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INGENUITY PROPERTY INVESTMENTS LIMITED - Firm intention by Ingenuity to make an offer to Ingenuity shareholders and withdrawal of cautionary announcement

Release Date: 16/07/2019 16:22
Code(s): ING     PDF:  
 
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Firm intention by Ingenuity to make an offer to Ingenuity shareholders and withdrawal of cautionary announcement

INGENUITY PROPERTY INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/018084/06)
JSE share code: ING
ISIN: ZAE000127411
(“Ingenuity”)


ANNOUNCEMENT OF A FIRM INTENTION BY INGENUITY TO MAKE AN OFFER TO INGENUITY
SHAREHOLDERS TO REPURCHASE THEIR INGENUITY SHARES AND DELIST INGENUITY FROM THE
JSE, SUSPENSION OF THE PROPOSED SPECIFIC REPURCHASE AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT

    1. INTRODUCTION

        The board of directors of Ingenuity (the “Board”) is pleased to announce that it has resolved to propose
        the terms and conditions of:

        •   a cash offer to repurchase all the ordinary shares in Ingenuity for a repurchase price of R1.08 per
            share (“Scheme Consideration”), other than those held by the shareholders identified in
            paragraph 5 below, (the “Consortium”) (each, a "Scheme Share"), in accordance with section 48
            and section 114(1)(e) of the Companies Act, No. 71 of 2008 (“Companies Act”) and paragraph
            1.17(b) of the JSE Listings Requirements ("Listings Requirements") by way of a scheme of
            arrangement “(Scheme”); and

        •   a general offer to shareholders of Ingenuity, excluding the Consortium (each, a "General Offer
            Share"), as contemplated in section 117(1)(c)(v) of the Companies Act and paragraph 1.15(c) of
            the Listings Requirements, to acquire the General Offer Shares for a cash consideration of R1.08
            per General Offer Share (“General Consideration”) by way of a general offer (“General Offer”);
            and

        •   the delisting of all Ingenuity shares from the Johannesburg Stock Exchange ("JSE") pursuant to
            the implementation of the Scheme or pursuant to the delisting being approved and the General
            Offer being implemented (“Delisting”).

        The Scheme and General Offer are proposed concurrently on the basis that the implementation of
        the General Offer will be conditional upon, inter alia, the Scheme not becoming operative. In this
        regard, in the event that the Scheme becomes operative, the General Offer will lapse. Alternatively,
        if the Scheme does not become operative and the General Offer becomes wholly unconditional, the
        General Offer will be implemented.

        The Delisting will occur if the Scheme becomes operative or the General Offer becomes wholly
        unconditional and is implemented.
        Ingenuity has constituted an independent board of directors of Ingenuity (“Independent Board”) for
        the purposes of the Scheme and General Offer, including, evaluating the terms and conditions of the
        Scheme and General Offer and advising Ingenuity shareholders thereon as required by the
        Regulations, 2011, promulgated under the Companies Act ("Companies Regulations"). The
        Independent Board comprises Rodney Clive Squire-Howe, Raymond Selwyn Schur and Keith Getz.

        The purpose of this firm intention announcement (“Firm Intention Announcement”) is to advise the
        Ingenuity shareholders of the terms and conditions of the Scheme.

2. RATIONALE FOR THE SCHEME AND THE GENERAL OFFER

  Following a strategic review, the Ingenuity Board has considered what is in the best interests of
  Ingenuity shareholders and Ingenuity, with one option being a potential delisting from the main board
  of the JSE.

  In order to facilitate the exit of certain shareholders that do not wish to or are unable to remain invested
  in an unlisted entity, Ingenuity proposes a Scheme or the General Offer to repurchase shares held
  by Scheme Participants.

  Ingenuity has been listed on the JSE since 2007 and during that period Ingenuity has not experienced
  material benefits from being in the listed environment, having not garnered institutional shareholder
  support to justify the regulatory processes, listing requirements, compliance costs and associated
  costs with being listed. In addition, Ingenuity has been unable to generate sufficient shareholder
  spread and liquidity, impeding its ability to raise equity capital in order to fund its development
  pipeline. In addition, management of Ingenuity will be able to dedicate more time and resources to
  the performance of the business of Ingenuity without dedicating time, expenses and resources to
  regulatory requirements and processes associated with being a listed entity.

3. TERMS AND CONDITIONS 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 of and other information pertaining to the Scheme are set out below:

  3.1 Terms of the Scheme

      3.1.1     The Scheme will be proposed by the Board between Ingenuity and the shareholders of
                Ingenuity, other than the Consortium and subsidiaries of Ingenuity (the “Eligible
                Shareholders”).
      3.1.2     The Scheme will be subject to the fulfilment of the conditions set out in paragraph 3.3.
                below.
      3.1.3     In the event that the Scheme becomes operative, the listing of all of the ordinary shares
                in Ingenuity on the JSE will be terminated, and Eligible Shareholders, excluding those
                Eligible Shareholders who validly exercise their appraisal rights in accordance with
                section 164 of the Companies Act as a consequence of the approval of the Scheme and
                whose shareholder rights have not been reinstated as envisaged in sections 164(9) and
                164(10) of the Companies Act or who have not been ordered by any South African High
                court (the “the Court”) to withdraw their demands in terms of section 164(15)(c)(v)(aa)
                of the Companies Act (“Scheme Participants”), will be deemed to have disposed of all
                of their Scheme Shares at the Scheme Consideration, such that Ingenuity will acquire all
                of the Scheme Shares previously held by the Scheme Participants.

  3.2 Scheme Consideration

   The Scheme Participants shall receive the Scheme Consideration, in the amount of R1.08 per
   Scheme Share held by such Scheme Participant.

  3.3 Scheme Conditions

   The implementation of the Scheme is subject to the fulfilment or waiver, as the case may be, of
   the following conditions (“Scheme Conditions”) by no later than 31 December 2019 ("Longstop
   Date"):

   3.3.1     all approvals, consents or waivers from those South African regulatory authorities as may
             be necessary for Ingenuity to implement the Scheme, including the JSE and the Takeover
             Regulation Panel (“TRP”) (by means of the issue of a compliance certificate in terms of
             section 121(b)(i) of the Companies Act), are obtained on an unconditional basis or, to the
             extent that any such regulatory approvals, consents or waivers are obtained subject to
             any condition or qualification, Ingenuity (to the extent that it is adversely affected by the
             condition or qualification) confirms in writing that the condition or qualification is
             acceptable to it, which confirmation shall not be unreasonably withheld or delayed;
   3.3.2     all necessary shareholder approvals as may be necessary to give effect to the Scheme
             have been obtained, including, but not limited to, the Scheme special resolution at the
             general meeting of Eligible Shareholders ("General Meeting") to be held on or about
             13 September 2019 in order to consider and, if deemed fit, pass, the special resolution
             in accordance with sections 48(8) and 115(2) of the Companies Act and the special
             resolution of the Eligible Shareholders, in accordance with paragraph 5.69(b) of the
             Listings Requirements (collectively, the “Scheme Resolutions”);
   3.3.3     Ingenuity has not elected to treat the Scheme Resolution as a nullity pursuant to section
             115(5)(b) of the Companies Act;
   3.3.4     in the circumstances where Ingenuity has not elected to treat the Scheme Resolution as
             a nullity pursuant to section 115(5)(b) of the Companies Act, a Court has granted its
             approval pursuant to section 115(3) of the Companies Act in circumstances where:

               3.3.4.1   the Scheme Resolution is opposed by 15% or more of the voting rights that
                             were exercised in respect of the Scheme Resolution; and
               3.3.4.2    a shareholder who voted against the Scheme Resolution requires Ingenuity,
                             within five business days after the vote, to seek Court approval pursuant to
                             section 115(3)(a) of the Companies Act;

      3.3.5     no shareholder who voted against the Scheme Resolution applies to court within 10 (ten)
                business days after the passing of the Scheme Resolution for leave to apply to the court
                for a review of the Scheme in accordance with the requirements of section 115(3)(b) and
                section 115(6) of the Companies Act;
      3.3.6     Ingenuity waives the scheme condition in 3.3.5 and the Court does not grant leave to any
                shareholder to apply to Court for a review of the Scheme, as contemplated in sections
                115(3)(b), 115(6) and 115(7) of the Companies Act;
      3.3.7     Ingenuity waives the scheme condition in 3.3.6 and the Court approves the Scheme
                Resolution pursuant to section 115(7) of the Companies Act; and
      3.3.8     with regard to shareholders entitled to and exercising their appaisal rights, either
                (i) shareholders give notice objecting to the Scheme as contemplated in section 164(3)
                of the Companies Act and vote against the Scheme at the relevant meeting in respect of
                less than or equal to 2% of all of the issued Ingenuity shares or (ii) if shareholders give
                notice objecting to the Scheme and vote against the Scheme at the meeting in respect
                of more than 2% of all of the Ingenuity shares, then, within the time period permitted in
                terms of the Companies Act, dissenting shareholders have exercised appraisal rights, by
                giving valid demands in terms of sections 164(5) to 164(8) of the Companies Act, in
                respect of less than or equal to 2% of all the Ingenuity shares, or not at all.

      Ingenuity shall be entitled to waive (in whole or in part) in writing any one or more of the Scheme
      Conditions stipulated in paragraphs 3.3.5, 3.3.6 and 3.3.8. The remaining Scheme Conditions
      stipulated above are not capable of waiver. The Longstop Date may be extended by Ingenuity as
      may be agreed in writing between Ingenuity and the TRP.

3.4   Termination of the the Scheme

      The Scheme shall terminate and cease with immediate effect only as follows:

        3.4.1     if any Scheme Condition, which may be waived by Ingenuity, becomes incapable of
                  fulfilment, and Ingenuity does not waive that Scheme Condition; or
        3.4.2     if all the Scheme Conditions have not been fulfilled or waived on or by the date specified
                  for fulfilment.

4. TERMS AND CONDITIONS OF THE GENERAL OFFER

4.1   Terms of the General Offer

          4.1.1   Simultaneously with the Scheme, Ingenuity will make a separate but concurrent
                  General Offer, in terms of section 117(1)(c)(v) of the Companies Act and
                  paragraph 1.15(c) of the Listings Requirements, to the Eligible Shareholders,
                  whereby each Eligible Shareholder will be entitled to elect whether or not to dispose
                  of all of their General Offer Shares to Ingenuity for the General Offer Consideration
                  (“General Offer Participants”).

          4.1.2   For the avoidance of doubt, implementation of the General Offer will be conditional
                  on, inter alia, the Scheme not becoming operative. In the event that the Scheme does
                  become operative, the General Offer will lapse and be of no force and effect.

          4.1.3   If the Scheme does not become operative and the General Offer becomes wholly
                  unconditional and is implemented, then the Delisting will be implemented in terms of
                  paragraph 1.14 of the Listings Requirements and each General Offer Participant will
                  receive the General Offer Consideration in exchange for the General Offer Shares
                  tendered and disposed of.

          4.1.4   In the event that the General Offer becomes wholly unconditional and is
                  implemented, Ingenuity will acquire and own all the General Offer Shares tendered
                  and previously held by the General Offer Participants. The repurchase of the General
                  Offer Shares by Ingenuity, following the implementation of the General Offer, will be
                  subject to the acceptances of the General Offer and the provisions of section 124(1)
                  of the Companies Act. In the event that the General Offer is implemented and
                  accepted by Eligible Shareholders holding at least 90% of the General Offer Shares,
                  Ingenuity may, at its election, invoke the provisions of section 124(1) of the
                  Companies Act, to compulsorily acquire all of the General Offer Shares not already
                  tendered by the Eligible Shareholders.

          4.1.5   If the Scheme does not become operative and the General Offer becomes wholly
                  unconditional and is implemented, and Ingenuity elects not to invoke the the
                  provisions of section 124(1) of the Companies Act, Eligible Shareholders who have
                  not accepted the General Offer will remain shareholders in Ingenuity.

4.2   General Offer Consideration

      General Offer Participants shall receive the General Offer Consideration, in the amount of R1.08
      per General Offer Share held by such General Offer Participant.

4.3   The General Offer Conditions

      4.3.1   Implementation of the General Offer is subject to the fulfilment or waiver, as the case
              may be, of the following conditions ("General Offer Conditions") by no later than
              1 March 2020:

              4.3.1.1         the Scheme does not become operative;

              4.3.1.2         the delisting resolution is adopted by the requisite majority of Eligible
                              Shareholders at the General Meeting as contemplated in paragraphs
                              1.15(a) and 1.16 of the Listings Requirements (“Delisting
                              Resolution”);

              4.3.1.3         Eligible Shareholders accept the General Offer in respect of so many
                              General Offer Shares as will result in Ingenuity acquiring more than
                              90% of the General Offer Shares; and

              4.3.1.4         the receipt of all approvals, consents or waivers from those South
                              African regulatory authorities as may be necessary for Ingenuity to
                              implement the General Offer and Delisting, including the JSE and
                              TRP (by means of issue of a compliance certificate in terms of
                              section 121(b)(i) of the Companies Act) on an unconditional basis or,
                              to the extent that any such regulatory approvals, consents or waivers
                              are obtained subject to any condition or qualification, Ingenuity (to
                              the extent that it is adversely affected by the condition or
                              qualification) confirms in writing that the condition or qualification is
                              acceptable to it, which confirmation shall not be unreasonably
                              withheld or delayed.

      4.3.2   Waiver and extension of General Offer Conditions

              4.3.2.1         The General Offer Conditions set out in paragraphs 4.3.1.2 and
                              4.3.1.3 are capable of waiver by Ingenuity and the time and/or date
                              for fulfilment or waiver of such General Offer Conditions may be
                              extended by Ingenuity from time to time as may be agreed in writing
                              between Ingenuity and the TRP.

              4.3.2.2         The General Offer Conditions set out in paragraphs 4.3.1.1 and
                              4.3.1.4 are not capable of waiver but the time and/or date for
                              fulfilment of these General Offer Conditions may be extended by
                              Ingenuity from time to time as may be agreed in writing between
                              Ingenuity and the TRP.

              4.3.2.3         An announcement will be released on SENS as soon as practicable
                                      after all the General Offer Conditions have been fulfilled or waived,
                                      if the General Offer Conditions are not fulfilled or waived timeously,
                                      or if the time and/or date for fulfilment or waiver of the General Offer
                                      Conditions is extended.

5. THE CONSORTIUM

The Consortium includes inter-alia Jacana Assets Limited, Pruta Securities (Jersey) Limited, Bank of New
York (acting as custodian), Gingko Trading Proprietary Limited and Arnold Maresky. As at the date of this
announcement, the Consortium owns, in aggregate, 56% of Ingenuity’s shares (net of treasury shares).

Ingenuity and the Consortium are concert parties in relation to the Scheme in terms of Regulation 84 of
the Takeover Regulations and have therefore made declarations in the required form to Ingenuity and the
TRP, as required by Regulation 84(5) of the Companies Regulations. The Consortium will, accordingly,
abstain from voting on the Scheme at the Scheme Meeting.

6. IRREVOCABLE UNDERTAKINGS

Ingenuity has received irrevocable undertakings from certain Scheme Participants being, The Century
City Property Investment Trust (“CCPIT”), Investec Property Fund Limited (“IPF”) and The Nafco Trust
(“Nafco Trust”) to vote in favour of the Scheme and the Delisting Resolution.

A summary of the aforementioned Scheme Participants shareholdings are outlined below:
                                                                         Percentage of Ingenuity shares
  Shareholder                          Number of Ingenuity Shares
                                                                            (net of treasury shares)
  CCPIT                                        200 000 000                           18.70%

  IPF                                          115 041 528                           10.76%

  Nafco Trust                                  41 020 981                            3.83%

  Total                                        356 062 509                           33.29%

The aforementioned Scheme Participants shareholdings equates to 76.20% of all shares eligible to vote
on the Scheme and the Delisting Resolution.

7. SOLVENCY AND LIQUIDITY

The Board has concluded that Ingenuity will (i) satisfy the solvency and liquidity test contemplated in
section 4 of the Companies Act immediately after completing the repurchase by Ingenuity of the Scheme
Shares in terms of the Scheme and (ii) for purposes of paragraph 5.69(c) of the Listings Requirements,
that after considering the effect of the repurchase, the provisions of section 4 and section 48 of the
Companies Act have been complied with and that:

    7.1 Ingenuity and its subsidiaries ("Group") will be able, in the ordinary course of business, to pay
          their debts for a period of 12 months after the date of the repurchase;
    7.2 the assets of Ingenuity and the Group will exceed the liabilities of Ingenuity and the Group for a
         period of 12 months after the date of the repurchase;
    7.3 the share capital and reserves of Ingenuity and the Group will be adequate for ordinary business
         purposes for a period of 12 months after the repurchase; and
    7.4 the working capital of Ingenuity and the Group will be adequate for ordinary business purposes
         for a period of 12 months after the repurchase.

8. INDEPENDENT EXPERT AND FAIR AND REASONABLE OPINION

The Independent Board has appointed BDO Corporate Finance Proprietary Limited (“BDO”) as the
independent expert to provide it with external advice in connection with the Scheme and the General
Offer, in the form of the fair and reasonable opinion as required by and in compliance with the Takeover
Regulations and the Listings Requirements, and the fairness opinion as required by and in compliance
with the Listings Requirements.

The full substance of BDO’s expert report in connection with the Scheme, once procured, will be more
fully set out in the circular to be posted to Eligible Shareholders as referred to in paragraph 11 below.

9. RESPONSIBILITY STATEMENT

The Board, including the Independent Board, accepts responsibility for the information contained in this
announcement insofar as it relates to Ingenuity, the Scheme, General Offer and Delisting. To the best of
their collective knowledge and belief, the information contained in this announcement is true and this
announcement does not omit anything likely to affect the importance of the information.

10. CASH CONFIRMATION

The funds to settle the Scheme Consideration and/or the General Offer Consideration are in place and,
in accordance with Regulation 111(4) and 111(5) of the Takeover Regulations, Ingenuity has obtained
and delivered to the TRP an irrevocable unconditional bank guarantee issued by The Standard Bank of
South Africa Limited for the maximum possible Scheme Consideration or General Offer Consideration,
whichever is applicable.

11. POSTING OF THE CIRCULAR

Ingenuity will issue a circular to shareholders, containing full terms and conditions of the Scheme, General
Offer and notice to convene the General Meeting (“Circular”).

Full details of the Scheme as well as the independent expert’s opinion and the recommendation of the
Independent Board will be included in the Circular which will contain, inter alia, the terms of the Scheme,
pertinent dates relating to the Scheme and the necessary forms in order to effect the Scheme. The
Circular is expected to be distributed to shareholders on or about 14 August 2019.

12. SUSPENSION OF PROPOSED SPECIFIC REPURCHASE

In light of the contents of this announcement, and for the avoidance of doubt, shareholders are advised
that the proposed specific repurchase of Ingenuity shares, the most recent details of which were published
on SENS on 26 June 2019, is hereby suspended and accordingly, no circular will be posted in this regard.

13. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Post the release of this announcement, shareholders are advised that caution is no longer required to be
excercised in their dealings in Ingenuity shares.


CAPE TOWN
16 July 2019


LEGAL ADVISERS TO INGENUITY
Webber Wentzel


CORPORATE ADVISER AND TRANSACTION SPONSOR
Investec Bank


INDEPENDENT EXPERT
BDO Corporate Finance


SPONSOR
Nedbank Corporate and Investment Banking, a division of Nedbank Limited

Date: 16/07/2019 04:22:00
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