Wrap Text
AVU/MVG - Avusa Limited/Mvelaphanda Group Limited - Joint Announcement relating
to a firm intention by Mvela Group to make an offer
Avusa Limited Mvelaphanda Group Limited
Incorporated in the Republic Incorporated in the Republic
of South Africa of South Africa
Registration number: Registration number:
2008/002461/06 1995/004153/06
Ordinary share code: AVU Ordinary share code: MVG
ISIN code: ZAE000115895 ISIN code: ZAE000060737
("Avusa") ("Mvela Group")
Richtrau No. 229 (Proprietary)
Limited
Incorporated in the Republic
of South Africa
Registration number:
2008/008392/07
("Richtrau")
JOINT ANNOUNCEMENT RELATING TO A FIRM INTENTION BY MVELA GROUP TO MAKE AN OFFER,
THROUGH ITS WHOLLY OWNED SUBSIDIARY RICHTRAU, TO ACQUIRE THE ENTIRE ISSUED AND
TO BE ISSUED ORDINARY SHARE CAPITAL OF AVUSA THAT IT DOES NOT ALREADY
BENEFICIALLY OWN ("FIRM INTENTION ANNOUNCEMENT") AND CAUTIONARY ANNOUNCEMENT
Highlights
- Cash offer of R24.00 or a share offer of 1.48 new listed shares in Richtrau
per Avusa ordinary share;
- Richtrau will be listed on the JSE Limited ("JSE") and simultaneously
unbundled from Mvela Group;
- Furtherance of Mvela Group`s realisation and value unlocking strategy, which
will result in Mvela Group shareholders having direct exposure to Avusa through
Richtrau;
- New CEO of Avusa with a strong management team incentivised on implementing
and delivering a turnaround strategy to create shareholder value;
- Smaller board of directors including an independent chairperson; and
- Richtrau / Avusa to be renamed.
1. Introduction
Avusa shareholders and Mvela Group shareholders are advised that the independent
board of directors of Avusa (the "Avusa Board") has received communication of a
firm intention to make an offer (the "Offer") from Mvela Group, through its
wholly-owned subsidiary Richtrau, to acquire the entire issued and to be issued
ordinary share capital of Avusa that it does not already beneficially own
("Offer Shares"). If implemented, the Offer will result in Richtrau becoming the
registered and beneficial owner of all of the Offer Shares. Richtrau is acting
as principal in relation to the Offer and is not acting in concert with any
other party.
Avusa, Richtrau and Mvela Group entered into an implementation agreement on 11
June 2012 (the "Implementation Agreement") in relation to the Offer, which
agreement contains the provisions relating to the implementation of the Offer
and certain undertakings from Avusa (including terms regarding the conduct of
the business of Avusa in the period between the date of this Firm Intention
Announcement and the closing date of the Offer, the payment of a break fee and
the manner in which third party approaches will be dealt with by Avusa). Details
in respect of third party approaches and the break fee are set out in paragraphs
10 and 11 of this Firm Intention Announcement.
Richtrau proposes that the Avusa Board implement the Offer with its shareholders
other than Richtrau ("the Avusa Shareholders") by way of a scheme of arrangement
(the "Scheme") in terms of section 114 of the Companies Act, of 2008 as amended
(the "Companies Act") and by way of a comparable offer by Richtrau to holders of
options to acquire Avusa shares in terms of the Avusa Share Appreciation Scheme,
the Avusa Long Term Incentive Scheme, the Avusa Deferred Bonus Plan and to the
holders of the options rolled-over from the ElementOne Limited share scheme
(collectively the "Options").
Mvela Group intends, upon implementation of the Scheme, to list Richtrau on the
JSE and to thereafter unbundle all its shares in Richtrau to its shareholders
("the Unbundling") (the Scheme, together with the listing of Richtrau and the
Unbundling, referred to herein as the "Proposed Transaction").
As previously communicated, Mvela Group remains committed to the realisation and
unbundling of its assets. Pursuant to this strategy, Mvela Group believes that
the Unbundling is in the best interests of Mvela Group ordinary shareholders.
The Unbundling will result in Mvela Group ordinary shareholders having direct
exposure to Avusa through their resultant direct shareholding in Richtrau post
implementation of the Scheme. Furthermore, the Unbundling will unlock value for
Mvela Group ordinary shareholders and will allow Mvela Group ordinary
shareholders to trade their current indirect interest in Avusa separately to
their Mvela Group ordinary shares.
2. Terms of the Offer
2.1 Offer Consideration
In terms of the Offer, Avusa Shareholders will be entitled to elect to:
- receive a cash consideration of R24.00 per Avusa ordinary share for their
Offer Shares (or a portion thereof) (the "Cash Consideration"), with such Cash
Consideration being limited to a maximum aggregate consideration of
R1,130,000,000; and/or
- exchange their Offer Shares (or a portion thereof) for ordinary shares in
Richtrau (the "Share Consideration"), provided that such Share Consideration
will be limited to a maximum of 67.7% of the Offer Shares, on the basis that the
(i) Richtrau ordinary shares will be valued on a net asset value basis (existing
Avusa ordinary shares owned priced on the 30 day volume weighted average price
("VWAP") plus cash less debt) to arrive at an implied Richtrau ordinary share
price, and (ii) Avusa`s ordinary shares shall be priced on the 30-day VWAP.
The Richtrau share price is compared to the current 30-day VWAP per Avusa
ordinary share of R20.05 to derive an exchange ratio of 1.48 Richtrau ordinary
shares per Avusa ordinary share.
Avusa Shareholders who do not make a valid election in terms of the Scheme will
be deemed to have accepted the Cash Consideration in respect of 100% of their
Avusa shares, and accordingly will receive the Cash Consideration subject to the
maximum Cash Consideration set out above.
This offer structure is designed to provide flexibility to Avusa Shareholders to
realise their shareholding in Avusa at a substantial premium and/or continue to
retain exposure to Avusa`s future growth prospects through their shareholding in
Richtrau.
In the event that Avusa Shareholders in the aggregate elect to receive the Share
Consideration in excess of 67.7% of the Offer Shares, the balance of the Scheme
consideration in excess of 67.7% will be paid to Avusa Shareholders in
proportion to their respective shareholdings in the form of the Cash
Consideration.
If Avusa Shareholders in the aggregate elect to receive the Cash Consideration
in excess of R1,130,000,000, Richtrau may in its sole discretion reduce the Cash
Consideration payable to those Avusa Shareholders who elected the Cash
Consideration in respect of 100% of their Offer Shares, pro rata to such Offer
Shares held and on the basis that all such Avusa Shareholders are treated
equally provided that at least 60.3% of the consideration payable to those Avusa
Shareholders will be paid as the Cash Consideration taking into account
elections received in the irrevocable undertakings referred to in paragraph 2.6
below. The balance of the Scheme consideration will be paid to Avusa
Shareholders, in the form of the Share Consideration, in proportion to their
respective shareholdings.
If the receipt by an Avusa Shareholder of the Share Consideration would require
Richtrau to comply with filing and/or other regulatory obligations in the
jurisdiction in which such Avusa Shareholder is resident or has its registered
address (including, but not limited to, the United States of America, Canada,
Australia and Japan), (a "Cash-Only Shareholder"), such Cash-Only Shareholder
will be deemed to have elected to receive the Cash Consideration. If, as a
result of the number of Avusa Shareholders who elect the Cash Consideration, the
Cash Consideration is insufficient to settle the Scheme Consideration due to
Cash-Only Shareholders in full, any Share Consideration which would otherwise be
due to Cash-Only Shareholders will not be issued to such Cash-Only Shareholders
personally, but shall instead be retained by Richtrau or a third party in South
Africa nominated by Richtrau, which shall in each case hold such Share
Consideration on behalf of such Cash-Only Shareholders. Richtrau, or the third
party to whom such Share Consideration is issued, shall be obliged to dispose
thereof and to remit the proceeds of such disposal (net of applicable fees,
expenses, taxes and charges) to such Cash-Only Shareholders, at such Cash-Only
Shareholders risk.
The table below illustrates the Cash Consideration premium:
Before the Premium (%)
Firm Intention
Announcement (R)
Market price on 11 June 2012 20.50(1) 17.1
30-day VWAP to 11 June 2012 20.07(2) 19.6
60-day VWAP to 11 June 2012 20.31(3) 18.1
90-day VWAP to 11 June 2012 20.31(4) 18.1
Notes:
1. Closing price of Avusa shares on the JSE on 11 June 2012, being the last
trading day prior to publication of the Firm Intention Announcement.
2. VWAP at which Avusa shares traded on the JSE for the 30 trading days up to
and including 11 June 2012, being the last trading day prior to the publication
of the Firm Intention Announcement.
3. VWAP at which Avusa shares traded on the JSE for the 60 trading days up to
and including 11 June 2012, being the last trading day prior to the publication
of the Firm Intention Announcement.
4. VWAP at which Avusa shares traded on the JSE for the 90 trading days up to
and including 11 June 2012, being the last trading day prior to the publication
of the Firm Intention Announcement.
5. The information reflected in the table above does not take into account any
possible dividend and interest entitlements.
The Offer Consideration is determined on the basis that Avusa will not during
the offer period (the period during the submission of the Offer to the date of
the implementation of the Scheme):
- conduct any capital reductions, make any distributions, dividends or similar
payments ("Avusa Distribution") to Avusa Shareholders. In the event that Avusa
makes an Avusa Distribution to Avusa Shareholders from the date of this Firm
Intention Announcement to the date that the Scheme becomes operative, the Offer
Consideration will be adjusted downwards by the amount of the Avusa Distribution
on a per share basis;
- incur any further financial debt. In the event that Avusa incurs any further
financial debt, the Scheme consideration will be adjusted downwards by the
amount of the financial debt on a per-share basis; or
- issue any further shares. In the event that Avusa issues any further shares,
the Scheme consideration will be adjusted pro rata per-share.
2.2 Settlement of the Offer Consideration
If the payment of the Offer Consideration occurs after 30 September 2012 (by
reason of a delay in the fulfilment or waiver, if applicable, of the conditions
precedent), the Cash Consideration payable to the Avusa Shareholders on the
record date for the Scheme will be increased by an amount equivalent to the
prime overdraft rate, as published by FirstRand Bank Limited from time to time,
plus 2% (calculated daily from 1 October 2012 to the date of actual payment,
both dates inclusive).
2.3 Cash confirmation
The total funding required to satisfy the Cash Consideration for the Offer is
R1,130,000,000. Richtrau has furnished bank guarantees from South African
registered banks (Nedbank Limited, Rand Merchant Bank, a division of FirstRand
Bank Limited, and The Standard Bank of South Africa Limited) for the purpose of
fully satisfying the Cash Consideration, which are in a form acceptable to the
Takeover Regulation Panel ("TRP") and which comply with regulation 111(4) and
111(5) of the Takeover Regulations. The bank guarantees have been provided to
the TRP in favour of Avusa Shareholders for the sole purpose of fully satisfying
the consideration payable under the Cash Consideration.
2.4 Avusa Options
Option holders will be offered a cash consideration equivalent to the "in the
money" value of such Options, as determined by the Avusa Board`s remunerations
committee after consultation with Richtrau, on a net cash cancellation basis,
being an amount equal to the difference between the Cash Consideration and the
strike price of the relevant Options, upon the Scheme becoming operative. In
determining whether the Options are "in the money", the said remunerations
committee shall take into account whether the Options have met their performance
conditions as at the operative date of the Scheme.
Avusa has agreed not to issue any further Options following the date of this
Firm Intention Announcement, without the prior written consent of Richtrau.
2.5 Irrevocable undertakings from Avusa Shareholders
Richtrau has received irrevocable undertakings from the following Avusa
Shareholders to vote in favour of the Offer, which shareholders collectively
hold 65.01% of the Offer Shares:
Shareholder Number of Avusa Percentage of Offer Shares
ordinary shares beneficially held or controlled
(directly or indirectly)
Coronation Fund 24,100,000 24.62%
Managers Limited
UHC Communication 20,555,555 21.00%
(Proprietary)
Limited
Kagiso Asset 14,480,000 14.79%
Management
(Proprietary)
Limited
Cadiz Asset 2,797,268 2.86%
Management
(Proprietary)
Limited
Old Mutual 1,700,000 1.74%
Investment Group
(South Africa)
(Proprietary)
Limited
Total 63,632,823 65.01%
2.6 Irrevocable undertakings from Mvela Group Shareholders
Richtrau has received irrevocable undertakings from the following Mvela Group
shareholders to vote in favour of the Proposed Transaction:
Shareholder Number of Mvela Percentage of Outstanding Shares
Group ordinary beneficially held or controlled
shares (directly or indirectly)
Blackstar Group SE 147,078,527 28.28%
Mvelaphanda 103,752,650 19.95%
Holdings
(Proprietary)
Limited
Tantalum Capital 47,000,000 9.04%
(Proprietary)
Limited
Total 297,831,177 57.27%
2.7 Beneficial shareholding in Avusa
Mvela Group, through its wholly-owned subsidiary Richtrau, currently holds
26,474,396 Avusa ordinary shares, which equates to 21.29% of the entire issued
share capital of Avusa.
3. Overview of Mvela Group, Richtrau and Avusa
3.1 Background on Mvela Group and Richtrau
Mvela Group is an iconic South African focused black economically empowered
investment holding company listed on the Main Board of the JSE. Since September
2009, Mvela has implemented an investment strategy focussed on unlocking value
for Mvela Group shareholders. In January 2012, Blackstar Group SE ("Blackstar")
acquired 28% of Mvela Group, becoming the single largest investor in the
company. In addition, two of Blackstar`s executives were appointed to the Mvela
Group board and assumed the roles of interim chief executive officer and
financial director with a view to unbundle and continue realising the value of
Mvela`s remaining investment portfolio in the most efficient manner.
Richtrau was incorporated in South Africa on 11 April 2008 as a wholly-owned
subsidiary of Mvela Group with the sole purpose of holding shares in Avusa.
Richtrau acquired its 21.29% shareholding in Avusa during the first half of
2008. As a wholly-owned subsidiary of Mvela Group, Richtrau will acquire the
Offer Shares from the Avusa Shareholders pursuant to the Scheme.
Richtrau is the ultimate purchaser of the Offer Shares pursuant to the Scheme.
Blackstar, as a 28% shareholder of Mvela Group, is acting as promoter and
arranger of the Proposed Transaction.
Mvela Group`s current investments are:
- an effective 47.3% interest in Batho Bonke Capital (Proprietary) Limited,
which owns ordinary shares with an effective 4.75% interest in ABSA Group
Limited;
- 100% shareholding in Richtrau, whose sole investment is its 21.29% interest in
Avusa. Richtrau`s ordinary shares in Avusa are encumbered in favour of Nedbank
Limited, the subscriber to the Richtrau preference share capital; and
- ordinary and share option investment in Group Five Limited.
Pursuant to the Unbundling, Mvela Group will only hold its investments in Batho
Bonke (Proprietary) Limited and Group Five Limited.
3.2 Background on Avusa
Avusa is a leading South African media and entertainment company, boasting
prominent brands and innovative content delivered across a variety of channels.
The company is a leading media and entertainment content provider with various
business units that make up the group, namely Media, Books, Retail Solutions,
Entertainment and Digital. The businesses are supported by end-to-end supply
chain and logistics platform businesses. Avusa possesses leading media brands
that are the cornerstone of the success of the organisation.
4. Rationale for the Offer and growth plans for Avusa
The Proposed Transaction presents a unique opportunity for Richtrau to
consolidate South Africa`s leading media entertainment company through a single
listed entity, and to partner with a strong management team in pursuing an
encouraging growth strategy. Avusa Shareholders are afforded the opportunity (if
they so elect) to continue to remain invested in a restructured Avusa by
exchanging their Avusa ordinary shares for Richtrau ordinary shares.
On implementation of the Proposed Transaction, Richtrau will own all of the
issued share capital of Avusa. The capitalisation of Richtrau (at prudent levels
of leverage) is designed to provide the business of Avusa with sufficient
flexibility to support growth as well as to protect the Company through periods
of adverse economic conditions. The Proposed Transaction will facilitate the
injection of gearing into Avusa in an efficient manner and will enable Avusa to
operate with a more efficient capital structure. In addition, the Cash
Consideration provides Avusa Shareholders with an alternative to dispose of
their Avusa shares at a substantial premium to the current share price, giving
Avusa Shareholders certainty over the consideration that they will receive.
The management and operational structure of Avusa is to be restructured to focus
on the operational turnaround and implement a number of identified cost saving
and efficiency measures. Post the implementation of the Proposed Transaction,
Colin Cary will head Avusa (the operating company). Colin is an entrepreneur who
built Hirt & Carter, now a subsidiary of Avusa, as a twenty-first century
business which occupies a unique position in the South African market.
Blackstar, as the promoter of the Proposed Transaction, will have board
representatives and assist management in driving the turnaround strategy in
Avusa, focused on bringing the company back to basics with a strong focus on
fixing existing businesses through cost rationalisation, driving efficiencies
and collaboration across all business units.
Blackstar has a long term growth-orientated investment and value creation
approach, which is well aligned with Avusa`s strategic intention. Blackstar will
support a reorganised Avusa management team to deliver on the cost
rationalisation, divisional integration. A new management incentive scheme
arrangement will be established to ensure that Avusa management are focused on
implementing and delivering on the stated turnaround strategy to create
shareholder value. In line with delivering on these efficiencies on a
restructured Avusa, Richtrau will be constituted of a smaller board comprised of
experienced business professionals who will effectively monitor and support
management as it implements the turnaround strategy.
The acquisition debt providers have required Blackstar to be locked in for a
minimum period of three years to ensure that the operational turnaround is
implemented and the majority of the acquisition finance is repaid.
5. Richtrau unbundling and listing rationale
The Scheme forms part of a larger Mvela Group restructuring. As previously
communicated, Mvela Group remains committed to the realisation and unbundling of
its assets. Pursuant to this strategy, Mvela Group believes that the unbundling
of Richtrau to Mvela Group ordinary shareholders is in the best interests of the
Mvela Group ordinary shareholders. The Unbundling will result in Mvela Group
shareholders having direct exposure to Avusa through their resultant direct
shareholding in Richtrau post implementation of the Scheme. Furthermore, the
Unbundling will unlock value for Mvela Group shareholders and will allow Mvela
Group ordinary shareholders to trade their current indirect interest in Avusa
separately to their Mvela Group ordinary shares.
The Proposed Transaction will consist, inter alia, of the following inter-
conditional and indivisible steps which will be implemented in the following
sequence:
- the Scheme becoming operative;
- the listing of all the ordinary shares of Richtrau on the JSE (the "Listing");
and
- Mvela Group declaring and making a distribution to its shareholders of all the
ordinary shares held by it in the issued share capital of Richtrau at the time
of the distribution.
The inter-conditional and indivisible steps set out above will only be
implemented if all the conditions to each step have been fulfilled or waived and
the Scheme as a whole has been implemented.
As previously communicated, Mvela Group remains committed to the realisation and
unbundling of its assets. Pursuant to this strategy, Mvela Group believes that
the unbundling of Richtrau to Mvela Group ordinary shareholders is in the best
interests of the Mvela Group ordinary shareholders. The Unbundling will result
in Mvela Group shareholders having direct exposure to Avusa through their
resultant direct shareholding in Richtrau post implementation of the Scheme.
Furthermore, the Unbundling will unlock value for Mvela Group shareholders and
will allow Mvela Group ordinary shareholders to trade their current indirect
interest in Avusa separately to their Mvela Group ordinary shares.
6. Scheme conditions
The implementation of the Scheme will be subject to the fulfilment, or waiver
(in whole or in part) of the following conditions by no later than 4 December
2012 (which, to the extent not satisfied or waived as at the time of the posting
of the Circular shall be included in the Circular materially in the form set out
below):
- the conditions to the Unbundling being fulfilled other than those conditions
requiring any of the conditions to the Scheme being fulfilled;
- the JSE consenting to the Listing of Richtrau`s shares on the Main Board of
the JSE and such consent becoming unconditional in accordance with its terms
(except for any condition requiring the Scheme to be effected);
- lodgement with and registration (to the extent necessary) by the Companies and
Intellectual Property Commission of all special resolutions passed by the
shareholders of Richtrau to: (i) convert Richtrau to a public company, (ii)
adopt a memorandum of incorporation that is compliant with the JSE Listings
Requirements, and (iii) amend its authorised share capital to enable the issue
of the Share Consideration;
- the approval of the Scheme by the requisite majority of Avusa Shareholders, as
contemplated in section 115(2) of the Companies Act, and: (i) to the extent
required, the approval of the implementation of such resolution by the Court;
and (ii) if applicable, Avusa not treating the aforesaid resolution as a
nullity, as contemplated in section 115(5)(b) of the Companies Act;
- within 30 business days following the Avusa Shareholders` meeting convened to
approve the Scheme, Avusa Shareholders exercise appraisal rights, in terms of
section 164 of the Companies Act by giving valid demands in terms of section
164(7) of the Companies Act, in respect of no more than 5% of the issued
ordinary shares of Avusa, provided that, in the event that Avusa Shareholders
give notice objecting to the Scheme as contemplated in section 164(3) of the
Companies Act and/or vote against the resolutions proposed at the Scheme meeting
in respect of no more than 5% of the issued ordinary shares of Avusa, this
condition shall be deemed to have been fulfilled at the time of the Scheme
meeting;
- the receipt of unconditional approvals, consents or waivers from all
regulatory bodies, governmental or quasi-governmental entities necessary to
implement the Scheme including, but not limited to, the TRP (in terms of a
compliance certificate to be issued in terms of the Companies Act in relation to
the Scheme), the South African and Namibian competition authorities to the
extent necessary or, to the extent that any such consents are subject to
conditions, such conditions being satisfactory to Richtrau (acting reasonably);
- the South African Revenue Services issuing an unconditional directive in terms
of section 23K(3) of the Income Tax Act confirming that all interest incurred by
a wholly owned subsidiary of Richtrau in respect of the funding raised to
acquire all or some of the business of Richtrau following implementation of the
Proposed Transaction, will be deductible for income tax purposes;
- the following events have not occurred in relation to any company in the Avusa
group which contributes 5% or more of the earnings before interest, tax,
depreciation and amortisation ("EBITDA"), assets or turnover of the Avusa group
by the finalisation date:
i. if it is dissolved or de-registered; or
ii. an order or declaration is made, or a resolution is passed, for the
administration, custodianship, bankruptcy, liquidation, business rescue,
winding-
up, judicial management, receivership, supervision, trusteeship, de-registration
or dissolution (and, in each case, whether provisional or final) of it, its
assets or its estate or an order or declaration is made, or a resolution is
passed, to authorise the commencement of any business rescue proceeding in
respect of it, its assets or its estate; or
iii. it convenes any meeting to consider the passing of resolution for the
administration, custodianship, bankruptcy, liquidation, business rescue,
winding-
up, judicial management, receivership, supervision, trusteeship, de-registration
or dissolution (and, in each case, whether provisional or final) of it, its
assets or its estate or to authorise the commencement of any business rescue
proceeding in respect of it, its assets or its estate; or
iv. it seeks or requests the appointment of an administrator, liquidator
(whether provisional or final), business rescue practitioner, conservator,
receiver, trustee, judicial manager, judicial receiver, administrative receiver,
compulsory manager, custodian or other similar official for it or for all or
substantially all its assets or estate; or
v. it has a secured party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 (thirty) days
thereafter; or
vi. it is unable (or admits inability) to pay its debts generally as they fall
due or is (or admits to being) otherwise insolvent (but excluding for this
purpose any technical insolvency) or stops, suspends or threatens to stop or
suspend payment of all or a material part of its indebtedness or proposes or
seeks to make or makes a general assignment or any arrangement, compromise or
composition with or for the benefit of its creditors or any class of its
creditors or a moratorium is agreed or declared in respect of or affecting all
or a material part of its indebtedness; or
vii. it takes or proposes to its creditors any proceeding for, or seeks to make
or makes, a general readjustment, rescheduling or deferral of its indebtedness
(or any part thereof which it would otherwise be unable to pay when due); or
viii. any receiver, administrative receiver, judicial receiver, judicial
manager, administrator, compulsory manager, judicial custodian, trustee in
bankruptcy, liquidator (whether provisional or final), business rescue
practitioner or the like is appointed in respect of it, its estate or any
material part of its assets; or
ix. it causes or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any of the
events specified in the above paragraphs;
- by the date on which each of the above conditions referred to in this
paragraph 7 have been fulfilled or waived (as the case may be), there not having
occurred an adverse effect, fact, circumstance or any potential adverse effect,
fact or circumstance which has arisen or occurred, or might reasonably be
expected to arise or occur and which is or might reasonably be expected (alone
or together with any other such actual or potential adverse effect, fact or
circumstance) to be material with regard to the operations, continued existence,
business, condition, assets and liabilities of Avusa and its subsidiaries
(whether as a consequence of the Offer or not) and/or any restrictive covenant
or covenants or similar provision entered into by Avusa or any of its
subsidiaries which may materially reduce the operating performance of Avusa. For
the purposes of this paragraph 7, to be material, the adverse effect, fact or
circumstance or covenant or position must have (or be reasonably expected to
have) an adverse impact upon Avusa`s annual consolidated EBITDA for the 12 month
rolling period ending on the date on which the above conditions referred to in
this paragraph 7 have been fulfilled or waived (as the case may be) of no less
than 15% when measured against EBITDA for the financial year ending 31 March
2012 on an annualised basis taking into account the period since 31 March 2012.
Richtrau has agreed with its lenders that it will not waive certain of the
conditions and will not accept any conditions attached to regulatory approvals
or the SARS directive without its lenders prior written consent.
7. Conditions to the Mvela Group Category 1 transaction and the Unbundling
The implementation of the Proposed Transaction will be subject to the
fulfilment, or waiver (in whole or in part) of the following conditions by no
later than 12h00 on 4 December 2012:
- all the conditions to the Scheme set out in clause 6 being fulfilled; and
- approval by Mvela Group shareholders of the Proposed Transaction.
8. Richtrau listing and subsequent de-listing of Avusa
Following the implementation of the Scheme as per the inter-conditional and
indivisible steps which will be implemented in the sequence described in
paragraph 5 above, Avusa Shareholders that elect the Share Consideration, will
receive 1.48 Richtrau ordinary shares for each 1 Avusa ordinary share held.
Richtrau will be listed on the JSE and as such, will be fully tradable. In
preparation for the implementation of the Scheme and the listing of Richtrau, an
application will be made by Avusa to the JSE to terminate the listing of Avusa
Shares on the JSE.
9. Avusa Media Editorial Charter
Avusa has a charter that defines editorial roles and positioning within the
company. Richtrau is fully committed to this charter and the principles of free
media and editorial independence. As a consequence of the Proposed Transaction,
Richtrau will commit to supporting and protecting this independence,
acknowledging the responsibility of editorial to report and comment on the
affairs of South Africa and the rest of the world fairly, accurately and
regardless of any commercial, personal or political interests including those of
shareholders, directors, management and staff.
10. Third party approaches
During the period from the date of this Firm Intention Announcement until the
date that is 10 weeks thereafter, Avusa has agreed that it will not and shall
procure that no member of its group, nor any director, employee, adviser or
agent of it or them shall, on its behalf, directly or indirectly, and save as
may be required by applicable law (including the fiduciary duties of the
directors of Avusa):
- solicit, initiate or encourage any expression of interest, inquiry, proposal
or offer regarding any merger, amalgamation, share exchange, business
combination, take-over bid, sale or other disposition of all or substantially
all of its assets, recapitalisation, reorganisation, liquidation, material sale
or issue of treasury securities or rights or interests therein or thereto or
rights or options to acquire any material number of treasury securities or any
type of similar transaction, or series of transactions, which would or could
constitute a change of control (as contemplated in section 123(5) of the
Companies Act read with regulation 86 of the Takeover Regulations) or reasonably
be considered to be likely to preclude the Proposed Transaction or its
implementation (each an "Alternative Proposal"); or
- participate in any discussions or negotiations regarding any Alternative
Proposal unless it constitutes a bona fide Alternative Proposal received by
Avusa which the Avusa Board determines in good faith, and through the exercise
of its fiduciary duties would, if consummated in accordance with its terms,
result in a transaction more favourable to the Avusa Shareholders than the
Proposed Transaction taking into account, inter alia, the financial terms of the
Proposed Transaction and the likelihood of such a transaction being completed
within a reasonable period of time and the financing risks related thereto
("Superior Proposal"); or
- approve or recommend an Alternative Proposal or enter into an agreement in
respect of an Alternative Proposal, unless it is a Superior Proposal;
provided, however, nothing shall prevent Avusa from furnishing non-public
information to, or entering into a confidentiality agreement and/or discussions
with, any person in response to a bona fide Alternative Proposal that is
submitted by such person after the date hereof which is not withdrawn, provided
further that:
- the Avusa Board concludes, acting in good faith, that such action is required
in order for them to comply with their fiduciary obligations under applicable
law or their obligations under the Companies Act; and
- Avusa first gives Richtrau advance written notice of its intention to furnish
such non-public information or entering into discussions, along with the name of
such person and copies of all other due diligence materials exchanged between
such person and Avusa to the extent not already provided.
Avusa has agreed, save as may be required by applicable law (including the
fiduciary duties of the directors of Avusa), to promptly notify Richtrau if it
or any of its directors, employees or agents receives any approach in relation
to a possible Alternative Proposal which it wishes to pursue. Such notification
shall include details of the conditions of the Alternative Proposal and the name
of the person making the Alternative Proposal.
11. Break fee
The Implementation Agreement includes a break fee of R12 million which would be
payable by Avusa if, at any time after publication of this Firm Intention
Announcement, any of the following events occur:
- the independent board of Avusa does not recommend the Scheme, or it withdraws
or modifies or qualifies its recommendation of the Scheme, save in the event
that the fairness opinion of the Independent Expert does not justify or warrant
such a recommendation or only justifies such a recommendation subject to such
qualifications as may be identified in the fairness opinion;
- Avusa or the Avusa Board approves or recommends and/or enters into an
agreement to effect an Alternative Proposal (including a Superior Proposal);
- an Alternative Proposal (including a Superior Proposal) is announced and the
transaction contemplated in that Alternative Proposal is completed; and
- the Avusa Board or the independent board of Avusa determines not to implement
the Scheme by:
i. refusing to take the required steps to obtain approval of the Scheme by the
requisite majority of Avusa Shareholders as contemplated in section 115(2) of
the Companies Act;
ii. refusing to take the required steps to obtain approval of the Court to
implement the special resolution approving the Scheme in the circumstances
contemplated in section 115(3) of the Companies Act; or
iii. treating the shareholder approval as a nullity, as contemplated in section
115(5)(b) of the Companies Act.
12. Independent board and fairness opinion
As a result of Mvela Group`s participation in the Proposed Transaction, the
board of Avusa has established a board sub-committee of independent non-
executive directors of the Board (the "Independent Board"). The Independent
Board has appointed Ernst & Young who will consider the terms and conditions of
the Proposed Transaction and whether such terms and conditions are fair to
shareholders. The full opinion of the independent expert and the basis for its
conclusion will be included in the Circular to Shareholders to be posted on or
about 18 July 2012. The opinion of the Independent Board after taking into
consideration the opinion of the independent expert will also be published in
the Circular.
13. Financial effects
The financial effects for Mvela Group and Avusa are due to be finalised and
released on or about 20 June 2012. The pro-forma financial effects of the
Proposed Transaction for both Mvela Group and Avusa will be released together
with the Avusa financial results.
14. Documentation
Further details of the Scheme will be included in the Circular to be sent to
Avusa Shareholders, containing, inter alia, a notice of general meeting of Avusa
Shareholders. Subject to the fulfilment of the conditions contained in paragraph
6 above, the Circular is expected to be posted to Avusa Shareholders on or about
18 July 2012. The salient dates in relation to the Scheme will be published
prior to the posting of the Circular.
The Proposed Transaction will constitute a Category 1 transaction in terms of
the JSE Listing Requirements for Mvela Group. Accordingly, Mvela Group will be
required to issue a circular to its shareholders containing full details of the
Proposed Transaction and to seek shareholder approval to undertake the Proposed
Transaction. Accordingly, a circular will be posted to Mvela Group shareholders,
which is expected to be posted on or about 18 July 2012.
15. Responsibility statement
Each of Richtrau, Mvela Group, Avusa and their respective directors (which in
the case of Avusa, refers only to the Independent Board) accept responsibility
for the information contained in this announcement insofar as it applies to it.
To the best of their respective knowledge and belief, the information contained
in this announcement is true and nothing has been omitted which is likely to
affect the importance of such information.
16. Cautionary announcement
The pro-forma financial effects of the Proposed Transaction for both Mvela Group
and Avusa will be released on SENS and in the press as set out in paragraph 13
above. Accordingly, Avusa and Mvela Group shareholders are advised to exercise
caution when trading in their respective securities until such time as a further
announcement is made and the financial effects have been published.
Rosebank
12 June 2012
Financial advisor and lead debt arranger Merchant bank and sponsor to Avusa
to Mvela Group and Richtrau Rand Merchant Bank, a division of
Rand Merchant Bank, a division of First First Rand Bank Limited
Rand Bank Limited
Promoter and Arranger Independent adviser to the Avusa
Blackstar Board
Ernst & Young
Legal adviser to Mvela Group and Richtrau
Webber Wentzel Legal adviser to Avusa
Werksmans Attorneys
Sponsor to Mvela Group
PSG Capital
Communication advisor to Richtrau Legal adviser to lead debt arranger
Brunswick Bowman Gilfillan
Date: 12/06/2012 11:31:01 Supplied by www.sharenet.co.za
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.
Sharenet Sites 
