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BRIMSTONE INVESTMENT CORPORATION LIMITED - Replacement BEE shareholder secured in respect of the Clover transaction and withdrawal of cautionary announcement

Release Date: 26/07/2019 14:00
Code(s): BRT BRN     PDF:  
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Replacement BEE shareholder secured in respect of the Clover transaction and withdrawal of cautionary announcement

BRIMSTONE INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1995/010442/06
Share Code: BRT ISIN: ZAE000015277
Share Code: BRN ISIN: ZAE000015285
(“Brimstone” or the “Company”)

REPLACEMENT BEE SHAREHOLDER SECURED IN RESPECT OF THE CLOVER TRANSACTION AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. BACKGROUND

   Shareholders are referred to the announcements released by Brimstone on the Stock Exchange News Service of
   the JSE Limited (“JSE”) on 4 February, 7 February, 22 March, 12 April and 18 April 2019, in relation to Brimstone’s
   participation in, and subsequent withdrawal from, the Clover Industries Limited transaction (the “Clover
   Transaction”).

   To summarise, the board of directors of Brimstone (the “Board”) resolved to not proceed with the Clover
   Transaction, and thus entered into an agreement with Milco SA Proprietary Limited (“Milco SA”) and International
   Beer Breweries Limited, to facilitate Brimstone’s exit from its participation in the Clover Transaction, should
   Brimstone not conclude a transaction with a suitable replacement B-BBEE investor (“Replacement B-BBEE
   Shareholder”) before 31 December 2019. Shareholders are reminded that the Company received a ruling from the
   JSE in terms of which the JSE confirmed that the provisions of Section 9 of the JSE Listings Requirements are not
   applicable i.e. Brimstone will not be required to call a shareholders’ meeting for their subscription in Milco SA nor its
   decision to not proceed with this investment.

2. REPLACEMENT AGREEMENT

   Shareholders are hereby advised that Brimstone has successfully concluded an agreement (“Replacement
   Agreement”) with BEEMilk Proprietary Limited (“BEEMilk”), an entity representing a consortium of investors (the
   “Consortium”) comprising Khulasande Capital Trust through its fund manager Khulasande Capital III Proprietary
   Limited, Global Capital Empowerment Fund and Ubisi Noju Proprietary Limited, such that Brimstone will exit its
   participation in the Clover Transaction.

3. PRO FORMA FINANCIAL EFFECTS

   The anticipated total once-off costs incurred and to be incurred to give effect to the Board’s decisions to enter into
   and exit the Clover Transaction are listed below:
       o R55 million relating to Brimstone’s contribution in disposing of its right to subscribe for Milco SA shares in
           terms of the Clover Transaction;
       o R6.2 million in legal and regulatory fees;
       o R7.3 million in advisory fees; and
       o R0.2 million in other costs.

   The table below sets out the pro forma financial effects of the Board’s decision to enter into and exit the Clover
   Transaction on Brimstone’s published audited consolidated financial results for the year ended 31 December 2018.
   The pro forma financial effects have been prepared for illustrative purposes only and because of their pro forma
   nature, may not fairly present Brimstone's financial position, changes in equity, results of operations or cash flows,
   nor the effect and impact of these events going forward.

   The pro forma financial effects have been prepared using accounting policies that comply with IFRS and that are
   consistent with those applied in the published audited consolidated financial results of Brimstone for the year ended
   31 December 2018. The pro forma financial effects are presented in accordance with the JSE Listings Requirements
   and the Guide on Pro Forma Financial Information issued by the South African Institute of Chartered Accountants.
   The Board is responsible for the compilation, contents and preparation of the Brimstone pro forma financial effects.
   Their responsibility includes determining that the Brimstone pro forma financial effects have been properly compiled
   on the basis stated, which is consistent with the accounting policies of Brimstone and that the pro forma adjustments
   are appropriate for purposes of the pro forma financial effects disclosed pursuant to the JSE Listings Requirements.


                                                                                                                         Percentage
                                                                                                        Pro forma          change
     Per Brimstone share (cents)                                                          Before(a)       after              (%)
     Basic loss per Brimstone share(b)                                                       (32.4)           (58.2)             (79.6)
     Diluted loss per Brimstone share(b)                                                     (32.4)           (58.2)             (79.6)
     Basic headline loss per Brimstone     share(b)                                          (21.1)           (46.8)            (121.8)
     Diluted headline loss per Brimstone    share(b)                                         (21.1)           (46.8)            (121.8)
     Net asset value per Brimstone share     (NAV)(c)                                       1 123.8          1 100.5              (2.1)
     Tangible net asset value per Brimstone share       (TNAV)(c)                             610.3            586.9              (3.8)
     Intrinsic net asset value per Brimstone share      (INAV)(c)                           1 615.1          1 591.8              (1.4)
     Weighted average number of Brimstone shares in issue ('000)                            241 946          241 946                    -
     Diluted weighted average number of Brimstone shares in issue ('000)                    241 946          241 946                    -
     Number of Brimstone shares in issue ('000)                                             241 446          241 446                    -

   Notes and assumptions:
   a) The "Before" information has been extracted without adjustment from Brimstone’s published audited consolidated financial
       results for the year ended 31 December 2018.
   b) The basic and diluted loss per share and basic headline and diluted headline loss per share "Pro forma after" amounts are
       based on the assumption that the Clover Transaction was implemented on 1 January 2018. The total anticipated once-off
       costs of R68.7 million are debited to the statement of profit or loss, additional finance costs of R5.9 million to fund these costs
       are incurred and a tax saving of R12.3 million is credited to the statement of profit or loss.
   c) The NAV, TNAV and INAV "Pro forma after" amounts are based on the assumption that the Clover Transaction was
       implemented on 31 December 2018 and the total anticipated costs of the transaction (less taxation of R12.3 million) reduce
       capital and reserves by R56.4 million.

4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

   As Brimstone has now announced the conclusion of the Replacement Agreement, Brimstone shareholders are no
   longer required to exercise caution when dealing in the Company’s securities.

Cape Town

26 July 2019

Sponsor to Brimstone
Nedbank Corporate and Investment Banking, a division of Nedbank Limited

Legal Advisor to Brimstone
Bernadt Vukic Potash and Getz Attorneys

Date: 26/07/2019 02:00:00
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