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Firm intention by KayDav to make an offer to repurchase KayDav shares and potential delisting
KAYDAV GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/038698/06)
JSE share code: KDV ISIN: ZAE000108940
(“KayDav” or “the Group” or “the Company”)
FIRM INTENTION BY KAYDAV TO MAKE AN OFFER TO REPURCHASE KAYDAV SHARES AND
POTENTIAL DELISTING
1. Introduction
1.1. Shareholders are advised that the board of directors of KayDav (“the KayDav Board”) has resolved that,
subject to securing the requisite approval from its shareholders in a general meeting and the JSE
approving the Company’s delisting application, it would be in the best interests of the Company to seek a
delisting of the Company’s shares from the Main Board of the JSE (“the delisting”).
1.2. In order to give effect to the delisting, the KayDav Board proposes a scheme of arrangement (“the
scheme”) in accordance with the provisions of section 114(1)(c) of the Companies Act, No. 71 of 2008,
as amended (“the Companies Act”), between KayDav and KayDav shareholders, excluding
the Davidson Family Trust, Gary Davidson, Craig Dawson and Martin Slier (collectively, “the excluded
shareholders”), which, if implemented will result in KayDav acquiring all of the KayDav shares held by
KayDav shareholders (“the scheme shares”), excluding the shares held by the excluded shareholders, in
exchange for:
1.2.1. a cash consideration of R1.41 per KayDav share (“the cash consideration”); or
1.2.2. a loan note consideration, being the issue of one unlisted KayDav loan note for each KayDav
share held at an issue price of R1.41 per loan note, as more fully detailed in paragraph 1.3 below
(“loan note”) (“the note consideration”), subject to a maximum of 14 184 397 loan notes (“the
note consideration limitation”); or
1.2.3. a combination of the cash consideration and note consideration as elected by shareholders,
subject to the note consideration limitation.
The cash consideration and the note consideration are collectively referred to herein as “the scheme
consideration.” and KayDav shareholders, excluding the excluded shareholders, are referred to as “the
scheme members.”
1.3. The loan notes will be issued on the date of implementation of the scheme and will be unlisted, unsecured
and subordinated to the senior debt. They will accrue interest at the prime rate (as quoted by Nedbank
Limited) plus 3%, with interest payable monthly in arrears on the last calendar day of each month. The
loan notes will be redeemable on the 5th anniversary of the issue date, unless redeemed earlier and
otherwise on terms that will be detailed in the scheme circular, as defined below.
1.4. The maximum number of loan notes that will be issued will be 14 184 397 loan notes. To the extent
scheme members elect loan notes in excess of such number, the aggregate number of the loan notes in
respect of which scheme members made the loan note election will be reduced pro rata to their election
of loan notes (with any fractional entitlement rounded down to the closest whole number of loan notes)
and such scheme members will be deemed to have elected the cash consideration in respect of the balance
of their scheme shares.
1.5. Scheme members who do not make a valid election in terms of the scheme will be deemed to have
elected to receive the cash consideration in respect of 100% of their scheme shares.
1.6. The scheme will be implemented in compliance with the relevant provisions of Chapter 5 of the
Companies Act and the Takeover Regulations promulgated thereunder (“the Takeover Regulations”).
1.7. This announcement contains further details of the scheme and constitutes a firm intention announcement
in terms of Regulation 101 of the Takeover Regulations.
2. Rationale for the delisting
2.1. The KayDav Board is of the opinion that KayDav’s listing on the JSE no longer benefits the Company
(and indirectly shareholders) due to:
2.1.1. the high costs associated with maintaining a listing;
2.1.2. the low probability of using KayDav shares as currency to raise capital or to effect acquisitions;
2.1.3. the significant time and energy spent by the Company’s executives on ensuring compliance with
the JSE Listings Requirements and other related regulatory requirements; and
2.1.4. the lack of liquidity in KayDav’s shares.
2.2. The scheme will afford KayDav shareholders an ability to monetise their shareholding at a significant
premium to the traded price of a KayDav share. In this regard, the scheme consideration represents a
premium of 182.85% to the 30-day volume weighted average price (“VWAP”) of 49.85 cents per
KayDav share to 26 November 2020 and a premium of 158.32% to the 90-day VWAP of 54.58 cents per
KayDav share to that date.
2.3. KayDav intends to give effect to the intention to delist by way of the scheme.
3. Terms and conditions of the scheme
The material terms of the scheme are as follows:
3.1. Scheme consideration
The scheme consideration will consist of:
3.1.1. the cash consideration of R1.41 per KayDav share; or
3.1.2. the note consideration, subject to a maximum of 14 184 397 loan notes; or
3.1.3. a combination of the cash consideration and note consideration as elected by scheme members,
subject to the note consideration limitation.
The scheme consideration will be discharged to scheme members against delivery of ownership of the
relevant scheme shares into the Company’s name.
3.2. Conditions precedent to the scheme
The scheme will be subject to, inter alia, the fulfilment, or waiver (in whole or in part) by the Company,
at its sole discretion, of the following conditions within 120 days of the date of the publication of this
firm intention announcement, unless the date is extended by the Company with the consent of the
Takeover Regulation Panel (“TRP”):
3.2.1. the approval of the scheme by the requisite majority of KayDav shareholders, as contemplated in
section 115(2) of the Companies Act, and:
3.2.1.1. to the extent required, the approval of the implementation of such resolution by the
court; and
3.2.1.2. if applicable, KayDav not treating the aforesaid resolution as a nullity, as
contemplated in section 115(5)(b) of the Companies Act;
3.2.2. with regard to KayDav shareholders exercising their appraisal rights under section 164 of the
Companies Act (if any), either: (i) no KayDav shareholders give notice objecting to the scheme
as contemplated in section 164(3) of the Companies Act and vote against the scheme at the
relevant meeting or (ii) if any KayDav shareholders give notice objecting to the scheme and vote
against the scheme at the scheme meeting then, within the time period permitted in terms of the
Companies Act, no dissenting shareholders have exercised appraisal rights, by giving valid
demands in terms of sections 164(5) to 164(8) of the Companies Act; provided that this condition
precedent will not fail if the company has elected to waive this condition;
3.2.3. the receipt of unconditional approvals, consents or waivers from all regulatory bodies necessary
to implement the scheme including, but not limited to the Competition Authorities and the TRP
(in terms of the compliance certificate to be issued in terms of the Companies Act in relation to
the scheme).
4. Ability to proceed with the scheme
KayDav has confirmed to the TRP that it has sufficient funds to fully satisfy the maximum potential cash
consideration. KayDav has delivered an irrevocable unconditional guarantee issued by Nedbank Limited in
accordance with Regulations 111(4) and 111(5) of the Takeover Regulations and in favour of KayDav
shareholders for the sole purpose of fully satisfying the maximum potential cash consideration.
5. Shareholdings in KayDav of the excluded shareholders
The excluded shareholders have disclosed the following shareholdings in KayDav:
Name Number of shares %
The Davidson Family Trust 57 847 320 33.5
Gary Davidson 13 695 794 7.9
Craig Dawson 8 883 863 5.1
Martin Slier 6 000 100 3.5
Total 86 427 077 50.0
6. KayDav shareholder support
The following shareholder has given an irrevocable undertaking to vote in favour of any resolutions proposed
by KayDav in respect of the scheme (and subsequent delisting of KayDav) and to elect the note consideration in
respect of 14 184 397 scheme shares, being the note consideration limitation:
% of issued shares (excluding
Number of shares % of issued shares the excluded shareholders)
The Inhlanhla Trust 78 999 551 45.7 91.5
Total 78 999 551 45.7 91.5
7. Pro forma financial information
7.1. The table below sets out the pro forma financial effects of the scheme on KayDav shareholders based on
KayDav’s audited financial results for the year ended 31 December 2019, assuming that the scheme and
delisting had been implemented on 1 January 2019 for purposes of the statement of comprehensive
income and on 31 December 2019 for purposes of the statement of financial position.
KayDav shareholder pro forma financial Before the After the
effects (cents): scheme(1) scheme(2) % change
Net asset value per share 139.51 132.57 (4.97)%
Net tangible asset value per share 124.25 102.07 (17.85)%
Basic and diluted earnings per share3 12.65 17.33 37.03%
Headline and diluted earnings per share3 12.67 17.39 37.17%
Distribution per share - - -
Notes and assumptions
1. This information has been extracted, without adjustment, from KayDav’s audited financial statements for the
year ended 31 December 2019, which have been prepared in accordance with IFRS.
2. The scheme is assumed to be implemented based on the terms and conditions as described in the scheme
circular, as defined below.
3. The group has no dilutive instruments in issue.
7.2. The pro forma financial effects, which are the responsibility of the directors of KayDav, have been
prepared for illustrative purposes only and for the purpose of this announcement. The pro forma financial
effects, because of their nature, may not fairly present KayDav’s financial position, changes in equity,
results of operations or cash flows.
7.3. The pro forma financial effects have been prepared in accordance with the accounting policies of
KayDav, which are in compliance with IFRS, the Guide on Pro Forma Financial Information issued by
the South African Institute of Chartered Accountants and were used in the preparation of its audited
results for the year ended 31 December 2019.
8. Appointment of the independent board and an independent expert
In accordance with the provisions of the Companies Act and the Takeover Regulations, an independent sub-
committee of the KayDav Board, comprising Shane van Niekerk, Boitumelo Tlhabanelo and Frank Davidson
(“the independent board”) was appointed to advise KayDav shareholders on the scheme.
The independent board appointed Nodus Capital TS Proprietary Limited (“Nodus”) to provide the independent
board with its opinion as to whether the terms of the scheme are fair and reasonable to KayDav shareholders, in
accordance with the Takeover Regulations.
Nodus’ full report, as well as the independent board’s opinion on the scheme and scheme consideration, will be
included in the scheme circular, as defined below, to be posted to KayDav shareholders.
9. Scheme circular posting date
KayDav will issue a circular to KayDav shareholders, as contemplated in Regulations 102 and 106 of the
Takeover Regulations, setting out the full terms and conditions of the scheme and including a notice convening
a general meeting of KayDav shareholders (“the scheme circular”). The scheme circular will be posted to
KayDav shareholders within 20 business days of the date of this announcement.
Shareholders will be advised of the posting of the scheme circular by means of an announcement on SENS.
10. The independent board and KayDav Board responsibility statement
The independent board and KayDav Board (to the extent that the information relates to KayDav) collectively
and individually accept responsibility for the information contained in this announcement and certify that, to the
best of their knowledge and belief, the information contained in this announcement relating to KayDav is true
and this announcement does not omit anything that is likely to affect the import of such information.
27 November 2020
Corporate advisor and sponsor
Java Capital
Date: 27-11-2020 12:10:00
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