CLOVER INDUSTRIES LIMITED - Firm intention by Milco to acquire all the issued shares of Clover and withdrawal of cautionary announcement

Release Date: 04/02/2019 08:30
Code(s): CLR
 
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Firm intention by Milco to acquire all the issued shares of Clover and withdrawal of cautionary announcement

Clover Industries Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/030429/06)
JSE ordinary share code: CLR
NSX ordinary share code: CLN
ISIN: ZAE000152377
(“Clover” or “the Company”)

Milco SA Proprietary Limited
Incorporated in the Republic of South Africa
(Registration number 2018/610365/07)
(“Milco” or the “Offeror”)

FIRM INTENTION BY MILCO TO ACQUIRE ALL THE ISSUED SHARES OF CLOVER AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1.   INTRODUCTION

     Further to the cautionary announcement released on the Stock Exchange News Service
     (“SENS”) of the JSE Limited (“JSE”) on 19 October 2018 (“Cautionary Announcement”) and
     the subsequent renewal of the Cautionary Announcements released on SENS on 30
     November 2018 and 21 January 2019, shareholders of Clover Industries Limited (“Clover”)
     (“Shareholders”) are informed that Clover has entered into an implementation agreement
     (“IA”) with Milco SA Proprietary Limited (“Milco”), in terms of which Milco will make an offer to
     acquire all of the issued shares in Clover (on a fully diluted basis, such that thereafter there
     will be no remaining rights exercisable or convertible into shares) (“Clover Shares”), by way
     of a scheme of arrangement (“Scheme”) in terms of section 114 of the Companies Act, No.
     71 of 2008, as amended (“Companies Act”) between Clover and the Shareholders.

     The amount payable in terms of the Scheme will be a cash consideration of R25.00 per Clover
     Share (“Scheme Consideration”), subject to the terms set out in paragraph 5 below.

     Clover has established an independent board of directors ("Independent Board") for
     purposes of the Scheme and related matters (the “Transaction”), including, evaluating the
     terms and conditions of the Scheme and advising Shareholders thereon as required by the
     Regulations promulgated under the Companies Act ("Companies Regulations"). The
     Independent Board comprises Dr. Steve Booysen (as lead independent director), Dr. Whitey
     Basson, Ms. Neo Mokhesi, Mr. Flemming Morgan and Ms. Babalwa Ngonyama.

     Pursuant to paragraph 1.17(b) of the JSE Listings Requirements, all the Clover Shares will be
     delisted from the Main Board of the JSE and the Namibian Stock Exchange (“NSX”) pursuant
     to the implementation of the Scheme (“Delisting”).

     The purpose of this joint firm intention announcement (“FIA”) is to, inter alia, advise
     Shareholders of the terms and conditions of the Transaction.

2.   INFORMATION ABOUT CLOVER

     Clover is a leading and competitive branded consumer goods and products group operating
     in South Africa and select African countries reaching a wide range of consumers with a range
     of quality value-added dairy and non-dairy products. Clover has one of the largest ambient
     and chilled distribution networks in Southern Africa. The Company’s segments include: dairy
     fluids, dairy concentrated products, ingredients, non-alcoholic beverages, fermented products
     and other products. Clover’s footprint extends across South Africa and sub-Saharan Africa,
     with the Company employing over 8,500 employees.

3.   INFORMATION ABOUT MILCO

     Milco has been formed to act as the Offeror in the proposed Scheme. Immediately following
     the Scheme operative date, the shareholding of Milco will be held as follows:

     -     c.78.7% by Milco Mauritius International Limited, a Mauritian holding company, the Milco
           shareholding of which will, in turn, be effectively held c.59.5% by International Beer
           Breweries Limited ("IBBL"), c.8.3% by IncuBev Limited (“IncuBev”) and c.10.9% by
           Ploughshare Investments Limited (“Ploughshare”);
     -     15% by Brimstone Investment Corporation Limited (“Brimstone”); and
     -     c.6.3% by the executive management of Clover (“Management”).

     Particulars regarding each of IBBL, IncuBev, Ploughshare, Brimstone and Management are
     set out below.

     IBBL is a directly owned subsidiary of the Central Bottling Company (“CBC”) Group. CBC is a
     privately-owned international food and beverage group whose subsidiary companies serve
     over 160 million consumers worldwide. CBC is Israel's leading manufacturer and distributor of
     beverages, and, through its foreign subsidiaries, has manufacturing and distribution
     operations in Turkey, Romania, and Uzbekistan. CBC, which is also the owner of the Tara
     dairy, Israel's second largest milk processing dairy, produce and distributes its own brands
     and Müller brands, and it operates the license for the Müller brand in Romania. CBC also owns
     Gat Foods, a “grove to table” juice operation with customers in over 70 countries. In addition,
     CBC works closely with its international franchisors, including The Coca-Cola Company,
     Carlsberg, Anheuser-Busch InBev, the Müller Group and Diageo.

     IncuBev is an international business focused on the food and beverage sectors in sub-
     Saharan Africa. The shareholders of IncuBev comprise global executives with extensive
     knowledge, experience and relationships, both in sub-Saharan Africa and the rest of the world,
     in the dairy and non-alcoholic beverage industry. IncuBev has a network design with access
     to deep operational, private equity, banking and management consulting expertise, within sub-
     Saharan Africa and globally.

     Ploughshare is a privately owned, independent investment company which is part of a broader
     international investment group which has investments and expertise in retail, distribution and
     beverages.

     Brimstone, established in 1995 and listed on the JSE, is a black-controlled and managed
     investment company incorporated and domiciled in South Africa. Brimstone employs more
     than 3,500 employees in its subsidiaries and more than 24,000 employees in its associates.
     It has investment expertise in industries such as fast-moving consumer goods, health care
     and financial services, amongst others. Brimstone has an experienced senior management
     team with investment expertise built up over more than 20 years.

     Milco has strong faith in Management as evidenced by the track record of the business and
     will look to support them and the Company in their growth plans. Collectively, Management
     will reinvest a portion of the proceeds they receive from the Scheme and the cash settlement
     of certain of their share appreciation rights ("SARs") into Milco (the “Reinvestment”). In
     addition, Milco will provide funding to Management to facilitate their subscription for additional
     shares in Milco. Milco is confident that the continuity and achievement of Clover's business
     plans is assured by its ability to retain, post-completion of the Scheme, the professional,
     experienced services of Management.
     
     Milco believes that the combination described above brings significant operational, technical
     and financial capacity to support Clover’s growth strategy in sub-Saharan Africa.

4.   RATIONALE FOR THE TRANSACTION

     Milco believes that Clover presents a uniquely attractive investment given its expansive chilled
     distribution capability, strong market position for key brands and an experienced management
     team. Milco, which brings extensive knowledge of the dairy, juice and non-alcoholic beverage
     industries, has the technical and research ability to bring healthier food to consumers, access
     to international brands, and connections and operating experience in sub-Saharan
     businesses, in addition to its proven commercial and trade abilities. Milco intends to combine
     its capabilities with those of Clover to unlock value through key strategic initiatives, primarily
     aimed at accelerating sales, distribution and efficiency opportunities within Clover’s product
     portfolio in South Africa, with expansion into select sub-Saharan Africa territories.

     Given the relatively low trading volumes in Clover Shares on the JSE and NSX, the Scheme
     Consideration represents a compelling proposition and attractive opportunity for Shareholders
     to realise value in cash and to divest of their Clover Shares at a substantial premium to the
     current share price, as set out in paragraph 5.2 below.

5.   MATERIAL TERMS OF THE TRANSACTION

5.1. Transaction mechanism

     5.1.1.   The Offeror has offered to acquire all of the Clover Shares by way of a scheme of
              arrangement in terms of section 114 of the Companies Act. The Scheme will be
              proposed by the Board between Clover and its Shareholders.

     5.1.2.   The Scheme Consideration is set out in paragraph 5.2 below.

     5.1.3.   The Scheme will be subject to the fulfilment or waiver (as appropriate) of a number of
              conditions precedent (as detailed in paragraph 6 below).

     5.1.4.   If the Scheme becomes operative, the listing of all of Clover’s Shares on the main
              board of the JSE and the NSX will be terminated, and Shareholders will be deemed
              to have disposed of all of the Clover Shares for the Scheme Consideration thereby
              constituting Clover as a wholly-owned subsidiary of Milco.

5.2. Scheme Consideration

     5.2.1.   In terms of the Transaction, Shareholders will receive a cash consideration of R25.00
              per Clover Share acquired.

     5.2.2.   The Scheme Consideration will not be adjusted for any FY2019 interim dividend
              payable by Clover which is in accordance with Clover’s historical dividend policy with
              respect to interim dividends. The dividend declaration will follow a board meeting of
              Clover scheduled to take place on 4 March 2019 and the dividend is to be paid during
              the 2019 financial year.

     5.2.3.   The Scheme Consideration has been determined on the basis that Clover will not
              issue any further Clover Shares or SARs, nor make any repurchases or effect any
              capital reductions between the signature date of the IA and the Scheme operative
              date.

     5.2.4.   The Scheme Consideration assumes that the total net debt of the Company on a
              consolidated basis at the finalisation date of the Scheme, does not exceed
              R800 million. The aforegoing excludes any increase in the Company’s net debt as a
              result of the cash settlement of the SARs. The position regarding the SARs is further
              detailed in paragraph 9.2 below. Subject to the aforegoing, the Scheme Consideration
              will be subject to adjustment only in the event that Clover declares dividends outside
              of the parameters indicated in 5.2.2 above or if the net debt of the Company on the
              finalisation date of the Scheme exceeds R800 million.

     5.2.5.   The table below illustrates the Scheme Consideration premium:
                                       Clover Share
                                       price on the day
                                       prior to the                          Clover Share
                 Reference             Cautionary            Resultant       price on the day        Resultant
                 point                 Announcement(1)       premium         prior to this FIA(2)    premium

                 Closing price         R14.10                 77%            20.00                   25%

                 30-day VWAP(3)        R14.73                 70%            19.09                   31%

                 60-day VWAP(3)        R16.10                 55%            18.05                   39%

                 90-day VWAP(3)        R16.16                 55%            16.93                   48%


                Notes:
                1.   Respective price metrics of Clover Shares on the JSE on 18 October 2018, being the last trading
                     day prior to the publication of the Cautionary Announcement
                2.   Respective price metrics of Clover Shares on the JSE on 1 February 2019, being the last trading
                     day prior to the publication of this FIA
                3.   VWAP refers to volume weighted average price over the particular number of trading days

5.3.   Break fee

       In certain instances, as more fully set out in the IA, where the Scheme does not proceed or
       fails, Clover undertakes to pay Milco a break fee equal to 1% of the Scheme Consideration.

6.     MATERIAL SUSPENSIVE CONDITIONS TO THE POSTING OF THE CIRCULAR

       The posting of a circular to Shareholders in respect of the Scheme ("Circular") is subject to
       the fulfilment or waiver of, inter alia, the following suspensive conditions:

6.1.   an independent expert, appointed by the Independent Board having delivered to the
       Independent Board, the Independent Expert Report in relation to the Transaction in
       compliance with the Companies Act and the Companies Regulations, confirming that, in its
       opinion, the Scheme Consideration and the Reinvestment are fair and reasonable to
       Shareholders;

6.2.   the Takeover Regulation Panel established in terms of section 196 of the Companies Act
       (“TRP”) having granted exemption in terms of section 119(6) of the Companies Act,
       alternatively in terms of regulation 113 of the Companies Regulations, of the Reinvestment by
       Management from the application of section 127(1) of the Companies Act, either
       unconditionally or subject to the passing of resolutions related to the Transaction; and

6.3.   all requisite approvals in respect of the Circular having been obtained from the JSE, the TRP
       and the Financial Surveillance Department of the South African Reserve Bank.

7.     MATERIAL SUSPENSIVE CONDITIONS TO THE SCHEME

       The Scheme will be subject to the fulfilment or waiver of, inter alia, the following suspensive
       conditions on or before 20 August 2019 (or such later date as Milco and Clover may agree
       upon):

7.1.   written consent having been obtained from the relevant counterparties to specific material
       contracts in respect of the change of control that will result from the implementation of the
       Transaction;

7.2.   by not later than 23h59 on the 90th (ninetieth) day after the date of posting of the Circular, in
       respect of the Scheme:

       7.2.1.   a special resolution having been passed, at the Scheme meeting to consider the
                Transaction (“Scheme Meeting”), by the requisite majority of Shareholders entitled to
                vote on the Scheme, approving the Scheme in terms of section 115(2)(a) of the
                Companies Act (the "Scheme Special Resolution") and, to the extent required in
                terms of section 115(3) of the Companies Act, the implementation of the Scheme
                Special Resolution having been approved by the Court;

       7.2.2.   if the Scheme Special Resolution has been passed, at the Scheme Meeting, by the
                requisite majority of Shareholders entitled to vote on the Scheme and any person who
                voted against the Scheme Special Resolution has applied to Court within 10 (ten)
                business days after the vote for a review of the Transaction in accordance with the
                requirements of section 115(3)(b) of the Companies Act:

                -     no leave having been granted by the Court to that person, to apply to Court for
                      a review of the Transaction in accordance with the requirements of section
                      115(7) of the Companies Act; or

                -     leave having been granted by the Court, to that person to apply to Court for a
                      review of the Transaction in accordance with the requirements of section 115(6)
                      of the Companies Act, but the Court not having set aside the Scheme Special
                      Resolution in terms of section 115(7) of the Companies Act;

7.3.   within the time period prescribed in section 164(7) of the Companies Act, Shareholders have
       not exercised appraisal rights, by giving valid demands in accordance with the requirements
       of sections 164(5) to 164(8) of the Companies Act, in respect of more than 5% (five per cent)
       of all the Clover Shares;

7.4.   by not later than 23h59 on the 90th (ninetieth) day after the date of posting of the Circular and,
       to the extent necessary, the requisite majority of Brimstone's shareholders having approved
       an ordinary resolution authorising Brimstone's subscription of an amount of approximately
       R726 million for a 15% shareholding in Milco;

7.5.   by no later than 23h59 on the 90th (ninetieth) day after the date of posting of the Circular, the
       Transaction Resolutions having been passed at the Scheme Meeting, by the requisite majority
       of Shareholders entitled to vote on the Transaction Resolutions;

7.6.   by no later than 200 days following the date of signature of the IA (“Long Stop Date”), the
       Transaction having been unconditionally approved by the relevant Competition Authorities, or
       conditionally approved on terms and conditions which the party(ies) which is/are affected by
       such conditions or terms, having confirmed in writing (within 5 (five) business days of receipt
       of such conditional approval, but in any event by not later than 23h59 on the Long-Stop Date)
       to be acceptable to it/them, acting reasonably;

7.7.   by no later than the date on which the last of the aforementioned conditions is fulfilled or such
       later date if there is a dispute as to whether a Material Adverse Change has occurred (but by
       no later than the Long Stop Date), Milco not having terminated the Transaction as a result of
       a Material Adverse Change (as defined below); and

7.8.   by no later than 23h59 on the 10th (tenth) business day following the day on which the last of
       the conditions to the Scheme (other than this condition) is fulfilled or waived, as the case may
       be, the TRP has issued a compliance certificate in respect of the Transaction in terms of
       section 119(4)(b) of the Companies Act, provided that if such compliance certificate is issued
       conditionally or on terms, this condition shall not be regarded as having been fulfilled unless
       the party (ies) which is/are affected by such conditions or terms, confirm/s in writing (by not
       later than the said date and time) that such conditions and terms are acceptable to it/them,
       acting reasonably.

       A "Material Adverse Change" is an adverse effect, fact or circumstance (other than certain
       excluded matters) which has arisen or occurred or might reasonably be expected to arise or
       occur in the future (alone or together with any such actual or potential adverse effect, fact
       and/or circumstance), and which is material with regard to the business, condition, assets,
       liabilities, operations, financial performance, net income and prospects of Clover, and/or any
       restrictive covenant or covenants or similar provision entered into by Clover which will or could
       reasonably be expected to materially reduce the actual or potential value of Clover. To be
       material, the adverse impact must have or be likely to have or have had an impact:

       7.8.1.   on the net asset value of Clover at any time prior to or subsequent to the Finalisation
                Date (as such term is contemplated in the JSE Listings Requirements) in an amount
                of more than 7.5% compared to Clover's 2018 audited tangible net asset value (being
                the net asset value of Clover exclusive of intangible assets and goodwill at 30 June
                2018);

       7.8.2.   on, or must be reasonably likely adversely to affect, Clover's EBITDA by more than
                10% compared to Clover's EBITDA for Clover's financial year ending 30 June 2018
                for which purpose EBITDA means the sustainable consolidated earnings of Clover for
                any 12 month period (covering any financial year) before interest, tax, depreciation
                and amortisation, before taking into account any foreign exchange adjustment, and
                excluding costs directly attributable to the Transaction (including the settlement of
                SARs).

8.     FUNDING THE TRANSACTION

       In compliance with regulations 111(4) and 111(5) of the Companies Regulations, the Offeror
       has provided the TRP with irrevocable, unconditional bank guarantees issued by Rand
       Merchant Bank (a division of FirstRand Bank Limited), Nedbank Limited and HSBC Bank plc
       – Johannesburg Branch ("Banks") for an aggregate amount of R4,797,793,425, which
       guarantees confirm that in the event that the Scheme Consideration is not paid within the
       relevant time period the Banks agree to make payment of their respective portions of the
       Scheme Consideration to the transfer secretaries in respect of the Scheme or such other
       designated payment agent as the TRP may direct in writing, for the benefit of the Scheme
       Participants and, as applicable, Clover. Payment under any guarantee is subject to the
       Scheme becoming unconditional and being implemented in accordance with the terms and
       conditions of the Scheme. No demand may be made by the TRP under any one particular
       bank guarantee unless the TRP has at the same time made a demand for payment from the
       guarantors under the other two guarantees for the full amount guaranteed thereunder.

9.     CONCERT PARTIES IN CLOVER AND REINVESTMENT

9.1.   As at the date of this FIA, Management holds or controls (directly or indirectly) 9,329,839
       shares in Clover, representing c.4.9% of the Clover Shares. On the Scheme operative date,
       Management will receive the Scheme Consideration pursuant to each Clover Share held,
       amounting in the aggregate to R233,245,975.

9.2.   As at the date of this FIA, Management holds 12,259,006 SARs, which SARs will be cash
       settled by Clover by not later than the Scheme operative date at a price equivalent to the
       Scheme Consideration, totalling in the aggregate, R112,729,612. Of the aforementioned
       SARs, the vesting of 4,521,515 will need to be accelerated as a result of the Transaction and
       for this purpose, an amendment to the rules of the SARS Plan will be proposed at the Scheme
       Meeting in order for Shareholders to consider and, if deemed fit, approve. The balance of the
       aforementioned SARs will already have vested according to their terms by the time of their
       cash settlement on or before the Scheme operative date.

9.3.   As set out in the IA, Management will re-invest the following by way of a new equity
       subscription into Milco:

       9.3.1.   R112,648,755 of the total proceeds received from the Scheme Consideration; and

       9.3.2.   R43,401,901 of the total proceeds received from the cash settlement of the SARs.

       The abovementioned amounts are net of:

       -        capital gains tax and PAYE which will become payable as a result of receipt of the
                proceeds set out in paragraphs 9.1 and 9.2 above; and

       -        an amount of approximately 30% to 45% of such proceeds which Management will
                retain for use at their discretion.

       Furthermore, the abovementioned amounts also do not take into account an additional amount
       of R150,000,000 which Milco has agreed to lend and advance to Management to fund the
       subscription of additional shares in Milco, which will result in Management, after all
       subscription monies have been received, holding c.6.3% of Milco’s issued share capital. A
       resolution will be proposed at the Scheme Meeting to permit the re-investment by
       Management as contemplated in the Regulations. The independent expert referenced in
       paragraph 12 below will opine on the fairness of the Reinvestment consideration.

9.4.   Milco has or will enter into an agreement with Management in respect of the provision of on-
       going services to be rendered to Clover following the Scheme operative date and the terms of
       Management's re-investment into Milco.

9.5.   In terms of the Companies Act, as read with the Companies Regulations, Management are
       considered to be concert parties as defined and, as such, will not be able to vote their Clover
       Shares at the Scheme Meeting.

10.    PRE-TRANSACTION STAKE ACQUISITION

10.1.  For the sake of good order, Milco herewith discloses that persons (collectively the “Pre-deal
       Investors”), invested in or engaged with IncuBev have, prior to the end of May 2018,
       purchased Clover Shares on the open market. As at the date of this FIA, the Pre-deal Investors
       hold in aggregate, 2,187,867 Clover Shares and have indicated that all such shares will
       participate in the Scheme. Pre-deal Investors will not vote on the Scheme or on the
       Transaction Resolutions.

10.2.  Milco does not hold any shares in Clover.

11.    UNDERTAKINGS AND SHAREHOLDER SUPPORT

11.1.  To date, irrevocable undertakings to vote or procure the voting of the stated number of Clover
       Shares, either as a principal or collectively holding or managing Clover Shares on behalf of
       their respective clients, in favour of the Scheme and the other resolutions to be proposed at
       the Scheme Meeting, have been received from certain Shareholders representing 36.9% of
       the Clover Shares with effective voting rights in respect of the Scheme, as set out below:

                                 Clover Shares
                                 subject to                                               Effective voting rights
                                 undertaking at the             Holding at                in respect of the
            Shareholder          signature date of              signature date of         Scheme at signature
                                 irrevocable                    irrevocable               date of irrevocable
                                 undertaking                    undertaking               undertaking (1)
                                                                %                         %
            Allan Gray
            Proprietary
            Limited              30,380,803                     15.8                      16.9
            Clover Milk
            Producers
            Trust                23,690,000                     12.3                      13.1
            Arisaig Africa
            Consumer
            Fund Limited         7,416,074                      3.9                       4.1
            Clucas Gray
            Investment
            Management           5,100,000                      2.7                       2.8


            Total                66,486,877                     34.7                      36.9

         Note:
         1.    The effective voting rights in respect of the Scheme are calculated as the number of shares outstanding, being
               191,911,737, less the 11,517,706 shares that are ineligible to vote as a result of being held by concert parties,
               namely J H Vorster, various IncuBev investors and J H F Botes, thereby equating to 180,394,031 Clover Shares

11.2.   To date, a letter of support to vote or procure the voting of the stated number of Clover Shares,
        either as a principal or collectively holding or managing Clover Shares on behalf of their
        respective clients, in favour of the Scheme and the other resolutions to be proposed at the
        Scheme Meeting, have been received from Kagiso Asset Management, representing 10.9%
        of the Clover Shares with effective voting rights in respect of the Scheme, as set out below:

                                                        Holding at         Effective voting rights
                            Clover Shares subject       signature date     in respect of the
                            to support at the           or                 Scheme at signature
                            signature date of           confirmation       date or confirmation   
         Shareholder        confirmation                date               date                                                                                                                                                                                             
                                                        %                  %
         Kagiso Asset       
         Management         20,844,000                  10.9               11.6


11.3.   In total, Shareholders that have provided irrevocable undertakings, letters of support or
        commitments to vote or procure the voting of the stated number of Clover Shares in favour of
        the Scheme amount to 87,330,877 Clover Shares or 48.5% of the effective voting rights in
        respect of the Scheme at signature date or confirmation of irrevocable undertaking, letter of
        support or commitment.

11.4.   The directors of Clover (other than Management who are not entitled to vote at the Scheme
        Meeting) have indicated that they intend to vote all the Clover Shares held by them in favour
        of the Scheme.

11.5.   Brimstone has committed to convening a shareholder meeting and Brimstone shareholders,
        who between them have, in the aggregate, the right to exercise in excess of 50% of the voting
        rights attributable to all the shares in Brimstone’s issued share capital, have provided
        irrevocable undertakings to vote in favour of all resolutions authorising Brimstone’s
        subscription of an amount of approximately R726,078,456 for a shareholding of 15% in the
        issued share capital of Milco.

12.     INDEPENDENT EXPERT AND FAIR AND REASONABLE OPINION

12.1.   The Independent Board has appointed PricewaterhouseCoopers Corporate Finance
        Proprietary Limited (“PwC”) as the 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, 110(1)
        and 113(1)(a) of the Companies Regulations, and to express an opinion on whether the
        Scheme, the Scheme Consideration and the consideration for the Reinvestment are fair and
        reasonable to Shareholders ("Independent Expert Report"). The Independent Expert's
        Report will be detailed in the Circular.

12.2.   PwC has furnished a draft opinion (“Preliminary Opinion”) to the Independent Board that it
        considers the Transaction to be fair and reasonable to Clover Shareholders. The Preliminary
        Opinion is based on financial information available to PwC up to and including 31 December
        2018 and is subject to the limitations and conditions to be set out in the formal opinion to be
        contained in the Circular. The Independent Board, having considered the terms of the
        Transaction and the Preliminary Opinion, intend to unanimously recommend to Shareholders
        to vote in favour of the Scheme, the resolution to amend the SARs plan to accelerate the
        vesting of certain SARs which have not yet vested and the resolution to approve the
        Reinvestment if the Preliminary Opinion is not changed or withdrawn.

13.     DOCUMENTATION

13.1.   Details of the Scheme will be included in the Circular, which will contain, inter alia, the terms
        of the Scheme, a notice convening the Scheme Meeting, a form of proxy in connection with
        the Scheme Meeting, and a form of acceptance, surrender and transfer in respect of the Clover
        Shares. The Circular is expected to be posted to Shareholders by no later than 1 March 2019
        or as soon as possible thereafter in accordance with the parties’ obligations in terms of the
        Companies Regulations.

13.2.   The salient dates pertaining to the Scheme will be released on SENS and published in the
        press prior to the distribution of the Circular.

13.3.   A copy of the IA will be made available for inspection by Shareholders from the date of
        distribution of the Circular to Shareholders up to and including the date of the Scheme Meeting.

14.     DELISTING

        Following implementation of the Scheme, the listing of all the Clover Shares on the Main
        Board of the JSE and NSX will be terminated.

15.     WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

        The Cautionary Announcement is hereby withdrawn, and caution is no longer required to be
        exercised by Shareholders when dealing in their Clover Shares.

16.     MILCO RESPONSIBILITY STATEMENT

        The board of directors of Milco, individually and collectively accepts full responsibility for the
        accuracy of the information contained in this FIA to the extent that it relates solely to Milco. In
        addition, the board of directors of Milco certifies that to the best of its knowledge and belief,
        the information contained in this FIA solely pertaining to Milco is true and, where appropriate,
        does not omit anything that is likely to affect the importance of the information contained
        herein     solely pertaining to Milco, and that all reasonable enquiries to ascertain such
        information have been made.

17.     INDEPENDENT BOARD RESPONSIBILITY STATEMENT

        The Independent Board, individually and collectively, accepts full responsibility for the
        accuracy of the information contained in this FIA to the extent that it relates to Clover. In
        addition, the Independent Board certifies that to the best of its knowledge and belief, the
        information contained in this FIA is true and, where appropriate, does not omit anything that
        is likely to affect the importance of the information contained herein pertaining to Clover, and
        that all reasonable enquiries to ascertain such information have been made.


Johannesburg

4 February 2019

Sponsor to Clover
Rand Merchant Bank (A division of FirstRand Bank Limited)

Legal adviser to Clover
Werksmans
Financial adviser and investment bank to Milco
Rand Merchant Bank (A division of FirstRand Bank Limited)

Legal adviser to Milco
ENSafrica

NSX Sponsor
Merchantec Capital Namibia Proprietary Limited

Independent Expert
PricewaterhouseCoopers Corporate Finance Proprietary Limited

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