- July 8, 2008
- Posted by: admin
- Category: SENS Announcements
Shareholders are referred to the announcements released by HCI and Johnnic on the Securities Exchange News Service (“SENS”) of the JSE Limited (“the JSE”) on Friday, 27 June 2008 and published in the press on Monday, 30 June 2008.
Investec Bank Limited is authorised to announce that pursuant to the HCI group`s strategic objective to increase its shareholding in Johnnic, HCI has, through its wholly-owned subsidiary, Mercanto Investments (Proprietary) Limited (the “offeror”), expressed a firm intention to the board of directors of Johnnic to make an offer to acquire all the shares in the issued share capital of Johnnic, other than the shares already owned by the HCI group (the “offer shares”), in accordance with and as contemplated by the Securities Regulation Code on Take-overs and Mergers and the Rules of the Securities Regulation Panel (“SRP”) (the “offer”).
The offer will be subject to the fulfilment or written waiver by the offeror (to the extent legally permissible) of the conditions precedent, as set out in paragraph 5 below.
2. Rationale and section 440K
The HCI group has a current shareholding of 67% in Johnnic and has publicly stated its intention to increase its interest in Johnnic and its exposure to gaming activities. The offer will assist the HCI group in achieving this objective.
Should the offer be accepted by Johnnic shareholders holding not less than nine-tenths of the offer shares, it is the intention of the offeror to exercise its entitlement to compulsorily acquire the remaining Johnnic shares in issue in terms of section 440K of the Companies Act No. 61 of 1973, as amended (“Companies Act”).
In this event Johnnic will become a wholly-owned subsidiary of the HCI group and the listing of the Johnnic shares on the JSE will be terminated.
3. Offer consideration
Subject to the fulfilment of the conditions precedent, as set out in paragraph 5 below, the offeror hereby offers to acquire all the offer shares for an offer consideration of R16.75 per Johnnic share (the “offer consideration”), in respect of which it receives valid acceptances prior to the closing date of the offer, which will be announced on SENS and published in the press in due course. The cash consideration and combined share and partial cash consideration represents a premium of 72.7% and
69.6% to the closing Johnnic share price and 42.5% and 40.3% respectively to the 30 day volume weighted average price of a Johnnic share on the JSE at the close of business on Thursday, 26 June 2008, being the day immediately prior to the release of the cautionary announcement by Johnnic regarding the offer.
Johnnic shareholders will be entitled to elect one of the following settlement alternatives of the offer consideration per Johnnic share, namely:
– the cash consideration, being an amount equal to R16.75 per Johnnic share, settled in cash (“cash consideration”); or
– the combined share and partial cash consideration, settled as follows:
– 0.02085 HCI ordinary shares per Johnnic share; plus
– R15.11 in cash per Johnnic share,
(“combined share and partial cash consideration”).
4. Irrevocable undertakings
Johnnic shareholders collectively representing approximately 86.8% of the offer shares have irrevocably undertaken to accept the offer in respect of all of the Johnnic shares held by them and to elect to receive the combined share and partial cash consideration in respect thereof.
5. Conditions precedent
The offer will be subject to the fulfilment by the offeror of the following conditions precedent:
To the extent required, the approval of the relevant regulatory authorities including but not limited to the JSE, the SRP and the Exchange Control Division of the South African Reserve Bank.
6. Gaming Authorities
Application for the approval of the offer by the relevant Gaming Authorities will be made in due course. Accordingly, the implementation of the offer is not conditional upon the aforesaid approvals being obtained from the relevant Gaming Authorities.
7. Cash confirmation
The SRP has been provided with an appropriate confirmation which complies with its requirements, that the offeror has sufficient cash resources and/or facilities available to meet its commitments in terms of the offer.
8. Pro forma financial effects on a Johnnic shareholder
The preparation of the unaudited pro forma financial effects is the responsibility of the directors of Johnnic. The unaudited pro forma financial effects have been prepared for illustrative purposes only to provide information on how the offer may impact on a Johnnic shareholder and due to the nature thereof may not give a fair reflection of a Johnnic shareholder`s financial position.
Before After the Change
(cents) (cents) (%)
Cash consideration 970 1,675 72.7%
Combined share and 970 1,645 69.6%
partial cash 3
The financial effects are indicative only and have been based on the assumptions set out below:
1 The “Before the offer” column reflects the Johnnic share price at the close of the last trading day prior to the day on which Johnnic released the cautionary announcement relating to the offer, being Thursday, 26 June 2008.
2 The “After the offer” column has been adjusted for the effects of the offer consideration on a Johnnic shareholder. No account has been taken of adjustments for interim Johnnic distributions, taxes, commissions or any other charges in calculating the above financial effects.
3 The “After the offer” calculation for the combined share and partial cash consideration has been based on the HCI share price on the JSE at the close of business on the day on which Johnnic released the cautionary announcement relating to the offer, being Thursday, 26 June 2008.
9. Salient dates
The salient dates of the offer are set out in the table below, details of which will be confirmed by further announcements on SENS and in the press in due course:
Circular posted to Johnnic shareholders Monday, 21 July
Opening date of the offer at 09:00 on Monday, 21 July
First offer consideration settlement
date in respect of firm
acceptances of the offer before 12:00 Monday, 21 July
Offer consideration settlement dates in Every seventh
respect of firm business day after
acceptances of the offer received Monday, 21 July until
before 17:00 on the seven
business day preceding the relevant business days after
settlement date the closing
Last day to trade in order for Johnnic Five business days
shareholders to participate prior to the
in the offer closing date
Johnnic shares trade ex the right to Four business days
participate in the offer prior to the
Record date on which Johnnic
shareholders must be recorded
in the register in order to participate The closing date
in the offer
Closing date of the offer at 12:00 The closing date as
announced on SENS and
published in the
The above dates and times are subject to amendment at the discretion of HCI and/or Johnnic. Any such amendment will be released on SENS and published in the South African press.
10. Independent advisor
Johnnic has appointed Deloitte & Touche Corporate Finance Division as the independent advisor to the Johnnic shareholders.
11. Odd lot offer
Shareholders of Johnnic are referred to the Johnnic announcement released on SENS on Friday, 27 June 2008 and published in the press on Monday, 30 June 2008 wherein Johnnic shareholders were informed that the Johnnic board of directors had, at that stage, decided not to implement the odd lot offer (the “odd lot offer”) to Johnnic shareholders holding less than 100 Johnnic shares (“odd lot holders”).
In this regard, in the event that the offeror does not become entitled to invoke section 440K of the Companies Act, as referred to in paragraph 2 above, then odd lot holders will be notified on SENS and in the press of the details of the implementation of the odd lot offer.
12. Further documentation
A circular containing the detailed terms of the offer will be posted to Johnnic shareholders in due course.
13. Withdrawal of cautionary announcement
Johnnic shareholders are advised that the cautionary announcement released on SENS on 27 June 2008 is hereby withdrawn.