DISCOVERY LIMITED - Accelerated bookbuild offering of new Discovery ordinary shares to raise up to ZAR1.85 billion

Release Date: 08/11/2018 17:18
Code(s): DSY
 
Wrap Text
Accelerated bookbuild offering of new Discovery ordinary shares to raise up to ZAR1.85 billion

DISCOVERY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/007789/06)
JSE share code: DSY ISIN: ZAE000022331
(“Discovery” or the “Company”)

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, DISTRIBUTION OR
RELEASE WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM AN OFFER OF
SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION.

ACCELERATED BOOKBUILD OFFERING OF NEW DISCOVERY ORDINARY SHARES TO RAISE UP TO ZAR1.85
BILLION

Discovery shareholders (“Shareholders”) are referred to Discovery’s audited results for the year ended 30 June 2018, which
were published on 4 September 2018, wherein they were advised that Discovery and FirstRand Investment Holdings Limited
(“FRIHL”) had reached an agreement in terms of which Discovery will:
    – acquire FRIHL’s effective 25.01% interest in Discovery Bank Limited (“Discovery Bank”);
    – acquire the remaining 25.01% economic interest that FirstRand Bank Limited (together with FRIHL the “FirstRand
      Group”) currently owns in the Discovery card joint venture business; and
    – through Discovery Bank, acquire all rights to the Discovery card book and related assets which will be migrated to
      Discovery over time (collectively “the Acquisition”).

The total combined acquisition price payable by Discovery to the FirstRand Group will be ZAR1.85 billion (“Acquisition
Consideration”). Since the Acquisition constitutes a new initiative and presents an important opportunity for Discovery, the
board has decided that the Acquisition should be funded by way of an equity issuance limited to the Acquisition Consideration.

Shareholders are now advised that all regulatory approvals for the Acquisition have been obtained.

The Vendor Consideration Placing

Investors are advised of the launch of a placing of new Discovery ordinary shares (the “Placement Shares”) to raise up to
ZAR1.85 billion, by way of a vendor consideration placement as contemplated in the JSE Listings Requirements (the
“Placement”), the proceeds of which will be used to settle the Acquisition Consideration. The Placement is being made to
qualifying investors (as set out in the disclaimer below) only and is not an offer to the public in any jurisdiction.

Rand Merchant Insurance Holdings Limited (“RMI”) currently holds 25% of Discovery’s ordinary shares and have indicated
that they intend to apply for up to ZAR464 million worth of Placement Shares at the clearing price of the bookbuild.

Certain directors of Discovery including, A Gore, B Swartzberg and H Mayers (the “Participating Directors”), collectively
holding 13% of Discovery’s ordinary shares, have irrevocably committed to subscribe for in aggregate ZAR240 million worth
of Placement Shares at the clearing price of the bookbuild. The subscription by the Participating Directors remains subject to
the approval of the necessary resolutions at the annual general meeting of Discovery shareholders, scheduled for 26
November 2018, authorising the issue of Placement Shares to the Participating Directors in terms of section 41(1) of the
Companies Act, No. 71 of 2008, as amended.

The book for the Placement is open with immediate effect and is expected to close as soon as possible. Pricing and allocations
will be announced as soon as practicable following the closing of the book.

Rand Merchant Bank, a division of FirstRand Bank Limited and Morgan Stanley & Co. International plc are acting as joint
bookrunners for the Placement (the “Joint Bookrunners”). Discovery has agreed, pursuant to a placing agreement entered
into with the Joint Bookrunners, not to issue or sell any further Discovery ordinary shares for a period of 90 days after the
closing of the Placement, subject to customary exceptions and waiver by the Joint Bookrunners.

Sandton
8 November 2018

Joint Bookrunners
Rand Merchant Bank (A division of FirstRand Bank Limited)
Morgan Stanley & Co. International plc

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

Legal counsel to Discovery
ENS Africa
Shearman & Sterling (London) LLP

Legal counsel to the Joint Bookrunners
Bowman Gilfillan Inc
Freshfields Bruckhaus Deringer LLP

The distribution of this announcement and the offer and sale of the Placement Shares in certain jurisdictions may be restricted
by law. The Placement Shares may not be offered to the public in any jurisdiction in circumstances which would require the
preparation or registration of any prospectus or offering document relating to the Placement Shares in such jurisdiction. No
action has been taken by Discovery or the Joint Bookrunners or any of their respective affiliates that would permit an offering
of the Placement Shares or possession or distribution of this announcement or any other offering or publicity material relating
to such securities in any jurisdiction where action for that purpose is required. Persons into whose possession this
announcement comes are required to inform themselves about and to observe any such restrictions. Any failure to comply
with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

In South Africa, the Placement will not be an “offer to the public” as defined in the South African Companies Act, No.71 of
2008 (“Companies Act”). Qualifying investors will accordingly only be permitted to apply for shares, if the applicant is a person
who or which falls within one of the specified categories of persons listed in section 96(1)(a) of the Companies Act, or in
accordance with s96(1)(b) of the Companies Act, the application is for a minimum total acquisition cost, per single addressee
acting as principal, of greater than or equal to ZAR1,000,000.

This press release is for informational purposes only and does not constitute or form a part of an offer to sell or a solicitation
of an offer to purchase any security in the United States or in any other jurisdiction where such offer or solicitation is unlawful.
The securities described in this press release have not been and will not be registered under the U.S. Securities Act of 1933,
as amended (the “Securities Act”), or any applicable state or foreign securities laws and may not be offered or sold in the
United States absent registration or an exemption from the registration requirements of the Securities Act. The Placement
Shares are being offered and sold in the United States only to a limited number of “qualified institutional buyers” (“QIBs”) in
reliance on Rule 144A under the Securities Act or another exemption from, or transaction not subject to, the registration
requirements of the Securities Act, and are being sold outside the United States in offshore transactions in accordance with
Regulation S under the Securities Act. There will be no public offering of securities in the United States.

In Member States of the European Economic Area (“EEA”), this announcement and any offer if made subsequently is directed
exclusively at persons who are “qualified investors” within the meaning of the Prospectus Directive (“Qualified Investors”).
For these purposes, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including
the 2010 PD Amending Directive), and includes any relevant implementing measure in the Member State and the expression
“2010 PD Amending Directive” means Directive 2010/73/EU. In the United Kingdom, this announcement is directed
exclusively at Qualified Investors (i) who have professional experience in matters relating to investments falling within Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) who
fall within Article 49(2)(A) to (D) of the Order, and (iii) to whom it may otherwise lawfully be communicated.

Date: 08/11/2018 05:18:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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