Wrap Text
TRP investigation involving Extract Grp Ltd, Enx Grp Ltd, Zarclear Holdings Ltd, African Phoenix Inv Ltd
12 April 2023
TRP investigation involving Extract Grp Ltd, Enx Grp Ltd, Zarclear Holdings Ltd, African
Phoenix Inv Ltd
TAKEOVER REGULATION PANEL
(Established in terms of the Companies Act, 2008) ("TRP" or "Panel")
TAKEOVER REGULATION PANEL INVESTIGATION INVOLVING EXTRACT GROUP
LIMITED, ENX GROUP LIMITED, ZARCLEAR HOLDINGS LIMITED, AFRICAN PHOENIX
INVESTMENTS LIMITED
1. Introduction
a. On 19 August 2022, the Panel announced the initiation of an investigation relating to
certain corporate transactions in respect of the above-mentioned companies
(Investigation).
b. The Investigation, among other things, invited any interested parties to provide
information believed to be relevant to the matters under investigation to assist with the
Investigation.
c. The Panel's Investigation, led by its Deputy Executive Director, Zano Nduli, as the
inspector appointed by the Executive Director, Andile Nikani, commenced in earnest
in September 2022.
d. The inspector then engaged the various parties being investigated (Investigated
Parties) between September 2022 and February 2023 on different aspects of the
Investigation and various acquisitions.
e. The result of the Panel's investigation and the settlement reached amongst the Panel
and the Investigated Parties is that an estimated aggregate value of R680,534,155.26
will be offered to shareholders in respect of the mandatory offers that will be made to
shareholders.
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2. Settlement
The Investigation having established certain facts, which were provided by the Investigated
Parties, through their legal representatives, without admission of any contravention of the
Companies Act, 2008 ("the Act") or the Takeover Regulations, it was agreed between the
Panel and the Investigated Parties to settle the Investigation on the following basis:
a. On the basis of the Panel's interpretation of section 2(2)(d) of the Act, certain of the
Investigated Parties acquired control over Zarclear Holdings Limited (Zarclear) and
African Phoenix Investments Limited (API) as at 1 January 2020, and control over
Extract Group Limited (Extract) and ENX Group Limited (ENX) as at 18 May 2020 (in
each instance, the Relevant Date), by acquiring shares above the prescribed
percentage (35%) as contemplated in section 123(2) of the Act, thereby in each case
triggering a mandatory offer in terms of section 123 of the Act on the respective
Relevant Date(s).
b. Having regard to the above, it became necessary for the Investigated Parties to
implement remedial action and make mandatory offers when they were considered on
the Panel's interpretation to have acquired control over the relevant regulated
companies.
c. In light of the above, the Panel and the Investigated Parties have agreed to settle this
matter as follows:
i. The Investigated Parties agree to make mandatory offers to the shareholders
of each of Zarclear, API, Extract and ENX as at the respective Relevant
Date(s); and
ii. The aggregate purchase price in each case (other than in respect of ENX as
set out below) shall be calculated as follows:
1. The highest price at which any of the Investigated Parties acquired shares
in the respective regulated company in the six months immediately
preceding the Relevant Date applicable to that regulated company;
2. Interest at the prescribed rate of interest on the highest price referred to at
subparagraph 1 above, commencing on the Relevant Date until the 30th
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business day after the opening of the mandatory offer prescribed in the
settlement or the date of settlement of the offer price, whichever occurs
first; and]
3. The above amounts should be reduced by any capital returns to
shareholders during the relevant periods.
iii. In respect of ENX the aggregate purchase price was agreed between the
relevant Investigated Parties and the Panel, based on the trading by the
Investigated Parties.
iv. The Investigated Parties:
1. Have accounted fully to the Panel regarding the applicable highest price
applicable to each of the relevant companies;
2. Shall procure that the relevant Investigated Parties make the necessary
mandatory offers as contemplated above at the price as determined above;
3. The mandatory offerors above issue the requisite firm intention
announcements to initiate the offer processes contemplated in the Act and
the Takeover Regulations (Takeover Provisions), plus all other processes
required by the Takeover Provisions in respect of mandatory offers.
3. Conclusion
The Panel believes that the settlement achieves a careful balance between the interests of
various market participants as it is enjoined to do so under section 119 of the Act. This
Investigation was particularly challenging because of its scope and breadth. The Panel is
grateful to everyone who assisted with coming forward with relevant information. Lastly, we
acknowledge the cooperative manner in which the Investigated Parties conducted
themselves, which ultimately resulted in an amicable resolution to this Investigation. This being
the case, the Panel has closed its Investigation and issued its compliance notice to the
Investigated Parties on the basis outlined herein.
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Date: 13-04-2023 04:30:00
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