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HOSKEN CONSOLIDATED INVESTMENTS LIMITED - Related party transaction announcement relating to the acquisition by HCI of HCI Invest6 Holdco Proprietary Limited

Release Date: 26/06/2020 13:48
Code(s): HCI     PDF:  
Wrap Text
Related party transaction announcement relating to the acquisition by HCI of HCI Invest6 Holdco Proprietary Limited

(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
(Share code: HCI & ISIN: ZAE000003257)
(“HCI” or the “Company”)



        The Company’s shareholders (“Shareholders”) are hereby advised that HCI has agreed to acquire the
        Southern African Clothing and Textile Workers Union’s (“Sactwu”) shares in and loan claims against HCI
        Invest6 Holdco Proprietary Limited (“HCI Invest6”) (“Proposed Transaction”).


        HCI currently holds 70% of the issued shares of HCI Invest6 and Sactwu owns the remaining 30% of the
        issued shares. HCI Invest6 in turn currently owns 323,330,485 N ordinary shares (“EMN Shares”) in the
        issued share capital of E Media Holdings Limited (“eMedia”). The Proposed Transaction, if implemented,
        will result in HCI holding all of the shares in and claims against HCI Invest6. The Proposed Transaction will
        result in HCI increasing its interest in EMN Shares, which HCI believes to be acquired at an attractive
        purchase price, having regard to EMN Shares being the only underlying assets of HCI Invest6.


        3.1.    Description of HCI Invest6 and eMedia

                HCI Invest6 is the holding company of HCI and Sactwu’s joint interest in EMN Shares. HCI Invest6
                conducts no business other than holding 323,330,485 EMN Shares.

                eMedia is a JSE-listed company that owns 67.7% of E Media Investments Proprietary Limited
                (“eMedia Investments”), a South African media group with holdings in a variety of broadcasting,
                content and production businesses. eMedia Investments is owned and controlled by eMedia
                Holdings and Venfin Media Beleggings (Pty) Ltd.

        3.2.    Particulars of the Proposed Transaction

                In terms of the Proposed Transaction, the Company will acquire 30% of the issued share capital of
                HCI Invest6 (“Sale Shares”) and all claims owing by HCI Invest6 to Sactwu (“Sale Claims”), such
                that immediately after implementation of the Proposed Transaction, HCI will hold 100% of the shares
                in and shareholder loan claims against HCI Invest6.

                The consideration payable by HCI to Sactwu (“Purchase Consideration”) is the aggregate of:
                3.2.1.     the amount of R153,998,291 (“Cash Portion”); plus
                3.2.2.     20,000,000 EMN Shares (“EMN Consideration Shares”).

                Cash Portion

                The Cash Portion of the Purchase Consideration shall be settled by HCI as follows:
       3.2.3.       on the Effective Date:

              HCI shall pay R1.00 to Sactwu in settlement of the purchase price owing
                                for the Sale Shares; and
              HCI shall make payment on behalf of Sactwu of amounts due and owing by
                                Sactwu (and/or its subsidiaries) on the Effective Date to HCI’s subsidiary,
                                Deneb Investments Limited and its subsidiaries (which claims had a face
                                value of approximately R77,557,731 as at 25 May 2020) and HCI’s wholly-
                                owned subsidiary, HCI Solly Sachs House Proprietary Limited (which
                                claims had a face value of approximately R38 256 071 as at 30 April 2020);

       3.2.4.       the remainder of the Cash Portion shall remain owing by HCI to Sactwu on loan
                    account, which loan account shall accrue interest at the Prime Rate plus 1%, and shall
                    be repaid by HCI to Sactwu by no later than 31 December 2021.

       EMN Consideration Shares

       By no later than the date that is six months after the Effective Date, HCI shall transfer (or procure
       the transfer of) the EMN Consideration Shares to Sactwu in settlement of the relevant portion of the
       Purchase Consideration.

3.3.   Conditions Precedent

       The Proposed Transaction is subject to, inter alia, the fulfilment or waiver of the condition precedent
       (“Condition Precedent”) that the shareholders of HCI (excluding Sactwu) approving of the
       Proposed Transaction as a “related party transaction” in accordance with paragraph 10.4 of section
       10 of the JSE Listings Requirements.

       The Condition Precedent must be fulfilled or waived as the case may be, on or before 1 December
       2020; or such later date(s) as may be agreed between the Parties.

3.4.   Effective Date

       The effective date of the Proposed Transaction shall be the second business day following the date
       of fulfilment (or waiver) of the Condition Precedent (“Effective Date”).

3.5.   Financial Information

       eMedia’s net assets attributable to eMedia shareholders was R2 618 million as at 31 March 2020.

       Losses attributable to eMedia shareholders was R(1 888) million for the year ended 31 March 2020.

       Subsequent to implementation of the Proposed Transaction, HCI’s effective economic interest in
       eMedia will increase from 62.9% to 80.3%.

       Sactwu is a related party to HCI due to Sactwu being a material shareholder of HCI. The Proposed
       Transaction therefore constitutes a “related party transaction” in terms of section 10 of the JSE Listings

       As the value of the Proposed Transaction exceeds 5% of HCI’s market capitalisation as at the date of
       conclusion of the sale agreement, the Company is required to comply with paragraph 10.4 of the JSE Listings
       Requirements. The Company will procure that a fairness opinion is prepared by an independent expert. The
       Proposed Transaction is subject to the approval of the HCI shareholders is obtained by way of an ordinary
       resolution of shareholders, excluding Sactwu.


       A circular containing the full details of the Proposed Transactions, incorporating a notice convening the
       required Shareholders meeting, a copy of the fairness opinion and other required documentation, will be
       posted to Shareholders in due course. The salient dates and times of the Proposed Transaction, including
       the date of the Shareholders meeting, will be announced on SENS in due course.

Cape Town
26 June 2020

Sponsor: Investec Bank Limited

Legal Adviser: ENSafrica

Date: 26-06-2020 01:48:00
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