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ECSPONENT LIMITED - Terms Announcement regarding an Option Agreement, and update in respect of Invest Solar Africa and MHMK Capital

Release Date: 30/01/2019 15:15
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Terms Announcement regarding an Option Agreement, and update in respect of Invest Solar Africa and MHMK Capital

ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
Debt Issuer Codes: ECSP and ECSD
(“the Company” or “Ecsponent”)

TERMS ANNOUNCEMENT REGARDING AN OPTION AGREEMENT, AND UPDATE IN RESPECT OF
INVEST SOLAR AFRICA AND MHMK CAPITAL BOTSWANA AGREEMENTS

1.     TERMS ANNOUNCEMENT REGARDING A CALL AND PUT OPTION AGREEMENT OVER SHARES
       HELD IN MYBUCKS SA

1.1.     Introduction

Shareholders are advised that Ecsponent Botswana Limited and Ecsponent Treasury Services Proprietary
Limited (collectively referred to as “the Grantors”), being wholly owned subsidiaries of the Company, and
Ecsponent has entered into a call and put option agreement (“the Option Agreement”) with Claymore
Private Foundation (referred to as “the Option Holder”), in respect of shares held by Ecsponent and any
of its subsidiaries (“the Ecsponent Group” or “the Group”) in MyBucks SA (“MyBucks”) (“the Option
Shares”).

1.2.     Rationale

The Board believes that MyBucks is a perfect fit in respect of its target investment profile as the
internationally listed group offers a high technology, high profit margin business, while providing significant
barriers to entry. The Board also believes that fintech is in a growth phase, especially in Africa, where the
technology will bridge the significant infrastructure gaps which are currently hampering the ease of
transacting.

The Group’s investment strategy is such that all investments have specific exit parameters and the MyBucks
investment is no different. The Option Agreement therefore provides the Group with certainty as to its ability
to exit its investment in MyBucks over a five-year period, on a non-exclusive basis.

The MyBucks group also holds various banking licenses, the intellectual property on bespoke artificial
intelligence (AI) developments and scalable credit scoring systems. Depending on market developments and
consumer requirements, there may be value in developing these assets in future. The timing of Option
Agreement is such that the MyBucks business would have reached maturity, resulting in a positive impact
on the Group’s balance sheet.

The Option Agreement does not limit the Group’s upside opportunity to realise its investment and provision
is made for short term liquidity requirements of the Group. In addition, the Option Agreement makes
provision for the inclusion of any additional investment the Group may make in MyBucks.

1.3.     Overview of MyBucks

1.3.1.    MyBucks is a financial technology company (Fintech) listed on the Frankfurt Stock Exchange, which
          provides financial products and services to customers locally and internationally. MyBucks was first
          incorporated in 2015 and converted to a public company in 2016.

1.3.2.    MyBucks has five banking licenses and several non-banking financial institution licenses and offers
          products such as savings, short-term single payment loans, instalment loans and other credit-
          related services similar to those of Ecsponent.

1.3.3.    Financial products offered by MyBucks include banking, lending (short-and long-term), insurance,
          credit reports and budgeting tools. MyBucks operates under the following three brands:
          1.3.3.1.    GetBucks, represented in 11 countries and consisting of lending to small and medium
                      size companies and entrepreneurs, including home improvement loans, personal credit
                      loans, educational loans, agricultural loans, corporate loans, credit reports and
                      budgeting tools;
          1.3.3.2.    GetSure, represented in 6 countries and consisting of insurance products, including
                      agricultural catastrophe insurance, corporation insurance, income protection and
                      education provider cover; and
          1.3.3.3.    GetBanked, represented in 6 countries and consisting of virtual banking products, such
                      as savings accounts, mobile transactions, transactional cards and remittances.

1.3.4.    The MyBucks strategy consists of providing higher volume credit and financial services to
          customers with positive credit ratings, at reduced rates and on attractive terms.

1.3.5.    Net loss after tax of MyBucks as per the published audited financial statements for the year ended
          30 June 2018 is €8,191,933 (being a loss of R127.4m as at the date of this announcement).

1.3.6.    The value of the net assets of MyBucks as per the audited financial statements for the year ended
          30 June 2018 is €6,852,251 (R106.6m as at the date of this announcement), excluding non-
          controlling interest.

1.3.7.    The MyBucks audited financial statements for the year ended 30 June 2018 have been prepared in
          accordance with International Financial Reporting Standards, as adopted by the European Union.

1.4.     Suspensive conditions, effective date and closing conditions

The Option Agreement is subject to the fulfilment of the following suspensive conditions (“the Suspensive
Conditions”) by no later than 17h00 on 31 May 2019, or such later date as agreed by the parties in writing:

1.4.1.    the board of directors of the Grantors authorising the entry into and implementation of the Option
          Agreement;
1.4.2.    approval of the shareholders of Ecsponent and the shareholders of the Grantors at a general
          meeting of shareholders; and
1.4.3.    approval from the JSE and other regulatory bodies to the extent necessary.

The Option Agreement will become effective on the date upon which all the Suspensive Conditions are
fulfilled (“Effective Date”).

The closing in respect of the sale of Option Shares is conditional on the receipt, within 120 days of the
issuance of a notice by the Option Holder or Grantors, as applicable, exercising the Call Option or the Put,
as applicable (or such later date as agreed by the parties in writing), of exchange control approval, as is
required at the time (“Closing Conditions”).

1.5.     Terms of the Call Option

1.5.1.    With effect from the Effective Date up to 31 December 2023, and in consideration of the sum of 1
          Euro, settled in cash, the Grantors have granted the Option Holder the option to purchase all or
          some of the Option Shares (“Call Option”) at a price to be calculated as follows:

          1.5.1.1.   14 Euros per Option Share, if the settlement date, being ten business days from the
                     date on which the Closing Conditions have been met (“Settlement Date”), is on or
                     before 31 December 2019;
          1.5.1.2.   15 Euros per Option Share, if the Settlement Date is on or before 31 December 2020;
          1.5.1.3.   16 Euros per Option Share, if the Settlement Date is on or before 31 December 2021;
          1.5.1.4.   17 Euros per Option Share, if the Settlement Date is on or before 31 December 2022;
                     and
          1.5.1.5.   18 Euros per Option Share, if the Settlement Date is on or before 31 December 2023
          (“the Option Price”).

1.5.2.    The exercise of the Call Option by the Option Holder will create a binding obligation on the Option
          Holder to buy, and the Grantors to sell, the Option Shares.
1.5.3.    Notwithstanding the Call Option granted, the Grantors are entitled, subject to a pre-emptive right
          in favour of the Option Holder, to dispose of up to 500 000 Option Shares per annum to any third
          party, or such larger number of shares as may be agreed in writing.

1.5.4.    The Grantors will be required to obtain the release of certain Option Shares pledged as security to
          third party financiers.

1.6.     Terms of the Put Option

1.6.1.    With effect from 31 December 2023 up to 17:00 South African time on 30 June 2024, and in
          consideration of the sum of 1 Euro, settled in cash, the Option Holder has granted the Grantors
          the option to require the Option Holder to purchase (“Put Option”) all of the remaining Option
          Shares which have not yet been purchased by the Option Holder by means of exercise of the Call
          Option, or disposed of to third parties (“Remaining Option Shares”), prior to the exercise of this
          the Put Option.

1.6.2.    The exercise of the Put Option creates a binding obligation on the Option Holder to buy, and the
          Grantors to sell, the Remaining Option Shares.

1.6.3.    The price payable by the Option Holder to the Grantors for each Remaining Option Share shall be
          an amount of 18 Euros.

1.7.     Other significant terms

1.7.1.    In the event of certain default events by the Option Holder, the Call Option shall lapse, and the
          Grantors will have the right to re-acquire the Option Shares already purchased by the Grantors at
          the Option Price. In the event of certain default events by the Grantors, the Put Option shall lapse,
          and the Option Holder will have the right to acquire the Option Shares not already purchased at
          the Option Price.

1.7.2.    Further terms, conditions and warranties that are usual for a transaction of this nature are
          contained in the Agreement.

1.8.     Application of sale proceeds

In the event of the exercise of the Call Option or Put Option, the Board will consider the appropriate
deployment of the sale proceeds into the business of the Ecsponent Group at the time.

1.9.     Categorisation and approvals required

In terms of the Listings Requirements, the Option Agreement constitutes a Category 1 transaction for
Ecsponent and therefore Ecsponent shareholder approval is required. A circular, setting out all the details of
the Option Agreement and incorporating a notice of general meeting, will be distributed to shareholders of
the Company in due course.

2.     CANCELLATION OF THE INVEST SOLAR AFRICA LIMITED (“INVEST SOLAR”) TRANSACTION
       AND THE MHMK CAPITAL BOTSWANA LIMITED (“MHMK”) MANAGEMENT AGREEMENT

Shareholders are referred to various announcements released on SENS on 29 June 2018 and on
26 September 2018 wherein shareholders were advised that Ecsponent had entered into:

•         a subscription agreement and underwriting agreement with Invest Solar in terms of which the
          Company agreed to:
          o     subscribe of 40 million shares in Invest Solar at BWP1.00 per share pursuant to a private
                placement of 70 million Invest Solar shares by Invest Solar in advance of its initial public
                offering (“IPO”), and
          o     fully underwrite a maximum of 30 million Invest Solar shares at BWP1.00 per share pursuant
                to the Invest Solar IPO; and
•         an investment management agreement with MHMK in terms of which MHMK will manage the
          portfolio of assets and investments owned by Ecsponent Botswana Limited,

(collectively “the Transactions”).

A circular containing full details of the Transactions was expected to be distributed to shareholders by
31 January 2019. The directors of Invest Solar Africa have decided to delay both the private placement and
the IPO to coincide with the commissioning of the first solar plant. As a result, the Board has decided to
terminate the Transactions until finality is reached in respect of both the private placement and the IPO. The
parties to the Transactions are in the process of concluding appropriate cancellation agreements in respect
of the Transactions.

The Group remains committed to investing in renewable energy in the Southern African region.


For more information about this announcement or the Ecsponent group, email
investor.relations@ecsponent.com or visit www.ecsponentlimited.com/investor-relations.


30 January 2019
Pretoria

Sponsor
Questco Corporate Advisory (Pty) Ltd

Date: 30/01/2019 03:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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