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YRK - York Timber Holdings Limited - Company Announcement

Release Date: 03/06/2010 17:23
Code(s): YRK
Wrap Text

YRK - York Timber Holdings Limited - Company Announcement York Timber Holdings Limited (Registration number 1916/004890/06) Share code: YRK ISIN: ZAE000133450 ("York" or "the Company") ANNOUNCEMENT REGARDING: - THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF YORK: - TO ALLOW FOR THE EARLIER CONVERSION OF THE VOTING CONVERTIBLE NON- REDEEMABLE CUMULATIVE PREFERENCE SHARES; and - TO PROVIDE THE CHAIRMAN OF THE BOARD OF DIRECTORS ("the BOARD") WITH A SECOND CASTING VOTE IN THE EVENT OF A DEADLOCK; AND - A RELATED PARTY TRANSACTION 1. INTRODUCTION Shareholders of York ("Shareholders") are advised that an agreement was entered into between York, Main Street 488 (Proprietary) Limited ("Community SPV"), Main Street 493 (Proprietary) Limited ("Staff SPV") and Blackstar (Cyprus) Investors Limited ("Blackstar Cyprus") (collectively "the Parties") on 14 December 2009 ("the Agreement") and a further agreement between the Parties on 26 April 2010 ("the Additional Agreement") to allow for the earlier conversion of 2 870 529 unlisted voting convertible non-redeemable cumulative preference shares of five cents each in the share capital of York ("Convertible Preference Shares"), which is currently stipulated in the Articles of Association to be 14 September 2010 ("the Conversion Date")("the Early Conversion"). In addition, Shareholders are advised that York wishes to amend the Articles of Association to make provision for the chairman of the Board to have a second casting vote at Board meetings in the event that the Board are evenly split on a vote and cannot take action ("the Deadlock Amendment"). A circular to Shareholders setting out the full details of the Early Conversion and the Deadlock Amendment, including the special resolutions regarding the amendments to the Articles of Association to allow for the Early Conversion and the Deadlock Amendment, was posted to Shareholders yesterday, 2 June 2010 ("the Circular"). 2. BACKGROUND Shareholders approved the creation, allotment and issue of 2 870 529 Convertible Preference Shares of five cents each in the share capital of York, representing a 26% interest in the Company in March 2007. At the time of issuing the Convertible Preference Shares, one of York`s principal strategic objectives was the implementation of a Broad Based Black Economic Empowerment structure that would result in approximately 26% of the Company`s equity and voting rights being beneficially held by black people. 1 104 050 Convertible Preference Shares, representing a 10% interest in York, were issued to the Staff SPV and the balance of 1 766 479 Convertible Preference Shares, representing a 16% interest in York, were issued to the Community SPV ("the 2007 Blackstar Transaction"). This 2007 Blackstar Transaction was funded by the Blackstar Group plc ("the Blackstar Group") through the subscription for redeemable preference shares with a par value of five cents each in the capital of the Community SPV and the Staff SPV("collectively, the SPVs) ("the Redeemable Preference Shares"), which Redeemable Preference Shares were subsequently transferred to Blackstar Cyprus during 2010 ("Change in Ownership"). In terms of the Articles of Association of York, the Convertible Preference Shares will be convertible into York ordinary shares on a one-for-one basis at the instance of the holders of the Convertible Preference Shares, on the date three years and six months from date of issue. As a result of the change in ownership of the SPV`s ordinary shares, the original intention of the 2007 Blackstar Transaction, being the empowerment of staff and communities to participate in the share capital of York, could not be realised. Consequently, the Board, Blackstar Cyprus and the SPV`s (as holders of the Convertible Preference Shares) entered into the Agreement in terms of which the Convertible Preference Shares would be converted at an earlier date, subject to obtaining the required approvals. 3. RATIONALE York has the opportunity to ensure the conversion of the Convertible Preference Shares at an earlier date, which will result in the Company reducing its exposure to future cash outflows in the form of preference dividends which each holder of a Convertible Preference Share is entitled to receive in terms of the Articles of Association. 4. RELATED PARTY TRANSACTION AND FAIRNESS OPINION Blackstar Group has been a material shareholder in York up to October 2009, with a shareholding of 10.01%. Mr A Bonamour, Chief Executive Officer of Blackstar Group, was a director of York until his resignation on 5 October 2009. Mr Bonamour also has an indirect shareholding in Blackstar Group of 9.76%. Accordingly, the amendments to the Articles of Association of York and the terms of the Convertible Preference Shares to allow for the Early Conversion is a related party transaction as defined in the Listings Requirements of the JSE Limited ("the JSE"). Furthermore, as a "fair and reasonable opinion" was provided on the original terms of the Convertible Preference Shares and the related party element of the 2007 Blackstar Transaction, a fairness opinion is required on the related party transaction and the amended terms of the Convertible Preference Shares. Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited has been appointed by the Board as independent expert to provide an independent opinion on the Early Conversion. Their fair opinion is reproduced in the Circular. 5. UNDERTAKINGS In terms of the Additional Agreement, York has irrevocably and unconditional undertaken to: - procure that a fairness opinion by an independent professional expert is obtained as soon as practicable; - convene a general meeting of Shareholders ("the General Meeting") to propose the special resolution regarding the amendments to the Articles of Association to allow for the Early Conversion ("the Special Resolution"), and if approved, to lodge the Special Resolution with Companies Intellectual Property Registration Office for registration; - use reasonable commercial endeavours to obtain irrevocable undertakings from certain significant Shareholders to vote in favour of the Special Resolution prior to the General Meeting taking place; and - use all reasonable commercial endeavours to procure that the Early Conversion occurs as soon as practicable and in any event before the Conversion Date. Subject to approval by Shareholders at the General Meeting, all Convertible Preference Shares in the issued share capital of York will be converted into 2 870 529 York ordinary shares. Blackstar Cyprus, by virtue of owning the ordinary share capital of both SPV`s, will consequently indirectly own 2 870 529 (or 0.87%) of York`s ordinary share capital. 6. FINANCIAL EFFECTS OF THE EARLY CONVERSION The Early Conversion will have no material effect on York`s earnings, headline earnings, net asset value or tangible net asset value and accordingly, in terms of the JSE Listings Requirements, York is not required to present pro forma financial effects. 7. SALIENT DATES AND TIMES The salient dates and times in respect of the General Meeting are as follows: 2010 Circular posted to Shareholders on Wednesday, 2 June Last day to lodge forms of proxy for General Tuesday, 22 June Meeting by 10h00 on General Meeting to be held at 10h00 at the offices Thursday, 24 June of Prinsloo, Tindle & Andropoulos Inc being 1st Floor, 17 Fricker Road, Illovo Boulevard, Illovo, Johannesburg, 2196 on
Results of General Meeting released on SENS on Thursday, 24 June
Results of General Meeting published in the press Friday, 25 June on
Notes: 1. Any material change to the above dates and times will, subject to approval by the JSE, be communicated to Shareholders by notification on SENS and in the press. 2. All times indicated above are South African local times. Sabie 3 June 2010 Sponsor Barnard Jacobs Mellet Corporate Finance (Pty) Ltd Legal Advisor Prinsloo, Tindle & Andropoulos Inc. Date: 03/06/2010 17:23:02 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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