Wrap Text
Joint Announcement of a Firm Intention to make an Offer
MASTER PLASTICS LIMITED METIER CAPITAL GROWTH FUND II GP
Incorporated in the Republic of South Africa PROPRIETARY LIMITED
(Registration number 2016/323930/06) Incorporated in the Republic of South Africa
Share code: MAP ISIN: ZAE000242921 (Registration number 2014/232895/07)
("Master Plastics" or "Company") (In its capacity as ultimate general partner of the
Metier Capital Growth Fund II Partnership)
("MCGF II Partnership")
MCGF II INVESTMENTS
Incorporated in the Republic of Mauritius
(Company number 138321)
("MCGF II Investments")
JOINT ANNOUNCEMENT OF A FIRM INTENTION BY MCGF II PARTNERSHIP AND MCGF II INVESTMENTS TO MAKE AN OFFER
TO ACQUIRE ALL THE ISSUED ORDINARY SHARES OF MASTER PLASTICS (OTHER THAN CERTAIN EXCLUDED SHARES)
1 INTRODUCTION
MCGF II Partnership and MCGF II Investments (collectively, the "Offerors") and the Company are
pleased to announce that the Company, the Offerors and Manley Diedloff, the current Chief
Executive Officer of the Company ("Diedloff"), have concluded a written offer and implementation
agreement ("Implementation Agreement") dated 7 November 2018 ("Signature Date") in terms of
which the Offerors made a firm offer ("Offer") to acquire all of the issued ordinary shares in the
Company ("Shares"), excluding those Shares held by Diedloff, being a total of 104,933,212 Shares
("Scheme Shares").
The Offer will be implemented by way of a scheme of arrangement ("Scheme"), between the
Company and the holders of its Shares ("Shareholders"), in terms of section 114 of the
Companies Act, No. 71 of 2008 ("Companies Act").
The amount payable in terms of the Scheme will be a cash consideration of R2.00 per Scheme
Share ("Scheme Consideration"). Further details of the Scheme Consideration are set out in
paragraph 4.2 below.
The board of directors of the Company ("Board") has convened an independent board
("Independent Board") as required by the Companies Regulations, 2011 ("Companies
Regulations"), which comprises Thabo Mokgatlha, Sibongile Masinga, Craig McDougall and
Günter Steffens, for purposes of evaluating and advising Shareholders whether the Scheme and
the Scheme Consideration are fair and reasonable to Shareholders.
The Shares will be delisted from the alternative exchange of the JSE ("AltX") pursuant to the
implementation of the Scheme ("Delisting").
The purpose of this joint firm intention announcement ("Firm Intention Announcement") is to
advise Shareholders of the terms and conditions of the Scheme.
2 BACKGROUND TO THE COMPANY AND THE OFFERORS
Master Plastics, which is involved in the manufacture and provision of specific products and
solutions to customers operating in the agricultural, food, produce, dairy and general industrial
markets, was created through a series of "asset-for-share" transactions during the period from
31 January 2017 to 28 February 2017 whilst it still formed part of Astrapak Limited ("Astrapak")
which was formerly listed on the Main Board of the JSE. Master Plastics was unbundled to
shareholders of Astrapak by way of a distribution in specie in terms of section 46 of the Companies
Act and section 46 of the Income Tax Act, No. 58 of 1962 and listed on AltX on 24 May 2017.
The Offerors are private equity funds which make long-term investments into medium-to-large
businesses in South Africa and selectively in sub-Saharan Africa.
The Offerors enjoy a reputation as leading private equity funds, and bring extensive experience,
expertise and a strong track record of transaction execution and portfolio company management.
3 RATIONALE FOR THE OFFER
The Offerors believe the following benefits can be achieved through the implementation of the
Scheme and the Delisting:
• improved access to capital to develop Master Plastics' strategic and regional growth plans;
• greater manoeuvrability to assess further capital projects and acquisitions in attractive growth
niches to build scale and diversification;
• material cost and management time savings as a result of the removal of associated listing
costs and processes; and
• various benefits associated with private equity ownership, including flexibility for management
incentivisation and alignment.
The Offerors are further of the view that the Shares are currently not readily tradeable on AltX and
the Scheme will provide a liquidity opportunity for Shareholders at an attractive premium. In the
past, trades in even small volumes, have driven share prices down.
Lastly, the intention to delist the Shares will provide the Company with the flexibility required to
introduce sustainable broad-based black economic ownership structures.
Diedloff, who holds 10.72% of the issued Shares, has extensive knowledge of the Company's
business and experience within the flexible packaging products industry. Diedloff shares the
Offerors' view that Master Plastics may better realise its potential in an unlisted environment, with
access to the further capital and skills that the Offerors are able to contribute.
4 SALIENT TERMS OF THE SCHEME
The Scheme constitutes an "affected transaction" as defined in section 117(1)(c)(iii) of the
Companies Act, and, as such, the Scheme is regulated by the Companies Act and the Companies
Regulations.
The salient terms and conditions of the Scheme and other information pertaining to the Scheme
are set out below.
4.1 Scheme
The Scheme will be proposed by the Board between the Company and its Shareholders.
In the event the Scheme becomes operative, the listing of the Shares on AltX will be
terminated and each Shareholder, excluding (i) Diedloff and the Offerors (to the extent that
they hold any Shares); (ii) the holders of treasury shares (which there should not be); and (iii)
those Shareholders ("Dissenting Shareholders") that validly exercise their appraisal rights
in accordance with section 164 of the Companies Act ("Appraisal Rights") and who have
not had their rights in respect of their Shares re-instated as envisaged in sections 164(9) and
164(10) of the Companies Act, whether voluntarily or pursuant to a final court order
("Scheme Participants"); will be deemed to have disposed of all of their Scheme Shares in
exchange for the Scheme Consideration, such that the Offerors will own all of the Scheme
Shares previously held by the Scheme Participants.
Diedloff has agreed with the Company that he will not be a Scheme Participant and will not
dispose of any of his Shares pursuant to the Scheme.
Diedloff will be excluded for purposes of both determining whether the applicable quorum
requirements are satisfied and voting on the special resolution to approve the Scheme
("Scheme Resolution"), as contemplated in section 115(2)(a) of the Companies Act.
The Scheme will be subject to the fulfilment or waiver of the conditions precedent set out in
paragraph 4.3 below.
4.2 Scheme Consideration
The Scheme Consideration values Master Plastics at R235 million and represents a
premium of:
4.2.1 42.9% to the Share price of R1.40 as at 3 October 2018, being the business day
prior to receipt by the Independent Board of a non-binding expression of interest
from the Offerors;
4.2.2 60.0% to the 30-day volume-weighted average trading price per Share of R1.25 up
to and including 3 October 2018; and
4.2.3 57.5% to the 90-day volume-weighted average trading price per Share of R1.27 up
to and including 3 October 2018.
The tax implications of the Scheme are dependent on the individual circumstances of the
Scheme Participant concerned and the tax jurisdiction applicable to such Scheme
Participant. It is recommended that the Scheme Participants seek appropriate advice in this
regard.
4.3 Scheme Conditions
4.3.1 The implementation of the Scheme will be subject to the fulfilment or waiver (as the
case may be) of the following conditions precedent ("Scheme Conditions"):
4.3.1.1 by not later than 26 business days after the date upon which the Circular
(as defined below) has been posted, the Scheme Resolution is approved
by the requisite majority of Shareholders, as contemplated in
section 115(2)(a) of the Companies Act, and in the event of the provisions
of section 115(2)(c) of the Companies Act becoming applicable:
4.3.1.1.1 by no later than 40 business days after the Scheme Resolution is
approved, the court approves the implementation of the Scheme
Resolution; and
4.3.1.1.2 if applicable, the Company not treating the Scheme Resolution as
a nullity as contemplated in section 115(5)(b) of the Companies
Act;
4.3.1.2 with regards to Shareholders exercising their Appraisal Rights (if any),
either:
4.3.1.2.1 Shareholders give notice objecting to the Scheme Resolution as
contemplated in section 164(3) of the Companies Act and vote
against the Scheme Resolution in respect of less than 15% of all
of the issued Shares; or
4.3.1.2.2 if Shareholders do give notice objecting to the Scheme
Resolution and vote against the Scheme Resolution in respect of
15% or more of all of the issued Shares, then, within the time
period permitted in terms of the Companies Act, Dissenting
Shareholders have not exercised Appraisal Rights, by giving valid
demands in terms of sections 164(5) to 164(8) of the Companies
Act, in respect of 15% or more of the issued Shares;
4.3.1.3 by not later than 31 March 2019 ("Long Stop Date"), all regulatory
consents are received on an unconditional basis or, to the extent that any
such regulatory consents are subject to any condition or qualification, the
party/ies adversely affected by the condition or qualification confirms in
writing to the other/s that the condition is acceptable to it or them, which
confirmation shall not be unreasonably withheld or delayed; and
4.3.1.4 by not later than the Long Stop Date and only to the extent required,
Nedbank Limited or such other counterparty/ies to the Company's or its
subsidiaries' debt funding arrangements, have provided their written
consents to the change of shareholding or change of control of the
Company pursuant to the Scheme, in a form and substance reasonably
acceptable to the Offerors.
In the event that the Scheme Conditions are not fulfilled or waived timeously, the Scheme
will not become operative and shall be of no force or effect.
4.4 Waiver of Scheme Conditions
The Scheme Conditions in paragraphs 4.3.1.2 and 4.3.1.4 have been stipulated for the
benefit of the Offerors which will be entitled in their sole discretion to (i) extend the date for
fulfilment thereof, provided that the Offerors shall not extend the date for fulfilment beyond
the Long Stop Date without the Company agreeing to such extension by way of a signed
written agreement; or (ii) waive the fulfilment of such Scheme Conditions, in whole or in part,
on written notice to the Company.
The Scheme Conditions in paragraphs 4.3.1.1 and 4.3.1.3 are regulatory in nature and may
not be waived, unless the Offerors and the Company agree in writing to waive the fulfilment
of the aforesaid Scheme Conditions, in whole or in part, on the basis that any such
regulatory conditions are no longer (or are not) applicable to the Scheme.
4.5 Undertakings by the Company
In terms of the Implementation Agreement, the Offerors have received undertakings from the
Company that, during the period between the Signature Date and the date of implementation
of the Scheme, the business of the Company and its subsidiaries ("Group") will be carried
on in all material respects in the normal and ordinary course, and no member of the Group
will enter into any contract or commitment or do anything which, in any such case, is out of
the normal and ordinary course of business.
In terms of the Implementation Agreement, the Company has also given certain
undertakings in relation to the non-solicitation and/or receipt of alternative proposals in
respect of the Shares and/or the Group.
4.6 Termination Events
The Scheme will terminate forthwith:
4.6.1 upon written notice by the Offerors to the Company, if the Independent Board
recommends an alternative proposal to the Shareholders;
4.6.2 upon written notice by the Company to the Offerors if the Company has received
an alternative proposal which the Independent Board reasonably determines to be
more favourable to Scheme Participants, and, after affording the Offerors 5 days
within which to improve the terms of the Scheme, such alternative proposal
continues to be more favourable to Scheme Participants;
4.6.3 if any Scheme Condition, which may be waived by the Offerors, becomes
incapable of fulfilment, and the Offerors notify the Company in writing that the
Offerors will not waive that Scheme Condition;
4.6.4 if all the Scheme Conditions have not been fulfilled or waived (to the extent
permitted) on or before the relevant date/s for fulfilment or waiver;
4.6.5 upon written notice by the Offerors or the Company to the other of them
("Defaulting Party") if the Defaulting Party commits a breach of any material
provision of the Implementation Agreement or the Scheme and fails to remedy
such breach within 10 business days of receipt of a notice by the Defaulting Party
from the first mentioned party requesting such remedy;
4.6.6 on the 5th business day after the Offerors give written notice to the Company if a
Material Adverse Change occurs. A "Material Adverse Change" means:
- any circumstance, fact or event (including any change in law) but excluding any
circumstance, fact or event fairly disclosed by the Group to the Offerors before
the Signature Date and/or of which the Offerors were aware on or before the
Signature Date ("Event"), actual or which might reasonably be expected to
arise which has, or is reasonably likely to have, the effect of being materially
adverse with regard to the operations, continued existence, business,
condition, assets and/or liabilities of the Group. In this regard, to be material,
the Event, at the time of the assessment thereof, must have or must
reasonably be likely to:
o adversely affect the Group's consolidated earnings before interest, tax,
depreciation and amortisation (determined on the same basis as the
audited consolidated annual financial statements of the Group as at and in
respect of the financial year ended 28 February 2018 were prepared, but
excluding any attributable earnings resulting from the business acquisitions
and/or combinations concluded by the Company after 31 August 2018) by
more than 5% compared to the earnings before interest, tax, depreciation
and amortisation of the Group in the 12 months preceding 31 August 2018,
calculated based on the interim results for the Group for the period ended
31 August 2018 ("Applicable Financials"); or
o result in a loss by the Company (determined on the same basis as the
Applicable Financials were prepared) equivalent to 10% or more of the
consolidated net asset value of the Group, compared to the consolidated
net asset value of the Group as set out in the Applicable Financials. A
"Loss" means all liabilities, losses, claims, damages, costs and/or
expenses of any nature whatsoever; or
- the JSE All Share Index closing price, or any equivalent or replacement
thereof, falls and remains below the JSE All Share Index closing price on the
business day prior to the Signature Date, multiplied by 80% (the JSE All Share
Index closing price will be as published on the applicable Bloomberg screen
(JALSH Index HP)) for 5 or more consecutive trading days at any time after the
Signature Date.
5 IRREVOCABLE UNDERTAKINGS
To date, Shareholders who collectively hold or will hold in aggregate 68,427,401 Shares,
representing 58.22% of all the issued Shares in the Company, have provided irrevocable
undertakings to vote in favour of the Scheme Resolution at the General Meeting or any
adjournment thereof.
Date of Percentage
irrevocable Shares subject Shareholding
Shareholder undertaking to undertaking (%)*
Lereko Metier Capital Growth Fund
Trust and the LMCGF Parallel Trust I 30 October 2018 38,282,784 32.57
Steyn Capital Management Proprietary
Limited 31 October 2018 13,298,575 11.31
Robert van Zyl 31 October 2018 2,797,936 2.38
Asymmetry Asset Managers Proprietary
Limited 31 October 2018 2,737,639 2.33
Pieter Buitendag 31 October 2018 1,918,161 1.63
Edge Reformation (RF) Proprietary
Limited 31 October 2018 1,428,877 1.22
Element Investment Managers
Proprietary Limited 1 November 2018 7,963,429 6.78
TOTAL 68,427,401 58.22
* Percentage shareholding has been calculated with reference to all the issued Shares in
the Company.
6 GUARANTEE
In compliance with regulations 111(4) and 111(5) of the Companies Regulations, the Offerors have
provided the Takeover Regulation Panel with an irrevocable, unconditional bank guarantee issued
by The Standard Bank of South Africa Limited ("Standard Bank") for the maximum amount of the
Scheme Consideration, being an amount of R209,866,424.00 confirming that, in the event that the
Scheme Consideration is not paid within the relevant time period, Standard Bank agrees to make
payment of the Scheme Consideration to Computershare Investor Services Proprietary Limited,
being the Company's transfer secretaries, for the benefit of Scheme Participants.
7 DELISTING
Following implementation of the Scheme, the listing of all the Shares on AltX will be terminated.
8 ACTING AS PRINCIPAL
The Offerors confirm that they are the ultimate proposed purchasers of all the Scheme Shares and
that they are not acting as agent or broker for any other party.
No party is acting in concert with the Offerors, other than the respective general partners of
the Offerors (being Metier Capital Growth Fund II GP Proprietary Limited in its capacity as
ultimate general partner of MCGF II Partnership and Metier Mauritius GP as ultimate general
partner of MCGF II Investments) and their controlling shareholder (being Metier Investment and
Advisory Services Proprietary Limited), who are regarded to be acting in concert in terms of
section 117(2) of the Companies Act. The aforesaid general partners do not hold any beneficial
interest in any Shares, while Metier Investment and Advisory Services Proprietary Limited holds
an indirect beneficial interest in 2,147,684 Shares, constituting 1.83% of the issued Shares in
the Company. These parties will be excluded for purposes of determining whether the applicable
quorum requirements are satisfied and from voting on the Scheme Resolution, as contemplated in
section 115(4) of the Companies Act.
9 INDEPENDENT BOARD, INDEPENDENT EXPERT AND RECOMMENDATIONS
The Independent Board has appointed Nodus Capital TS Proprietary Limited as the independent
expert ("Independent Expert"), as required in terms of section 114(2) of the Companies Act and
the Companies Regulations, to issue an opinion dealing with the matters set out in sections 114(2)
and 114(3) of the Companies Act and regulations 90 and 110(1) of the Companies Regulations,
and to express an opinion on whether the Scheme and the Scheme Consideration are fair and
reasonable to Shareholders ("Independent Expert Report").
Having regard to the Independent Expert Report (which is in draft form as at the Signature Date),
the Independent Board is of the opinion that the Scheme and the Scheme Consideration are fair
and reasonable to Shareholders.
The final Independent Expert Report will be detailed in the Circular referred to in paragraph 10
below.
The Independent Board intends to recommend in the Circular (as defined below) that Shareholders
vote in favour of the Scheme Resolution.
10 CIRCULAR AND POSTING DATE
The Company and the Offerors will issue a combined offer circular to Shareholders, as
contemplated in regulation 102 of the Companies Regulations, setting out the full terms and
conditions of the Scheme and including the notice convening the general meeting of the
Shareholders to consider and, if deemed appropriate, approve the Scheme Resolution ("General
Meeting"), a form of proxy in respect of the General Meeting, and a form of surrender and transfer
for use by certificated Shareholders ("Circular").
The Circular is expected to be distributed to Shareholders on or about 30 November 2018.
The salient dates pertaining to the Scheme will be released on SENS and published in the press
prior to the distribution of the Circular.
11 RESPONSIBILITY STATEMENTS
The Independent Board, collectively and individually, accepts responsibility for the information
contained in this Firm Intention Announcement to the extent that it relates to the Company. To the
best of its knowledge and belief, the information contained in this Firm Intention Announcement
pertaining to the Company is true and nothing has been omitted that is likely to affect the import of
the information.
The Offerors, collectively and individually, accept responsibility for the information contained in this
Firm Intention Announcement to the extent that it relates to the Offerors. To the best of their
knowledge and belief, the information contained in this Firm Intention Announcement pertaining to
the Offerors is true and nothing has been omitted that is likely to affect the import of the
information.
Johannesburg
7 November 2018
Corporate Advisor and Transaction Sponsor to the Company
Merchantec Capital
Legal Advisor to the Company
Webber Wentzel
Financial and Corporate Advisor to the Offerors
The Standard Bank of South Africa Limited
Legal Advisor to the Offerors
Cliffe Dekker Hofmeyr Inc.
Independent Expert
Nodus Capital TS Proprietary Limited
Date: 07/11/2018 05:23:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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