Acquisition by Legal Shield Holdings of Constantia Risk and Insurance, Conduit Ventures and Withdrawal of Cautionary
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
OTCQX share code: TSCHY
ISIN Number: NA000A0RF067
(“Trustco” or “the Company”)
ACQUISITON BY LEGAL SHIELD HOLDINGS LIMITED OF CONSTANTIA RISK AND INSURANCE
HOLDINGS LIMITED AND CONDUIT VENTURES PROPRIETARY LIMITED AND WITHDRAWAL OF
Trustco Shareholders (“Shareholders”) are referred to the cautionary announcement released on
SENS on 27 November 2019 regarding the possible acquisition of a company operating in the South
African insurance market and the announcement released by Conduit Capital Limited (“Conduit”)
dated 9 December 2019.
Shareholders are hereby advised that pursuant to the cautionary announcement Trustco, Legal Shield
Holdings Limited (“LSH”) and Conduit (“the Parties”) entered into a binding term sheet on 6 December
2019 in terms of which LSH shall acquire all the shares and claims (“Sale Equity”) held by Conduit in
Constantia Risk and Insurance Holdings Proprietary Limited (“Constantia”) and Conduit Ventures
Proprietary Limited (“Conduit Ventures”) for a total consideration of ZAR 2,000,004,232 (Two billion
four thousand two hundred and thirty two Rand) (“Purchase Consideration”) (“the Transaction”).
1. DESCRIPTION OF THE BUSINESS CONDUCTED BY LSH
LSH is a diversified financial services provider in Namibia with a client base of more than
280,000 members comprising of individuals and small businesses. It currently holds both a
short and long-term insurance licence, and a commercial banking license (subject to
regulatory approval, refer to the announcement released on 28 October 2019 regarding the
proposed acquisition of the Banking and Finance segment by the Insurance and its
Investments segment) which will enable it to provide a full spectrum of services across the
financial services value chain in Namibia. It also owns over 4,000 hectares of high-quality real
estate assets in Namibia.
At the end of its last reporting period, LSH (including the proposed Banking and Finance
segment acquisition) held assets of NAD 5.8 billion, Capital and Reserves of NAD 2.1 billion,
recorded Revenues of NAD 1.5 billion and Profit after Tax of NAD 900 million.
2. DESCRIPTION OF THE BUSINESS CONDUCTED BY CONSTANTIA
Constantia offers a range of niche insurance and risk management solutions in South Africa,
covering areas such as medical malpractice cover, primary health insurance and medical gap
cover products, funeral and life insurance, guarantee and indemnity solutions, medical
evacuation insurance and niche motor and property lines. It operates both in the short term
and long term insurance markets and has access to substantial growth opportunities if capital
is made available.
At the end of its last reporting period, Constantia held assets of ZAR 2.1 billion, Capital and
Reserves of ZAR 699 million, recorded Revenues of ZAR 2.1 billion and a Loss after Tax of ZAR
3. DESCRIPTION OF THE BUSINESS CONDUCTED BY CONDUIT VENTURES
Conduit Ventures owns a number of subsidiaries that offers insurance adjacent services to
Constantia, as well as other insurers. These services include software solutions, risk
management solutions and claims related services.
At the end of its last reporting period, Conduit Ventures held assets of ZAR 68 million, Capital
and Reserves of ZAR 0 million, recorded Revenues of ZAR 17 million and a Loss after Tax of
4. RATIONALE FOR THE TRANSACTION
Trustco, through its subsidiary LSH, wishes to expand its insurance business regionally which
goal will be achieved via the Transaction. Significant synergies exist between the two
businesses in that Constantia services traditional insurance markets in South Africa while LSH
services the micro insurance market in Namibia, and there are opportunities for the
businesses to leverage off each other’s respective skills and to create cross selling
opportunities. Furthermore, the strength of the LSH asset base is likely to facilitate new
growth prospects for Constantia. Both businesses have attractive business models and high
growth potential, and it is envisioned that as a collective they can create substantial
5. SETTLEMENT OF THE PURCHASE CONSIDERATION
The Purchase Consideration shall be settled via the issuance to Conduit of 231,857 (two
hundred and thirty-one thousand eight hundred and fifty seven) shares in LSH (“LSH
Consideration Shares”) at a price of NAD 8,626.02 per LSH share. The total shares in issue
before the issuance of the purchase consideration will be 1,210, 000 (one million two hundred
and ten thousand).
The LSH Consideration Shares shall be issued and held in Trustco’s attorneys trust account
until all conditions precedent (“Conditions Precedent”) to the Transaction have either been
fulfilled or waived.
6. CONDITIONS PRECEDENT
The Transaction is subject to the fulfilment or waiver of the following Conditions Precedent:
• The Purchaser shall have completed, to its satisfaction, various due diligence investigations
on Constantia and Conduit Ventures.
• All regulatory and other approvals which are necessary for the implementation of the
Transaction, including approval from JSE, Competition Commission, Takeover Regulation
Panel, FSCA and Bank of Namibia shall have been obtained, either unconditionally or with
• All Parties having obtained board approval from their respective boards.
• All Parties having obtained shareholder approval to execute the Transaction.
7. BREAK FEE
Should Trustco decide not to pursue the Transaction for any reason other than a material
discovery via the various due diligence investigations to be undertaken, Trustco shall pay a
ZAR 10 million breakage fee to Conduit.
8. NET ASSETS AND PROFITS
The net assets and losses at the last reporting date that are the subject of this transaction are
ZAR 700 million and ZAR 594 million respectively as at the previous reporting date.
9. EFFECTIVE DATE AND CLOSING DATE
The effective date of the Transaction shall be 1 December 2019 or the soonest practical date
The closing date (“Closing Date”) of the Transaction shall be 31 March 2020, unless extended
in writing by the Parties. The Transaction shall lapse and be of no force or effect if the
Conditions Precedent, as set out above, have not been fulfilled or waived by the Closing Date.
10. CLASSIFICATION OF THE TRANSACTION
Related party transaction
Sean Riskowitz controls Protea Asset Management (“Protea”). Protea is the Investment
Advisor to the Riskowitz Value Fund LP and other accounts (“RVF”). RVF is a material
shareholder of Trustco and thus considered to be a related party to Trustco in terms of
paragraph 10.1(b) (i) of the Listings Requirements of the JSE Limited ("JSE Listings
Sean Riskowitz, through Protea and its associates, jointly own 237,767,048 Conduit shares
meaning Sean Riskowitz and the above entities which he controls and manages are considered
to be related parties to Conduit in terms of paragraph 10.1(b) (i) of the Listings Requirements.
of the JSE Limited ("JSE Listings Requirements") as they are a material shareholder of Conduit.
Therefore, as Sean Riskowitz, via the entities he controls and manages is a related party to
both Trustco and Conduit and that the Purchase Consideration is more than 10% of Trustco’s
market capitalization at the time of signing the binding term sheet, the Transaction is
considered to be a related party transaction in terms of section 10 of the Listings
Requirements consequently requiring the approval of Shareholders at a general meeting.
Specific repurchase of shares
Conduit, via Constantia currently owns 51,795,735 Trustco shares which shall effectively be
repurchased from a related party upon successful conclusion of the Transaction hence the
Transaction is also classified as a specific repurchase in terms of paragraph 5.69 of the Listings
Requirements consequently also requiring the approval of Shareholders at a general meeting.
A circular containing full details of the Transaction as well as a notice to convene a general
meeting of Shareholders in order to consider and, if deemed fit, to pass with or without
modification, the resolutions necessary to approve and implement the Transaction, will be
made available to Shareholders in due course.
11. WITHDRAWAL OF CAUTIONARY ANNOUNCMENT
Further to the information set out in this announcement, caution is no longer required to be
exercised by Shareholders when dealing in their shares.
9 December 2019
Acting Company Secretary
Trustco Group Holdings Limited
Vunani Corporate Finance - Johannesburg
Simonis Storm Securities Proprietary Limited – Windhoek
J.P Galda & Co – New York
Date: 09-12-2019 07:05:00
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