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Joint Announcement Of The Firm Intention Of Blackstar To Make An Offer To Acquire The Entire Issued Share Capital Of
New Bond Capital Limited
(Previously Mvelaphanda Group Limited)
Incorporated in the Republic of South Africa
Registration number: 1995/004153/06
Share code: NBC
ISIN: ZAE000170726
(“New Bond Capital” or “NBC”)
Blackstar Group SE
(Previously Blackstar Group PLC)
(Registered in Malta with registration number SE 4)
(Registered as an external company with limited liability in the Republic of South Africa under
registration number 2011/008274/10)
Share code: BCK / BLCK
ISIN: MT0000620105
("Blackstar")
JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF BLACKSTAR TO MAKE AN
OFFER TO ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF NEW BOND CAPITAL
BY WAY OF A SCHEME OF ARRANGEMENT (THE "SCHEME")
1. INTRODUCTION
1.1. Shareholders of New Bond Capital ("New Bond Capital Shareholders" or “NBC
Shareholders”) are advised that Blackstar has made an offer for the acquisition by
Blackstar, or its wholly owned subsidiaries, of the entire issued ordinary share
capital of New Bond Capital, (the “Target Shares"), by way of a scheme of
arrangement in terms of section 114 of the Companies Act 71 of 2008, as amended
(the "Companies Act").
1.2. If implemented, the Scheme will result in New Bond Capital Shareholders receiving
newly issued ordinary shares in Blackstar (“Blackstar Shares”) (the "Scheme
Consideration"). The mechanism for the calculation of the Scheme Consideration is
set out in more detail in paragraph 4 below. The Scheme Consideration will not
have a cash alternative.
1.3. The board of directors of New Bond Capital has agreed to propose the Scheme on
the terms and conditions summarised herein.
2. RATIONALE FOR THE SCHEME FOR NEW BOND CAPITAL SHAREHOLDERS
2.1. The Scheme will give NBC Shareholders a mechanism to exit the company, which
has effectively become a “cash shell” after the completion of the unwinding of its
investment portfolio.
2.2. NBC’s remaining funds will be used, inter alia, for administrative expenses required
to complete the complex and extensive task of settling outstanding liabilities and
unwinding structures in the various group subsidiaries. This is expected to be a
lengthy process as the group has had a long operating history and there are a
number of unresolved queries relating to prior years which need to be resolved.
The NBC board is obliged to hold back cash in order to meet the wind-down cost
and any liabilities that may still arise. Additional assets acquired by Blackstar in
terms of the Scheme will be used by Blackstar for investment opportunities as per
Blackstar’s stated investment policy.
2.3. NBC currently has operating expenses that are greater than the income being
earned on the cash invested which is not a sustainable situation.
2.4. NBC Shareholders will receive shares in Blackstar, which is an active investment
holding company with a primary listing on the Alternative Investment Market,
operated by the London Stock Exchange, and a secondary listing on the JSE’s
AltX.
2.5. Full details of Blackstar, its management and its track record will be included in the
Scheme circular to be sent to New Bond Capital Shareholders (the "Scheme
Circular").
3. RATIONALE FOR THE SCHEME FOR BLACKSTAR SHAREHOLDERS
3.1. Implementation of the Scheme will result in an increase in the asset base of
Blackstar, thereby effectively reducing the cost base as a percentage of assets as
the cost structure will not change. Blackstar will assume the assets and liabilities of
NBC and will settle the outstanding liabilities in the ordinary course of business.
The additional assets acquired by Blackstar will be used for investment
opportunities as per its stated investment policy.
3.2. The Scheme will not dilute Blackstar shareholders ("Blackstar Shareholders") as
described in the Scheme Consideration below.
4. SCHEME CONSIDERATION
4.1. The Scheme Consideration shall be calculated with reference to the intrinsic net
asset value per ordinary share (“NAV”) of each of Blackstar and NBC as at
31 December 2012, less a 10% (ten percent) discount on each such NAV.
4.2. The Scheme Consideration shall be calculated in accordance to the following
formula –
(A ÷ B) x 100 = X
where –
A = NAV of NBC, less a 10% (ten percent) discount
B = NAV of Blackstar, less a 10% (ten percent) discount
X = the number of Blackstar shares
exchanged for every 100 (one hundred) Target Shares ("Swap
Ratio")
4.3. Thus the Scheme Consideration as at 31 December 2012 is the Swap Ratio of
1.1200 (one point twelve) Blackstar Shares for 100 (one hundred) Target Shares
disposed of in terms of the Scheme, provided that any fraction of a Blackstar Share
which an NBC Shareholder (participating in the Scheme) becomes entitled to will
be rounded-off such that if it comprises 0.5 (zero comma 5) or –
4.3.1 more of a Blackstar Share, it will be rounded upwards; and
4.3.2 less of a Blackstar Share, it will be rounded downwards.
4.4. In the event that the NAV of either Blackstar or NBC has increased or decreased by
more than 10% (ten percent) as at a particular future date (to be agreed upon
between Blackstar and NBC and which will be a date prior to the release of the
Scheme Circular), from the NAV of either Blackstar or NBC as at 31 December
2012, Blackstar and NBC will recalculate the Swap Ratio by applying the
methodology for the calculation of the Swap Ratio set out in this section 4
("Adjusted Swap Ratio").
4.5. The Adjusted Swap Ratio will be announced to NBC Shareholders on SENS and in
the press as soon as possible after it has been calculated. The aforementioned
announcement will also contain pro forma financial effects of the Scheme once the
Adjusted Swap Ratio has been determined. Any dispute between the Parties in
relation to the calculation of the Scheme Consideration and in particular the Swap
Ratio and the Adjusted Swap Ratio will be referred for determination by an
independent corporate financier operating in the Republic of South Africa.
5. SHAREHOLDER SUPPORT
Blackstar has received irrevocable undertakings or written confirmations of support from
NBC Shareholders to vote in favour of the Scheme which shareholders collectively hold
75.5% of the Target Shares.
6. SCHEME CONDITIONS
6.1. The Scheme will be subject to the fulfilment (or waiver, where applicable) of the
following conditions precedent ("Scheme Conditions") on or before 30 June 2013 -
6.1.1. the passing of all resolutions required to implement the Scheme by the
requisite majority of Blackstar Shareholders, which resolutions will include,
inter alia, the increase of Blackstar's authorised share capital and the
authority to issue the Scheme Consideration by Blackstar;
6.1.2. the approval of the Scheme by the requisite majority of New Bond Capital
Shareholders as contemplated in section 115(2)(a) of the Companies Act,
and (a) to the extent required, the approval of the implementation of such
resolution by a High Court in South Africa in terms of section 115(2) and/or
section 115(3) of the Companies Act; and (b) if applicable, New Bond Capital
not treating the aforesaid resolution as a nullity, as contemplated in section
115(5)(b) of the Companies Act;
6.1.3. in relation to any objections to the Scheme by New Bond Capital
Shareholders:
6.1.3.1. no New Bond Capital Shareholders give notice objecting to the
Scheme, as contemplated in section 164(3) of the Companies Act
and vote against the resolutions proposed at the Scheme general
meeting; or
6.1.3.2. if New Bond Capital Shareholders give notice objecting to the
Scheme, as contemplated in section 164(3) of the Companies Act,
and vote against the resolutions proposed at the Scheme general
meeting, that New Bond Capital Shareholders holding no more than
10% (ten percent) of the Target Shares, eligible to be voted at the
Scheme general meeting, give such notice and vote against the
resolutions proposed at the Scheme general meeting; or
6.1.3.3. if New Bond Capital Shareholders holding more than 10% (ten
percent) of all Target Shares eligible to vote at the Scheme general
meeting give notice objecting to the Scheme, as contemplated in
section 164(3) of the Companies Act, and vote against the
resolutions proposed at the Scheme general meeting, that the
relevant New Bond Capital Shareholders do not exercise their
appraisal rights, by giving valid demands in terms of sections 164(5)
to 164(8) of the Companies Act within thirty business days following
the Scheme general meeting, in respect of more than 10% (ten
percent) of the Target Shares eligible to be voted at the Scheme
general meeting; and
6.1.4. in respect of the implementation of the Scheme and only to the extent that
same may be applicable, the approval of the South African Competition
Authorities, the South African Reserve Bank, the JSE, the TRP (through the
issue of the requisite compliance certificate), the London Stock Exchange
and any other relevant regulatory authorities (either unconditionally or
subject to conditions acceptable to Blackstar and NBC); and
6.1.5. the approval of the listing of the Blackstar ordinary shares to be issued as the
Scheme Consideration from the Blackstar South African share register by
JSE.
6.2. The Scheme Conditions in paragraphs 6.1.1, 6.1.2, 6.1.4 (save for the approval by
the Competition Authorities which may be waived by NBC) and 7.1.5 cannot be
waived.
6.3. The Scheme Conditions in paragraphs 6.1.3 and the approval by the Competition
Authorities under clause 6.1.4 may be waived by NBC upon written notice to
Blackstar, prior to the date for the fulfilment of this Scheme Condition..
6.4. NBC will be entitled to extend the date for the fulfilment of any of the Scheme
Conditions, by up to 30 days, in its own discretion, upon written notice to Blackstar,
but shall not be entitled to extend the date to a date later than the aforesaid 30-day
period without the prior written consent of Blackstar.
7. CONFIRMATION AS TO SCHEME CONSIDERATION
7.1. As the Scheme Consideration is entirely comprised of newly issued Blackstar
shares, no cash confirmation is required in terms of Regulation 111(4) of the
Companies Regulations, 2011 (the "Regulations").
7.2. Blackstar confirms that it has sufficient ordinary shares available to issue as
Scheme Consideration for the Target Shares.
8. DELISTING OF NEW BOND CAPITAL
Upon implementation of the Scheme, an application will be made to the JSE to terminate
the listing of the entire ordinary issued share capital of New Bond Capital on the JSE.
9. EXISTING HOLDING OF SHARES IN NEW BOND CAPITAL, BLACKSTAR ACTING
AS PRINCIPAL
9.1. As of the date of this announcement, Blackstar beneficially held 1 584 456 ordinary
shares, either directly or indirectly, in New Bond Capital, equal to approximately
0.3% of the issued share capital of New Bond Capital.
9.2. Blackstar confirms that it is the ultimate prospective purchaser of the Target Shares
and is acting alone and not in concert with any party.
10. INDEPENDENT BOARD, OPINION AND RECOMMENDATIONS
10.1. In order to comply with the requirements of the Regulations relating to the
composition of an independent board, Phumzile Langeni and Nonkqubela Maliza
have been co-opted as independent non-executive directors to the New Bond
Capital board of directors, with immediate effect until the implementation date of the
Scheme.
10.2. As required in terms of the Companies Act and the Regulations, New Bond Capital
has constituted an independent board, comprising Patrick Ntshalintshali, Phumzile
Langeni and Nonkqubela Maliza (the "New Bond Capital Independent Board"). The
New Bond Capital Independent Board will appoint an independent expert
acceptable to the TRP to provide the New Bond Capital Independent Board with
external advice in regard to the Scheme and to make appropriate
recommendations to the New Bond Capital Independent Board for the benefit of
New Bond Capital Shareholders. The substance of the external advice and the
opinion of the New Bond Capital Independent Board will be detailed in the Scheme
Circular.
11. FURTHER DOCUMENTATION AND SALIENT DATES
Further details of the Scheme will be included in a Scheme Circular, which is expected
to be posted to New Bond Capital Shareholders on or about 29 March 2013. The salient
dates in relation to the Scheme will be published prior to the issuing of the
aforementioned documentation.
12. FOREIGN SHAREHOLDING
The offer, as will be more fully set out in the Scheme Circular, is not made to any
shareholder of New Bond Capital in any jurisdiction where it would be illegal for such
offer to be made.
13. NEW BOND CAPITAL INDEPENDENT BOARD RESPONSIBILITY STATEMENT
The New Bond Capital Independent Board accepts responsibility for the information
contained in this announcement which relates to New Bond Capital and confirms that, to
the best of its knowledge and belief, such information which relates to New Bond Capital
is true and the announcement does not omit anything likely to affect the importance of
such information.
14. BLACKSTAR RESPONSIBILITY STATEMENT
The board of directors of Blackstar accepts responsibility for the information contained in
this announcement which relates to Blackstar and confirms that, to the best of its
knowledge and belief, such information which relates to Blackstar is true and the
announcement does not omit anything likely to affect the importance of such information.
Johannesburg & London
4 March 2013
Transaction advisor to New Bond Capital: PKF Corporate Finance (Pty) Ltd
Sponsor to New Bond Capital: PSG Capital (Pty) Ltd
Legal advisor to New Bond Capital: Cliffe Dekker Hofmeyr Inc.
Sponsor to Blackstar: PSG Capital (Pty) Ltd
Nomad to Blackstar: Liberum Capital Limited
Legal advisors to Blackstar: Paul Hastings (Europe) LLP
Date: 04/03/2013 09:00:00 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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