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Small Related Party Agreement
TISO BLACKSTAR GROUP SE
(Incorporated in England and Wales)
(Company number: SE 110)
(registered as an external company with
limited liability in the Republic of South Africa
under registration number 2011/008274/10)
Share code: TBG
ISIN: GB00BF37LF46
(“TBG” or “the Company”)
SMALL RELATED PARTY AGREEMENT
1. INTRODUCTION
Shareholders are advised that certain members of TBG Management, (“TBG
Management”) have established a special purpose vehicle K2018537321 (South Africa)
Proprietary Limited (“SPV”), to, inter alia, acquire 9 000 000 ordinary shares in TBG (“TBG
Shares”) using proceeds from a loan advanced by The Standard Bank of South Africa
Limited (“SBSA”) to the SPV in the amount of R28 483 000 (“Loan”), (“the Transaction”).
TBG Management includes Andrew David Bonamour (“AD Bonamour”), a director of and
a related party to TBG. The SPV is considered to be an associate of AD Bonamour.
The SPV intends to acquire 3 000 000 of the TBG Shares from Tiso Investment Holdings
(RF) Proprietary Limited, an associate of David Kwame Tandoh Adomakoh (“D
Adomakoh”) and Nkululeko Leonard Sowazi (“N Sowazi”), who are directors of TBG,
and 6 000 000 of the TBG Shares from the Tiso Foundation Charitable Trust (“Trust”).
Whilst the Trust is not an associate of D Adomakoh and N Sowazi, they have been
appointed as two out of the seven trustees of the Trust.
As security for the Loan, the SPV will cede and pledge in security the shares held by it in
TBG to and in favour of SBSA (“SPV Security”) and TBG Management will cede and
pledge in security the shares held by each of them through separate entities owned by
each of them, in the SPV and in TBG, to and in favour of SBSA (“TBG Management
Security”). The SPV Security and the TBG Management Security will, together, achieve
a 2.0x share cover ratio.
In addition to the SPV Security and the TBG Management Security, Shareholders are
advised that effective 28 June 2019, the Company, through its wholly-owned subsidiaries
Hirt & Carter Group Proprietary Limited (“H&C Group”) and Hirt & Carter (South Africa)
Proprietary Limited (“H&C”) (together, the (“Guarantors”), entered into a guarantee
agreement (“Agreement”) with SBSA. In terms of the Agreement, each Guarantor
irrevocably and unconditionally (and jointly and severally) guarantees as a separate,
principal and independent obligation to and in favour of SBSA (“TBG Guarantee”) the
payment and performance of the obligations of TBG Management and the SPV arising in
connection with the Loan, for a maximum guaranteed amount of R40 000 000.
As consideration for providing the TBG Guarantee, the SPV has agreed to pay the
Guarantors a fee of R54 000 being the fair value of the TBG Guarantee as confirmed
through an actuarial assessment performed by an independent party to TBG. The SPV
will also counter-indemnify the Guarantors against any claims by SBSA against the
Guarantors under the TBG Guarantee. Upon the Guarantors becoming liable to pay
SBSA any amount under the TBG Guarantee, the Guarantors shall notify the SPV in
writing thereof and demand payment of the amount claimed by SBSA under the TBG
Guarantee (“Notice”). Upon receipt by the SPV of the Notice, the SPV shall become liable
to pay the Guarantors the same amount claimed by SBSA under the TBG Guarantee,
together with interest incurred thereon.
2. RATIONALE FOR THE GUARANTEE
The granting of the TBG Guarantee will result in key management significantly increasing
their interest in TBG which is beneficial for TBG as it not only ensures retention of key
management but it also aligns management’s interest with those of shareholders. With
reference to the announcement made on 27 June 2019, the Tiso Blackstar Remuneration
Committee intend to cancel and not replace the existing long-term incentive scheme
(“Forfeitable Share Plan”) and consider alternative options to incentivise the remaining
employees who participated in the Forfeitable Share Plan including reassessing the short-
term incentive rules currently in place. As a result of the cancellation of the Forfeitable
Share Plan, key management will no longer be awarded TBG shares. However, the
Remuneration Committee note that as a result of the Transaction, TBG Management who
are considered to be key to the Group, will have an increased interest as shareholders of
TBG thereby addressing the objective of aligning their interest with shareholders.
In consideration of the benefit set out above and due to the fact that the SPV provides the
SPV Security, TBG Management provides the TBG Management Security, the SPV pays
a fee to the Guarantors equivalent to the value of the TBG Guarantee and furthermore
that, should the TBG Guarantee be called upon, the Guarantors have a legal right to
recover the amount paid with interest from the SPV, the Board is of the view that it is
unlikely that financial position of TBG will be impacted in anyway by the issue of such
TBG Guarantee.
3. CONDITIONS PRECEDENT
The Guarantee is unconditional and is therefore not subject to the fulfilment of any
conditions precedent.
4. EFFECTIVE DATE OF THE GUARANTEE
The Guarantee will become of full force and effect on the date of signature of the
Agreement and will expire on the date on which all of the obligations of the SPV and TBG
Management in connection with the Loan have been fully and finally discharged to the
satisfaction of SBSA and SBSA has no further commitment or liability in connection with
the Loan.
5. WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT
The Agreement contains representations and warranties by the Guarantors in favour of
SBSA which are standard for an agreement of this nature.
As a separate and independent obligation from its obligations under the Guarantee, the
Guarantors, as principal obligor, irrevocably and unconditionally indemnifies SBSA
against any losses, costs, claims, liabilities, damages and expenses suffered or incurred
by SBSA in connection with any failure of the SPV or the TBG Management to punctually
perform or discharge its payment or performance obligations arising in connection with
the Loan or as a result of any of those obligations becoming unenforceable, illegal or
invalid for any reason whatsoever (“Indemnity”). The amount payable by the Guarantors
under the Indemnity will not exceed the amount the Guarantors would have been obliged
to pay under the Guarantee if the amount claimed had been recoverable on the basis of
a guarantee.
The Guarantors waive any right it may have to first require SBSA to enforce the SPV
Security or the TBG Management Security before claiming from the Guarantors under the
Guarantee.
A default by the Guarantors under any existing facilities advanced by SBSA to the
Guarantors under a facility agreement dated on or about 15 May 2015 as amended will
constitute a default under the Loan, pursuant to which SBSA will be entitled to enforce its
rights under the Guarantee.
6. CLASSIFICATION OF THE ACQUISITION
Since the Guarantee will be provided to SBSA for the benefit of TBG Management and
the SPV which is an associate of AD Bonamour, a member of TBG Management and a
related party to TBG, the Guarantee Agreement constitutes a small related party
agreement for the purposes of the JSE Listings Requirements. Accordingly, the
Agreement is subject to paragraph 10.7(b) of the JSE Listings Requirements, which
requires the appointment of an independent expert to compile a fairness opinion on the
Agreement to confirm that the Agreement is fair as to shareholders of the Company.
The directors of the Company have appointed BDO (South Africa) Inc (“Independent
Expert”) as the independent expert to compile a fairness opinion on the Agreement in
terms of paragraph 10.7 of the JSE Limited Listings Requirements. The Independent
Expert has considered the terms and conditions of the Agreement and is of the opinion
that the terms and conditions of the Agreement are fair to the shareholders of the
Company. A copy of the fairness opinion is available for inspection at the Company’s
registered office for a period of 28 days from the date of this announcement.
7. DEALINGS ANNOUNCEMENTS
The dealings announcements in respect of the above transaction will be released on
SENS in due course.
London
1 July 2019
Sponsor
PSG Capital
Date: 01/07/2019 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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