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Proposed Disposal of Subsidiary; Withdrawal of Cautionary Announcement; and Postponement of Annual General Meeting
Delta EMD Limited
Incorporated in the Republic of South Africa)
Registration number 1919/006020/06
ISIN: ZAE000132817
Share code: DTA
(“the Company” or “the Group”)
Proposed Disposal of Subsidiary; Withdrawal of Cautionary
Announcement; and Postponement of Annual General Meeting
1. Introduction
Further to the cautionary announcement dated 6 September 2018 (“the
cautionary”), shareholders are advised that the Company, EMD
Investments Proprietary Limited (“EMD Investments”), a subsidiary
of the Company, and Delta (EMD) Proprietary Limited (“Delta EMD”),
a subsidiary of EMD Investments and the owner of the Group’s
Nelspruit plant site, entered into a conditional sale of shares
agreement on 14 September 2018 (“the sale agreement”), in terms of
which the Company will dispose of 2,129,101 ordinary par value
shares of R1 each in EMD Investments (constituting the entire
issued share capital of EMD Investments) to Viridi Developments
Proprietary Limited (“Viridi”), which in turn will result in the
indirect disposal of the Nelspruit plant site held by Delta EMD,
subject to the fulfillment of the conditions precedent set out
below (“the transaction”).
The agreed cash purchase price is the aggregate sum of R12 500 000
(twelve million five hundred thousand rand). A R1 000 000 (one
million rand) deposit has been paid and the remainder of the
purchase price will be secured through the issuance of a bank
guarantee(s) on or before 28 September 2018.
The Company has provided warranties to Viridi which are normal for
a transaction of this nature.
2. Use of proceeds
Prior to the implementation of the transaction, it is envisaged
that: (i) Delta EMD will declare and distribute, as a cash dividend,
a dividend to EMD Investments, leaving only an agreed cash balance
in Delta EMD; and (ii) EMD Investments will declare and distribute,
as a cash dividend, all the cash in EMD Investments to the Company.
The cash balance to remain in Delta EMD for certain known
liabilities and expenses is R4 047 648, together with R5 000 000
of additional working capital for the continuation of Delta EMD’s
business over the next 12 months.
The dividend to be paid to the Company by EMD Investments, together
with the purchase price, less on-going expenses to be incurred by
the Company prior to being wound up, will be available for
distribution to the Company’s shareholders upon the winding up of
the Company.
3. Conditions precedent
The following conditions precedent are to be fulfilled:
3.1 Viridi providing a bank guarantee(s) of R11 500 000
securing the payment of the purchase price on or before 28 September
2018;
3.2 the Company and Viridi compiling a detailed list of the
movable assets to remain with Delta EMD on or before 10 October
2018;
3.3 by no later than 14 December 2018:
3.3.1 the shareholders of the Company having adopted and passed
resolutions approving the transaction; and
3.3.2 the board of directors of the Company having adopted and
passed resolutions approving the transaction and the execution of
the sale agreement;
3.4 by no later than 3 business days after the fulfilment of
the condition precedent in paragraph 3.3.1 above:
3.4.1 the Company has taken the actions necessary to ensure that
certain liabilities have been paid or satisfied by Delta EMD, or
assumed by the Company, or in certain instances the provision for
such liability have been adjusted;
3.4.2 the Company has taken all the actions necessary to ensure
that any and all inter-company liabilities remaining amongst the
Company, EMD Investments and/or Delta EMD have been satisfied
and/or discharged in full;
3.4.3 the board of directors of Delta EMD have passed the
necessary resolutions in terms of section 46 of the Companies Act,
No 71 of 2008, as amended from time to time (“the Companies Act”),
declaring, as a cash dividend, the dividend described above to EMD
Investments; and
3.4.4 the board of directors of EMD Investments have passed the
necessary resolutions in terms of section 46 of the Companies Act,
declaring, as a cash dividend, the dividend described above to the
Company.
The conditions precedent referred to in paragraphs 3.3 and 3.4 may
be waived by agreement between the Company and Viridi by no later
than 10 December 2018.
The effective date of the transaction is when all of the conditions
precedent have been fulfilled.
4. Financial information and rationale
The audited profit after tax of EMD Investments for the year ended
27 December 2017 was R0 and the audited net asset value as at 27
December 2017 was R96 126 000 on an IFRS basis, including the cash
balances that will be distributed to the Company as described
above.
The proposed sale will realise a value for the Nelspruit plant site
less than its current carrying value of R10 000 000 (as at 30 June
2018).
Viridi has agreed to assume and satisfy, as well as to hold the
Company harmless, from any and all of EMD Investments’ and Delta
EMD’s liabilities and obligations, including but not limited to
those related to the historic environmental conditions at the
Nelspruit plant site.
The directors believe the proposed sale is in the Company’s best
interest as it will facilitate a more expeditious winding up of
the Company and the earlier payment of dividends to the Company’s
shareholders.
5. Categorisation
The transaction is a Category 2 transaction per the JSE Listings
Requirements based on the transaction value. Although not required
per JSE Listings Requirements, the directors of the Company, given
recent share price levels, have determined to seek shareholder
approval of the proposed transaction. Consequently, the transaction
is subject to EMD Delta shareholder approval as a condition
precedent.
A circular in this regard will be issued in due course, containing
notice of general meeting to approve the transaction.
6. Withdrawal of cautionary announcement
The cautionary announcement is herewith withdrawn and shareholders
therefore do not need to continue to exercise caution in dealing
in the securities of the company.
7. Postponement of annual general meeting (“AGM”)
Shareholders are advised that the AGM scheduled for 10 October 2018
is being postponed in order to have both the AGM and the general
meeting to approve the transaction on the same day. Shareholders
will be advised of the new date of the AGM in due course.
14 September 2018
Nelspruit
Sponsor
Deloitte & Touche Sponsor Services Proprietary Limited
Legal Advisors
Mervyn Taback Incorporated, registration number 2000/024541/21
Date: 14/09/2018 04:51:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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