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Ann of the firm intention of Rural Maintenance Pty Ltd to make an offer to acquire the issued shares of Selco
SOUTHERN ELECTRICITY COMPANY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/006894/06)
(Share code: SLO)
(ISIN: ZAE000041919)
(“SELCo”)
ANNOUNCEMENT OF THE FIRM INTENTION OF RURAL MAINTENANCE PROPRIETARY
LIMITED ("RURAL MAINTENANCE") TO MAKE AN OFFER TO ACQUIRE THE ISSUED
SHARES OF SELCO AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1. SELCo is pleased to announce that it has received an offer
from Rural Maintenance ("Firm Intention Offer") to acquire
all the issued shares in SELCo not already held by Resource
Management Integration Group Limited, being the holding
company of Rural Maintenance, ("REMIG") (“SELCo Shares”),
by way of:
1.1.1. a scheme of arrangement in terms of section 114
of the Companies Act 71 of 2008, as amended,
("Companies Act"), to be proposed by the board of
directors of SELCo ("SELCo Board") between SELCo
and its shareholders, excluding REMIG, ("SELCo
Shareholders") ("Scheme"); or
1.1.2. if the Scheme is not proposed or implemented, an
offer by Rural Maintenance to the SELCo
Shareholders to acquire the SELCo Shares
("Alternative Offer"),
(collectively the "Acquisition").
1.2. SELCo Shareholders will, if the Scheme becomes operative or
on acceptance of the Alternative Offer, as the case may be,
be entitled to receive 32 cents for every SELCo Share
disposed of (“Consideration”), which is equivalent to an
aggregate cash price of R3,213,627 for all the SELCo
Shares.
2. RATIONALE FOR THE FIRM INTENTION OFFER
2.1. The rationale for the Firm Intention Offer is to procure
the termination of SELCo's listing on the JSE. The SELCo
Board is of the opinion that SELCo no longer benefits from
its listing due to (i) the lack of liquidity of SELCo’s
shares, (ii) SELCo being unable to utilise its shares to
fund acquisitions, (iii) the high costs of maintaining a
listing, and (iv) a significant amount of time and energy
of SELCo’s executives being spent on listing-related
regulatory requirements.
2.2. The Firm Intention Offer will afford shareholders an
opportunity to monetise their investment in SELCo rather
than to continue holding shares in SELCo post its
delisting.
3. MECHANICS OF THE ACQUISITION
3.1. The Acquisition will constitute an "affected transaction"
as contemplated in section 117(1)(c) of the Companies Act.
3.2. The Acquisition will be implemented by way of the Scheme.
3.3. The making of the Firm Intention Offer will be subject to
the suspensive conditions set out in paragraph 4.2 ("Firm
Intention Offer Conditions").
3.4. The implementation of the Scheme will be subject to the
suspensive conditions set out in paragraph 5 ("Scheme
Conditions").
3.5. Should the Scheme not be proposed or, if proposed, not be
implemented due to non-fulfilment of the Scheme Condition
in paragraph 5.1.1, the Alternative Offer will be made to
the SELCo Shareholders, subject to the conditions set out
in paragraph 6.1.
4. THE FIRM INTENTION OFFER
4.1. Material terms of the Firm Intention Offer
The Firm Intention Offer will be made on the basis that:
4.1.1. Rural Maintenance will acquire all the SELCo
Shares;
4.1.2. following the implementation of the Scheme,
SELCo will be 100% owned by Rural Maintenance
and REMIG;
4.1.3. once all the Firm Intention Offer Conditions and
the Scheme Conditions have been fulfilled and
the Scheme is implemented, the SELCo
Shareholders will receive 32 cents for each
SELCo Share disposed of in terms of the Scheme
("Consideration"); and
4.1.4. SELCo will be delisted from the JSE after
implementation of the Scheme,
provided that if the Scheme is not proposed or, if
proposed, not implemented due to non-fulfilment of the
Scheme Condition in paragraph 5.1.1, the Alternative Offer
will be made to the SELCo Shareholders on the terms and
conditions set out in paragraph 6, in terms of which the
SELCo Shareholders will receive the Consideration for each
SELCo Share disposed of in terms of the Alternative Offer.
4.2. Suspensive conditions to the Firm Intention Offer
4.2.1. The posting of the circular in respect of the
Scheme and the Alternative Offer to SELCo
Shareholders ("Circular") is subject to the
fulfilment of the suspensive conditions that, by
no later than 31 October 2013:
4.2.1.1. the independent expert appointed by
the independent board of directors of
SELCo ("Independent Board") in terms
of section 114(2) of the Companies Act
and regulation 90 of the regulations
issued in terms of sections 120 and
223 of the Companies Act ("Takeover
Regulations") provides a report in
terms of section 114(3)of the
Companies Act on the Consideration
offered to SELCo Shareholders and the
fairness and reasonableness thereof;
4.2.1.2. the Independent Board and the SELCo
Board unanimously recommending to the
SELCo Shareholders to vote in favour
of the Scheme or to accept the
Alternative Offer, as may be
applicable; and
4.2.1.3. all requisite approvals having been
obtained from the JSE, the Financial
Surveillance Department of the South
African Reserve Bank ("SARB") and the
Takeover Regulation Panel ("TRP") for
the posting of the Circular.
4.2.2. The Firm Intention Offer Conditions in paragraphs
4.2.1.1 and 4.2.1.2 may be waived by Rural
Maintenance by written notice to SELCo, prior to
the date set out in paragraph 4.2.1 for the
fulfilment of the relevant Firm Intention Offer
Condition (as may be extended as contemplated in
paragraph 4.2.4).
4.2.3. The Firm Intention Offer Condition in paragraph
4.2.1.3 may not be waived.
4.2.4. Rural Maintenance will be entitled to extend the
date for fulfilment of any of the Firm Intention
Offer Conditions by up to 30 days, in its own
discretion, upon written notice to SELCo, but
shall not be entitled to extend the date to a
date later than the aforesaid 30 day period
without the written agreement of SELCo.
5. SUSPENSIVE CONDITIONS TO THE SCHEME
5.1. The implementation of the Scheme is subject to the
fulfilment or, if appropriate, waiver, of the following
suspensive conditions on or before 31 January 2013:
5.1.1. the approval of the Scheme by the requisite
majority of the SELCo Shareholders as
contemplated in section 115(2)(a) of the
Companies Act, and:
5.1.1.1. to the extent required, the approval of
the implementation of such resolution
by the High Court in terms of section
115(2)(c) of the Companies Act; and
5.1.1.2. if applicable, SELCo not treating the
aforesaid resolution as a nullity as
contemplated by section 115(5)(b) of
the Companies Act;
5.1.2. within 30 business days following the
shareholders' meeting convened to approve the
Scheme, SELCo 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 all of the issued shares in
SELCo, provided that, in the event that SELCo
Shareholders give notice objecting to the Scheme
as contemplated in section 164(3) of the
Companies Act and/or vote against the special
resolution proposed at the shareholders meeting
in respect of no more than 5% of all of the
issued shares in SELCo, this condition shall be
deemed to have been fulfilled at the time of the
shareholders' meeting;
5.1.3. to the extent required, the approval of the
Scheme and the delisting of SELCo by SARB; and
5.1.4. the issue of a compliance certificate by the TRP
with respect to the Scheme.
5.2. The Scheme Conditions in paragraphs 5.1.1, 5.1.3 and 5.1.4
cannot be waived.
5.3. The Scheme Condition in paragraph 5.1.2 may be waived by
Rural Maintenance by written notice to SELCo prior to the
date set out in paragraph 5.1 for fulfilment of the Scheme
Condition (as may be extended as contemplated by paragraph
5.4).
5.4. Rural Maintenance will be entitled to extend the date for
the fulfilment of any of the Scheme Conditions by up to 60
days, in its own discretion, upon written notice to SELCo,
but shall not be entitled to extend the date to a date
later than the aforesaid 60 day period without the written
agreement of SELCo.
6. ALTERNATIVE OFFER
6.1. Should the Scheme not be proposed or, if proposed, should
it not be implemented due to the suspensive condition in
paragraph 5.1.1 not being fulfilled, but subject to the
fulfilment or waiver (where appropriate) of the Firm
Intention Offer Conditions, Rural Maintenance will make an
irrevocable offer to the SELCo Shareholders to acquire
their SELCo Shares for the Consideration, subject to the
following suspensive conditions:
6.1.1. approval by SELCo Shareholders of the delisting
of SELCo from the JSE by ordinary resolution;
6.1.2. to the extent required, the approval of the
Alternative Offer and the delisting of SELCo by
SARB; and
6.1.3. the issue of a compliance certificate by the TRP
in respect of the Alternative Offer.
6.2. If the Alternative Offer is made, SELCo Shareholders will
only be able to accept the Alternative Offer in respect of
all of their SELCo Shares.
7. SHAREHOLDING IN SELCO AND ACTING AS PRINCIPAL
7.1. Rural Maintenance confirms that it holds none of the issued
shares in SELCo.
7.2. Rural Maintenance confirms that it is the ultimate
prospective purchaser of the SELCo Shares. It is acting in
concert with REMIG for purposes of the Acquisition.
8. INTERESTS IN SELCO
REMIG, the holding company of Rural Maintenance, currently holds
81.72% of the issued shares in SELCo.
9. GUARANTEE AND CONFIRMATION TO THE TRP
The Standard Bank of South Africa Limited has delivered an
irrevocable, unconditional bank guarantee in compliance with the
Takeover Regulations in favour of SELCo to SELCo and the TRP in
an amount of R3,213,627.
10. IRREVOCABLE UNDERTAKINGS
SELCo has received irrevocable undertakings and letters of
intent from SELCo Shareholders holding between them 1 510 604
SELCo Shares to vote in favour of the Scheme and the resolutions
to be proposed at the shareholders meeting and to accept the
Alternative Offer, representing in aggregate 2.7% of the
existing issued ordinary share capital of SELCo and 15.2% of the
SELCo Shareholders entitled to vote at the Scheme meeting.
11. TERMINATION OF SELCO LISTING
Following implementation of the Scheme, application will be made
to the JSE to terminate the listing of SELCo Shares on the JSE.
12. RECOMMENDATION AND FAIRNESS OPINION
12.1. In accordance with the requirements of the Takeover
Regulations, the Independent Board has been appointed by
the SELCo Board, comprising of WB Mahlangu, P Mopeli and S
Goliath.
12.2. The Independent Board has appointed BDO Corporate Finance
Proprietary Limited, an independent advisor acceptable to
the TRP and JSE, ("Independent Expert") to provide it with
external advice in relation to the Scheme and the
Alternative Offer and to make appropriate recommendations
to the Independent Board for the benefit of SELCo
Shareholders.
12.3. The Independent Board intends, based on the information
currently available to it, to make a unanimous
recommendation to SELCo Shareholders to vote in favour of
the resolutions to be proposed at the shareholders' meeting
to approve the Scheme or to accept the Alternative Offer
(as may be applicable).
12.4. The substance of the external advice and the views of the
Independent Board will be detailed in the Circular.
13. DOCUMENTATION AND SALIENT DATES
Further details of the Scheme and the Alternative Offer will be
included in the Circular, containing, inter alia, a notice of a
meeting of SELCo Shareholders, a form of proxy and a form of
acceptance, surrender and transfer. Each of the Scheme and the
Alternative Offer will constitute a separate affected
transaction for purposes of the Takeover Regulations and the
Circular will distinguish between them accordingly, inter alia
containing separate disclosures regarding each of the Scheme and
the Alternative Offer. The Circular is expected to be posted to
SELCo Shareholders on or about Wednesday, 23 October 2013. The
salient dates in relation to the Scheme and the Alternative
Offer will be published prior to the posting of the Circular.
14. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this announcement, the cautionary
announcement originally published by SELCo on 20 February 2013
and subsequently renewed, the last renewal of which took place
on 12 August 2013, is hereby withdrawn and caution is no longer
required to be exercised by SELCo Shareholders when dealing in
SELCo Shares.
15. RESPONSIBILITY STATEMENT
Rural Maintenance and the Independent Board accept
responsibility for the information contained in this
announcement. 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
import of the information.
Johannesburg
25 September 2013
Sponsor and Corporate Advisor to SELCo
Grindrod Bank Limited
Legal advisor to Rural Maintenance
Webber Wentzel
Independent Expert to SELCo
BDO Corporate Finance Proprietary Limited
Auditors and Reporting Accountants to SELCo and Rural Maintenance
Mazars Corporate Finanance Proprietary Limited
Date: 25/09/2013 12:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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