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Trustco Acquires Additional Interest In Legal Shield Holdings Limited And Riskowitz Value Fund Subscribes To Trustco
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
JSE share code: TTO
NSX share code: TUC
OTCQX share code: TSCHY
ISIN Number: NA000A0RF067
("Trustco" or "Company")
TRUSTCO GROUP HOLDINGS LIMITED ACQUIRES ADDITIONAL INTEREST IN
LEGAL SHIELD HOLDINGS LIMITED AND RISKOWITZ VALUE FUND SUBSCRIBES TO
TRUSTCO GROUP HOLDINGS SHARES IN LIEU OF CASH PAYMENT
1. Introduction
Shareholders are advised that Trustco Group Holdings Limited ("the Purchaser") has
entered into an agreement with Riskowitz Value Fund LP (the "Seller" or "RVF") to
acquire 1,135 shares in Legal Shield Holdings Limited ("Sale Shares") from RVF (the
"Parties") through issuing new Trustco shares to the Seller (the "Transaction").
2. Description of the businesses conducted by Trustco and Legal Shield Holdings
2.1 Trustco is an investment entity headquartered in Windhoek, Namibia, that manages
a diverse portfolio of investments spanning the insurance, real estate, commercial
banking, micro-finance, education and mining sectors. The business commenced in
1992 and has grown its investments substantially since its inception. The Group has
a global presence with listings on the Namibian and Johannesburg Stock Exchanges,
along with a presence on the OTCQX in New York.
2.2 Legal Shield Holdings is Trustco's 80% owned investment entity and is the holding
company of Trustco Insurance Limited, Trustco Life Limited and Trustco's real estate
portfolio. In fiscal year 2023, the insurance group produced a net profit margin of
32%. The impressive 2,473 sellable hectares (6,112 acres) of prime real estate is
strategically positioned across Namibia. This real estate portfolio has demonstrated
its value-generating prowess, generating cash in excess of NAD 934 million since
2011. Notably, the current average selling price for the portfolio stands at NAD 1,800
per square meter, underscoring the immense potential for capital appreciation and
revenue growth within this asset class. This vast land bank presents an unparalleled
opportunity, with the potential for over 26,000 mixed-use erven to be developed. The
real estate portfolio has established a proven track record, successfully servicing
more than 1,106 erven across all its developments over the past decade. Moreover,
the company boasts an ambitious development pipeline extending another 25 years.
Namibia is experiencing an acute shortage of serviced land, for residential,
commercial and industrial purposes.
2.3 Shareholders are referred to pages 12 to 20 of Trustco's 2023 Integrated Annual
Report for more detailed information on these high-value assets.
3. Rationale for the Transaction
The rationale for the Transaction:
3.1 the acquisition increases the net asset value of Trustco.
3.2 the acquisition allows Trustco to directly benefit from anticipated post-Covid capital
growth, improved liquidity and buyer demand in the Namibian Property Market.
3.3 the Transaction simplifies Trustco's investment portfolio and positions Trustco to raise
capital for growth more efficiently.
3.4 Trustco is able to re-acquire the Sale Shares at a substantial premium to the market
price of the Trustco shares.
4. Payment
The Purchaser shall pay to the Seller:
4.1 By issuing 400,000,000 (Four Hundred Million) new Trustco (TTO) shares listed on the
JSE, at a share price of 117 cents per share (the Payment Shares). in exchange for
the Sale Shares in Legal Shield Holdings Limited
4.2 After issuance of the Payment Shares in the name of the Seller or its nominee,
ownership of the Sale Shares shall pass from the Seller to the Purchaser.
4.3 The issue of Payment Shares will be effected in two tranches:
4.3.1 200 million shares, 7 (seven) days after the effective date; and
4.3.2 200 million shares, 12 (twelve) months after the issuance of the first tranche, unless
the Company Secretary advises that the balance of the Payment Shares is available
before the period has lapsed.
5. Salient terms and suspensive conditions
5.1 The Sale and Conversion Agreement ("Agreement") is subject to and conditional
upon the fulfilment or waiver (as the case may be) of each of the following
suspensive conditions ("the Suspensive Conditions") on or before 31 July 2024 or
as otherwise agreed between the Parties in writing:
5.1.1 the board of directors of the Purchaser pass a written resolution approving the
Transaction contemplated in this Agreement,
5.1.2 the Shareholders of the Purchaser pass a resolution authorising the Purchaser to
purchase the Sale Share in exchange for the Payment Shares as provided for in the
Agreement, including for the purposes of the JSE Listings Requirements and the
Namibian Companies Act,
5.1.3 The required shareholders' approval be obtained by the Purchaser in writing in
irrevocable proxy form within 21 (twenty-one) days of approval by the Trustco Board
of the Agreement;
5.1.4 The Trustco Board shall obtain the necessary approvals from its shareholders by
irrevocable proxies from shareholders prior to such shareholders' meeting by
including in any notice of the shareholder's meeting its recommendation that
Trustco's shareholders vote in favour of this Agreement as presented in the Proxy
statement.
5.1.5 Consent, if required, be obtained by the Company's minority shareholders in the
Company within 21 (twenty-one) days from the signature date.
5.2 The Parties agree that should any of the Suspensive Conditions remain unfulfilled
by 31 July 2024 or such further date(s) as the Parties agree in writing, then the
Agreement shall not come into force or effect. In such event, no Party shall have
any claim against the other Party(ies) by virtue of the provisions of the Agreement.
5.3 The Parties shall use their respective best endeavours in good faith to procure the
fulfilment of the Suspensive Conditions as soon as reasonably possible after the
date on which the last Party signing the Agreement signs ("Signature Date").
5.4 Trustco and RVF agree not to allow a de facto takeover of the Purchaser by the
implementation of the Agreement. RVF provides the chairperson of Trustco with an
irrevocable instruction to vote in line with the status quo prior to the Restatement
Instruction on behalf of the shares obtained as part of the Agreement. The
irrevocable instruction will remain in place until the Next Capital (Pty) Ltd and its
associates can exercise 50% plus 1 of the voting rights of Trustco or the Company
Secretary advises in writing that the voting rights have revested in RVF, whereafter
this condition will permanently fall away.
5.5 RVF will have the option to nominate one member to the Trustco Board, provided
that (i) RVF is the owner of at least 20% (twenty percent) of the issued share capital
of Trustco.
5.6 Put and Call Option: The Parties agreed that:
5.6.1 Call Option: RVF grants Trustco a call option to acquire at least 100,000,000 (One
Hundred Million) Trustco shares from RVF at a price of N$1,17 per shares in cash.
5.6.2 Put Option: Trustco grants RVF a put option of at least 100,000,000 (One Hundred
Million) Trustco shares to Trustco shares at a price of N$1,17 per share in cash.
5.6.3 The Call Option and the Put Option may be exercised by providing 30 (thirty) days'
notice to the other party and
5.6.4 the Trustco Board must objectively concur that Trustco will be able to pay the option
amount, which approval should not be unreasonably withheld.
6. Effective date
The Agreement will become unconditional on the first business day after the last of
the Suspensive Conditions are fulfilled.
7 Financial information
The book value of the net assets of Legal Shield Holdings Limited, which are the
subject of the Transaction, as of 31 August 2023, was NAD 793 million. The profit
after tax attributable to Legal Shield Holdings Limited for the year ended 31 August
2023 was NAD 81 million.
The above financial information has been extracted from the year-end results dated
31 August 2023 of Legal Shield Holdings Limited.
Shareholders are referred to the 2023 Integrated Annual Report of Trustco for
detailed information on the nature and value of the assets being acquired.
8 Classification of the Transaction
RVF and its associates are material shareholders in Trustco and are thus a related
party ("Related Party") to Trustco in terms of paragraph 10.1(b) (i) of the Listings
Requirements of the JSE Limited ("Listings Requirements").
The Transaction is a category 1 related party transaction in terms of section 10 of the
Listings Requirements requiring a circular to be sent to shareholders and the approval
of Trustco shareholders via an ordinary resolution. RVF and its associates will be
excluded from voting on the Transaction.
The issue of Trustco shares to RVF as consideration is also a specific issue ("Specific
Issue "), and a circular complying with section 5.51 of the Listings Requirements will
be issued to shareholders.
A circular containing full details of the category 1, Related Party Transaction, Specific
Issue of Shares Transaction, a Fairness Opinion as well as a notice to convene a
general meeting of Shareholders to consider and, if deemed fit, to pass with or without
modification, the resolutions necessary to approve and implement the Transaction,
will be made available to Shareholders in due course.
9 Board Responsibility
The Trustco Board individually and collectively accepts full responsibility for the
accuracy of the information contained in this announcement. In addition, the Trustco
Board certifies that to the best of its knowledge and belief, the information contained
in this announcement solely pertaining to the Group is true and, where appropriate,
does not omit anything that is likely to affect the importance of the information
contained herein, and that all reasonable enquiries to ascertain such information have
been made.
Windhoek, Namibia,
23 April 2024
Komada Holdings (Pty) Ltd
Company Secretary and Investor Relations Services to Trustco Group Holdings
Limited
JSE Sponsor
Vunani Sponsors
NSX Sponsor
Simonis Storm Securities Proprietary Limited – Windhoek
OTCQX Sponsor
J.P Galda & Co – New York
Date: 23-04-2024 11:39:00
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