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Joint Announcement Of A Firm Intention Offer By Offeror To Acquire All Of The Issued Shares Of Dawn Excluding Shares
Distribution and Warehousing Network Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
Share code: DAW & ISIN code: ZAE000018834
(“DAWN”)
Polanofield Proprietary Limited
(Incorporated in the Republic of South Africa)
(Registration number 2018/556404/07)
(“the Offeror”)
JOINT ANNOUNCEMENT OF A FIRM INTENTION OFFER BY OFFEROR TO ACQUIRE
ALL OF THE ISSUED SHARES OF DAWN EXCLUDING SHARES HELD BY THE
OFFEROR, ITS RELATED AND INTER-RELATED PERSONS AND PERSONS ACTING
IN CONCERT WITH ANY OF THEM AND ANY TREASURY SHARES AND WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
1.1 Further to the cautionary announcement released on SENS on
13 November 2018, the Offeror and DAWN hereby announce that
the Offeror has made a firm offer ("Offer") to acquire the
entire issued ordinary share capital of DAWN (“Shares”),
excluding Shares held by the Offeror, its related and inter-
related persons and persons acting in concert with any of
them and any treasury shares, by way of a scheme of
arrangement (“Scheme”) in terms of section 114 of the
Companies Act, No. 71 of 2008, as amended (“Companies Act”)
between DAWN and the holders of its Shares (“DAWN
Shareholders”).
1.2 The amount payable in terms of the Scheme will be a cash
consideration of R0.01 per Share (“Scheme Consideration”).
1.3 Pursuant to paragraph 1.17(b) of the JSE Limited (“JSE”)
Listings Requirements, the Shares will be delisted from
the main board of the JSE pursuant to the implementation of
the Scheme (“Delisting”).
1.4 The purpose of this announcement is to, inter alia, advise
DAWN Shareholders of the terms and conditions of the Scheme
and Delisting (collectively, (“Transaction”).
2 BACKGROUND
2.1 DAWN is listed in the Construction and Materials – Building
Materials and Fixtures sector of the JSE Limited and its
head office is based in Germiston, Gauteng.
DAWN distributes quality branded hardware, sanitaryware,
plumbing, kitchen, engineering and civil products; as well
as manufacturing pipe and fittings, which are all sold
through strategically positioned branch network in South
Africa and selected countries in Africa.
2.2 The Offeror is a South African company whose share capital
is owned by Derek Austin Tod and Luis Gonsalves Baeta.
3 RATIONALE
DAWN faces liquidity constraints, notwithstanding progress made
with the turnaround strategy, pursuant to an extensive evaluation
of all funding alternatives that have been considered. In this
regard,the board of directors of DAWN is of the opinion that the
Offer is the most viable alternative.
4 SALIENT TERMS OF THE SCHEME
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 the Companies
Regulations, 2011 (“Companies Regulations”). The salient terms
and conditions of the Scheme and other information pertaining to
the Scheme are set out below.
4.1 Scheme
4.1.1 Subject to the fulfilment, or waiver, as the case may
be, of a number of the conditions precedent (as
detailed in paragraph 4.2 below) (“Scheme
Conditions”), the Offeror has offered to acquire all
of the Scheme Shares held by DAWN Shareholders who
are Scheme Participants at the scheme implementation
date by way of a scheme of arrangement in terms of
section 114 of the Companies Act. The Scheme will be
proposed by the Board between DAWN and DAWN
shareholders.
4.1.2 If the Scheme becomes operative, the Delisting will
occur and all DAWN Shareholders, excluding those DAWN
Shareholders that validly exercise their appraisal
rights in accordance with section 164 of the
Companies Act as a consequence of the approval of the
Scheme and whose shareholder rights have not been
reinstated as envisaged in sections 164(9) and
164(10) and/or 164(15)(c)(v)(aa) of the Companies
Act, or who have not been ordered by the court to
withdraw their demands in terms of section
164(15)(v)(aa) of the Companies Act, will be deemed
to have disposed of all of their Scheme Shares to the
Offeror and/or DAWN, as applicable, in exchange for
the Scheme Consideration.
4.2 Scheme Conditions
The Scheme is subject to the fulfilment or waiver, as the
case may be, of the following suspensive conditions on or
before 1 February 2019 (or such other date as the Offeror
and DAWN may agree to in writing, with approval of the
Takeover Regulation Panel (“TRP”):
4.2.1 approval by DAWN Shareholders of the Offer as is
contemplated by section 114, read with section 115,
of the Act. To the extent required, approval by a
court of the implementation of such resolution in
terms of section 115(2)(c) and/or section 115(3) of
the Act; and if applicable, DAWN not having treated
the aforesaid resolution as a nullity, as
contemplated in section 115(5)(b) of the Act;
4.2.2 the Scheme has been conditionally or unconditionally
approved by the South African Competition
Authorities, and any other competition authority in
respect of the relevant African jurisdictions
("Competition Authorities"), unless any condition has
been imposed by any Competition Authority which DAWN
or the Offeror has confirmed in writing, within 5
business days of receipt of such conditional
approval, to be unreasonable in its effect on such
party (and specifying the reasons therefor) and DAWN
and the Offeror have subsequently failed to resolve
such condition, acting reasonably, within a further
5 business day period; and
4.2.3 The TRP has issued a compliance certificate in respect
of the Scheme in terms of section 119(4)(b) of the
Companies Act, provided that if such compliance
certificate is issued conditionally or on terms, this
condition shall not be regarded as having been
fulfilled unless the party which is or parties which
are affected by such conditions or terms, confirm/s
in writing (by not later than the said date and time)
that such conditions and terms are acceptable to
it/them, acting reasonably.
The above conditions cannot be waived and time periods for
the fulfilment of such conditions cannot be extended unless
agreed to in writing by DAWN and the Offeror.
5 CONDITIONS TO BE FULFILLED PRIOR TO POSTING OF THE CIRCULAR
5.1 The posting of the combined offer circular to the DAWN
Shareholders in terms of Regulation 106 of the Companies
Regulations and the Listings Requirements in relation to the
Offer (the "DAWN Circular") will be subject to the fulfilment
or waiver, as the case may be, of the following suspensive
conditions by no later than 7 December 2018 (or such other
date as the Offeror and DAWN may agree to in writing, with
approval from the TRP and JSE):
5.1.1 DAWN shall enter into an agreement with its existing
funder or another bridge provider in terms of which
bridging financing (in a form reasonably acceptable
to DAWN) of at least R25 million is made available
to DAWN or any of its subsidiaries for drawdown and
such facility is only conditional on the conditions
disclosed to DAWN on 30 November 2018;
5.1.2 The independent board of DAWN confirming in writing
that it recommends that DAWN Shareholders vote in
favour of the necessary resolutions required to
implement the Offer;
5.1.3 In terms of section 114(2) of the Companies Act, the
independent expert delivers to the independent board
of DAWN its report providing an opinion on the fair
and reasonableness of the Offer;
5.1.4 The Offeror has procured written irrevocable
undertakings in a form reasonably acceptable to the
Offeror and DAWN, in terms of which DAWN Shareholders
holding at least 60% of the total DAWN Shares, either
by means of irrevocable undertakings or letters of
support from DAWN Shareholders;
5.1.5 The DAWN Circular has been approved by the JSE, the
TRP and any other applicable regulatory authority;
and
5.1.6 To the extent required, any Exchange Control approval
which might be required by DAWN from the Financial
Surveillance Department of the South African Reserve
Bank has been obtained.
5.2 The conditions are for the benefit of both the Offeror and
DAWN and may be waived (save for those that are regulatory
in nature, which cannot be waived), in whole or in part, by
agreement in writing prior to the expiry of the time period
set out in paragraph 5.1.
5.3 The Offeror and DAWN undertake to use their reasonable
endeavours, and will co-operate in good faith, to procure
the fulfilment of the conditions in paragraph 5.1, as soon
as possible after DAWN's signature of this letter and in any
event by no later than the date stipulated therefor above.
6 CASH CONFIRMATION
In compliance with regulation 111(4)(b) of the Companies
Regulations, the Offeror has provided the TRP with the necessary
third party confirmation from Standard Bank that sufficient cash
is held in favour of DAWN Shareholders for the sole purpose of
discharging the Scheme Consideration. The aggregate cash
consideration amounts to R5 758 760.49.
7 BENEFICIAL INTERESTS IN DAWN SHARES
7.1 As at the date of this announcement, the Offeror does not
directly hold shares in DAWN.
Luis Baeta disclosed that he personally holds 10 056 shares
directly in DAWN, representing 0.0017% of the ordinary share
capital of DAWN excluding treasury shares. Derek Tod
disclosed that he holds 10 857 862 shares in DAWN, directly
or indirectly representing 1.85% of the ordinary share
capital of DAWN excluding treasury shares. As such they are
acting in concert with the Offeror as their shares are
excluded from the offer.
As required by regulation 101(7)(a) and (c) of the Companies
Regulations, the Offeror confirms that it is the ultimate
proposed purchaser of all the Shares and is not acting as
an agent.
8 INDEPENDENT BOARD, OPINION AND RECOMMENDATIONS
8.1 The board of directors of DAWN (“Board”) has convened an
independent board (“Independent Board”) as required by the
Companies Regulations, which comprises Dinga Mncube, Steve
Naude and Ms Nthabeleng Likotsi, for purposes of evaluating
the terms and conditions of the Scheme and advising DAWN
Shareholders thereon.
8.2 The Independent Board has appointed BDO Corporate Finance
(Pty) Ltd as the independent expert (“Independent Expert”),
as required in terms of section 114(2) of the Companies Act
and the Companies Regulations, to issue an opinion dealing
with the matters set out in sections 114(2) and 114(3) of
the Companies Act and regulations 90 and 110(1) of the
Companies Regulations, and to express an opinion on whether
the Scheme and the Scheme Consideration are fair and
reasonable to DAWN Shareholders (“Independent Expert
Report”). The Independent Expert’s Report will be detailed
in the Circular.
8.3 The Independent Board’s opinion in connection with the Scheme
will be communicated to DAWN Shareholders in due course in
the combined circular to be sent to DAWN Shareholders
detailing, inter alia, the terms of the Scheme (“Circular”).
8.4 Further information relating to the Circular is detailed in
paragraph 11 below.
9 DAWN UNDERTAKINGS AND WARRANTIES
9.1 DAWN undertook to grant the Offeror exclusivity for a 120-
day period from 23 November 2018 in terms of which DAWN,
save as may be required by the Companies At, the Regulations
or in terms of the fiduciary duties placed on the directors
of DAWN, cannot accept a Competing Transaction for the
duration of the exclusivity period (and will procure that
its directors and employees do not) –
9.1.1 enter into, or afford any options to enter into or
consummate, any Competing Transaction; or
9.1.2 solicit, initiate, encourage, approve or recommend
any expression of interest, enquiry, proposal or
offer regarding any Competing Transaction or options
to enter into or consummate, any Competing
Transaction,
a "Competing Transaction" means any proposal or
transaction for the merger, amalgamation, business
combination, takeover bid, sale or other disposition
of all or a majority of the equity in and/or business
and/or assets of DAWN or any of its material
subsidiaries, or any other transaction which could
reasonably be considered to be likely to materially
prejudice or frustrate the Offer or its
implementation; and
9.1.3 DAWN warranted to the Offeror that it is currently
not involved in any other negotiations regarding any
Competing Transaction. It however is aware of other
parties who have expressed an interest in DAWN.
9.2 DAWN undertook and warranted in favour of the Offeror that
until the closing date of the Offer or if the Offer fails
for whatsoever reason –
9.2.1 after signature of the Offer Letter, it will not sell,
encumber or dispose of any assets (and has not done
so since 1 November 2018) or enter into any material
short or long-term agreements, other than:
9.2.1.1 in the ordinary course of business (meaning
the buying and selling of trading stock in
the normal course of business); and
9.2.1.2 to dispose of DPI Plastics (Pty) Ltd and its
assets;
9.2.2 DAWN will provide the Offeror with its monthly
management accounts and will comply with all
reasonable requests made by the Offeror for
documentation and/or information not previously made
available to the Offeror, and to have access to
personnel and/or contractual counterparties;
9.2.3 DAWN is, and will be, compliant with all obligations
due to the applicable tax authorities;
9.2.4 DAWN and its subsidiaries, shall provide at their
cost, their tax clearance certificates as at 31 March
2018;
9.2.5 DAWN will provide the Offeror with its signed and
audited annual financial statements for the year
ended 31 March 2018 as well as its unaudited interim
financials for the half-year ended 30 September 2018
by 15 December 2018 after they have been approved and
signed by DAWN and, in respect of the annual financial
statements, by the auditor as well;
9.2.6 DAWN shall allow the Offeror, from date of acceptance
of the Offer, the right to communicate with staff,
customers and suppliers with permission from DAWN
management;
9.2.7 DAWN will use its reasonable endeavours to assist the
Offeror with the –
9.2.7.1 preparation of its proposed enhanced
business plan for the ensuing 12 month
period; and
9.2.7.2 negotiation with DAWN’s existing banker for
the existing facility to be maintained for
a period of 12 (twelve) months from the date
that the Offeror assumes ownership of the
business pursuant to implementation of the
Offer, and for such outcome to be confirmed
by the existing banker in writing;
9.2.8 notwithstanding anything to the contrary therein, the
Parties undertake to comply at all times with their
obligations under the Financial Markets Act, No.19 of
2012;
9.2.9 shall provide the Offeror, in respect of Dawn and
each subsidiary a declaration by agreed employees of
DAWN setting out the liabilities, guarantees, all
material contracts and outstanding legal issues (duly
commissioned under oath); and
9.2.10 DAWN undertakes, in respect of each subsidiary, to
provide the Offeror with a stock take as at 22
February 2019 and a verified and updated asset
register as at 7 December 2018.
10 WITHDRAWAL OF CAUTIONARY
The cautionary announcement dated 13 November 2018 is hereby
withdrawn.
11 CIRCULAR AND POSTING DATE
11.1 If the conditions to posting the Circular are fulfilled or
waived, as the case may be, as contemplated in paragraph
5, DAWN and the Offeror will issue the Circular to DAWN
Shareholders, as contemplated in regulation 106(2), setting
out the full terms and conditions of the Scheme and
including the notice convening the Scheme Meeting, the form
of proxy in respect of the Scheme Meeting, and the form of
surrender and transfer for use by certificated DAWN
Shareholders.
11.2 The salient dates pertaining to the Scheme will be released
on SENS and published in the press at the time of
distribution of the Circular. The Circular is to be
distributed to DAWN Shareholders on or about 20 December
2018.
12 RESPONSIBILITY STATEMENTS
12.1 The Independent Board collectively and individually accepts
responsibility for the information contained in this
announcement to the extent that it relates to DAWN. To the
best of its knowledge and belief, the information contained
in this announcement pertaining to DAWN is true and nothing
has been omitted that is likely to affect the import of the
information.
12.2 The Offeror accepts responsibility for the information
contained in this announcement to the extent that it relates
to the Offeror. To the best of their knowledge and belief,
the information contained in this announcement pertaining to
the Offeror is true and nothing has been omitted that is
likely to affect the import of the information.
By order of the Independent Board and the Offeror.
Germiston
3 December 2018
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
Legal Advisors to DAWN: ENSafrica (Edward Nathan Sonnenbergs Inc.)
Independent Expert: BDO Corporate Finance (Pty) Ltd
Legal Advisor to the Offeror: Alex May Incorporated
Date: 03/12/2018 03:19:00 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.
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