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Offer to shareholders to repurchase their shares, proposed delisting and withdrawal of cautionary announcement
STELLAR CAPITAL PARTNERS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/015580/06)
Share code: SCP ISIN: ZAE000198586
("Stellar Capital" or the "Company")
FIRM INTENTION BY STELLAR CAPITAL IN RESPECT OF AN OFFER TO
SHAREHOLDERS TO REPURCHASE THEIR SHARES AND THE PROPOSED
SUBSEQUENT DELISTING OF STELLAR CAPITAL FROM THE JOHANNESBURG
STOCK EXCHANGE ("JSE") AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
1.1 Shareholders are referred to the renewal of cautionary
announcement released on the Stock Exchange News Service
("SENS") on 29 July 2021 and are advised that the board of
directors of Stellar Capital ("Board") has resolved to propose
(i) to make a cash offer ("Offer") to Stellar Capital
shareholders ("Shareholders") to acquire all of the ordinary
shares held by Shareholders in the issued share capital of
Stellar Capital ("Shares") by way of a scheme of arrangement
("Scheme") in terms of sections 48 and 114(1)(e) of the Companies
Act, No. 71 of 2008, as amended ("Companies Act"), as set out
below and (ii) the subsequent delisting of the Company from the
JSE ("Proposed Delisting"):
1.1.1 in terms of the Scheme, Shareholders will have the option
to either elect to retain all or some of their Shares ("Retain
Option") or to elect to accept the Offer and to sell some or all
of their Shares ("Cash Option") for a cash consideration of 97
cents per Scheme Share ("Scheme Consideration"), on the basis
that Shareholders who make no election will be deemed to have
elected to receive the Cash Option in respect of all of their
Stellar Capital Shares; and
1.1.2 if the Scheme is implemented, all the Shares will be
delisted from the JSE in terms of paragraph 1.14 to 1.16 of the
Listings Requirements of the JSE ("Delisting").
1.2 The Scheme will be conditional on, inter alia, the Offer
being accepted (or deemed to have been accepted) in respect of
no more than 412,371,134 Shares, representing 47.26%% of the
total Shares in issue, excluding the Stellar Capital treasury
shares, totalling a maximum Scheme Consideration of R400,000,000
in order for the Company to satisfy the Solvency and Liquidity
requirements immediately after the implementation of the Scheme.
1.3 The Scheme will further be conditional on, inter alia, the
Delisting being approved in terms of paragraphs 1.14 to 1.16 of
the Listings Requirements of the JSE Limited ("Listings
Requirements").
1.4 The contents of this announcement ("Firm Intention
Announcement") constitute a firm intention by Stellar Capital
to make an offer to Stellar Capital Shareholders as contemplated
in Chapter 5 of the Companies Act and Chapter 5 of the Companies
Regulations, 2011, promulgated under the Companies Act (which
includes the "Takeover Regulations" issued pursuant to sections
120 and 223 of the Companies Act)("Companies Regulations").
1.5 Stellar Capital has constituted an independent board of
directors of Stellar Capital ("Independent Board") for purposes
of evaluating the terms and conditions of the Scheme and advising
Shareholders thereon as required by the Companies Regulations.
The Independent Board comprises Messrs. Potgieter, Roodt and
Wentzel.
1.6 The purpose of this Firm Intention Announcement is to advise
Shareholders of the terms and conditions of the Scheme and the
Delisting.
2. RATIONALE FOR THE TRANSACTION
2.1 A combination of the inability to raise capital on reasonable
terms and the significant costs and expenses associated with the
listing on the JSE, together with the lack of liquidity achieved
by small capitalisation investment holding companies and the
Company's investment strategy being best served in an unlisted
environment has led the Board to conclude that Stellar Capital
is more suited to an unlisted environment and that its continued
listing provides little benefit to its strategic Shareholders.
2.2 The Board has thus proposed that Stellar Capital use its
available internal cash resources to repurchase all of the
Shares other than those Shares held by Shareholders who elect
the Retain Option ("Scheme Shares") and to subsequently delist
the Company from the JSE. The Offer, which will cost Stellar
Capital a maximum capped amount of R400,000,000 (excluding
transaction costs), will provide minority Shareholders with a
valuable liquidity event.
2.3 The Scheme Consideration of 97 cents per Share represents a
22.8% premium to the closing price on 26 August 2021, being the
business day preceding this Firm Intention Announcement and a
28.7% premium to the 30-day volume weighted average price on 26
August 2021.
3. TERMS AND CONDITIONS OF THE SCHEME
The Scheme constitutes an an "affected transaction” as defined in
section 117(1)(c)(iii) of the Companies Act and, as such, the
Scheme is regulated by the Companies Act and the Companies
Regulations.
The Scheme constitutes a pro rata repurchase by Stellar Capital
of its shares from all its shareholders in terms of paragraph
5.67(B) of the Listings Requirements.
The salient terms of, and other information pertaining to, the
Scheme are set out below:
3.1 Terms of the Scheme
3.1.1 The Scheme will be proposed by the Board between Stellar
Capital and its Shareholders.
3.1.2 The Scheme will be subject to the fulfilment of the Scheme
Conditions Precedent set out in paragraph 3.3 below.
3.1.3 In the event that the Scheme becomes operative, the listing
of all of the Shares on the JSE will be terminated, and all
Shareholders, excluding those Shareholders who elect the Retain
Option, or who validly exercise their appraisal rights in
accordance with section 164 of the Companies Act as a consequence
of the approval of the Scheme and whose Shareholder rights have
are not reinstated as envisaged in sections 164(9) and 164(10)
of the Companies Act or who are not ordered by any South African
court of competent jurisdiction ("Court") to withdraw their
demands in terms of section 164(15)(c)(v)(aa) of the Companies
Act ("Scheme Participants"), will be deemed to have disposed of
all of their Scheme Shares at the Scheme Consideration, such
that Stellar Capital will acquire all of the Scheme Shares
previously held by the Scheme Participants.
3.2 Scheme Consideration
The Scheme Participants shall receive the Scheme Consideration,
in the amount of 97 cents per Scheme Share held by such Scheme
Participant.
3.3 Scheme Conditions Precedent
3.3.1 The implementation of the Scheme is subject to the
fulfilment or waiver, as the case may be, of the following
conditions ("Scheme Conditions Precedent") by no later than 31
December 2021 ("Longstop Date"):
3.3.1.1 to the extent required, all approvals, consents or
waivers from those South African regulatory authorities as may
be necessary for Stellar Capital to propose and implement the
Scheme and the Delisting, including the Takeover Regulation
Panel ("TRP") (by means of the issue of a compliance certificate
in terms of section 121(b)(i) of the Companies Act), the South
African Competition Authorities, the Financial Surveillance
Department of the South African Reserve Bank and the JSE Limited,
are obtained on an unconditional basis or, to the extent that
any such regulatory approvals, consents or waivers are obtained
subject to any condition or qualification, Stellar Capital (to
the extent that it is adversely affected by the condition or
qualification) confirms in writing that the condition or
qualification is acceptable to it, which confirmation shall not
be unreasonably withheld or delayed;
3.3.1.2 all necessary Shareholder approvals and/or resolutions
as may be necessary to give effect to the Scheme are obtained,
including, but not being limited to, the special resolution at
the general meeting of Shareholders (“General Meeting”) expected
to be held at Stellar Capital's registered office on or about
Tuesday, 26 October 2021 in order to consider and, if deemed
fit, to pass the special resolution in accordance with section
115(2) of the Companies Act (the "Scheme Resolution");
3.3.1.3 Shareholders approving the Delisting at the General
Meeting in terms of paragraphs 1.15(a) and 1.16 of the Listings
Requirements;
3.3.1.4 the Offer being accepted, or deemed to have been
accepted, in respect of no more than 412,371,134 Shares,
representing 47.26% of the total Shares in issue, excluding the
Stellar Capital treasury shares, totalling a maximum Scheme
Consideration of R400,000,000 ("Maximum Scheme Consideration");
3.3.1.5 if applicable, Stellar Capital not electing to treat the
Scheme Resolution as a nullity pursuant to section 115(5)(b) of
the Companies Act;
3.3.1.6 in the circumstances where Stellar Capital has not
elected to treat the Scheme Resolution as a nullity pursuant to
section 115(5)(b) of the Companies Act, a Court having granted
its approval pursuant to section 115(3) of the Companies Act in
circumstances where:
3.3.1.6.1 the Scheme Resolution is opposed by 15% or more of the
voting rights that are exercised in respect of the Scheme
Resolution; and
3.3.1.6.2 a Shareholder who votes against the Scheme Resolution
requiring Stellar Capital, within 5 business days after the
vote, to seek Court approval pursuant to section 115(3)(a) of
the Companies Act;
3.3.1.7 no Shareholder who votes against the Scheme Resolution
applying to Court, within 10 business days after the vote, for
leave to apply for a review of the Scheme in accordance with the
requirements of section 115(3)(b) of the Companies Act and
section 115(6) of the Companies Act;
3.3.1.8 Stellar Capital waiving the Scheme Condition Precedent
in paragraph 3.3.1.7 and the Court not granting leave to any
Shareholder to apply to Court for a review of the Scheme, as
contemplated in sections 115(3)(b), 115(6) and 115(7) of the
Companies Act;
3.3.1.9 Stellar Capital waiving the Scheme Condition Precedent
in paragraph 3.3.1.8 and the Court approving the Scheme
Resolution pursuant to section 115(7) of the Companies Act;
3.3.1.10 with regard to Shareholders entitled to and validly
exercising their appraisal rights, either: (i) Shareholders give
notice objecting to the Scheme as contemplated in section 164(3)
of the Companies Act and vote against the Scheme at the General
Meeting in respect of less than or equal to 5% of all of the
Scheme Shares; or (ii) if Shareholders give notice objecting to
the Scheme and vote against the Scheme at the General Meeting
in respect of more than 5% of all of the Scheme Shares, then,
within the time period permitted in terms of the Companies Act,
dissenting Shareholders having exercised appraisal rights, by
giving valid demands in terms of sections 164(5) to 164(8) of
the Companies Act, in respect of less than or equal to 5% of all
the Scheme Shares, or not at all; and
3.3.1.11 that, if required, the TRP exempts any Shareholder from
extending a mandatory offer to the other Shareholders in terms
of section 123 of the Companies Act if such Shareholder, either
alone or together with his related and/or concert parties,
becomes the holder of 35% or more of the total Shares in issue
upon implementation of the Scheme.
3.3.2 Stellar Capital shall be entitled to waive (in whole or
in part) in writing any one or more of the Scheme Conditions
Precedent stipulated in paragraphs 3.3.1.3, 3.3.1.4, 3.3.1.5,
3.3.1.7, 3.3.1.8, 3.3.1.10 and 3.3.1.11. The remaining Scheme
Conditions Precedent stipulated above are not capable of waiver.
The Longstop Date may be extended by Stellar Capital, subject
to any approval as may be required from the TRP. Any extension
of the Longstop Date will be announced on SENS and published in
the South African press.
3.4 Termination of the Scheme
The Scheme shall terminate and shall not be implemented only as
follows:
3.4.1 if any Scheme Condition Precedent, which may be waived by
Stellar Capital, becomes incapable of fulfilment, and Stellar
Capital does not waive that Scheme Condition Precedent; or
3.4.2 if all the Scheme Conditions Precedent have not been
fulfilled or waived on or by the Longstop Date.
4. IRREVOCABLE UNDERTAKINGS AND CONCERT PARTIES
4.1.1 As at the date of this Firm Intention Announcement,
Foxglove Capital Resources Limited ("Foxglove") has irrevocably
undertaken, in anticipation of the successful implementation of
the Scheme, to elect the Retain Option in respect of all of the
Shares held by Foxglove, being 295,041,641 Shares representing
32,3% of the total Shares in issue.
4.1.2 By virtue of the fact that Foxglove may, after the
implementation of the Scheme, hold more than 35% of the Shares,
and may, as a result, acquire control of the Company pursuant
to the implementation of the Scheme, it will be considered an
acquiring party for purposes of section 115(4) of the Companies
Act, with the result that the voting rights controlled by
Foxglove will not be included in calculating the percentage of
voting rights required (i) to be present in determining whether
the quorum requirements for the General Meeting are satisfied;
and (ii) to be voted in support of the Scheme Resolution.
Additionally, Foxglove has voluntarily consented that the voting
rights controlled by it will likewise not be included in the
calculating the percentage of voting rights required to be voted
in support of the Delisting Resolution.
4.1.3 Messrs. Graham, Steyn and Van Zyl, as directors and also
Shareholders of the Company, and entities controlled by them
(where applicable), are presumed to be concert parties with the
Company in terms of regulation 84 of the Companies Regulations
and have, therefore, made declarations in the required form to
the TRP, in terms of regulation 84(5) of the Companies
Regulations.
5. INDEPENDENT EXPERT AND FAIR AND REASONABLE OPINION
5.1 In accordance with paragraph 1.15(d) of the Listings
Requirements and section 114(2) of the Companies Act, the
Independent Board has appointed PSG Capital Proprietary Limited
as the independent expert in terms of section 114(2) of the
Companies Act, regulation 90 of the Companies Regulations and
Schedule 5 to the Listings Requirements ("Independent Expert")
to provide the Independent Board with external advice in
relation to the terms of the Scheme, in the form of a fair and
reasonable opinion as required by and in compliance with the
Companies Regulations and the Listings Requirements.
5.2 The full substance of the Independent Expert's report in
connection with the terms of the Scheme, once procured, will be
more fully set out in the Circular to be distributed to
Shareholders as referred to in paragraph 8 below.
6. RESPONSIBILITY STATEMENTS
The Independent Board, individually and collectively, accept s
full responsibility for the accuracy of the information
contained in this Firm Intention Announcement which relates to
Stellar Capital, the Scheme and the Delisting, and certifies
that, to the best of its knowledge and belief, such information
is true and this Firm Intention Announcement does not omit any
facts that would make any of the information false or misleading
or would be likely to affect the importance of any information
contained in this Firm Intention Announcement. The Independent
Board has made all reasonable enquiries to ascertain that no
facts have been omitted and this Firm Intention Announcement
contains all information required by law, the Companies Act and
the Listings Requirements.
The Board, individually and collectively, accepts full
responsibility for the accuracy of the information contained in
this Firm Intention Announcement which relates to Stellar
Capital, the Scheme and the Delisting, and certifies that, to
the best of its knowledge and belief, such information is true
and this Firm Intention Announcement does not omit any facts
that would make any of the information false or misleading or
would be likely to affect the importance of any information
contained in this Firm Intention Announcement. The Board has
made all reasonable enquiries to ascertain that no facts have
been omitted and this Firm Intention Announcement contains all
information required by law, the Companies Act and the Listings
Requirements.
7. CASH CONFIRMATION
Stellar Capital will use its available cash resources to fund
the Scheme Consideration. The funds to settle the Scheme
Consideration are in place and, in accordance with regulation
111(4) and 111(5) of the Companies Regulations, Stellar Capital
has procured and has delivered to the TRP, an irrevocable cash
confirmation in respect of the Maximum Cash Consideration issued
by Cliffe Dekker Hofmeyr Incorporated.
8. POSTING OF THE OFFER CIRCULAR AND NOTICE OF THE GENERAL MEETING
8.1 A circular providing full details of the Scheme and
incorporating a notice of the General Meeting, the report by the
Independent Expert, the recommendations of the Independent Board
and the Board and the salient dates and times relating to the
Scheme is expected to be distributed to Shareholders on or about
Monday, 27 September 2021 ("Circular").
8.2 The General Meeting is expected to be held at 09:30 on or
about Tuesday, 26 October 2021 at Stellar Capital's registered
office, 4th Floor, The Terraces, 25 Protea Road, Claremont, Cape
Town, 7708.
8.3 A further announcement setting out details of the salient
dates and times will be published in due course.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Further to the information set out in this announcement, the
cautionary announcement released on SENS on 18 November 2020
(and the subsequent renewals thereof) is hereby withdrawn and
caution is no longer required to be exercised by Stellar Capital
Shareholders when dealing in Shares.
Cape Town
27 August 2021
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 27-08-2021 09:00:00
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