Wrap Text
Conditional voluntary bid by PKI to acquire all MAS shares not already held by PKI – further announcement
MAS P.L.C.
Registered in Malta
Registration number C 99355
JSE share code: MSP
ISIN: VGG5884M1041
LEI code: 213800T1TZPGQ7HS4Q13
("MAS" or the "Company")
CONDITIONAL VOLUNTARY BID BY PK INVESTMENTS LIMITED ("PKI") TO ACQUIRE ALL
MAS SHARES NOT ALREADY HELD BY PKI – FURTHER ANNOUNCEMENT
Unless the context dictates otherwise, capitalised terms used in this announcement will have the same
meanings assigned to them in the PKI Bid Circular and, if not found there, then MAS's announcement
published on SENS on Tuesday, 5 August 2025.
Introduction
Shareholders are referred to the formal bid launch announcement published by PKI on SENS on
Monday, 4 August 2025 and the accompanying voluntary bid circular (the "PKI Bid Circular") published
by PKI on the same date and made available on PKI's website, https://primekapital.com/pk-investments/
(and ancillary documents, including a Prospectus, a Programme Memorandum (Listed) and Applicable
Pricing Supplement and Information Statement (Listed), a Programme Memorandum (Unlisted) and
Applicable Pricing Supplement and Information Statement (Unlisted) and Frequently Asked Questions
(together with the PKI Bid Circular, the "PKI Bid Documents")), regarding a conditional voluntary bid
by PKI to acquire all MAS Shares not already held by PKI (the "PKI Voluntary Bid").
The PKI Bid Documents contain the full details of the PKI Voluntary Bid as made by PKI to all
Shareholders. The PKI Bid Documents also contain important information regarding the PKI Voluntary
Bid and Shareholders should read the PKI Bid Documents in their entirety for a full understanding of
the PKI Voluntary Bid and instructions on how to participate, should Shareholders wish to do so. This
announcement is not a summary of the PKI Voluntary Bid and does not purport to provide any
investment advice or recommendation to Shareholders in respect of the PKI Voluntary Bid.
Given the nature and risks associated with the PKI Voluntary Bid, the independent board of directors of
MAS ("Independent Board") strongly recommends that Shareholders consult with their Broker, CSDP
or an independent financial advisor before making a decision in respect of the PKI Voluntary Bid.
Neither the Company, nor the Independent Board, were engaged in any meaningful way by PKI in
advance of PKI launching the PKI Voluntary Bid on Monday, 4 August 2025. As such, and given the
truncated nature of the offer period under the PKI Voluntary Bid, the Independent Board will not be able
to obtain appropriate and meaningful external advice (e.g., a fair and reasonable opinion from an
independent expert, requiring a valuation of MAS's shares and the Preferred Shares in PKI in the
context of the PKI Voluntary Bid) as would be the case under a customary voluntary bid process and
would, therefore, not be able to express a recommendation in respect of the PKI Voluntary Bid.
Having carefully considered the largely unregulated nature of the PKI Voluntary Bid and the contractual
relationships which underpin the DJV, and having obtained comprehensive South African, English and
Maltese law advice, the Independent Board is of the view that there are no legal grounds or formal
procedures available that would enable MAS to delay or amend the PKI Voluntary Bid timeline in any
way, nor is it able to challenge the implementation thereof by PKI. The Independent Board's
assessment in this regard and further information to address questions and comment received from
various shareholders during the past week are outlined below.
Shareholders should also take note of the pertinent factors and risks associated with the PKI Voluntary
Bid as outlined further below and in the PKI Bid Documents. In addition, Shareholders are referred to
the material risk factors, considered by PKI, as set out in the sections headed "Investor Considerations
/ Risk Factors" commencing on page 6 of the information statement included as part of the Programme
Memorandum (Listed).
The DJVA and the permissibility of the PKI Voluntary Bid under the DJVA
Background
In terms of the DJVA, the management and control of the DJV is vested in the board of directors of the
DJV (the "DJV Board") and the DJV Board shall have absolute discretion as to the manner in which it
conducts the business of the DJV, subject to the Restricted Matters (defined below). However, in
exercising its discretion, the DJV Board shall act with due care and in good faith with a view to
maximising long-term value for shareholders. Management of the DJV is subject to restriction on certain
matters ("Restricted Matters") that require unanimous approval of the B ordinary shareholders
("Unanimous B Shareholder Approval") prior to the DJV Board and the General Partner being able
to implement them.
In the DJVA, Prime Kapital (as "General Partner") has undertaken to MAS CEE that it will exercise all
its powers in relation to the DJV and its subsidiaries (together, the "DJV Group" or "Group Companies"
and each a "Group Company") so as to procure (insofar as it is able) that, no resolution, decision or
action shall be passed, made or taken by any Group Company in relation to any Restricted Matter
without Unanimous B Shareholder Approval. As General Partner, Prime Kapital controls the DJV Board,
is entitled to appoint the majority of the members of the DJV Board ("GP Nominated Directors") and,
as such, will be responsible for managing the business of the DJV through the appointment of its GP
Nominated Directors.
Relevantly, the DJVA includes (among others) the following as Restricted Matters:
- in connection with the DJV's 'Commercial Development Business', the borrowing of any money
or incurring of any indebtedness (excluding loans advanced to the DJV Group by a third party
lender in the form of development and/or construction financing facilities ("Development
Loans")) which, when aggregated with all other borrowing and indebtedness of the DJV Group
(excluding all Development Loans and any borrowing and indebtedness incurred in connection
with the DJV's 'Residential Development Business'), exceeds 50% of the fair market value of
the real estate assets of the DJV Group that are fully developed or re-developed ("Commercial
Development LTV");
- any change (including by way of buy-back, redemption, conversion or creating any new class
of shares) to the authorised and/or issued share capital (including an increase to the authorised
and issued share capital of the DJV (company);
- the issue, allotment or granting of an interest in, option or other right to subscribe for, any shares
or any other shares or securities in the DJV (company);
- the variation of share rights attaching to any class of share capital of the DJV (company);
- any amendment to the constitutional documents of the DJV (company) (including the articles
of association of the DJV (company)) or the DJVA; and
- obtain any third party finance which gives the lender the right to participate in the share capital
of the DJV (company).
In April 2018, the DJV adopted an investment mandate which was revised in May 2020 with the
"Mandate to Management of the Company Regarding Investments in Listed Securities" ("Investment
Mandate"). The 2018 investment mandate permitted the DJV with discretion to deploy liquidity in listed
securities of real estate issuers, and the Investment Mandate expressly permitted investment in MAS
shares. The Investment Mandate was (i) approved by Unanimous B Shareholder Approval (as required
and permitted in terms of the Restricted Matters); (ii) amended the investment mandate of the DJV
under the DJVA; and (iii) superseded and replaced all mandates previously given to the DJV
management in connection with the investment of funds available to the DJV in listed securities on the
terms set out in the Investment Mandate.
The Investment Mandate confirmed that the DJV is permitted to deploy funds provided to it under the
DJVA in the following three ways: (i) by investing in capital directly in the property development activities
of the DJV; (ii) by investing capital directly in the acquisition of yielding property; and (iii) by investing
capital indirectly in portfolios of yielding property, through listed securities of issuers in that sector. The
Investment Mandate provided that the DJV's investment mandate and general authority of the DJV to
invest funds available to the DJV Group from time to time, specifically include the making or acquisition
of investments in marketable securities in their discretion, provided they fall within following parameters:
- investment is permitted into the listed securities (including shares, ETFs, futures contracts,
CFDs and other publicly traded instruments) issued by or relating to real estate businesses, as
well as bonds and other traded debt instruments;
- the general objective with each investment should be to optimise returns to the DJV;
- the performance of investments in real estate listed equity securities will be indirectly exposed
to the valuation of real estate assets and it is accepted that there is a risk of negative returns.
Management's focus on limiting the downside risk should be to avoid risks associated with
companies with significant exposure to high-risk jurisdictions (i.e. jurisdictions with a risk profile
that is worse than that of the CEE region), illiquid securities, companies vulnerable to an
adverse change in the credit cycle as a result of high debt levels (i.e. over geared companies),
etc; and
- the intention is not to manage downside risk by creating a highly diversified portfolio of
securities, but rather to permit management flexibility to exploit situations where they perceive
that particular securities offer value over holding cash. Investment in securities issued by MAS
or any of its affiliates, from time to time, is expressly permitted.
In terms of the Investment Mandate, in the event that the DJV acquires MAS Shares, management shall
aim to manage debt levels by limiting the acquisition of MAS shares so that the consolidated loan to
value ratio of MAS and the DJV does not exceed 50% ("Investment Mandate LTV").
Permissibility of the PKI Voluntary Bid under the DJVA
With the above in mind and having considered various queries from Shareholders, MAS wishes to clarify
the following points as regards the PKI Voluntary Bid:
- Prime Kapital (as General Partner) by virtue of its control of the DJV Board and, through it,
indirectly, the Group Companies (which includes PKI) is making the PKI Voluntary Bid on the
basis that, subject to any restrictions applicable in terms of the DJVA, it has the absolute
discretion to manage the business and affairs of the DJV including with regard to capital
allocation decisions within the DJV Group.
- The PKI Voluntary Bid is being made without the consent or cooperation of MAS or MAS CEE
and, as noted above, neither MAS nor the Independent Board were engaged in any meaningful
way by PKI in advance of PKI launching the PKI Voluntary Bid.
- MAS does not control the offer timetable and has no ability to defer the PKI Voluntary Bid or
delay or extend the offer timetable. PKI is making the offer directly to Shareholders and not to
or via MAS.
- The PKI Voluntary Bid is ostensibly being made on the basis that the GP Nominated Directors
(i) are acting with due care and in good faith with a view to maximising long-term value for
shareholders; and (ii) consider the PKI Voluntary Bid (and further investment in MAS shares)
to optimise returns to the DJV. MAS cannot comment further on this aspect as MAS's
representative (being one of three directors on the DJV Board) was not privy to any discussions
or decision-making by the DJV Board or PKI in respect of the decision to pursue the PKI
Voluntary Bid.
- The investment in MAS shares is permissible under the DJVA, as further clarified by the
Investment Mandate.
- The launch of the PKI Voluntary Bid does not require the approval of MAS CEE as a Restricted
Matter:
- as regards the issue of the Consideration Instruments, this is permitted without
approval of MAS CEE as the Consideration Instruments are being issued by a
subsidiary of the DJV (and not in or by the DJV (company) as contemplated by the
Restricted Matters); and
- as regards the use of available cash resources and gearing in the DJV Group to fund
the Cash Consideration, the DJV Board may apply available cash resources and may
leverage the DJV Group's asset portfolio, in its discretion, to pursue the business of the
DJV, subject to ongoing compliance with the Commercial Development LTV (a breach
of which would require Unanimous B Shareholder Approval as a Restricted Matter).
MAS understands that the Cash Consideration is being funded primarily through debt
raised against newly completed DJV assets developed (Arges Mall and Mall Moldova).
In MAS's calculations (and without obtaining any input from the DJV Board), neither
this new debt nor the issue of the Consideration Instruments (to the extent applicable
and/or considered to be debt for these purposes) would result in a breach of the
Commercial Development LTV.
- Although not a Restricted Matter, the PKI Voluntary Bid would also not in MAS's calculations
result in a breach of the Investment Mandate LTV, noting that MAS has significant loan-to-value
(LTV) headroom available.
- There is no obligation under the DJVA for the DJV to apply available cash resources in the DJV
Group or funds raised pursuant to gearing of DJV Group assets to redeem MAS's preferred
equity in the DJV in preference to using the available resources to pursue the DJV's business
or, to that end and in the DJV Board's discretion, implement the PKI Voluntary Bid. As noted
above, in MAS's view all accrued unpaid preference dividends must be paid in full before any
surplus capital and/or capital profits can be distributed to the DJV's ordinary shareholders,
subject to the satisfaction of the 20% TNAV test (noting that the distribution of surplus capital
and/or capital profits is a discretionary matter for the DJV Board). However, the PKI Voluntary
Bid is not a distribution and therefore the proposed use of the Cash Consideration, in the DJV
Board's discretion, does not require the payment of any accrued unpaid preference dividends
or the redemption of any of MAS's preferred equity.
- In the 2022 DJV Relationship Extension Letter, the parties agreed that if, following a 'Major
Capital Event' (meaning any corporate or corporate finance transaction that results in the
receipt of a capital sum by a member of the DJV Group, including a direct or indirect disposal
or exit of or realisation of interests in real estate assets or other investments held by the DJV
Group, or any capital raise events such as debt re-financings), the DJV applies the proceeds
thereof to redeem A preference shares previously subscribed for by MAS CEE, an equivalent
amount of the funding commitment (limited to a maximum amount not exceeding
EUR100,000,000 in aggregate) will be reinstated as an obligation of MAS CEE to subscribe for
A preference shares at par value on a fully revolving basis. However, this does not place an
obligation on the part of the DJV to use the proceeds of a Major Capital Event to redeem MAS's
preferred equity.
Funding of the PKI Voluntary Bid
The Cash Consideration is not being funded by way of further drawdowns of preference share funding
from MAS. As noted in MAS's voluntary trading update of 30 June 2025, at the end of May 2025 MAS
had invested an aggregate of EUR470,000,000 in preferred equity and, as a result, MAS had no further
undrawn commitments to invest in additional preferred equity in the DJV. Prior to 30 June 2025, MAS
had invested in preferred equity issued by DJV the remaining of its commitment, which had amounted
to EUR25,300,000 on 31 December 2024 (and EUR41,900,000 on 30 June 2024). In terms of the 2022
DJV Relationship Extension Letter (the terms of which were approved by Shareholders on 30 June
2022), MAS also has a commitment to make available to the DJV a EUR30,000,000 revolving credit
facility, which was undrawn on 31 May 2025 (figures not proportionally consolidated). However, to date,
the DJV has not sought to draw down on any part of this revolving credit facility.
Key features of the PKI Voluntary Bid and Risk Factors
In terms of the PKI Voluntary Bid, Shareholders are being asked to consider, within a very limited period,
the disposal – subject only to the fulfilment (or waiver) of the Minimum Cash Acceptance Condition – of
all or a portion of their MAS Shares in return for a consideration consisting of:
- a Cash Consideration of EUR1.40 per MAS Share (limited to a total amount payable by PKI of
EUR110,000,000, which maximum amount PKI may, in its discretion, increase (any number of
times) at any time before the Cash Settlement Date) ("Cash Consideration"), representing a
premium of 26.55% to the MAS share price at the close of business on Friday, 1 August 2025
(being the last business day preceding the PKI Voluntary Bid) and a discount of 21.33%, to the
last reported MAS tangible net asset value ("TNAV"); or
- Preferred Shares in PKI, to be listed on the CTSE (the "Consideration Instruments"), issued
in a ratio of 100 preference shares for each MAS Share tendered; or
- a combination of the Cash Consideration and Consideration Instruments, as may be elected by
Shareholders tendering their MAS Shares into the PKI Voluntary Bid (the "Bid Participants").
The implementation of the PKI Voluntary Bid is subject to the fulfilment of the Minimum Cash
Acceptance Condition, meaning that at least 10% of the total MAS Shares in issue are tendered into
the PKI Voluntary Bid by Bid Participants electing the Cash Consideration (which condition may be
waived by PKI in its sole discretion).
The Voluntary Bid is currently open, with a closing date of 12:00 on Thursday, 14 August 2025. It is
anticipated that the results of the PKI Voluntary Bid will be announced on SENS on Tuesday, 19 August
2025.
Shareholders should note that the PKI Voluntary Bid is largely unregulated due to the following:
- MAS is a company carried on under the laws of Malta and its shares are not listed on the Malta
Stock Exchange. Accordingly, MAS is not subject to the takeover provisions contained in the
Maltese Capital Market Rules or the supervision of the Malta Financial Services Authority and,
although applicable to MAS, the Malta Companies Act (Cap. 386 of the Laws of Malta) does
not regulate takeover offers.
- MAS is listed on the main board of the securities exchange operated by the JSE but is not
registered as a South-African company. Accordingly, the PKI Voluntary Bid is not subject to the
South African Takeover Regulations and the JSE considers the PKI Voluntary Bid to be an
unregulated corporate action under the JSE Listings Requirements.
Given that the offer envisaged by the PKI Bid Documents are not regulated, as explained above, there
is no regulatory body to intervene proactively for the protection of Shareholders.
Financial metrics
The below is for illustrative purposes only, assuming PKI acquires all of the issued share capital of MAS
not already owned by PKI.
For the purposes of the metrics illustrated below, the below assumptions have been made to arrive at
the total number of MAS Shares subject to the PKI Voluntary Bid:
Shares owned
Shares owned by PKI 1 153,498,569 21.94%
MAS Shares subject to PKI Voluntary Bid 546,060,254 78.06%
Total issued share capital of MAS (excluding treasury shares) 699,558,823 100.00%
Notes:
1. 153,498,569 MAS Shares owned by PKI, as detailed in the PKI Bid Circular, being 21.94% of the total
issued share capital of MAS (excluding treasury shares).
Cash Consideration (per share) 1 R28.84
- Premium to 30-day VWAP ending 15 May 2025 2 +60.04%
- Premium to the closing share price on 15 May 2025 3 +51.39%
- Premium to 30-day VWAP ending 1 August 2025 4 +25.07%
- Premium to the closing share price on 1 August 2025 5 +26.55%
- MAS TNAV (per share) 6 R36.66
- Implied discount to TNAV (21.33%)
Consideration Instruments (per share) 7 R30.90
- Premium to 30-day VWAP ending 15 May 2025 2 +71.47%
- Premium to the closing share price on 15 May 2025 3 +62.20%
- Premium to 30-day VWAP ending 1 August 2025 4 +34.00%
- Premium to the closing share price on 1 August 2025 5 +35.59%
- MAS TNAV (per share) 6 R36.66
- Implied discount to TNAV (15.71%)
Total PKI Voluntary Bid consideration R16.711bn 100.00%
- Cash Consideration 8 R2.266bn 13.56%
- Consideration Instruments 9 R14.445bn 86.44%
Notes:
1. The Cash Consideration per share of EUR1.40 multiplied by an assumed EUR/ZAR exchange rate of
R20.60.
2. Premium to the 30-day VWAP of MAS at the close of business on 15 May 2025 (being the last business
day prior to the release of the letter from PKI regarding an intention to make a voluntary bid to acquire all
the shares in MAS) of R18.02 (a premium of 60.04% for the Cash Consideration and 71.47% for the
Consideration Instruments).
3. Premium to the MAS share price at the close of business on 15 May 2025 (being the last business day
prior to the release of the letter from PKI regarding an intention to make a voluntary bid to acquire all the
shares in MAS) of R19.05 (a premium of 51.39% for the Cash Consideration and 62.20% for the
Consideration Instruments).
4. Premium to the 30-day VWAP of MAS at the close of business on 1 August 2025 (being the last business
day prior to the release of the PKI Voluntary Bid) of R23.06 (a premium of 25.07% for the Cash
Consideration and 34.00% for the Consideration Instruments).
5. Premium to the MAS share price at the close of business on 1 August 2025 (being the last business day
prior to the release of the PKI Voluntary Bid) of R22.79 (a premium of 26.55% for the Cash Consideration
and 35.59% for the Consideration Instruments).
6. Calculated as the last reported MAS TNAV, on 31 December 2024, of EUR1.78 per share multiplied by
an assumed EUR/ZAR exchange rate of R20.60.
7. Calculated as the floor price of the Consideration Instruments of EUR1.50 per share, multiplied by an
assumed EUR/ZAR exchange rate of R20.60.
8. Calculated as the maximum Cash Consideration of EUR110,000,000 multiplied by an assumed EUR/ZAR
exchange rate of R20.60.
9. Calculated as the estimated total MAS Shares subject to the PKI Voluntary Bid of 546,060,254, less the
78,571,429 shares acquired via the Cash Consideration (EUR110,000,000 divided by EUR1.40 per
share), multiplied by the floor price of the Consideration Instruments of EUR1.50 per share, multiplied by
an assumed EUR/ZAR exchange rate of R20.60.
Undertakings by PKI and DJV distribution waterfall
In the PKI Bid Circular, PKI states that as a term of the PKI Voluntary Bid with effect from the first
business day following the Closing Date, it irrevocably offers to undertake to and in favour of MAS and
MAS CEE, subject to the fulfilment or waiver by PKI of the Minimum Cash Acceptance Condition, that:
- if, pursuant to the PKI Voluntary Bid, the PK Parties (including PKI) hold more than 50% of the
MAS Shares in issue, PKI will not acquire any further MAS shares in the market, and will
procure that neither the DJV nor any of its subsidiaries acquire any further MAS shares in the
market; and
- provided that, pursuant to Bid Participants electing to receive the Cash Consideration, PKI
acquired MAS Shares representing at least 10% of the total MAS Shares in issue, it will take
all such steps as are legally permissible:
- to procure that the DJV (i) makes distributions of surplus capital and/or capital profits
to its shareholders in accordance with MAS' Interpretation of the Distribution Waterfall;
and (ii) prioritises distributing DJV Available Profits over new investments; and
- to procure that the MAS Board gives written notice to commence winding down of the
DJV as provided for in terms of the DJVA, by not later than 23 March 2035.
PKI further states that:
- for purposes of the above undertakings ("PKI Bid Undertakings"), it shall be legally
permissible for PKI to take any action or decision if the taking of such action or decision will not
result in a breach or contravention by PKI or MAS of the rules or any order or directive of the
JSE or the CTSE (or any other exchange on which the securities of PKI or MAS are listed), or
any constitution, statute, by-law, code, ordinance, decree, judicial, arbitral, administrative,
ministerial, departmental or regulatory judgment; or common law in any jurisdiction, in each
case which are applicable to PKI or MAS; and
- the offer of undertakings:
- constitutes an offer in favour of MAS and MAS CEE capable of acceptance by MAS
and MAS CEE at any time by written notice to PKI;
- shall upon acceptance by MAS and MAS CEE result in binding undertakings by PKI;
and
- shall be governed by the laws of Malta.
For ease of reference, the PKI Bid Circular defines "MAS' Interpretation of the Distribution Waterfall" as
follows:
"purely for purposes of the undertakings by PKI contained in paragraph 3 of this Circular, PKI's
understanding of MAS' interpretation of the distribution waterfall under the DJVA, being in respect of
any distribution of profits or capital (including reserves) made by DJV to its shareholders, payments
made by DJV to MAS CEE in respect of A Preference Shares or payments made by DJV to Prime
Kapital in respect of development margin:
(i) in the first instance, effecting payment to MAS CEE in an amount equal to current and accrued
fixed dividends at a coupon of 5% per annum on the 470,000,000 A Preference Shares held by
MAS CEE in DJV;
(ii) thereafter, effecting payment to MAS CEE in an amount equal to current and accrued fixed
dividends at a coupon of 2.5% per annum on the 470,000,000 A Preference Shares held by MAS
CEE in DJV and concomitantly therewith payment to Prime Kapital in an amount equal to current
and accrued development margin outstanding to Prime Kapital; and
(iii) thereafter effecting payment of the balance to MAS CEE and Prime Kapital as the holders of
DJV's B ordinary shares in the proportions in which they hold DJV's B ordinary shares, being
40% in respect of MAS CEE and 60% in respect of Prime Kapital,
it being recorded, for the avoidance of doubt, that DJV shall not on account of this Circular be required
to make distributions of profits or capital (including reserves) to its shareholders in accordance with this
definition other than in accordance with the offers of undertakings in paragraph 3 of this Circular and
only in the event that such offers of undertakings have been accepted and the condition to such
undertakings have been satisfied;".
As referred to in MAS's previous announcements, the priority of payments out of the DJV is the subject
of a difference of opinion between MAS and Prime Kapital which stems from an interpretation of the
2022 DJV Relationship Extension Letter (the terms of which were approved by Shareholders on 30
June 2022). Prime Kapital has indicated that its view is that surplus capital and/or capital profits can be
distributed to the DJV's ordinary shareholders at any time, subject to the satisfaction of a 20% TNAV
test. This test refers to the condition that, following the proposed distribution, the aggregate amount of
the tangible net asset value of the DJV (that is net asset value which includes only assets and liabilities
likely to crystallise on disposal less the aggregate amount of nominal share capital and share premium
account attributable to the preferred equity) must be at a level which is in excess of 20% of the
aggregate amount of nominal share capital and share premium account attributable to the preferred
equity. MAS's view, on the other hand, is that all accrued unpaid preference dividends must be paid in
full before any surplus capital and/or capital profits can be distributed to the DJV's ordinary
shareholders, subject to the satisfaction of the 20% TNAV test.
The effect of MAS' Interpretation of the Distribution Waterfall, as described in the PKI Bid Undertakings
contained in the PKI Bid Circular, is that accrued unpaid dividends rank in priority to any distributions
to the DJV's ordinary shareholders, as contended by MAS. Therefore, should the PKI Bid Undertakings
become unconditional and be accepted by MAS and MAS CEE, and assuming that the DJV will make
and continue to make distributions on the basis set out in the PKI Bid Undertakings, then the priority of
payments out of the DJV will align with MAS's interpretation, as suggested by the above definition of
"MAS' Interpretation of the Distribution Waterfall". If, however, the PKI Bid Undertakings do not become
unconditional and MAS and Prime Kapital do not resolve their difference of opinion regarding the priority
of payments out of the DJV, the matter may need to be referred to arbitration. At this stage, however,
there is no formal dispute, and the DJV board has not approved any distributions in line with Prime
Kapital's interpretation of the priority of payments out of the DJV.
Conditions Precedent
The PKI Voluntary Bid is subject only to the fulfilment (or waiver, in PKI's sole discretion) of the Minimum
Cash Acceptance Condition.
It is noted that PKI has received SARB Approval for the listing of the Consideration Instruments (Listed)
on the CTSE and, as such, Bid Participants will no longer be able to receive Consideration Instruments
(Unlisted). Any Listed Only Election will now be irrevocable if already submitted and if not yet submitted,
will become irrevocable once submitted. Shareholders can accordingly disregard the Programme
Memorandum (Unlisted) and the Applicable Pricing Supplement (Unlisted).
Risks associated with the PKI Voluntary Bid
With the features of the PKI Voluntary Bid in mind, the Independent Board notes the following prima
facie risks associated with PKI's offer, whether for Bid Participants or for Shareholders wishing to retain
their MAS Shares. Shareholders should consider the following factors when assessing the PKI
Voluntary Bid.
For those Shareholders wishing to participate in the PKI Voluntary Bid:
- Unusual timeline and associated timing pressure: Shareholders are given a period of less than
10 business days in which to make a complex decision without the benefit of a considered view
and recommendation of the Independent Board, which is not possible in an offer period of less
than 10 business days and without any meaningful prior engagement/consultation from PKI. As
noted earlier, the PKI Voluntary Bid is largely unregulated which allows PKI the discretion to
set its choice of offer timeline which creates undue time pressures for Shareholders. For
example, under the South African Takeover Regulations offers must remain open for at least
(i) 30 business days after the opening date; and (ii) 10 business days after it becomes
unconditional, and the offer consideration must then be settled within six business days
thereafter. The same principle applies under Maltese regulations, where the Maltese Capital
Markets Rules provide that "the time allowed for the acceptance of a Bid shall be determined
in the offer document and shall be not less than three weeks nor more than ten weeks from
when the offer document is made available to the public". Also, under the JSE's standard
corporate actions timetable, conditional offers are required to remain open for acceptance until
all conditions are satisfied (and, in fact, for a period of at least eight business days thereafter)
followed then only with implementation and payment of the offer consideration on the first
business day after the offer closing date. We note the PKI Voluntary Bid is therefore not
compliant with the JSE's standard corporate actions timetable.
- Acceptances are irrevocable: all acceptances of the Voluntary Bid received by PKI and MAS's
Transfer Secretaries and treated as valid by them, shall be irrevocable and cannot be
withdrawn. Shareholders who tender their MAS Shares in the PKI Voluntary Bid will therefore
be unable to accept a superior offer (or trade their shares in the market) until the PKI Voluntary
Bid is implemented or terminated. Shareholders are also referred to the update provided by PKI
in respect of the SARB Approval having been obtained for the Consideration Instruments
(Listed) and should take note that Bid Participants will no longer be able to receive
Consideration Instruments (Unlisted).
- Unknown cash settlement quantum: the cash portion of the offer is capped at EUR 110,000,000
(though PKI reserves the right to increase this amount). If total cash elections exceed this cap,
and if PKI does not increase the Maximum Cash Amount, acceptances will be scaled back. A
Bid Participant may not receive cash for all tendered MAS Shares and will have to decide
whether to accept Consideration Instruments (Listed) for the balance or retain their MAS
Shares, noting that if a Shareholder elects to receive only the Cash Consideration, there will be
no automatic allocation of Consideration Instruments (Listed) in the event of a scale back of
Cash Consideration. In that event, the relevant Shareholder will retain their existing MAS
Shares in respect of the portion not acquired by PKI, unless such Shareholder elects to receive
Consideration Instruments (Listed).
- Credit risk and lack of guarantee: PKI is an investment holding company incorporated in the
Isle of Man and is not supervised or regulated by any financial authority. Furthermore, as noted
earlier, the PKI Voluntary Bid is largely unregulated. This limits the protections typically
available to minority investors in a regulated takeover offer. Unlike many regulated takeover
processes, the Cash Consideration is not supported by a bank guarantee or an irrevocable
bank confirmation of funds, and the redemption of the Consideration Instruments is not secured.
The PKI Bid Circular states that the cash will be funded from PKI's "available cash balances".
Bid Participants are therefore exposed to the credit risk of PKI for the settlement of the Cash
Consideration and for redemption of the Consideration Instruments at a later stage. In this
regard, Shareholders should also note that, while PKI indicated that it intends to redeem the
Consideration Instruments within 18 months of issuance (refer to paragraph 2.2.7 of the formal
bid launch announcement issued on Monday, 4 August 2025), the Applicable Pricing
Supplement (Listed) provides that the Consideration Instruments is subject to a five-year
redemption period.
- Foreign Exchange risk: the Cash Consideration for South African Bid Participants will be
converted from EUR to ZAR. This exposes them to the risk of adverse movements in the
ZAR/EUR exchange rate between the time of their decision and the settlement. A similar risk
may also apply to South African Bid Participants in respect of the redemption of the
Consideration Instruments, as these are also priced in Euro and subject to a ZAR/EUR
exchange rate.
- Uncertainty regarding liquidity of Consideration Instruments: there is uncertainty regarding the
liquidity of the Consideration Instruments and the Consideration Instruments (although listed
on the CTSE) may suffer from limited trading liquidity, which could cause them to trade at a
discount to their perceived fair value.
- Credit risk of the Consideration Instruments: given their unsecured nature, there is a risk that
the Consideration Instruments are not redeemed at the stated five-year redemption date. As
PKI is a foreign company based in the Isle of Man, should Bid Participants wish to enforce their
legal rights and claims against PKI, they may need to do so in the Isle of Man and any
enforcement procedures may not be similar to procedures followed for South African
companies. Shareholders are referred to the PKI website, where PKI has recently published
annual financial statements for its 2022 – 2024 financial years ended 30 June. PKI has also
published interim financial statements for the nine-month period to 31 March 2025. As at
31 March 2025, PKI had total assets of EUR256,200,000 and a total equity value of
EUR204,000,000 (R5.3 billion and R4.2 billion, respectively, at an assumed EUR/ZAR
exchange rate of R20.60). These balance sheet metrics should be considered carefully by
Shareholders from a credit risk perspective in the context of the potential EUR701,200,000
(R14.4 billion, at an assumed EUR/ZAR exchange rate of R20.60) Consideration Instruments
that may be issued as part of the PKI Voluntary Bid (calculations per the illustrative financial
metrics table).
PKI financial statements can be accessed at the link below:
https://primekapital.com/pk-investments/
- Governing Law: the PKI Voluntary Bid is made and is governed by and subject to the provisions
of the laws of Malta and will be subject to the exclusive jurisdiction of the courts of Malta. In
terms of the PKI Bid Circular, each Bid Participant will be deemed by their acceptance to have
consented and submitted to the exclusive jurisdiction of the courts of Malta in relation to all
matters arising out of or in connection with the PKI Voluntary Bid and acceptance thereof.
Accordingly, it may be difficult for Shareholders to enforce their legal rights and claims against
PKI, should there be any dispute in connection with the PKI Voluntary Bid. Shareholders should
also take note that PKI is incorporated in the Isle of Man and is subject to the laws of the Isle
of Man. The redemption of the Consideration Instruments and the payment of any redemption
dividend thereon will be subject to the laws of the Isle of Man pursuant to PKI's incorporation
and, in addition, the issuance of the Consideration Instruments is specifically governed by the
laws of the Isle of Man, as stipulated in the Programme Memorandum (Listed).
For those Shareholders who do not wish to participate in the PKI Voluntary Bid or who will retain some
of their MAS Shares after the implementation of the PKI Voluntary Bid:
- Unknown outcome: the outcome of the PKI Voluntary Bid is unknown and depends on the
number of MAS Shares tendered into the PKI Voluntary Bid. Note too that PKI may waive the
Minimum Cash Acceptance Condition even if it has received cash elections in respect of less
than 10% of MAS Shares in issue and, potentially, no elections for the Consideration
Instruments. PKI (including the other PK Parties) may, following the implementation of the PKI
Voluntary Bid, have sufficient shareholding to control decisions of Shareholders requiring 50%
approval bearing in mind historic shareholder participation in MAS Shareholder meetings, even
if PKI does not acquire sufficient MAS Shares to hold (with the other PK Parties) more than
50% of the MAS Shares in issue.
- Potential control by PKI at MAS and DJV level: if PKI acquires sufficient MAS Shares to allow
it to control MAS (whether alone or with other PK Parties), MAS will have a controlling
shareholder that also controls the DJV. The DJV is a substantial portion of the NAV of MAS
and these Shareholders will therefore have exposure to decisions made by PKI in the DJV and
in MAS.
- Reduced liquidity: a smaller free float often leads to lower trading liquidity, which can make it
more difficult for remaining Shareholders to sell their shares in the future without negatively
impacting the share price. Thus, if the free float of MAS declines significantly as a result of the
implementation of the PKI Voluntary Bid, Shareholders may not be able to sell their MAS
Shares or may only be able to sell their MAS Shares at a lower price than current trading prices.
- Conditionality attached to the PKI Bid Undertakings: there is no certainty that the PKI Bid
Undertakings will become unconditional and capable of acceptance by MAS and MAS CEE.
PKI could waive the Minimum Cash Acceptance Condition and proceed with the PKI Voluntary
Bid, but the condition to the PKI Bid Undertakings would then have failed and not be capable
of acceptance by MAS and MAS CEE. The PKI Bid Circular is not clear whether, if the Minimum
Cash Acceptance Condition is waived, the PKI Bid Undertakings will become capable of
acceptance by MAS and MAS CEE. Furthermore, the acceptance of the PKI Bid Undertakings
by MAS and MAS CEE will need to be assessed in terms of the JSE Listings Requirements
and any other regulatory requirements (to the extent applicable) for any requisite consents or
approvals.
- Non-compliance with PKI Bid Undertakings: even if the PKI Bid Undertakings become
unconditional and are accepted by MAS and MAS CEE, it is unclear whether and to what extent
it will be complied with or result in an increase in distributions by the DJV or MAS. It is not
certain that the DJV will effect distributions to MAS or that MAS will effect further distributions
to Shareholders in any particular quantum or at any point in time, which could be affected by
(among others) future circumstances such as the solvency and liquidity of the DJV or the
solvency and liquidity of MAS.
- No mandatory bid: if as a result of the implementation of the PKI Voluntary Bid, the PK Parties
and the PCC Shareholders ("Exempt Parties") and any person "Acting in Concert" (as such
term is defined in the Malta Listing Rules) with any of the Exempt Parties exceeds the 35%
Threshold or the 50% Threshold, the Exempt Parties and any person "Acting in Concert" (as
such term is defined in the Malta Listing Rules) with the Exempt Parties will be exempt from the
Mandatory Bid Requirement notwithstanding that their combined holdings of MAS Shares
exceed the 35% Threshold or the 50% Threshold. Further, although PKI has committed (in
terms of the PKI Bid Undertakings) that it will not buy further MAS shares on the market (which
undertaking does not seem to extend to on-market purchases by the other PK Parties), it could
potentially make a further voluntary offer in the future at a price of its choosing, without the
equitable pricing protections that would be required under the Maltese mandatory offer regime.
In this regard, Shareholders are specifically referred to article 41.5 of the MAS Articles which
incorporates provisions of Rule 11.8 of the Malta Listing Rules and makes it applicable to MAS
and all Shareholders from time to time, on the basis and subject to the modifications provided
in article 41, and MAS and all Shareholders from time to time shall accordingly have the
respective rights and obligations contemplated in Rule 11.8 of the Malta Listing Rules (on the
basis and subject to the modifications provided in article 41) even though the Malta Listing
Rules are not as a matter of law applicable to MAS and its Shareholders. Furthermore,
article 41.4 records Rules 11.8 and 11.39 (contained in Chapter 11) of the Malta Listing Rules
(with capitalised terms having the meanings given thereto in the Malta Listing Rules) as follows:
• Rule 11.8: Where a person acquires a Controlling Interest as a result of his own
acquisition or the acquisition by persons Acting in Concert with him, such a person shall
make a Bid as a means of protecting the minority Shareholders of that Company. Such
a Bid shall be addressed at the earliest opportunity to all the holders of those Securities
for all their holdings at the equitable price as determined in accordance with the
provisions of Listing Rule 11.39.
• Provided that where Control has been acquired following a Voluntary Bid made to all
the holders of Securities for all their holdings, the obligation to launch a Mandatory Bid
shall not apply.
• Rule 11.39: The equitable price to be paid for Securities is the highest price determined
by the following criteria, calculated from the date of the announcement of the Bid:
o 11.39.1 the price offered for the security should not be below the weighted
average price of the Security or the Security transactions made on a Regulated
Market during the previous six (6) months;
o 11.39.2 the price offered for the Security should not be below the highest price
paid for the Security by the Offeror or Persons Acting In Concert with the
Offeror during the previous six (6) months;
o 11.39.3 the price offered for the Security should not be below the weighted
average price paid for the Security by the Offeror or Persons Acting In Concert
with the Offeror during the previous six (6) months;
o 11.39.4 the price of the Security should not be lower than ten percent (10%)
below the weighted average price of the Security within the previous ten trading
days.
Note, however, that if as a result of the implementation of the PKI Voluntary Bid, the Exempt
Parties and any person "Acting in Concert" (as such term is defined in the Malta Listing Rules)
with the Exempt Parties do not exceed the 50% Threshold, the mandatory offer provisions in
the MAS Articles would continue to apply to the Exempt Parties.
Engagement with Shareholders
The Independent Board and its advisors will engage Shareholders in respect of the PKI Voluntary Bid.
Shareholders are strongly advised to seek informed and appropriate professional advice when
considering the PKI Voluntary Bid.
8 August 2025
For further information please contact:
Irina Grigore, MAS P.L.C. +356 27 66 36 91
Valeo Capital, JSE Sponsor +27 21 851 0091
Investec Bank Limited, Corporate Advisor +27 11 291 3269
Webber Wentzel, Legal Advisor
Date: 08-08-2025 05:12:00
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