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Category 1 Disposal to Related Parties
Unicorn Capital Partners Limited
Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: UCP ISIN: ZAE000244745
(“Unicorn” or “the Company”)
CATEGORY 1 DISPOSAL TO RELATED PARTIES
1. INTRODUCTION
The board of directors of Unicorn (“the Board”) is pleased to advise shareholders that the Company has accepted
a binding offer (“the Offer”) by the Reef Group Proprietary Limited (“TRG”) and Calibre Investment Holdings
Proprietary Limited (“CIH”) (collectively, “the Offerors”) to acquire 51% in aggregate of the issued share capital
of a newly incorporated subsidiary company (“Newco”) (“Proposed Transaction”), which shall acquire the shares
in and claims against certain of Unicorn’s existing subsidiary companies immediately prior to the implementation
of the Proposed Transaction (‘the Internal Restructure”), as follows:
Newco will acquire, from Unicorn, all of Unicorn’s:
– shares in and shareholder claims against Geosearch Proprietary Limited (“Geosearch”); and
– ordinary and preference shares in and shareholder claims against Unicorn Mining Services
Investments Proprietary Limited (“UMSI”) and all of the shareholder claims that Unicorn has against
Benicon Opencast Mining Proprietary Limited, Caston Plant Sales Proprietary Limited, JEF Drill and
Blast Proprietary Limited (“JEF”) and Ritchie Crane Hire Proprietary Limited (“RCH).
Upon the implementation of the Internal Restructure, Newco will enter into management and administration
agreements with Unicorn and TRG (“the Management Agreements”). Further details of the Management
Agreements are set out in paragraph 6 below.
2. THE PROPOSED TRANSACTION
The Proposed Transaction incorporates the steps set out below.
– Newco will enter into preference share funding agreements with Absa Bank Limited (“Absa”) in terms of
which Absa will subscribe for preference shares in NHC at a subscription price of R50 million in order to settle
the amount owing by Unicorn to ABSA (“Funding Arrangement”).
– The Offerors will subscribe for shares in Newco (“Newco Subscription Shares”) for a subscription
consideration of R25 million (“the Subscription”) (“Subscription Proceeds”), such that the Offerors will
collectively hold 10% of the issued share capital in Newco after the Subscription.
– The Offerors will acquire the loan claims from Calibre Treasury and Management Services Proprietary Limited
(“CTM”) and RECM and Calibre Limited (“RCL”) that are owing by the Company in favour of CTM and RCL
(“Calibre Group Claims”).
– Subject to the implementation of the Internal Restructure and the Funding Arrangements, the Offerors will
acquire from the Company 41% of the Newco Shares (“Newco Sale Shares”) with effect from 1 February
2020, or a later date agreed between the parties, for a purchase consideration of R102 500 000 (“Newco
Purchase Consideration”) which will be settled:
- by setting off the face value of the Calibre Group Claims against a portion of the Newco Purchase
Consideration equal to the face value of the Calibre Group Claims, amounting to R39 million; and
- the balance in cash.
3. POST-CLOSING DISPOSALS
Within 180 days from the date of implementation of the Proposed Transaction (“the Disposal Period”), Unicorn
may direct NHC to dispose of any of Geosearch, RCH or JEF (collectively, “the Disposal Assets”) on behalf of NHC
(“a Post-Closing Disposal”). The Offerors and NHC shall vote in favour of any such disposals as may be proposed
by Unicorn, provided that the following requirements are satisfied:
– the Disposal Assets may only be disposed of during the Disposal Period and the disposal of each Disposal
Asset must become unconditional and fully implemented within the Disposal Period;
– the Disposal Assets may only be disposed of to parties that are not related to NHC (as contemplated in the
Listings Requirements); and
– each Disposal Asset may only be disposed of for the Cost Price thereof to the Offerors, as allocated in the
Offer, plus a 20% hurdle per annum, taking into account the capital injected into or withdrawn from the
relevant Disposal Asset by its shareholders.
The conditional right to make Post-Closing Disposals has been granted to Unicorn to ensure that it is able to
optimise the price at which it disposes of the Disposal Assets. This right and associated rights shall be embodied
in a single “A” Share (“the A Share”) that will be issued to Unicorn by Newco on implementation of the Proposed
Transaction. A break-fee of R500 000 will payable by Unicorn to CIH in respect of the disposal of each of
Geosearch, RCH and JEF.
4. RATIONALE FOR THE PROPOSED TRANSACTION AND USE OF PROCEEDS
Shareholders are referred to the announcements published on SENS on 31 October 2019 and 12 November 2019,
respectively, where the Company advised of a four stage fall of ground event in Nkomati Anthracite Proprietary
Limited’s (“Nkomati”) underground mine which would impact underground mining production in the short to
medium term, as well as short-term production disruption at the opencast mine owing to the liquidation of the
mining contractor in place at that time. Both of these events have resulted in working capital constraints.
The Board has considered a number of funding alternatives and has concluded that the Proposed Transaction
represents the best solution to the current funding needs of the Company and its subsidiaries and will result in a
more appropriate capital structure to meet its needs in the medium term.
The Subscription Proceeds will be utilised as working capital for JEF, Geosearch and Ritchie. The cash portion of
the Newco Purchase Consideration (after the offset of the Calibre Group Claims) will be used to support the
working capital requirements of Unicorn’s other subsidiary companies, specifically Nkomati.
5. CONDITIONS PRECEDENT
The Proposed Transaction is subject to the fulfilment and/or waiver, as the case may be, of the following
conditions precedent:
– the implementation of the Internal Restructure;
– the implementation of the Funding Arrangements;
– the conclusion of the Offeror’s legal, financial, tax and commercial due diligence investigations to the
satisfaction of the Offerors;
– the publication of relevant announcements and/or circulars relating to the Proposed Transaction as may be
required by the Listings Requirements of the JSE Limited (“JSE”) (“Listings Requirements”);
– Unicorn obtaining an opinion confirming the fairness and reasonableness of the Proposed Transaction, in
accordance with the Listings Requirements;
– final approval by the Board and shareholders of the Company of the Proposed Transaction, in accordance
with the Company’s constitutional documents, Listings Requirements and the Companies Act;
– final approval by the boards of directors and/or shareholders (to the extent required) of Newco, CIH and
TRG in connection with the Proposed Transaction;
– the execution of definitive transaction agreements required for the Proposed Transaction (including a
subscription agreement, a sale of shares agreement and a shareholders’ agreement);
– the consent to the Proposed Transaction by Absa and any other lenders or material counterparties whose
consent may be required for the implementation of the Proposed Transaction;
– the obtaining of all regulatory approvals, consents and/or exemptions that may be necessary for the
implementation of the Proposed Transaction, including but not limited to approvals and consents from the
South African competition authorities, the JSE and the Takeover Regulation Panel, as applicable; and
– the filing of an amended memorandum of incorporation (including the creation of the A Share) in respect of
Newco, to the satisfaction of the Offerors.
6. THE MANAGEMENT AGREEMENTS
Newco will agree to make payment of the following amounts to each of Unicorn and TRG:
- In respect of Unicorn, an administration and financial services fee of R500 000 per annum and a management
fee of R2 million per annum, excluding VAT and disbursements; and
- In respect of TRG, a management fee of R1 million per annum, excluding VAT and disbursements.
The amounts payable in terms of the Management Agreements shall be escalated annually at the rate of the
consumer price index (as published by Statistics South Africa).
7. DESCRIPTION OF THE GEOSEARCH, JEF AND RCH BUSINESSES
- The Geosearch group of companies includes the exploration drilling services operations in South Africa,
Botswana and Mozambique;
- UMSI is the holding company of JEF and Ritchie;
- JEF includes drilling and blasting operations which use specialised drilling rigs in the opencast mining sector,
primarily in the coal industry; and
- RCH includes the hiring out of medium to heavy duty mobile cranes.
8. WARRANTIES AND RESTRAINTS
The Company and Newco will be required to provide warranties to the Offerors that are customary for
transactions of this nature.
9. IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings have been received from Unicorn shareholders collectively holding in aggregate
318 417 860 Unicorn shares, representing 27.27% of all the issued shares in the Company as at the date of this
announcement to vote in favour of the resolutions to give effect to the Proposed Transaction at the general
meeting of Unicorn shareholders.
10. FINANCIAL INFORMATION
The net asset values and net profit after taxation in respect of Geosearch and UMSI are set out below.
As at 30 June 2019 Net assets Net profit after tax
(R’000) (R’000)
Geosearch 63 841 6 747
UMSI 185 493 32 041
The financial information disclosed above has been extracted from the Unicorn audited consolidated financial
results for the year ended 30 June 2019, which was prepared in accordance with International Financial Reporting
Standards. It does not take into account the Internal Restructure or the Funding Arrangements.
11. CLASSIFICATION OF THE PROPOSED TRANSACTION
The Proposed Transaction meets the definition of a category 1 transaction as contemplated in section 9 of the
Listings Requirements and accordingly is required to be approved by an ordinary resolution of the Unicorn
shareholders.
Theunis de Bruyn, being a non-executive director of the Board and TRG, being an associate of Theunis de Bruyn,
are classified as related parties of the Company (“Related Parties”). The Proposed Transaction is therefore a
related party transaction in terms of section 10 of the Listings Requirements and will require a fairness opinion
to be prepared by an independent expert and the approval of the Unicorn shareholders by an ordinary resolution
of shareholders excluding the Related Parties.
12. CIRCULAR
A circular containing the full details of the Proposed Transaction, incorporating a notice convening the required
general meeting of Unicorn shareholders and a copy of the fairness opinion and other required documentation,
will be distributed to Unicorn shareholders in due course.
The salient dates and times of the Proposed Transaction, including the date of the general meeting of Unicorn
shareholders, will be announced in due course.
Johannesburg
9 December 2019
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 09-12-2019 08:40:00
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