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Firm Intention Announcement: Specific Repurchase of Shares, Category Two Disposal and Withdrawal of Cautionary
INSIMBI INDUSTRIAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2002/029821/06)
Share code: ISB ISIN: ZAE000116828
("Insimbi" or "the Company")
FIRM INTENTION ANNOUNCEMENT IN RELATION TO A SPECIFIC REPURCHASE OF SHARES,
CATEGORY TWO DISPOSAL ANNOUNCEMENT AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
1.1. Shareholders are advised that on 21 June 2024, the Company and its wholly-owned subsidiaries,
Amalgamated Metals Recycling (Pty) Ltd ("AMR"), Amalgamated Metals Recycling SA (Pty) Ltd
("AMR SA"), Amalgamated Metals Recycling West Rand (Pty) Ltd ("AMR WR") and Spring Lights 1135
(Pty) Ltd ("Spring Lights"), entered into binding agreements ("Agreements") in terms of which the
Company intends to repurchase a number of listed ordinary issued Insimbi shares ("Shares") and
dispose of certain business assets owned by its subsidiaries ("Transaction").
1.2. The Transaction will comprise of:
1.2.1. the repurchase by Insimbi of 21 065 200 Shares, comprising 5,58% of its total issued shares, from
two associated shareholders, namely Crimson Clover Investments (Pty) Ltd (beneficially owned by
the JCCD Share Trust) and Crimson Clover Investments 1 (Pty) Ltd (beneficially owned by the JCCD
Investment Trust) (collectively referred to as the "Crimson Clover Shareholders"), at a repurchase
price of R1 per Share, as one indivisible transaction and subject to the fulfilment of certain conditions
precedent ("Crimson Clover Repurchase");
1.2.2. the disposal by AMR and AMR SA of certain business assets used in connection with the scrap metal
trading business operated under the name "Amalgamated Metals Recycling SA" at 110 Fourth Street,
Booysens Reserve ("AMR Booysens Business") to Booysens Buy Back Center (Pty) Ltd ("BBBC"),
which is an associate of the Crimson Clover Shareholders ("AMR Booysens Disposal"), which AMR
Booysens Disposal will be inter-conditional upon the implementation of the Crimson Clover
Repurchase, as a portion of the repurchase consideration received in terms of the Crimson Clover
Repurchase will be used to settle the purchase consideration due in terms of the AMR Booysens
Disposal,
(the Crimson Clover Repurchase and the AMR Booysens Disposal, collectively referred to as
the "Crimson Clover Transaction");
1.2.3. the repurchase by Insimbi of 21 985 200 Shares, comprising 5,83% of its total issued shares, from
two other associated shareholders, namely Casterly Rock Investments (Pty) Ltd (beneficially owned
by the LSC Share Trust) and Southern Vault Investments 1 (Pty) Ltd (beneficially owned by the LSC
Investment Trust), neither of which are related to or associates of the Crimson Clover Shareholders
(collectively referred to as the "Casterly Rock Shareholders"), at a repurchase price of R1 per Share,
as one indivisible transaction and subject to the fulfilment of certain conditions precedent ("Casterly
Rock Repurchase"); and
1.2.4. the disposal by AMR, AMR WR and Spring Lights of certain other business assets used in connection
with the scrap metal trading business operated under the name "Amalgamated Metals Recycling West
Rand" at 141 Main Reef Road, Manufacta, Roodepoort ("AMR WR Business") to West Rand Buy
Back Centre (Pty) Ltd ("WRBBC") and certain immovable properties to Casterly Rock Properties (Pty)
Ltd ("CRP"), both of which are associates of the Casterly Rock Shareholders ("AMR West Rand
Disposal"), which AMR West Rand Disposal will be inter-conditional upon the implementation of the
Casterly Rock Repurchase, as a portion of the repurchase consideration received in terms of the
Casterly Rock Repurchase will be used to settle the purchase consideration due in terms of the AMR
West Rand Disposal,
(the Casterly Rock Repurchase and the AMR West Rand Disposal, collectively hereinafter referred to as
the "Casterly Rock Transaction").
2. RATIONALE FOR THE TRANSACTION
2.1. Insimbi acquired the shares in AMR, AMR SA and AMR WR in December 2016 with the intention of
creating a larger, more diversified company which would become a more significant player in the recycling
sector.
2.2. Due to the underperformance of the AMR Booysens Business and the AMR WR Business, Insimbi
believes that the disposal of the business assets in terms of the AMR Booysens Disposal and AMR West
Rand Disposal (collectively hereinafter referred to as the "Disposals") is in the best interest of the
Company.
2.3. The Crimson Clover Repurchase and Casterly Rock Repurchase (collectively hereinafter referred to as
the "Repurchases") will facilitate the Disposals, as a portion of the repurchase considerations to be paid
by Insimbi in terms of the Repurchases, will be used to settle the purchase considerations due in terms
of the Disposals.
2.4. The Repurchases are considered an appropriate allocation of capital as the impact of the Repurchases
and the cancellation and delisting of such repurchased Shares ("Repurchase Shares") are expected to
enhance the net asset value per Insimbi Share. The reduction in the number of issued Shares will also
have the effect of increasing the holdings of the Company's existing shareholders.
3. CLASSIFICATION OF TRANSACTION
3.1. The Repurchases will each be a "specific repurchase of shares for cash" in terms of the listings
requirements of the securities exchange operated by JSE Limited ("JSE") ("JSE Listings
Requirements"), requiring the approval of shareholders, excluding the shareholders participating in the
Repurchases, ("Remaining Shareholders") by way of special resolutions (achieving 75% of the votes
cast in favour thereof). None of the counterparties to the Repurchases are "related parties" of the
Company.
3.2. Further to the above, each of the Repurchases will, individually, constitute the repurchase of more than
5% of the issued Shares of Insimbi and will accordingly be subject to the provisions of section 48(8)(b)
read with the provisions of sections 114 and 115 of the Companies Act, No. 71 of 2008 ("Companies
Act") and the Companies Regulations, 2011 ("Regulations"). The Repurchases will be regarded as
affected transactions in terms of section 117(1)(c)(iii) of the Companies Act and will be regulated by the
Takeover Regulation Panel ("TRP"). A fair and reasonable opinion is required in respect if the
Repurchases in terms of section 114 of the Companies Act.
3.3. The AMR Booysens Disposal and the AMR West Rand Disposal will each individually, or collectively if
aggregated, be classified as "category 2 disposals" in terms of the JSE Listings Requirements, as the
disposal consideration is equal to more than 5%, but less than 30% of the market capitalisation of Insimbi
on the date of signature of the Agreements.
4. REPURCHASE AND DISPOSAL CONSIDERATIONS
4.1. The aggregate repurchase consideration, payable by Insimbi in terms of the Repurchases, is
R43 050 400 ("Repurchase Consideration"), which will be funded by Insimbi from its available cash
resources and facilities, comprising of:
4.1.1. the aggregate repurchase consideration payable by Insimbi to the Crimson Clover Shareholders in
terms of the Crimson Clover Repurchase of R21 065 200; and
4.1.2. the aggregate repurchase consideration payable by Insimbi to the Casterly Rock Shareholders in
terms of the Casterly Rock Repurchase of R21 985 200.
4.2. The aggregate purchase consideration in terms of the AMR Booysens Disposal is R5 660 000, payable
in cash by BBBC and the aggregate purchase consideration in terms of the AMR West Rand Disposal is
R24 340 000, payable in cash by WRBBC and CRP. Accordingly, the aggregate proceeds which will be
received by Insimbi from the Disposals is R30 000 000.
5. CONDITIONS PRECEDENT AND EFFECTIVE DATE
5.1. The implementation of the Transaction is subject to the fulfilment of the following outstanding conditions
precedent on or before 31 August 2024 ("Conditions Precedent"):
5.1.1. the shareholders of Insimbi have passed (i) the special resolutions in terms of section 48(8)(b) read
with sections 114 and 115 of the Companies Act ("Section 48(8)(b) Special Resolutions") and
(ii) the special resolutions in terms of the JSE Listings Requirements ("LR Special Resolutions"),
authorising the Repurchases as contemplated in the Agreements;
5.1.2. the JSE has granted the approvals, consents or waivers as may be required for the Company to
implement the Repurchases;
5.1.3. to the extent that the provisions of section 115(2) read with section 115(3) of the Companies Act
become applicable:
5.1.3.1. the Section 48(8)(b) Special Resolutions being approved by the Court unconditionally or, if subject
to conditions, Insimbi confirms in writing that the conditions are acceptable to it;
5.1.3.2. the Section 48(8)(b) Special Resolutions not being set aside by the Court; or
5.1.3.3. Insimbi not treating the Section 48(8)(b) Special Resolutions as nullities in terms of
section 115(5)(b) of the Companies Act; and
5.1.4. within the period prescribed by section 164(7) of the Companies Act, no valid demands (relating to
appraisal rights) have been received by the Company from any shareholder of the Company in terms
of that section read with section 115(8) of the Companies Act, pursuant to the Section 48(8)(b) Special
Resolutions or, if such a demand has been duly delivered, the Company has waived this condition on
or before 17h00 on 31 August 2024.
5.2. The Conditions Precedent other than the Condition Precedent set out in paragraph 5.1.4 above, are not
capable of being waived but the date for fulfilment of any Conditions Precedent may be extended by
agreement between the parties to the Agreements.
5.3. In order to comply with the Regulations, and specifically regulation 102(13), Insimbi, the Crimson Clover
Shareholders and the Casterly Rock Shareholders have agreed that notwithstanding the fulfilment of the
Conditions Precedent, the Repurchases shall not be implemented unless and until the TRP has granted
all the required approvals and consents and issued a compliance certificate in respect of the
Repurchases in terms of section 119(4)(b) of the Companies Act.
5.4. The effective date of the Transaction is expected to be on or about the end of August 2024.
6. CIRCULAR AND NOTICE OF GENERAL MEETING
6.1. A circular to Insimbi shareholders regarding the Repurchases will be distributed on or about 11 July 2024
("the Circular"), once all the relevant regulatory approvals have been obtained.
6.2. The Circular shall include:
6.2.1. the full terms and conditions of the Transaction;
6.2.2. the pro forma financial effects on the financial position of Insimbi following the implementation of the
Transaction and the independent reporting accountants' assurance thereon;
6.2.3. the independent expert's report in respect of the Repurchases;
6.2.4. a notice convening the general meeting of Insimbi shareholders to consider and if deemed fit to
approve the special resolutions required to implement the Repurchases ("Repurchase Resolutions")
("General Meeting"); and
6.2.5. a summary of the Dissenting Shareholders' Appraisal Rights afforded to Insimbi shareholders in terms
of the Regulations.
6.3. The salient dates and times relating to the Transaction will be included in the further announcement to
be released by Insimbi, relating to the distribution of the Circular and the notice of General Meeting.
7. CONFIRMATION OF CASH RESOURCES
The Company is required to provide a bank guarantee to the TRP from a South African registered bank
unconditionally and irrevocably guaranteeing settlement of the full Repurchase Consideration. The
Company has obtained and delivered to the TRP a bank guarantee issued by ABSA Bank Limited for the
full Repurchase Consideration, being R43 050 400, in accordance with regulations 101(7)(b)(vi) and
111(4)(a) of the Regulations.
8. INDEPENDENT BOARD
8.1. The board of directors of Insimbi (the "Board") constituted an independent board in accordance with the
Companies Act and Regulations comprising of Robert Dickerson, Cleopatra Ntshingila and Nelson
Mwale, (the "Independent Board").
8.2. The Independent Board appointed Mazars Corporate Finance as the independent expert (which meets
the requirements set out in section 114(2) of the Companies Act) to advise it on the Repurchases and to
compile a report in terms of section 114 of the Companies Act to the Independent Board concerning the
Repurchases (the "Independent Expert").
8.3. The report of the Independent Expert and the Board and Independent Board's recommendation and
opinion will be included in the Circular.
9. SOLVENCY AND LIQUIDITY
9.1. A resolution has been passed by the Board in terms of section 46 of the Companies Act that having
applied the solvency and liquidity test as set out in section 4 of the Companies Act (the "solvency and
liquidity test"), it has satisfied itself that at the date of the Repurchase Resolutions being passed that it
reasonably appears, and it has thus reasonably concluded, that the Company will satisfy the solvency
and liquidity test, immediately after implementation of the Repurchases.
9.2. Furthermore, in accordance with the JSE Listings Requirements, the Board, having considered the effect
of the Repurchases, consider that there are reasonable grounds for believing that:
9.2.1. the Company and its subsidiaries ("the Group") will be able, in the ordinary course of business, to
repay their debts for a period of 12 months after the date of issue of the Circular;
9.2.2. the assets of the Company and the Group will be in excess of the liabilities of the Company and the
Group for a period of 12 months after the date of issue of the Circular. For this purpose, the assets
and liabilities have been recognised and measured in accordance with the accounting policies used
in the latest audited Group financial statements;
9.2.3. the share capital and reserves of the Company and the Group shall be adequate for ordinary business
purposes for a period of 12 months after the date of issue of the Circular; and
9.2.4. the working capital of the Company and the Group shall be adequate for ordinary business purposes
for a period of 12 months after the date of issue of the Circular.
10. FINANCIAL INFORMATION
10.1. As at 29 February 2024, being the date of the last published audited consolidated annual financial
statements of Insimbi for the financial year ended 29 February 2024, the aggregate value of the net
assets and immovable properties being sold in terms of the Disposals was R36 203 224.
10.2. The aggregate losses attributable to the AMR Booysens Business and the AMR WR Business, in
connection with which the net assets being sold in terms of the Disposals are used, for the financial year
ended 29 February 2024, was R3 468 130, based on the last published audited consolidated annual
financial statements of Insimbi for the financial year ended 29 February 2024, which were prepared in
terms of IFRS.
10.3. The pro forma financial effects of the Transaction, which includes the Disposals will be set out in the
Circular.
10.4. The pro forma financial effects of the Repurchases on the financial position of Insimbi, to assist
shareholders in assessing the impact of the Repurchases on, inter alia, the earnings per share, headline
earnings per share, diluted earnings per share, diluted headline earnings per share, net asset value per
share and tangible net asset value per share, will be included in the Circular.
10.5. The TRP provided a dispensation in respect of regulation 106(7)(c)(i) and (ii) of the Regulations by
allowing Insimbi to include extracts of its annual financial statements in the Circular, and make complete
sets of the annual financial statements available for inspection by Insimbi shareholders during normal
business hours at the registered offices of the Company and the sponsor and by referring shareholders
to the Insimbi website where the full sets of annual financial statements can be assessed, viewed and
downloaded, as opposed to incorporating complete sets of the annual financial statements in the Circular
itself.
11. EXCLUDED SHAREHOLDERS AND VOTING REQUIREMENTS
11.1. In terms of the JSE Listings Requirements the votes of any shareholder and its associates that are
participating in a share repurchase, shall be excluded from the special resolutions required to approve
the Repurchase in terms of the JSE Listings Requirements. Accordingly, Insimbi Shares held by the
Crimson Clover Shareholders (comprising 5,58% of the issued Shares) and the Casterly Rock
Shareholders (comprising 5,83% of the issued Shares) (the "Excluded Shareholders") will be excluded
from voting on the LR Special Resolutions.
11.2. Any Shares held as treasury shares ("Treasury Shares") will be excluded from voting on any resolution
at the General Meeting.
11.3. The Repurchase Resolutions, as will be set out in the notice of General Meeting, will be subject to the
approval of more than 75% of the votes cast by the Shareholders, present in person or represented by
proxy at the General Meeting and who are entitled to vote (excluding the Excluded Shareholders and the
Treasury Shares) in terms of the Companies Act.
12. IRREVOCABLE UNDERTAKINGS
If Insimbi procures any irrevocable letters of undertaking ("Irrevocable Undertakings") from Shareholders
to vote in favour of the Repurchase Resolutions required to implement the Transaction, the details of such
Irrevocable Undertakings will be disclosed in the Circular.
13. RESPONSIBILITY STATEMENTS
13.1. The Independent Board, collectively and individually, accept responsibility for the accuracy of the
information given in this announcement and certify that, to the best of their knowledge and belief, the
information contained in this announcement is true, that no facts have been omitted which would make
any statement in this announcement false or misleading, that all reasonable enquiries to ascertain such
facts have been made and that this Firm Intention Announcement contains all information required by
law, the Companies Act, the Regulations, and the JSE Listings Requirements.
13.2. The Board collectively and individually accept full responsibility for the accuracy of the information given
and certify that to the best of their knowledge and belief there are no facts that have been omitted which
would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts
have been made and that this Firm Intention Announcement contains all information required by law the
Companies Act, the Regulations and the JSE Listings Requirements.
14. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement released on SENS on 13 May 2024 relating to a
potential transaction, and are advised that, as the detailed terms of the Transaction have now been
disclosed, caution is no longer required to be exercised when dealing in the Company's securities.
Johannesburg
21 June 2024
Transaction Advisor and Sponsor
PSG Capital
Date: 21-06-2024 04:00:00
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