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Results of General Meeting and Rights Offer Declaration Announcement
City Lodge Hotels Limited
(Incorporated in the Republic of South Africa)
(Reg. No. 1986/002864/06)
Share Code: CLH ISIN Code: ZAE000117792
(“City Lodge” or the “Company” or the “Group”)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA OR JAPAN. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM AN
OFFER OF SECURITIES IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY OTHER
JURISDICTION.
ANNOUNCEMENT RELATING TO:
- RESULTS OF THE GENERAL MEETING; AND
- RIGHTS OFFER DECLARATION ANNOUNCEMENT
1. RESULTS OF THE GENERAL MEETING OF SHAREHOLDERS
Reference is made to the circular distributed to shareholders of City Lodge (“Shareholders”) on Monday, 22 June
2020 (“the Circular”) and the Company’s notice to convene the General Meeting held today, Tuesday, 21 July
2020 (“the General Meeting”) at which Shareholders were requested to consider and if deemed fit, pass the
ordinary and special resolutions set out in the notice of the General Meeting.
Capitalised terms used in this announcement bear the same meaning as the capitalised and defined terms used
in the Circular.
The total number of shares voted in person or by proxy at the General Meeting including abstentions was
33,822,821, representing 77.62% of City Lodge’s issued share capital as at Friday, 10 July 2020, being the Voting
Record Date.
The voting results were as follows:
SHARES
TOTAL SHARES VOTED
ABSTAINED
FOR AGAINST
NUMBER %* %*
RESOLUTION (%) (%)
Special resolution number 1
Conversion of par value City Lodge Shares to no par 81.74 18.26 33,673,533 77.28 0.03
value City Lodge Shares
Special resolution number 2
Increase number of authorised City Lodge Shares 80.41 19.59 33,673,763 77.28 0.03
Special resolution number 3
Amendments to Memorandum of Incorporation 81.47 18.53 33,671,522 77.27 0.04
Special resolution number 4
Approval to issue 30% or more of the Company’s
81.42 18.58 33,664,744 77.26 0.05
issued City Lodge Shares
Special resolution number 5
Financial assistance for the Collateral Deposit 77.77 22.23 29,191,900 66.99 10.32
Ordinary resolution number 1
Placing City Lodge Shares under the control of the
81.25 18.75 33,322,968 76.47 0.84
Directors for the specific purpose of the Rights Offer
Ordinary resolution number 2
Rights Offer waiver 81.71 18.29 33,657,143 77.24 0.07
Ordinary resolution number 3
General authority 81.75 18.25 33,671,292 77.27 0.04
*Expressed as a percentage of 43 573 893 City Lodge Shares in issue as at the Voting Record Date
All the above resolutions were accordingly duly passed.
2. RIGHTS OFFER DECLARATION
2.1 Introduction
City Lodge shareholders are referred to the announcement released on the Stock Exchange News Service
(“SENS”) on Monday, 22 June 2020 in which the Company announced its intention to undertake a
renounceable rights offer to its shareholders to raise R1.2 billion. A condition precedent imposed by the
Company to the rights offer requires that the special resolutions numbered 1, 2, 3 and 4 passed at the
General Meeting be registered with the Companies and Intellectual Property Commission (“CIPC”).
Confirmation of registration has not yet been received from CIPC and as such the timetable below facilitates
the confirmation of registration.
2.2 Background and rationale
The COVID-19 pandemic has significantly impacted the global economy and strained the hospitality industry
due to travel restrictions and containment and mitigation directives, resulting in closed businesses, guest
cancellations and significantly reduced business and leisure travel around the world, including South Africa,
the Group’s primary country of operation, and the other countries where the Group operates (Botswana,
Kenya, Mozambique, Namibia and Tanzania). In South Africa, a national state of disaster was declared by the
government on 15 March 2020 (the “SoD Announcement”), and on 23 March 2020, President Cyril
Ramaphosa and Health Minister Zweli Mkhize announced strict lockdown protocols commencing 27 March
2020 to minimise the spread of the COVID-19 pandemic, including the closure of all shops and businesses
(except for pharmacies, laboratories, banks, the JSE, supermarkets, petrol stations and healthcare providers).
Similarly strict lockdown protocols were followed shortly thereafter in the other African countries where the
Group operates.
On 23 April 2020, President Ramaphosa announced a phased reopening plan called the COVID-19 Risk
Adjusted Strategy (the “COVID-19 RAS”). The phases included in the COVID-19 RAS range from Level 5,
which is the strict lockdown protocol previously announced, to Level 1, which is expected to entail the removal
of all COVID-19 protocols. Under current protocols, only in Level 1 is leisure travel permitted. On 30 May
2020, the Tourism Business Council of South Africa and the Federated Hospitality Association of South Africa
announced that some of the industry lockdown restrictions in Level 3 would be relaxed to allow
accommodation for people performing permitted services, prior to Level 1 of the COVID-19 RAS. Further
amendments were made effective 25 June 2020, which included allowing hotels to open if they are providing
accommodation for people travelling for the purpose of business permitted under Level 3, international tourists
who remain in South Africa or are appointed as quarantine facilities.
As a result of the foregoing, for a period starting 27 March 2020, all of the Group’s 62 hotels (of which 55 are
based in South Africa) were temporarily closed to the public in accordance with government protocols in
South Africa and the other countries in which the Group operates, though four hotels in South Africa remained
open on a limited basis to provide support to government authorities and essential and critical business
continuity services, and to provide other enabling services in the form of either quarantine facilities or staff
accommodation, as well as to provide accommodation to international tourists unable to return to their home
countries. On 6 April and 12 April 2020, an additional one and two hotels, respectively, re-opened in South
Africa on a similarly limited basis, with additional hotels re-opening as permissible. Re-opened hotels have
been operating at low levels of occupancy as well as reduced “Stay Safe” room rates. As at the Last
Practicable Date, 30 of the Group’s hotels (26 South Africa and 4 non-South African) have remained open on
such a limited basis with limited occupancy, whilst all remaining hotels in South Africa, as well as all Group
hotels outside of South Africa, have remained closed.
Accordingly, despite the Group having implemented various liquidity and capital preservation measures, the
restricted operational and economic environment arising from the COVID-19 pandemic has had an adverse
impact on the Group’s revenue and results of operations towards the end of the nine months ended 31 March
2020, and increasingly so for the year ended 30 June 2020.
As part of its liquidity and capital preservation measures, the Company is seeking to raise R1.2 billion in gross
proceeds through a fully underwritten renounceable rights offer (“the Rights Offer”). The Board believes that
the Group operates a highly cash generative business with a solid asset base, and that the Rights Offer will
serve to support the Group’s long-term viability and continued growth during the uncertainty arising from the
COVID-19 pandemic. Importantly, the Group has generated profit in each reported period and year in its
entire 35-year history, and has historically funded its investment in both the development of new hotels and
the refurbishment and maintenance of existing hotels, together with consistent and strong dividend payments
to Shareholders, primarily with existing cash and cash generated from operations.
The Rights Offer is the Group’s first equity capital raise since its listing on the JSE in 1992.
The net proceeds of the Rights Offer will be used to: (i) repay a substantial portion of the Group’s outstanding
indebtedness under its secured facilities; (ii) retain on deposit an amount equal to the Company’s guarantee
of BEE interest-bearing borrowings and the BEE Preference shares and accrued dividends liability to the
settlement date, which amount will be set aside and available for either the settlement (on or before 31
January 2021, being the settlement date of the BEE Funding) of the BEE Funding guaranteed by City Lodge,
or for the exercise of the BEE Unwind Option, at the election of the Company; and (iii) improve liquidity.
If the Rights Offer is not successfully completed, the Group may not have sufficient funds to meet the Group’s
obligations under its secured facilities, working capital facility, BEE Funding and other payment obligations as
they fall due. The Board believes that a successful Rights Offer will ensure that the Group is well-positioned
from a working capital perspective to fund its cash flow shortfall and maintain a sustainable residual level of
debt in light of the impact of the COVID-19 pandemic and consequent lockdown measures, and create debt
capacity and a flexible capital structure to position the Group for future growth.
Salient features in relation to the Rights Offer is set out below. Full terms will be set out in the Rights Offer
circular (“Rights Offer Circular”) which is expected to be made available on the Company’s website
www.clhg.com on or about 3 August 2020.
2.3 Terms of the Rights Offer
City Lodge is targeting gross proceeds of R1.2 billion through an offer of renounceable rights to subscribe for
new City Lodge ordinary shares (“Rights Offer Shares”) to City Lodge Shareholders as recorded in the
register on the record date for the Rights Offer, which date is expected to be Friday, 7 August 2020, but
excluding City Lodge shareholders resident or located in certain restricted jurisdictions to be set out in the
Rights Offer Circular (“Qualifying Shareholders”). The final terms of the Rights Offer, including the Rights
Offer price and ratio of entitlement, will be announced on SENS by City Lodge on the finalisation date,
expected to be on or about Thursday, 30 July 2020.
Application will be made to the JSE for the listing of:
• the letters of allocation in respect of all the Rights Offer Shares with effect from the commencement of
trade (SAST) which is expected to be on Friday, 5 August 2020 to the close of trade (SAST) on
Tuesday, 18 August 2020, both days inclusive; and
• the Rights Offer Shares from commencement of trade (SAST) which is expected to be on Monday, 24
August 2020.
The Rights Offer Shares will, upon issue, rank pari passu with all other shares of the same class.
2.4 Excess applications
All Rights Offer Shares not taken up pursuant to the terms of the Rights Offer will be available for allocation to
Qualifying Shareholders who wish to apply for a greater number of Rights Offer Shares than those offered to
them in terms of the Rights Offer. Accordingly, Qualifying Shareholders may also apply for additional Rights
Offer Shares in excess of the Rights Offer Shares allocated to that Qualifying Shareholder in terms of the
Rights Offer on the same terms and conditions as those applicable to the Rights. The right to apply for
additional Rights Offer Shares is transferable on renunciation.
2.5 Entitlement
The allocation of Rights Offer Shares will be such that shareholders will not be allocated a fraction of a Rights
Offer Share and only whole numbers of Rights Offer Shares will be issued. Any entitlement to receive a
fraction of a Rights Offer Share will be:
• rounded down to the nearest whole number if less than half a Rights Offer Share; and
• rounded up to the nearest whole number if more than or equal to half of a Rights Offer Share.
2.6 Underwriting
It is intended that the Rights Offer Shares will be underwritten by The Standard Bank of South Africa Limited,
subject to customary terms and conditions.
2.7 Conditions precedent
The implementation of the Rights Offer remains subject to:
• the registration by CIPC of the special resolutions referred to in paragraph 2.1 above; and
• the JSE granting a listing of the letters of allocation and the Rights Offer Shares on the securities
exchange of the JSE in respect of the Rights Offer.
2.8 Foreign shareholders
Foreign shareholders may be affected by the Rights Offer, having regard to prevailing laws in their relevant
jurisdictions. Such foreign shareholders should inform themselves with regard to and observe any applicable
legal requirements of such jurisdiction in relation to all aspects of this announcement that may affect them,
including the Rights Offer. It is the responsibility of each foreign shareholder to satisfy himself as to the full
observation of the laws and regulatory requirements of the relevant foreign jurisdiction in connection with the
Rights Offer, including obtaining any governmental, exchange or other consents or the making of any filing
which may be required, the compliance with any other necessary formalities and the payment of any issue,
transfer or other taxes or other requisite payments due in such jurisdictions. The Rights Offer is governed by
the laws of South Africa and is subject to applicable laws and regulations, including Exchange Control
regulations. Nothing in this declaration announcement or the Rights Offer Circular referred to herein
constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.
2.9 Salient dates and times
The proposed salient dates and times in relation to the Rights Offer will be as follows:
2020
Declaration announcement released on SENS on Tuesday, 21 July
Finalisation announcement released by 11:00 (SAST) on SENS on or about Thursday, 30 July
Circular made available on the Company’s website on or about Monday, 3 August
Last day to trade in City Lodge Ordinary Shares on the JSE in order to participate in Tuesday, 4 August
the Rights Offer (cum rights) on
City Lodge Ordinary Shares commence trading on the JSE ex-rights at 09:00 (SAST) Wednesday, 5 August
on
Listing of and trading in the Letters of Allocation on the exchange operated by the JSE Wednesday, 5 August
commences under share code CLHN and ISIN ZAE000288429 at 09:00 (SAST) on
Circular and Form of Instruction distributed to qualifying Certificated Shareholders on Thursday, 6 August
or about
Record Date for the Rights Offer at close of business on Friday, 7 August
Rights Offer opens at 09:00 (SAST) on Tuesday, 11 August
Letters of Allocation credited to an electronic account held at the transfer secretaries in Tuesday, 11 August
respect of qualifying Certificated Shareholders on
Letters of Allocation credited to CSDP or Broker accounts in respect of qualifying Tuesday, 11 August
Dematerialised Shareholders on
Circular distributed to qualifying Dematerialised Shareholders Tuesday, 11 August
Last day to lodge Form of Instruction with the transfer secretaries in respect of Tuesday, 18 August
qualifying Certificated Shareholders (or their renouncees) wishing to sell all or some of
their Letters of Allocation by 12:00 (SAST) on
Last day for trading Letters of Allocation on the exchanges operated by the JSE in Tuesday, 18 August
order to participate in the Rights Offer
Listing of Rights Offer Shares and trading therein on the exchanges operated by the Wednesday, 19 August
JSE commences at 09:00 (SAST) on
Payment to be made and Form of Instruction to be lodged with the transfer secretaries Friday, 21 August
by qualifying Certificated Shareholders wishing to renounce or subscribe for all or part
of their entitlement by 12:00 (SAST) on
Rights Offer closes at 12:00 (SAST) on Friday, 21 August
Record Date for the Letters of Allocation Friday, 21 August
Rights Offer Shares issued on or about Monday, 24 August
CSDP or Broker accounts of qualifying Dematerialised Shareholders (or their Monday, 24 August
renouncees or purchasers of their Letters of Allocation or purchasers of qualifying
Certificated Shareholders’ Letters of Allocation) debited with Rights Offer price and
credited/updated with Rights Offer Shares at 09:00 (SAST) on
Share certificates posted to qualifying Certificated Shareholders (or their renouncees Monday, 24 August
or purchasers of their Letters of Allocation) by registered post on or about
Results of the Rights Offer and basis of allocation of excess Rights Offer Shares Monday, 24 August
announced on SENS on or about
Rights Offer Shares in respect of successful excess applications, if applicable, issued Wednesday, 26 August
to qualifying Dematerialised Shareholders on
In respect of successful excess applications, if applicable, CSDP or Broker accounts Wednesday, 26 August
of qualifying Dematerialised Shareholders debited with Rights Offer Price and
credited/updated with Rights Offer Shares
In respect of successful excess applications, if applicable, share certificates posted to Wednesday, 26 August
qualifying Certificated Shareholders by registered post on or about
In respect of unsuccessful excess applications, if applicable, refunds made to Wednesday, 26 August
qualifying Certificated Shareholders on or about
Notes:
(1) Share certificates in respect of City Lodge Ordinary Shares may not be dematerialised or rematerialised in the case of
City Lodge Ordinary Shares listed on the JSE, between Wednesday, 5 August 2020 and Friday, 7 August 2020, both
days inclusive.
(2) CSDPs effect payment on a delivery versus payment basis in respect of Dematerialised Shares.
(3) Qualifying Dematerialised Shareholders are required to inform their CSDP or Brokers of their instructions in terms of
the Rights Offer in the manner and time stipulated in the custody agreement governing the relationship between the
qualifying Dematerialised Shareholder and their CSDP or Broker. Qualifying Dematerialised Shareholders are advised
to contact their CSDP or Broker as early as possible to establish what the cut-off dates and times are for acceptance
of the Rights Offer, as set out in the custody agreement, as this may be earlier than the proposed closing time of the
Rights Offer.
Shareholders are advised that the dates and times in respect of the Rights Offer may change. Any changes to the
dates and times will be announced on SENS.
The Board of Directors of the Company accepts responsibility for the information contained in this announcement
and certifies that, to the best of their knowledge and belief, the information contained in this announcement is true
and nothing has been omitted which is likely to affect the importance of the information.
Johannesburg
21 July 2020
Financial Advisor, Underwriter, Bookrunner Legal Adviser to City Lodge
and JSE Transaction Sponsor to City Lodge as to South African law
The Standard Bank of South Africa Limited Edward Nathan Sonnenbergs Inc.
Legal Adviser to Standard Bank Legal Adviser to City Lodge
as to South African law as to US and English law
Allen & Overy (South Africa) LLP Shearman & Sterling (London) LLP
Legal Adviser to Standard Bank Transfer Secretaries of City Lodge
as to US and English law
Computershare Investor Services Proprietary Limited
Allen & Overy LLP
Independent Reporting Accountants and Independent Corporate Adviser to the Independent
Auditors Board of City Lodge
KPMG Inc. Questco Proprietary Limited
IMPORTANT NOTICE
The Rights Offer is being made in accordance with the South African Companies Act No. 71 of 2008, as amended (the
“Companies Act”) and is only addressed to persons to whom it may lawfully be made. By subscribing for any Rights Offer Shares
or purchasing any Letters of Allocation, you will be deemed to have represented and agreed that: (i) you are not (and any per son
for whom you are acting is not) a Restricted Shareholder or otherwise (a) a resident in any jurisdiction in which such offer would be
unlawful or (b) a person to whom the Rights Offer may not lawfully be made; and (ii) you have received all necessary information
required to make an informed investment decision.
This Announcement is not an offer of new City Lodge Ordinary Shares, or an invitation to exercise any of the Rights pursuant to the
Letters of Allocation, in any jurisdiction in which such offer would be unlawful. In a number of countries, in particular in the United
States and the Restricted Territories, the distribution of this Announcement, the exercise of Rights pursuant to the Letters of
Allocation, the offer of the Rights Offer Shares, as well as the sale of the Rights Offer Shares, are subject to restrictions imposed by
law (such as registration, admission or other regulations). No action has been or will be taken by City Lodge or by the Underwriter
to permit the possession or distribution of this Announcement (or any Letter of Allocation) in any jurisdiction where such distribution
may otherwise lead to a breach of any law or regulatory requirement. The Rights Offer Shares have not been and will not be
registered under the US Securities Act, or under any securities laws of any state or other jurisdiction of the United States.
Accordingly, neither this Announcement nor any advertisement nor any other offering material may be distributed or published in
any jurisdiction except under circumstances that will be in compliance with applicable laws and regulations. Persons into whose
possession this Announcement may come are required to inform themselves about and comply with such restrictions, in particular
not to publish or distribute this Announcement in violation of applicable securities regulations. Any failure to comply with such
restrictions may result in a violation of applicable securities regulations. This Announcement does not constitute an offer to sell the
Letters of Allocation or the Rights Offer Shares to any person in any jurisdiction in which it is unlawful to make such offer to such
person, or a solicitation of an offer to buy the Letters of Allocation or the Rights Offer Shares from a person in a jurisdiction in which
it is unlawful to make such solicitation.
No person is or has been authorised to give information or to make any representation regarding this Rights Offer other than those
contained in this Announcement and, if given or made, such information or representations shall not be relied upon as having been
so authorised. In particular, save as expressly stated elsewhere in this Announcement, the contents of City Lodge’s website are not
incorporated by reference into this Announcement and do not form a part of this Announcement, and investors should not rely on
them. No representation or warranty, express or implied, is made by the Underwriter as to or in respect of the contents of this
Announcement, or in relation to the accuracy, completeness or verification of the information contained in this Announcement, and
nothing contained in this Announcement is, or shall be relied upon as, a promise or representation by the Underwriter in this
respect, whether as to the past or the future. The Underwriter assumes no responsibility for the accuracy, completeness or
verification of the information contained in this Announcement and, accordingly, disclaims to the fullest extent permitted by
applicable law any and all liability whether arising in tort (delict), contract or otherwise which they might otherwise be found to have
in respect of this Announcement or any such statement. Information given or representations made in connection with this Rights
Offer or the subscription or the sale of the Letters of Allocation or the Rights Offer Shares that are inconsistent with those contained
in this Announcement are invalid.
Investors acknowledge that: (i) they have not relied on the Underwriter or any person affiliated with the Underwriter in connection
with any investigation of the accuracy of any information contained in this Announcement or their investment decision; and (ii) they
have relied only on the information contained in this Announcement, and that no person has been authorised to give any
information or to make any representation concerning the Group, the Letters of Allocation or the Rights Offer Shares (other than as
contained in this Announcement) and, if given or made, any such other information or representation should not be relied upon as
having been authorised by City Lodge or the Underwriter.
The distribution of this Announcement does not mean that the data contained herein is current as of any time after the date of this
Announcement. In particular, neither the delivery of this Announcement nor the offer, sale or delivery of the Letters of Allocation or
the Rights Offer Shares means that no changes have occurred or no events have happened after the date of this Announcement
which may or could result in an adverse effect on the Group’s business, financial condition or results of operations and prospects.
Nothing contained in this Announcement is intended to constitute investment, legal, tax, accounting or other professional advice.
This Announcement is for your information and nothing in this Announcement is intended to endorse or recommend a particular
course of action. In making an investment decision, each investor must rely on its own examination, analysis and enquiry of the
Group and the terms of the Rights Offer, including the merits and risks involved. Neither City Lodge, nor the Underwriter, nor any of
their respective representatives or affiliates, is making any representation to any offeree, subscriber or purchaser of the Letters of
Allocation or the Rights Offer Shares regarding the legality of acquiring the Letters of Allocation or subscribing for the Rights Offer
Shares by such offeree, subscriber or purchaser under the laws applicable to such offeree, subscriber or purchaser. Each investor
should consult its own advisers before acquiring the Letters of Allocation or subscribing for the Rights Offer Shares. Investors are
required to make an independent assessment of the legal, tax, business, financial and other consequences of acquiring the Letters
of Allocation or the Rights or subscribing for the Rights Offer Shares. They are also required to make their independent assessment
of the risks involved in acquiring the Letters of Allocation or the Rights or subscribing for the Rights Offer Shares.
This announcement includes certain forward-looking statements, beliefs or opinions, including statements with respect to City
Lodge’s business, financial condition, results of operations and prospects. Forward-looking statements are typically identified by the
use of forward looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “intends”, “estimates”, “plans”,
“assumes”, “anticipates”, “annualized”, “goal”, “target” or “aim” or the negative thereof or other variations thereof or comparable
terminology, or by discussions of strategy that involve risk and uncertainties. These statements reflect the directors' beliefs and
expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the
future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be
achieved. There are a number of risks, uncertainties and factors that could cause actual results and developments to differ
materially from those expressed or implied by these statements and forecasts. Past performance cannot be relied on as a guide to
future performance. Forward-looking statements speak only as at the date of this announcement, and City Lodge expressly
disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this
announcement. No statement in this announcement is intended to be a profit forecast. As a result, you are cautioned not to place
any undue reliance on such forward-looking statements.
Date: 21-07-2020 03:54:00
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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
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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