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Trustco: Grants Option to Founder Family To Convert N$1,4 Billion Loan In Ordinary Shares Through Conversion Option
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
JSE share code: TTO
NSX share code: TUC
OTCQX share code: TSCHY
ISIN Number: NA000A0RF067
(“Trustco” or “Company”)
TRUSTCO: GRANTS OPTION TO FOUNDER FAMILY TO CONVERT N$1,4 BILLION
LOAN INTO ORDINARY SHARES THROUGH CONVERSION OPTION
1. Introduction
Shareholders are advised that Trustco (“the Borrower”) has negotiated
terms with Dr. Quinton van Rooyen (“van Rooyen”) and Next Capital (Pty)
Ltd (“Next”) (collectively referred to as “the Lender”) to grant an option to
convert the N$1,478,768,750 (one billion four hundred and seventy eight
million seven hundred and sixty eight thousand seven hundred and fifty
Namibian Dollars) related party loan into 1,050,000,000 (one billion and
fifty million) Trustco shares at a price of N$1,41 per share. The terms to
the Conversion Option were agreed between the Parties on 31 August
2023.
2. Background
Dr. van Rooyen and/or Next and/or associates of Dr. van Rooyen provided
loans to Trustco and/or entities that form part of the Trustco group of
companies, during previous financial years. Next is the investment vehicle
of the Van Rooyen family.
3. Rational
3.1. Subsequently, the Lender advised that the loans advanced in terms of the
Huso Transactions (approved by shareholders on 13 June 2017) and the
Related Party Loan Transaction (approved by shareholders on 22 January
2019), are being waived.
3.2. The subsequent Total Loan Waiver contributed to the EBITAASA of
Trustco Resources, which triggered the earn out mechanism, and a
number of 628,800,000 Trustco shares was issued in terms of the Huso
Transaction at a price of N$4,69 per share.
3.3. The Trustco Board, the JSE accredited auditors and the JSE approved the
issue of the shares at the time.
3.4. The JSE subsequently directed and the Financial Services Panel (“FSP”)
confirmed that Trustco should restate its annual financial statements
("AFS") and cancel the 628,800,000 Trustco shares. The North Gauteng
High Court upheld this decision which is currently the subject of an appeal
to the Supreme Court of South Africa.
3.5. Trustco restated its AFS and after the return of the shares by the Lender,
cancelled the 628,800,000 Trustco ordinary shares.
3.6. Trustco now has a related party liability to the Lender in the amount of
N$1,478,768,750, of which N$1,000,000,000 would become due and
payable on 31 March 2024.
3.7. The Net asset value (NAV) of Trustco decreased further as of 28 February
2023 to N$1,61 per share as per its (unaudited) interim results. The raising
of the loan has decreased the NAV of the company by over NAD1,4 billion.
3.8. Trustco needs to be able to clear its legacy debt and raise new capital for
further investments and address the ‘going concern’ disclosures in its AFS
preferably by 31 August 2023, its financial year end.
3.9. Both parties agree that the restatement was done under protest, but that
the rule of law had to be followed.
4. Terms of conversion option
4.1. The Lender or their nominees is granted an option to convert its
N$1,478,768,750 related party loan into 1,050,000,000 ordinary Trustco
shares at a price of N$1,41 per share.
4.2. The option will be valid until 31 August 2029 ("Option Period"). The Option
can be exercised after shareholder approval in Tranches of not more than
25% of the Issued number of Shares in any 12 (twelve) month period.
4.3. The Lender will advise the Company Secretary of Trustco, by written notice
of the exercising of the Option in any 12 (twelve) month period.
4.4. From the date that shareholders approved the Conversion Option, the loan
amount will bear no interest and the repayment date set out in the Related
Party Loan Transaction will be amended as required.
4.5. At the expiry of the Option Period, any balance of the loan amount will be
payable on written demand by the Lender. Interest will accrue on any
outstanding amount at the expiry of the Option Period to date of final
payment. Interest will then accrue at the Prime Lending Rate of Namibia
as published at the time.
4.6. The number of shares relate to a price of N$1,41 per share and would be
used when exercising the Option. The Option Price will remain fixed,
irrespective of (a) the share trading price of Trustco or (b) the listing status
of Trustco.
4.7. The terms of the Related Party Loan Transaction will be amended in line
with the conversion Option.
5. Related parties
Van Rooyen and Next are both regarded as related parties in terms of
Section 10 of the JSE Listings Requirements as Van Rooyen is a director
of Trustco and Van Rooyen and Next are material shareholders of Trustco.
A related party fairness opinion on the loan conversion will be required in
compliance with paragraph 5.53(b) of the JSE listings requirements.
6. Circular to shareholders
In terms of paragraph 5.51(g) of the JSE Listings Requirements, the
specific issue requires the approval by way of an ordinary resolution
(requiring at least a 75% majority of the votes cast in favour of such
resolution) by all Trustco shareholders present or represented by proxy at
a general meeting, excluding van Rooyen, Next and/or associates. A
circular to Shareholders together with the detailed terms and date of the
meeting, will be made available in due course.
7. Increase in authorised share capital
A special resolution will be put to shareholder to vote on the increase of
the authorised share capital from 2,500,000,000 to 3,500,000,000 by
increasing the authorised share capital with 1,000,000,000, together with
the corresponding amendment to the Group’s Memorandum of
Incorporation (“MOI”).
8. Board responsibility
The board individually and collectively accepts full responsibility for the
accuracy of the information contained in this announcement. In addition,
the Board certifies that to the best of its knowledge and belief, the
information contained in this announcement solely pertaining to the Group
is true and, where appropriate, does not omit anything that is likely to affect
the importance of the information contained herein, and that all reasonable
enquiries to ascertain such information have been made.
Windhoek, Namibia,
1 September 2023
Komada Holdings (Pty) Ltd
Company Secretary and Investor Relations Services to Trustco Group
Holdings Limited
JSE Sponsor
Vunani Sponsors
NSX Sponsor
Simonis Storm Securities Proprietary Limited – Windhoek
OTCQX Sponsor
J.P Galda & Co – New York
Date: 01-09-2023 02:02:00
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