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Disposal of Shares in KTH, Scheme, Standby Offer and Delisting of Tiso Blackstar
TISO BLACKSTAR GROUP SE
(Incorporated in England and Wales)
(Registration number SE000110)
(Registered as an external company with limited
liability in the Republic of South Africa under
registration number 2011/008274/10)
JSE share code: TBG
ISIN: GB00BF37LF46
("Tiso Blackstar" or "the Company")
ANNOUNCEMENT REGARDING:
• THE PROPOSED DISPOSAL BY TISO BLACKSTAR OF ITS INTEREST IN KAGISO TISO
HOLDINGS PROPRIETARY LIMITED;
• A SCHEME OF ARRANGEMENT FOR R4.15 PER SHARE (PREMIUM OF 78.5% TO 30 DAY
VWAP) TO BE PROPOSED BY THE BOARD OF DIRECTORS OF TISO BLACKSTAR
BETWEEN TISO BLACKSTAR AND ITS SHAREHOLDERS IN TERMS OF WHICH TISO
BLACKSTAR WILL CANCEL THE SHARES HELD BY CERTAIN OF ITS SHAREHOLDERS;
• IN THE EVENT THAT THE SCHEME OF ARRANGEMENT IS NOT APPROVED OR DOES
NOT BECOME EFFECTIVE, A STANDBY OFFER FOR R3.95 PER SHARE (PREMIUM OF
69.9% TO 30 DAY VWAP) TO BE MADE BY TISO BLACKSTAR IN TERMS OF WHICH TISO
BLACKSTAR WILL ACQUIRE THE SHARES HELD BY CERTAIN OF ITS
SHAREHOLDERS;
• THE PROPOSED DELISTING OF THE TISO BLACKSTAR SHARES; AND
• UNDERTAKINGS OF SUPPORT RECEIVED FROM TISO BLACKSTAR SHAREHOLDERS
HOLDING 59% OF TISO BLACKSTAR'S ISSUED SHARES.
1. INTRODUCTION
Tiso Blackstar shareholders ("Shareholders") are advised that the Company, through its
wholly-owned subsidiary, Tiso Blackstar Holdings SE ("TBH UK"), entered into a written
agreement titled "Sale of Shares Agreement" ("KTH Sale Agreement") with Tiso Investment
Holdings (RF) Proprietary Limited ("TIH") on 26 June 2020 to dispose of its entire interest in
Kagiso Tiso Holdings Proprietary Limited ("KTH") ("KTH Sale Shares") to TIH for an aggregate
consideration of R850,000,000 ("KTH Sale Consideration"), subject to the material terms and
conditions set out below ("KTH Sale").
Further to the KTH Sale, the board of directors of Tiso Blackstar ("Board") has resolved to seek
the delisting ("Delisting") of Tiso Blackstar from the Main Board of the exchange operated by
the JSE Limited ("JSE"). The Delisting shall be effected (subject to Shareholders approving the
Delisting) pursuant to the JSE Listings Requirements and following either:
• the coming into effect of a scheme of arrangement (the "Scheme") pursuant to Part 26 of
the Companies Act 2006 of the UK, as amended from time to time ("UK Companies Act"),
between Tiso Blackstar and Scheme Shareholders (as defined below) in respect of their
Tiso Blackstar shares ("Shares") (the "Scheme Shares") pursuant to which the Scheme
Shareholders are able to make elections to either have their Shares cancelled (the "Exit
Election") or to retain their Shares (the "Continuation Election"). Where Scheme
Shareholders make (i) valid Exit Elections; (ii) invalid Exit Elections or invalid Continuation
Elections; or (iii) no election in respect of their Scheme Shares; they will be treated as
having made Exit Elections in respect of such Scheme Shares (the "Exit Election
Shares"). The Exit Election Shares will be cancelled for a consideration of R4.15 per Exit
Election Share; or
• in the event that the Scheme is not approved or does not come into effect, an offer to all
Shareholders in terms of which Tiso Blackstar will acquire the Shares of those
Shareholders who elect to dispose of their Shares for a consideration of R3.95 per Share
("Standby Offer").
The material terms and conditions of the Scheme and the Standby Offer are more fully set out
below.
2. RATIONALE
KTH is a black-owned investment company with a diversified asset portfolio covering the
industrial, services, media, financial services and healthcare sectors. Tiso Blackstar's
investment in KTH is a non-core investment and, in-line with its stated strategy, Tiso Blackstar's
medium term view has been to dispose of its interest in KTH at a price which is reflective of the
fair value of the investment.
The KTH Sale presents an opportunity for Tiso Blackstar to realise value through the disposal
of its entire interest in KTH, for cash, in a single transaction and the proceeds received can be
applied towards returning value to Shareholders.
Tiso Blackstar has had a significant reduction in its investments during 2019. The KTH Sale will
further reduce the Company's investments. Considering this reduction in investments, the
Board has determined that the Company's operations are no longer of a size that is suited to
extract additional value from a listing versus the costs of retaining a listing. Additionally, trading
in Shares on the Main Board of the JSE has been illiquid and has yielded little or no value for
Shareholders for several years.
Given the values at which Shares have historically traded, Tiso Blackstar's access to capital
through the market has been restricted, as any issue of Shares would have been extremely
dilutive to Shareholders. This has resulted in an additional cost of capital (such as listing costs)
without additional benefit. Accordingly, the Board is of the view that the elimination of costs
associated with a listing is in the best interest of Tiso Blackstar and its Shareholders.
Although the disposal of its assets has resulted in Tiso Blackstar no longer being suited to a
listing on the JSE, it will place Tiso Blackstar in a position where it can present a cash offer to
those Shareholders wishing to dispose of their interests in Tiso Blackstar. The Board is of the
view that the price offered to those Shareholders that wish to dispose of their Shares will allow
them to realise fair value for their investment in Tiso Blackstar, at a price well above the price
that Shares have traded at for an extended period of time. Additionally, many Shareholders
have expressed a view to the Board that they are locked into holding their Shares at current
market prices and that the Company should facilitate a liquidity event to allow Shareholders to
exit at a fair price, thereby unlocking value in the Shares.
Accordingly, the rationale for the Scheme, the Standby Offer and the Delisting is to provide
Shareholders that wish to exit with the opportunity to do so at a fair price and at the same time
preserve value for those Shareholders that wish to remain invested in Tiso Blackstar in an
unlisted environment by rationalising the cost base.
3. SALIENT TERMS OF THE KTH SALE
3.1 Transaction Steps
The KTH Sale will be implemented via a sale of shares transaction, which in turn forms part of
a series of indivisibly linked transaction steps which must be implemented sequentially in order
to ultimately give effect to the KTH Sale ("Transaction Steps"). The Transaction Steps are set
out and regulated in a written agreement headed "Transaction Implementation Agreement"
which has been concluded by, amongst other parties, Tiso Blackstar, KTH and TIH ("TIA").
3.2 Settlement of KTH Sale Consideration
The KTH Sale Consideration which is payable by TIH to TBH UK for the KTH Sale Shares shall
be paid in cash.
3.3 Categorisation of the KTH Sale
The KTH Sale constitutes a category 1 transaction pursuant to section 9 of the JSE Listings
Requirements and a related party transaction pursuant to section 10 of the JSE Listings
Requirements as a result of:
• the value of the KTH Sale Consideration exceeding 30% of Tiso Blackstar's market
capitalisation as at the date of signature of the KTH Sale Agreement; and
• TIH being an associate of each of David Adomakoh ("D Adomakoh") and Nkululeko
Sowazi ("N Sowazi"). D Adomakoh and N Sowazi are both directors of Tiso Blackstar. TIH
is therefore an associate of related parties to Tiso Blackstar as contemplated in paragraph
10.1(b)(vii) of the JSE Listings Requirements.
The KTH Sale requires the approval of more than 50% of the votes exercised on the KTH Sale
Resolution (as defined below), excluding the votes of the related parties and their associates.
3.4 Conditions Precedent
The KTH Sale is conditional upon the fulfilment and/or waiver, by no later than
30 September 2020, of, inter alia, the following conditions precedent which remain outstanding
as at the date of this announcement ("KTH Sale Conditions"):
• the KTH Sale has been approved at a meeting of the Shareholders by more than 50% of
the votes of such shareholders voting in person or by proxy in accordance with the
provisions of the UK Companies Act and / or the JSE Listings Requirements; and
• the TIA has been entered into and has become unconditional in accordance with its terms,
save in respect of any condition requiring that the KTH Sale Agreement has become
unconditional.
The TIA is in turn conditional upon the fulfilment and/or waiver, by no later than
30 September 2020, of the condition precedent that each of the transaction agreements giving
effect to the Transaction Steps ("Transaction Agreements") has been entered into and has
become unconditional in accordance with its terms, save for any condition requiring that the
TIA has become unconditional.
The KTH Sale Conditions may only be waived by agreement in writing between the parties to
the KTH Sale Agreement and the dates for fulfilment of such KTH Sale Conditions may only be
extended by agreement in writing between such parties.
The closing date (and the effective date) of the KTH Sale shall occur upon implementation of
the Transaction Steps pursuant to the TIA, which is expected to occur before 30 September
2020.
3.5 Use of proceeds
If the Scheme becomes effective, the proceeds received pursuant to the KTH Sale shall be
predominantly used to fund the Scheme Consideration (as defined below) payable in respect
of the Scheme. If the Standby Offer becomes operative, the proceeds of the KTH Sale shall
be predominantly used to fund the Standby Offer.
3.6 Other significant terms of the KTH Sale
The KTH Sale Agreement includes title warranties pursuant to which TBH UK warrants in favour
of TIH that -
• TBH UK is and will be the registered and beneficial owner of the KTH Sale Shares and
is and will be entitled to dispose of the same; and
• no other party is or will have any claim to or over or in respect of the KTH Sale Shares,
nor are they or will they be encumbered in any way.
In addition to the title warranties, the KTH Sale Agreement includes other general power,
capacity and authority warranties standard for a transaction of this nature.
3.7 Business of Tiso Blackstar post the KTH Sale
Post the KTH Sale, the business of Tiso Blackstar will primarily comprise of Hirt & Carter as
well as its non-core media, broadcasting and content assets in Ghana, Nigeria and Kenya.
4. SALIENT TERMS OF THE SCHEME AND THE STANDBY OFFER
4.1 Structure of the Scheme and Standby Offer
The Scheme is proposed to be an arrangement between Tiso Blackstar and those
Shareholders who are listed in the securities register of the Company on the record date in
respect of the Scheme (such persons being referred to as the "Scheme Shareholders"). The
Scheme is structured pursuant to Part 26 of the UK Companies Act by way of a reduction in
the capital of the Company ("Capital Reduction") by the cancellation of the Exit Election
Shares. The procedure involves an application by Tiso Blackstar to the High Court of Justice
in England and Wales ("UK Court") to sanction the Scheme.
The Standby Offer will become operative in the event that (i) any condition relating to the
Scheme is not fulfilled and (where applicable) not waived; or (ii) the Scheme otherwise lapses
or fails. Under the Standby Offer, Tiso Blackstar will repurchase Shares from those
Shareholders who make an election to sell such Shares.
4.2 Shareholder Approval
A meeting of Shareholders listed in the securities register of the Company on the voting record
date will be convened ("Court Meeting") in order to consider and, if deemed fit, approve the
Scheme.
Additionally, a general meeting of Shareholders listed in the securities register of the Company
on the voting record date will be convened ("General Meeting") in order to consider and, if
deemed fit, approve the following resolutions:
• a special resolution approving the implementation of the Scheme and the Capital Reduction
("Scheme Resolution");
• an ordinary resolution approving the Delisting pursuant to the JSE Listings Requirements
("Delisting Resolution");
• an ordinary resolution approving and authorising the KTH Sale ("KTH Sale Resolution");
and
• an ordinary resolution approving an off-market purchase of its own Shares by Tiso
Blackstar pursuant to the Standby Offer under section 44 of the UK Companies Act
("Repurchase Resolution").
For the Scheme Resolution to be approved, it must be supported by 75% of the Shareholders
voting in person or by proxy. Each of the ordinary resolutions to be proposed at the General
Meeting must be supported by more than 50% of the votes exercised on the resolution in order
for it to be approved.
D Adomakoh, N Sowazi and their associates shall be excluded from voting on the KTH Sale
Resolution. However, D Adomakoh and N Sowazi and their associates will be taken into
account for purposes of determining a quorum.
The Scheme Resolution shall be conditional upon the approval of the Scheme at the Court
Meeting and the approval of the Delisting Resolution and KTH Sale Resolution.
The Scheme and the Standby Offer will be subject to the conditions set out in paragraphs 5
and 6 below.
4.3 Scheme consideration
In terms of the Scheme, Tiso Blackstar will propose to cancel the Scheme Shares, with
disposing Scheme Shareholders receiving as consideration for the cancellation R4.15 per Exit
Election Share, to be settled in cash ("Scheme Consideration").
The Scheme Consideration represents a 78.5% premium over the 30 day volume weighted
average price of the Shares as at 25 June 2020.
4.4 Standby Offer consideration
In terms of the Standby Offer, Tiso Blackstar will propose to re-acquire Shares at a price of
R3.95 per Share, to be settled in cash ("Standby Offer Consideration").
The Standby Offer Consideration represents a 69.9% premium over the 30 day volume
weighted average price of the Shares as at 25 June 2020.
5. SCHEME CONDITIONS
The Scheme will be subject to the fulfilment or waiver, as applicable, of the following conditions:
• by no later than 31 December 2020 (or such later date as may be determined by the
Company and notified to Shareholders through an announcement on SENS):
o the KTH Sale Resolution being approved by more than 50% of votes of Shareholders
entitled to and, in fact, voting in person or by proxy. For the avoidance of doubt, D
Adomakoh and N Sowazi and their associates will be excluded from voting on the KTH
Sale Resolution;
o the Scheme being approved at the Court Meeting by a majority in number of Scheme
Shareholders voting in person or by proxy and holding at least 75% of the Shares;
o the Scheme being approved at the General Meeting by at least 75% of the
Shareholders voting in person or by proxy;
o the Delisting Resolution being approved by more than 50% of votes of Shareholders
entitled to and, in fact, voting in person or by proxy;
o the KTH Sale being implemented and the KTH Sale Consideration being paid in cash,
as contemplated in paragraph 3.2, and received by Tiso Blackstar;
o the Board obtaining an opinion from an independent expert confirming that the KTH
Sale is fair to Shareholders and an opinion from that independent expert confirming
that the Scheme is fair to Shareholders;
o Scheme Shareholders holding, in aggregate, no more than 161 450 000 Shares
making Exit Elections or being deemed to have made Exit Elections pursuant to the
Scheme;
o all regulatory approvals required to implement the Scheme and the Delisting being
obtained either unconditionally or on such conditions as are reasonably acceptable to
the parties, including:
- the JSE granting the approval of the Delisting; and
- the Scheme and the Capital Reduction receiving sanction from the UK Court
and the stamped court order confirming such sanction being received by the
Company for filing,
collectively referred to as the "Scheme Conditions".
If, on or after the date of the Circular (defined below), any dividend and/or other distribution
and/or return of capital is declared, made or paid or becomes payable in respect of the Shares
with a record date before the court hearing, Tiso Blackstar reserves the right to reduce the
Scheme Consideration payable under the terms of the Scheme for the Scheme Shares by an
amount up to the amount of such dividend and/or other distribution and/or return of capital, in
which case any reference in this document to the Scheme Consideration payable under the
terms of the Scheme will be deemed to be a reference to the Scheme Consideration as so
reduced. In such circumstances, Shareholders would be entitled to retain any such dividend
and/or other distribution and/or return of capital.
6. STANDBY OFFER CONDITIONS
The Standby Offer will only be implemented in the event that any one of the Scheme Conditions
is not fulfilled or waived, as the case may be, or if the Scheme otherwise lapses or fails
("Standby Offer Trigger Event").
If a Standby Offer Trigger Event occurs, the Standby Offer will be subject to the fulfilment or,
where applicable, waiver of the conditions precedent that by no later than 31 December 2020
(or such later date as may be determined by the Company and notified to Shareholders through
an announcement on SENS):
• the KTH Sale being implemented and the KTH Sale Consideration being paid in cash and
received by Tiso Blackstar;
• the Delisting Resolution is approved by the requisite number of Shareholders voting in
person or by proxy;
• the Board obtaining an opinion from an independent expert confirming that the KTH Sale
is fair to Shareholders and an opinion from that independent expert confirming that the
Standby Offer is fair to Shareholders;
• all regulatory approvals required to implement the Standby Offer and the Delisting,
including the JSE granting the approval of the Delisting, are obtained either unconditionally
or on such conditions as are reasonably acceptable to the parties;
• the acquisition of Shares in terms of the Standby Offer being approved by more than 50%
of the votes of Shareholders voting in person or by proxy; and
• Shareholders validly accepting the Standby Offer in respect of an aggregate of less than or
equal to 169 625 000 Shares by 11:00am BST (12:00pm SAST) on the first Friday falling
on or after the 20th business day after the date on which the Standby Offer is open for
acceptance; provided that if that Friday is not a business day, the closing date of the
Standby Offer shall be the business day preceding that Friday (or such other date as the
JSE may direct),
collectively referred to as the "Standby Offer Conditions".
Tiso Blackstar shall be entitled to waive in writing the Standby Offer Conditions in whole or in
part or determine an extended date for the fulfilment of any of them.
If, on or after the date of the Circular (defined below), any dividend and/or other distribution
and/or return of capital is declared, made or paid or becomes payable in respect of the Tiso
Blackstar Shares with a record date before the settlement of the Standby Offer Consideration,
Tiso Blackstar reserves the right to reduce the Standby Offer Consideration payable under the
terms of the Standby Offer by an amount up to the amount of such dividend and/or other
distribution and/or return of capital, in which case any reference in this document to the Standby
Offer Consideration payable under the terms of the Standby Offer will be deemed to be a
reference to the Standby Offer Consideration as so reduced. In such circumstances,
Shareholders would be entitled to retain any such dividend and/or other distribution and/or
return of capital.
Should a Standby Offer Trigger Event occur, all important dates and times pertinent to the
Standby Offer will be published on SENS and in the press.
7. CIRCULAR AND SALIENT DATES
Further details of the KTH Sale, the Scheme, the Standby Offer and the Delisting will be
included in a circular to Shareholders to be posted on or about 18 August 2020 ("Circular").
The Circular will, inter alia, contain a report of an independent expert regarding the fairness of
the KTH Sale, a report of an independent expert regarding the fairness of the Scheme and the
Standby Offer, a notice of the Court Meeting and a notice of the General Meeting, a form of
proxy and forms of election for purposes of making the Continuation Election and Exit Election.
The Circular will also set out the salient dates pertaining to the KTH Sale, the Scheme, the
Standby Offer and the Delisting, which dates will also be announced by Tiso Blackstar on SENS
and in the press on the date on which the Circular is posted to Shareholders.
8. IRREVOCABLE UNDERTAKINGS AND LETTERS OF SUPPORT
Tiso Blackstar has received irrevocable undertakings and letters of support from certain
Shareholders representing in aggregate 59% of the issued share capital of Tiso Blackstar to
vote in favour of all resolutions necessary for approval of the KTH Sale, the Scheme, the
Standby Offer and the Delisting. Only the Scheme requires the approval of 75% of the votes
cast on the relevant resolution whereas the KTH Sale, the Standby Offer and Delisting only
require the approval of the majority of the votes cast on the relevant resolutions.
Tiso Blackstar has furthermore received irrevocable undertakings from certain Shareholders,
representing in aggregate 44% of the issued share capital of Tiso Blackstar, in terms of which
they irrevocably undertake to exercise the Continuation Election and to not accept the Standby
Offer in respect of their Shares.
9. DELISTING
Following implementation of the Scheme or the Standby Offer, application will be made by Tiso
Blackstar to the JSE to terminate the listing of the Shares on the exchange operated by the
JSE.
10. FINANCIAL INFORMATION
The net asset value of KTH as at 31 December 2019, being the date of the last reviewed (six
months interim) financial statements of KTH, was R5,689,192,000.
The reviewed profit after tax attributable to the shareholders of KTH for the six months ended
31 December 2019 was R228,785,000.
The KTH reviewed interim financial statements were prepared in accordance with International
Financial Reporting Standards and the South African Companies Act No. 71 of 2008. The
Company is satisfied with the quality of the KTH interim financial statements.
The pro forma financial effects of the KTH Sale, the Scheme and the Standby Offer will be
detailed in the Circular.
11. BOARD RESOLUTIONS, RECOMMENDATION AND FAIRNESS OPINION
The Board has appointed BDO Corporate Finance Proprietary Limited as independent expert
to provide it with external advice in relation to the KTH Sale, the Scheme, the Standby Offer
and the Delisting.
The substance of the external advice and the views of the Board will be detailed in the Circular.
Messrs D Adamakoh and N Sowazi recused themselves from participating in the passing of the
Board resolutions necessary to approve the KTH Sale and matters ancillary thereto.
Messrs D Adamakoh, N Sowazi and A Bonamour recused themselves from participating in the
passing of the Board resolutions necessary to, inter alia, approve the Scheme, the Standby
Offer and the Delisting and matters ancillary thereto.
12. EXCHANGE CONTROL APPROVAL
The Financial Surveillance Department of the South African Reserve Bank ("SARB") has
approved the Scheme and/or the Standby Offer and the Delisting. The approval granted by the
SARB is conditional on either:
• Shareholders which are residents of South Africa and continue to hold Shares after the
Delisting, disposing of such Shares, within a period of 12 months, to a non-resident of the
Common Monetary Area and receiving the proceeds in South Africa in terms of the
Exchange Control Regulations; or
• the "loop" created by the South African residents holding more than 40% of the unlisted
Shares being unwound by restructuring the shareholding in the South African entities which
hold such Shares.
13. RESTRICTED JURISDICTIONS
The circulation of this announcement and the distribution of the Circular in certain jurisdictions
outside of South Africa and the UK may be restricted or prohibited by the laws of such foreign
jurisdiction. In such cases, this announcement and the Circular is deemed to have been
provided for information purposes only, and Tiso Blackstar and the Board do not accept any
responsibility for any failure by Shareholders to inform themselves about, and to observe, any
applicable legal requirements in any relevant foreign jurisdiction. Shareholders who are resident
or incorporated in such jurisdictions should inform themselves about any applicable legal
requirements which they are obliged to observe in relation to the transactions contemplated
herein or in the Circular. It is the responsibility of any such Shareholder to satisfy himself/herself
as to the full observance of the laws of any relevant jurisdiction in connection with the
transactions outlined herein and in the Circular. Shareholders who are resident or incorporated
in such jurisdictions shall be deemed to have warranted that they have complied in all respects
with all laws and requirements in relation to their participation (or otherwise) in the transactions
outlined herein and in the Circular. Shareholders who are in doubt as to their position should
consult their professional advisors.
London
26 June 2020
Sponsor - PSG Capital
Corporate Advisor - Vestra Advisory
English Legal advisor - Paul Hastings
Independent Expert - BDO
Independent Reporting Accountants - Deloitte & Touche and PricewaterhouseCoopers
SA Legal Advisor - Cliffe Dekker Hofmeyr
Date: 26-06-2020 02:48:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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