board (the “Board”) has resolved, subject to the approval of Shareholders in general
     meeting, to repurchase and cancel the 101,511 Sabvest ordinary shares and 584,479 Sabvest ‘N’ ordinary shares
     held as treasury shares (the “Treasury Shares”) from its wholly-owned subsidiary, Sabvest Finance and
     Guarantee Corporation Limited (the “Treasury Share Repurchase”).

     The dates provided for in this announcement are subject to amendment. A further announcement will be published
     in due course setting out the salient dates and times of the Specific Repurchase and the Treasury Share
     Repurchase.


2.   TERMS OF THE SPECIFIC REPURCHASE AND TREASURY SHARE REPURCHASE

     Subject to the approval of Shareholders in general meeting, and in terms of sections 48, 114 and 115 of the
     Companies Act 71 of 2008 (“Companies Act”), the Companies Regulations, 2011 (“Regulations”) and the Listings
     Requirements of the JSE Limited (“JSE”), the Company has agreed to repurchase and cancel the Repurchase
     Shares from RMB at the earliest practicable date, expected to be on or about 13 November 2018.

     The Specific Repurchase will be made at a price of R34.60 per Sabvest ‘N’ ordinary share, which price represents
     a discount of 36.6% to the reported net asset value (“NAV”) per share of R54.58 as at 30 June 2018 and 0.09%
     discount to the volume weighted average traded price of the Sabvest ‘N’ ordinary shares, measured over the 30
     business days prior to 10 September 2018 (“30-day VWAP”), being the day prior to the date on which the Specific
     Repurchase price was agreed to in writing between Sabvest and RMB.

     The Treasury Shares will be repurchased at the market value determined as at the close of trading on or about 29
     October 2018.


3.   RATIONALE FOR THE SPECIFIC REPURCHASE AND TREASURY SHARE REPURCHASE

     Given that the Specific Repurchase price of R34.60 represents a 36.6% discount to the reported NAV of R54.58
     as at 30 June 2018, the Specific Repurchase will further enhance the NAV per share of the Company and is viewed
     by the Board as an appropriate capital allocation for the Company’s surplus cash resources.

     The Board has resolved to repurchase, delist and cancel the Treasury Shares in order to simplify the Company’s
     share capital structure, eliminate accounting and regulatory complexities arising from treasury shares in general
     and save additional costs of administration.


4.   CIRCULAR AND GENERAL MEETING

     A circular containing full details of both the Specific Repurchase and the Treasury Share Repurchase and
     incorporating a notice convening a general meeting of Shareholders in order to consider and, if deemed fit, to pass
     the resolutions necessary to give effect to the Specific Repurchase and Treasury Share Repurchase (“Circular”),
     is expected to be distributed to Shareholders on or about 28 September 2018.

     The general meeting of Shareholders, is expected to be held on or about 29 October 2018 at Commerce Square,
     Building 4, 39 Rivonia Road, Sandhurst, Sandton (“General Meeting”).


5.   CONDITIONS PRECEDENT TO THE SPECIFIC REPURCHASE AND TREASURY SHARE REPURCHASE

     The Specific Repurchase is subject to the fulfilment or waiver of the following conditions precedent:

         •    the approval of the Circular by the JSE and the Takeover Regulation Panel (“TRP”);

         •    the passing of a special resolution of the Shareholders (excluding RMB and its associates) approving the
              Specific Repurchase, as required by sections 48(8)(b), 114 and 115(2) of the Companies Act and
              paragraph 5.69(b) of the Listings Requirements, and (ii) to the extent required, the approval of the
              implementation of the special resolution for the Specific Repurchase by the court in terms of section 115(3)
              of the Companies Act, and (iii) if applicable, Sabvest not treating such resolution as a nullity, as
              contemplated in section 115(5)(b) of the Companies Act;

         •    within 30 business days following the General Meeting, Shareholders exercising their appraisal rights in
              terms of section 164 of the Companies Act, by giving valid demands in terms of section 164(7) of the
              Companies Act, in respect of no more than 10% of the issued shares in Sabvest. If Shareholders give
              notice objecting to the Specific Repurchase as contemplated in section 164(3) of the Companies Act, or
              vote against the special resolution for the Specific Repurchase in respect of no more than 10% of the
              issued shares in Sabvest, this condition will be deemed to have been fulfilled at the time of the passing of
              the special resolution for the Specific Repurchase; and

         •    the issuance of a compliance certificate by the TRP in terms of section 121(b) of the Companies Act.

     The Treasury Share Repurchase is subject to the fulfilment or waiver of the following conditions precedent:

         •    the approval of the Circular by the JSE; and

         •    the passing of a special resolution of the Shareholders approving the Treasury Share Repurchase, as
              required by paragraph 5.69(b) of the Listings Requirements.


6.   IMPACT ON SABVEST’S FINANCIAL INFORMATION

     Should the Specific Repurchase be for 3,471,602 Sabvest ‘N’ ordinary shares, the implementation will impact the
     financial information of Sabvest by way of:

         •    a decrease in cash of R120,117,429.20; and
         •    a decrease in equity of R120,117,429.20.

     The Specific Repurchase consideration will be funded from the Company’s existing cash reserves, which amounted
     to R184.3 million at 30 June 2018.

     As the Treasury Share Repurchase is an intra-group transaction, no change in the Company’s financial cash
     resources will transpire as a result of the implementation thereof and the financial effects of the Treasury Share
     Repurchase are minimal.


7.   OPINIONS AND RECOMMENDATIONS

     As required in terms of the Companies Act and Regulations, an independent board of Sabvest directors
     (“Independent Board”) has been constituted for the purpose of evaluating the terms of the Specific Repurchase.
     The Independent Board comprises Dawn Mokhobo, Bheki Shongwe and Nigel Hughes.

     As the Specific Repurchase is in respect of more than 5% of the Sabvest ‘N’ ordinary shares in issue, an
     independent expert opinion is required in terms of section 114 of the Companies Act and regulation 90 of the
     Regulations. The Independent Board has appointed BDO Corporate Finance Proprietary Limited (“Independent
     Expert”) to provide an independent fair and reasonable opinion on the terms of the Specific Repurchase and to
     make appropriate recommendations to the Independent Board. The Independent Expert’s opinion and the views
     of the Independent Board will be detailed in the Circular.


8.   CANCELLATION AND DELISTING

     Following the fulfilment of the conditions precedent set out in paragraph 5 above, application will be made to the
     JSE for the delisting of the Repurchase Shares and the Treasury Shares, which shares will be cancelled as issued
     shares and reinstated as authorised but unissued shares. The Repurchase Shares and the Treasury Shares are
     expected to be cancelled and delisted on or about Tuesday, 13 November 2018. Following the implementation of
     the Specific Repurchase and Treasury Share Repurchase, Sabvest will no longer hold any shares in treasury.


9.   RESPONSIBILITY STATEMENT

     The Independent Board accepts responsibility for the information contained in this announcement and confirms
     that, to the best of its knowledge and belief, the information is true and does not omit anything likely to affect the
     importance of the information.


Sandhurst
10 September 2018

Independent Transaction Sponsor
Questco Corporate Advisory Proprietary Limited

JSE Sponsor
RMB

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