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Disposal of CRIH and CLL
CONDUIT CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/017351/06)
Share code: CND ISIN: ZAE000073128
(“Conduit Capital” or “the Group”)
DISPOSAL OF CRIH AND CLL
1. INTRODUCTION
1.1 Shareholders of Conduit Capital (“Shareholders”) are advised that on 23 May 2023, Conduit
Capital and its wholly-owned subsidiary, Copper Sunset Trading 186 Proprietary Limited
(“Copper Sunset”), entered into an agreement (“Agreement”) with TMM Holdings Proprietary
Limited (“TMM” or “the Purchaser”), an unrelated third party, to dispose of the “Sale Interest”,
as described below, to the Purchaser for an aggregate cash purchase price of R55 million
(“Purchase Price”) (“Disposal”).
1.2 The “Sale Interest” comprises:
1.2.1 the “Sale Shares”, being 100% of the issued ordinary shares of Constantia Risk and
Insurance Holdings Proprietary Limited (“CRIH”), a wholly-owned subsidiary of Copper
Sunset and an indirect wholly-owned subsidiary of Conduit Capital, as at the Effective
Date referred to in paragraph 2.4.2 below; and
1.2.2 the “Sale Claims”, being all claims, other than the “Excluded Claims” referred to in
paragraph 2.6.1 below, that Copper Sunset and/or Conduit Capital and/or Conduit
Capital’s subsidiaries may have against CRIH and/or against Constantia Life Limited
(“CLL”), a wholly-owned subsidiary of CRIH, as at the Effective Date.
1.3 The sale and purchase of the Sale Shares and Sale Claims constitute one indivisible transaction.
1.4 The Seller of the Sale Shares is Copper Sunset and the Seller of the Sale Interest is Conduit Capital
and/or Copper Sunset, as the case may be, and “Sellers” refers to Conduit Capital and/or Copper
Sunset.
2. THE DISPOSAL
2.1 Nature of the CRIH and CLL businesses
CRIH is the holding company of the Group’s insurance interests which consist of two registered
life insurance companies and a minority interest in a leading pan-African health underwriting
manager.
2.2 Details pertaining to the Purchaser
Established in 2003, TMM is a diversified pan-African investment group with interests in a number
of specialised entities across a variety of industries including technology, security, venture capital,
agriculture and property. TMM is privately owned by A Da Silva Marques (2%), M A Da Silva
Marques (2%), C M G Dias (1%), T A Dubek (3%), M J A Ferreira (80%), R A Ferreira (1%), W T Jager
(3%), C W Metelerkamp (3%), P S Reddy (2%) and A G Wilsenach (3%).
2.3 Rationale for the Disposal
Since the liquidation of Conduit Capital’s largest insurance business, Constantia Insurance
Company Limited (“CICL”), the Group lacks the scale and capital to grow its remaining insurance
businesses. The sale of CRIH and CLL provides an opportunity for Conduit Capital to realise value
from the disposal of these entities.
2.4 Suspensive Conditions and Effective Date
2.4.1 The Disposal is subject to the fulfilment of the following suspensive conditions on or
before 1 July 2023, or such later date(s) as the Sellers and the Purchaser may agree to in
writing:
2.4.1.1 the requisite regulatory approvals being obtained including those, if any,
required in terms of the Competition Act, 1998 (Act 89 of 1998) and the
Prudential Authority established in terms of the Financial Sector Regulation Act,
2017 (Act 9 of 2017), as amended;
2.4.1.2 the distribution of a circular to Shareholders, and Shareholders’ approval of the
Disposal;
2.4.1.3 CRIH’s shareholding in its wholly-owned subsidiary, Oraclemed Health
Investments Limited (“OMHI”), being unbundled by means of a dividend in
specie declared by CRIH to Copper Sunset, as contemplated by and in conformity
with section 46 of the Income Tax Act, 1962 (Act 58 of 1962) (“Income Tax Act”)
and section 46 of the Companies Act, 2008 (Act 71 of 2008), as amended
(“Companies Act”);
2.4.1.4 the agreement between CRIH and Affinity Financial Services South Africa
Proprietary Limited for the conditional sale of CRIH’s 100% shareholding in its
wholly-owned subsidiary, Constantia Life and Health Assurance Company
Limited (“CLAH”) (“CLAH Sale Agreement”) becoming unconditional in
accordance with its tenor, alternatively in the event of the CLAH Sale Agreement
not having become unconditional, CRIH’s entire shareholding in CLAH being
unbundled by means of a dividend in specie declared by CRIH to Copper Sunset
as contemplated by and in conformity with section 46 of the Income Tax Act and
section 46 of the Companies Act;
2.4.1.5 the completion of a due diligence investigation of CRIH and CLL by the
Purchaser;
2.4.1.6 evidence of the change of the signing powers of the banking accounts of CRIH
and CLL;
2.4.1.7 by the date on which the last of the Suspensive Conditions is fulfilled or waived,
as the case may be, no material adverse change has occurred; and
2.4.1.8 the liquidator of CICL (“CICL Liquidator”) confirming to Conduit Capital and the
Purchaser of the non-existence of any claims arising owned by CICL and/or the
CICL Liquidator immediately before the Effective Date against the Group (“CICL
Liquidator Claims”).
2.4.2 The effective date of the Disposal will be the last day of the month in which the last of the
Suspensive Conditions is fulfilled or waived, as the case may be (“Effective Date”).
2.5 Purchase Price and Payment
2.5.1 On the Effective Date, the Purchaser will pay the Purchase Price to the Sellers by way of
electronic funds transfer, as follows:
2.5.1.1 R27.5 million into Copper Sunset’s nominated bank account; and
2.5.1.2 R27.5 million into an escrow account (“Escrow Amount”) in the name of Conduit
Capital and Copper Sunset as security against legal costs and claims that may be
brought against CRIH and indemnified by Conduit and CRIH.
2.5.1.3 Conduit Capital’s attorneys (“Attorneys”) shall release the Escrow Amount, plus
interest accrued in respect thereof, in the following instances:
2.5.1.3.1 if a final judgement and/or taxed cost order pursuant to paragraph
2.5.1.2 above is granted against CRIH, Copper Sunset and/or Conduit
Capital, the Attorneys shall release such amount from the Escrow
Account so as to satisfy such judgement up to the maximum Escrow
Amount, with any such greater amount, as the case may be, being
paid by Conduit Capital and/or Copper Sunset to CRIH ; and/or
2.5.1.3.2 to the extent that the monies held in the Escrow Account are not
required for the for the purposes of paragraph 2.5.1.2 above, the
Attorneys shall release the Escrow Amount to Copper Sunset and
Conduit Capital.
2.6 Significant terms of the Agreement
2.6.1 Excluded Claims
The amounts not included in the Sale Claims include:
2.6.1.1 undistributed dividends of whatsoever nature declared by CRIH to Copper
Sunset.
2.6.1.2 CRIH’s right, title and interest, if any, to the issued share capital of CLAH, the
proceeds of the CLAH Sale Agreement and the issued share capital of OMHI;
2.6.1.3 litigation proceeds, if any;
2.6.1.4 the Escrow Amount deposited into escrow in accordance with the escrow
agreement between Conduit Capital, Copper Sunset, CRIH, the CICL Liquidator,
the Purchaser and the Attorneys, together with interest accruing thereon; and
2.6.1.5 legal fees incurred in relation to the aforesaid litigation.
2.7 Warranties
The Agreement contains warranties and undertakings which are standard for a disposal of this
nature.
3. FINANCIAL INFORMATION
Due to the Provisional Liquidation of CICL, a wholly-owned subsidiary of CRIH, on 14 September 2022,
Conduit Capital’s auditors have not been able to complete the audit of the Group for the year ended
30 June 2022. Consequently, the results of the Group for the year ended 30 June 2022, and the results
for six months ended 31 December 2022, are yet to be published.
The unaudited value of the net assets of CLL, based on management accounts as at 31 December 2022,
is R2.31 million and as at 30 April 2023 is R2.51 million. The unaudited loss after tax for CLL, based on
management accounts, for the six months ended 31 December 2022 is R1.26 million, with an unaudited
after-tax profit of R0.20 million for the first four months ending 30 April 2023.
The unaudited value of the net assets of CRIH (including CLL, but excluding the Excluded Claims), based
on management accounts as at 31 December 2022, is negative R0.34 million and as at 30 April 2023 is
negative R1.04 million. The unaudited loss after tax for CRIH based on management accounts for the six
months ended 31 December 2022 is R0.62 million, with a further unaudited after-tax loss of R0.70 million
for the four months ending 30 April 2023.
The unaudited results have been prepared in accordance with International Financial Reporting
Standards and the Companies Act, on the same basis as the audited annual financial statements for the
year ended 30 June 2021.
4. CATEGORISATION OF THE DISPOSAL AND FURTHER DOCUMENTATION
The Disposal constitutes a Category 1 transaction in terms of section 9.5(b) of the JSE Listings
Requirements. Accordingly, a circular containing full details of the Disposal including, inter alia, a notice
to convene a general meeting of Shareholders in order to consider and, if deemed fit to pass, with or
without modification, the resolutions necessary to approve and implement the Disposal, will be
distributed to Shareholders in due course.
5. CONTINUING PROSPECTS
Shareholders are referred to the announcement released on SENS on 28 December 2022 regarding the
disposal of CLAH wherein it was stated that the Group will no longer qualify for a listing post the
successful implementation of the CLAH disposal. Accordingly, following the distribution of its annual
report (incorporating the audited consolidated annual financial statements) for the year ended 30 June
2022, Conduit Capital will consider the options available to enable it to reinstate its listing in terms of the
JSE Listings Requirements.
Cape Town
24 May 2023
Sponsor and Corporate Advisor
Merchantec Capital
Date: 24-05-2023 04:00:00
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