Wrap Text
Proposed new equity ownership plan
Brait SE
(Registered in Malta as a European Company)
(Registration No. SE1)
Share code: BAT ISIN: LU0011857645
Bond code: WKN: A1Z6XC ISIN: XS1292954812
LEI: 549300VB8GBX4UO7WG59
("Brait")
PROPOSED NEW EQUITY OWNERSHIP PLAN
Brait today announces its intention to seek shareholder approval for a new equity ownership plan
(the “Plan”) for its Corporate Advisors, Brait Advisory Services UK Limited (“BUK”) and Brait South
Africa Proprietary Limited (“BSAL”).
The Plan is a five-year structure which has been designed to align the long-term interests of the
Corporate Advisors with those of Brait’s shareholders.
The Plan involves the creation of a new class of share (“B Shares”) and share appreciation rights
(“SARs”) by Brait Mauritius Limited (“BML”) which BUK and BSAL will allocate in full to their
investment teams.
B Shares
Holders of B Shares will have the right (the “Put Right”) to have their B Shares redeemed or
repurchased by BML for an amount equal to the volume weighted average price (“VWAP”) of a Brait
share for the seven-day period prior to the date of exercise, less a strike price (the “Put Amount”).
The strike price will be “out-the-money” at R35.00 which is a premium of 84% to the thirty-day VWAP
of R19.02 as at 1 July 2019 requiring a minimum Brait share price compound annual growth rate
(“CAGR”) of 13% over a five-year period before the Put Amount has any value.
The Put Rights can only be exercised from the second anniversary of the issue date of the relevant
B Share and will lapse on the fifth anniversary of the issue date. In addition, BML will have the right
(at its discretion) to repurchase B Shares at any time during the five-year period of the Plan. Any B
Shares repurchased by BML will be cancelled and will not be regranted.
The strike price (and the limits described below) are subject to customary adjustments to reflect the
effect of non-ordinary course changes in Brait’s share capital or reserves (such as stock splits,
capital reductions and special dividends), except that there shall be no adjustments in the case of
an offering of Brait shares under a rights issue. Should any of the following events occur, Put Rights
will be capable of early exercise for a limited period following which they will lapse:
- BML’s investment advisory contract with BSAL and BUK is terminated;
- there is a change of control including a person (or persons acting in concert) acquiring more
than 50% of the voting rights of Brait, BML or Brait Malta Limited; and/or
- Brait shares ceasing to be admitted to trading on an internationally recognised stock
exchange.
Should any of the above events occur, the strike price will also be reduced to an amount that equates
to the current Brait share VWAP of R19.02 increased at a CAGR of 13% from the date of issue to
the date on which the relevant trigger event occurs.
Upon exercise of Put Rights, amounts payable to holders of B Shares may be settled in kind
(including through the transfer of Brait shares held by BML) or in cash to be determined at BML’s
sole discretion.
The B Shares carry no voting or dividend rights and no directors of Brait will participate.
SARs
SARs have economic rights which are substantially equivalent to those of the B Shares. SARs can
be exercised, redeemed or repurchased in the same circumstances as Put Rights and holders would
receive an amount determined on an equivalent basis.
Limits
As a result of limits included in the Plan, the maximum dilution which could be experienced by Brait
shareholders on exercise of Put Rights and SARs is 3.5% (assuming Put Rights and SARs are fully
settled through Brait shares held by BML). No more than 29,000,000 B Shares and SARs (in
aggregate) will be issued under the Plan. The Put Amount will also be capped at a percentage of
the prevailing Brait share price at the time of exercise of a Put Rights or SARs. The applicable
percentage limit will depend on the CAGR of a Brait share based on the thirty-day VWAP of a Brait
share as of the date of this announcement (being R19.02) and calculated from the issue date of the
relevant B Share or SAR to the exercise date of the Put Right or SAR as follows:
Brait share price Implied maximum Maximum Brait Maximum Brait Maximum Put
CAGR from starting Brait share price in shareholder dilution* shares which could Amount/strike price
VWAP to exercise of year 5 from starting be used in as a % of the
Put Right/SAR VWAP settlement* prevailing Brait share
price
CAGR <= 13% R35.00 0.0% 0 0%
13% < CAGR <= 20% R47.33 1.5% 7.2 million 24.8%
20% < CAGR <= 25% R58.04 2.5% 12.1 million 41.7%
25% < CAGR <= 30% R70.62 3.0% 14.6 million 50.3%
30% < CAGR R70.62 < Share Price 3.5% 17.1 million 59.0%
*On the basis that all Put Rights and SARs are exercised when the relevant CAGR applies, that they are all satisfied using
Brait shares, there are no other changes to Brait’s share capital and BML does not exercise its right to repurchase any Put
Rights or SARs.
Illustrative Example
Given the initial VWAP of R19.02 per Brait share and a five-year share price CAGR of 20%, the
prevailing Brait share price in year five would be R47.33. Given the strike price of R35.00 and
assuming a Put Right or SAR is exercised in year five, settlement per B Share or SAR would, at
BML’s discretion, either be in kind through the transfer of 0.26 Brait shares (being R12.33, which is
difference between the Brait share price of R47.33 and the strike price of R35.00, divided by the
Brait share price of R47.33), or through a cash payment of R12.33. In the absence of limits included
in the Plan, if all 29 million B Shares and SARs were settled using Brait shares, the required number
of Brait shares would be 7.5 million, resulting in an effective shareholder dilution of 1.6% given the
current number of Brait shares in issue of 471.5 million. However, to limit the dilution to shareholders
to 1.5% in accordance with the table above, only 7.2 million Brait shares would be transferred for
settlement, with the cash pay-out settlement limited to 0.248 Brait shares or R11.75 per B Share or
SAR.
Shareholder Approval
Although shareholder approval is not required under applicable law or listing requirements, the board
of Brait has resolved to voluntarily seek shareholder approval for the Plan by way of ordinary
resolution at the upcoming annual general meeting (“AGM”) scheduled for 31 July 2019. Further
details will be provided in the notice of meeting for the AGM to be given to shareholders in due
course.
Malta
1 July 2019
Brait’s primary listing is on the Euro MTF market of the Luxembourg Stock Exchange and its
secondary listing is on the Johannesburg Stock Exchange.
Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
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