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Unbundling Of Kaap Agri Limited (“Kaap Agri”) Shares: Apportionment of Tax Cost for South African Income Tax Purpose
ZEDER INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/019240/06)
Share code: ZED
ISIN: ZAE000088431
LEI: 37890022AF5FD117D649
(“the Company” or “Zeder”)
UNBUNDLING OF KAAP AGRI LIMITED (“Kaap Agri”) SHARES: APPORTIONMENT OF TAX
COST FOR SOUTH AFRICAN INCOME TAX PURPOSES AND CASH PAYMENT IN RESPECT OF
FRACTIONAL ENTITLEMENTS
Shareholders are referred to the announcements published by the Company on the Stock Exchange
News Service (“SENS”) on 28 February 2022 (“Declaration Announcement”) and 22 March 2022
(“Finalisation Announcement”) regarding the unbundling of the Company's shareholding in Kaap
Agri (“Zeder Unbundling”). In particular, the Company is in the process of unbundling 31 286 956
Kaap Agri no par value ordinary shares (“Kaap Agri Distribution Shares”), comprising approximately
42.2% of the total issued share capital of Kaap Agri, to shareholders of Zeder (“Shareholders”) by
way of a pro rata distribution in specie, in the ratio of 1 Kaap Agri share for every 49.22692 Zeder
shares held by Shareholders on the record date of the Zeder Unbundling (“Zeder Unbundling
Record Date”) (“Distribution Ratio”).
Terms appearing in title case and that are not otherwise defined herein, shall bear the meanings
ascribed to those terms in the Declaration Announcement.
1. INTRODUCTION
1.1. The purpose of this announcement is to notify Shareholders of:
1.1.1. the apportionment ratio to be applied by Shareholders in determining the apportionment
of the cost of their existing shareholding to be allocated to (a) the unbundled Kaap Agri
Distribution Shares to be distributed to Shareholders, with the remainder being allocated
to (b) the ordinary shares in the issued share capital of Zeder (“Zeder Shares”) held by
Shareholders following the Zeder Unbundling; and
1.1.2. the payment of cash in respect of fractional entitlements by the Company to Shareholders
who may be entitled thereto.
1.2. The tax-related summary below represents general comments and is not intended to
constitute a complete analysis of the tax consequences for Shareholders, in terms of existing
South African tax law, of the Zeder Unbundling or of the payment of cash in respect of
fractional entitlements. It is not intended to be, nor should it be considered as legal or tax
advice. Neither Zeder nor its associates, advisors, directors or employees can be held
responsible for the tax consequences of the Zeder Unbundling and therefore Shareholders
are advised to consult their own tax advisors in this regard.
2. APPORTIONMENT TAX PRINCIPLES
2.1. Zeder Shares held as trading stock
2.1.1. Any Shareholder holding Zeder Shares as trading stock or on revenue account will be
deemed to acquire the Kaap Agri Distribution Shares as trading stock or on revenue
account, as the case may be.
2.1.2. The combined expenditure of the Zeder Shares and Kaap Agri Distribution Shares will be
the original aggregate expenditure incurred in respect of the Zeder Shares, as
contemplated in section 11(a), section 22(1) or section 22(2) of the Income Tax Act.
2.1.3. The portion of the above combined expenditure to be allocated to the Kaap Agri
Distribution Shares will be determined by applying the ratio that the market value of the
Kaap Agri Distribution Shares, bears to the sum of the market value of the Zeder Shares
and the Kaap Agri Distribution Shares as at the last day to trade plus one Business Day,
being Wednesday, 30 March 2022, taking the Distribution Ratio into account. The
expenditure so allocated to the Kaap Agri Distribution Shares will reduce the expenditure
relating to the retained Zeder Shares, as set out in paragraph 2.3 below.
2.2. Zeder Shares held as capital assets
2.2.1. Any Shareholder holding Zeder Shares as capital assets will be deemed to acquire the
Kaap Agri Distribution Shares as capital assets.
2.2.2. The combined expenditure of the Zeder Shares and Kaap Agri Distribution Shares will be
the original expenditure incurred in respect of the Zeder Shares, that is allowable in terms
of paragraph 20 of the Eighth Schedule to the Income Tax Act.
2.2.3. The portion of the above combined expenditure to be allocated to the Kaap Agri
Distribution Shares will be determined by applying the ratio that the market value of the
Kaap Agri Distribution Shares, bears to the sum of the market value of the Zeder Shares
and the Kaap Agri Distribution Shares as at the last day to trade plus one Business Day,
being Wednesday, 30 March 2022, taking the Distribution Ratio into account. The
expenditure so allocated to the Kaap Agri Distribution Shares will reduce the expenditure
relating to the retained Zeder Shares, as set out in paragraph 2.3 below.
2.3. Apportionment Ratio
2.3.1. Shareholders are hereby advised that the expenditure of their Zeder Shares as referred
to above and their unbundled Kaap Agri Distribution Share must be apportioned in
accordance with the apportionment ratio set out below (“Apportionment Ratio”). The
Apportionment Ratio is based on the closing price of 274 cents per Zeder Share and
4 686 cents per Kaap Agri Distribution Share on the last day to trade, plus one Business
Day, being Wednesday, 30 March 2022, and has been calculated as follows:
Apportionment Ratio of Kaap Agri Distribution Share = (A / (A+B))
Where:
A = the closing price of an unbundled Kaap Agri Distribution Share multiplied by the
Distribution Ratio, i.e. 95.19182 cents
(calculated as 4 686 cents*(1 / 49.22692))
B = the closing price of a Zeder Share, i.e. 274 cents
With the result that the Apportionment Ratio amounts to:
= 95.19182 cents / (95.19182 cents + 274 cents)
= 25.78%
2.3.2. Accordingly, Shareholders are hereby advised that the expenditure of their Zeder Shares
must be apportioned in the ratio of 74.22% to a Zeder Share held after the Zeder
Unbundling and 25.78% to an unbundled Kaap Agri Distribution Share received.
2.3.3. No Securities transfer tax is payable upon the transfer of Kaap Agri Distribution Shares in
terms of the Zeder Unbundling.
3. IMPLEMENTATION OF THE ZEDER UNBUNDLING
3.1. As indicated in the Declaration Announcement, under the Zeder Unbundling, Shareholders
will receive the Kaap Agri Distribution Shares in Dematerialised form only.
3.2. Accordingly, all Certificated Shareholders wishing to receive their Kaap Agri Distribution
Shares must appoint a CSDP under the terms of the Financial Markets Act, directly or
through a Broker, to receive the Kaap Agri Distribution Shares on their behalf.
3.3. The CSDP or Broker accounts of Dematerialised Shareholders or Certificated Shareholders
wishing to receive their Kaap Agri Distribution Shares in Dematerialised form will be updated
to reflect such shares on Monday, 4 April 2022, in accordance with the timetable contained
in the Finalisation Announcement.
3.4. Should a Certificated Shareholder not appoint a CSDP under the terms of the Financial
Markets Act, directly or through a Broker, to receive the Kaap Agri Distribution Shares on its
behalf, such Shareholder will be issued with a statement of allocation on Monday,
4 April 2022, reflecting its Kaap Agri Distribution Shares, by the Transfer Secretaries. Such
Shareholders can thereafter instruct the Transfer Secretaries to transfer their Kaap Agri
Distribution Shares, represented by the statement of allocation, to their appointed CSDP or
they can instruct the Transfer Secretaries to issue them with a share certificate at their risk
at any time following the Zeder Unbundling.
3.5. If a Shareholder is in any doubt as to what action to take in respect of the Zeder Unbundling,
such Shareholder should consult its Broker, CSDP, banker, attorney or other professional
advisor.
4. FRACTIONAL ENTITLEMENTS
4.1. The Cash Payment
4.1.1. As set out in the Declaration Announcement, where a Shareholder’s entitlement to the
Kaap Agri Distribution Shares in terms of the Zeder Unbundling, calculated in accordance
with the Distribution Ratio, gives rise to a fraction of a Kaap Agri Distribution Share, such
fraction will be rounded down to the nearest whole number, resulting in allocations of
whole Kaap Agri Distribution Shares and a cash payment to the Shareholder in respect of
such fraction. The aggregated fractions to which Shareholders would otherwise be entitled
will not be transferred to such Shareholders, but will instead be sold in the market for their
benefit as soon as practical after the Zeder Unbundling.
4.1.2. In accordance with the JSE Listings Requirements, the value of the Kaap Agri Distribution
Share to be utilised in determining the fractional cash payment due to a Shareholder is
4 221.69935 cents, being the volume weighted average traded price of Kaap Agri
Distribution Shares on the JSE on Wednesday, 30 March 2022 (being the last day to
trade, plus one Business Day) less 10%.
4.1.3. Payment of the cash relating to such fractional entitlements will be made, on Monday
4 April 2022, to the CSDP or Broker accounts of Dematerialised Shareholders or to the
bank accounts of Certificated Shareholders. Certificated Shareholders whose bank
account details are not held by the Transfer Secretaries, are requested to provide such
details to the Transfer Secretaries to enable payment of the cash amount due for the
aforementioned fraction of a Kaap Agri Distribution Share. Should no details be on record,
the funds will be held by the Company in trust until such time as the details have been
provided and the cash will thereafter be paid to the Shareholder upon its request without
interest, subject to the applicable laws of prescription.
4.2. Tax implications of the Cash Payment
4.2.1. Shareholders are informed that, as far as the tax implications of the cash payment of the
fractional entitlements is concerned, the receipt of the cash payment by Shareholders will
be subject to capital gains tax for Shareholders holding Zeder Shares as capital assets
or, to income tax for Shareholders holding Zeder Shares as trading stock or on revenue
account, as the case may be.
5. NON-RESIDENT SHAREHOLDERS
Shareholders who are non-resident for tax purposes in South Africa are advised to consult their
own professional advisors regarding the tax and regulatory treatment of the Zeder Unbundling
in their respective jurisdictions, having regard to the laws in their jurisdiction and any applicable
tax treaties between South Africa and their country of residence.
In particular the distribution of Kaap Agri Distribution Shares to non-resident Shareholders may
be affected by the laws governing such non-resident Shareholders. It is the responsibility of
those Shareholders (including nominees, agents and trustees acting for the benefit of those
Shareholders) wishing to receive Kaap Agri Distribution Shares to fully satisfy themselves of the
requirements in those jurisdictions relating to the Unbundling, including the ability to receive
Kaap Agri Distribution Shares, whatever governmental and other consents must be obtained
and to pay transfer and other taxes in those jurisdictions, if applicable. Non-resident
Shareholders are obliged to comply with the laws of the foreign jurisdictions applying to them.
Stellenbosch
31 March 2022
Transaction Advisor and Sponsor
PSG Capital
Independent Joint Sponsor
Tamela Holdings
Date: 31-03-2022 10:30:00
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