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Firm Intention Announcement by RVF to make a Mandatory Offer
Finbond Group Limited Riskowitz Value Fund LP
(Incorporated in the Republic (Formed in the State of Delaware
of South Africa) in the United States of America)
(Registration number (Registration number 4797702)
2001/015761/06) (“RVF”)
(JSE share code: FGL)
(ISIN: ZAE000138095)
(“Finbond” or “the Company”)
FIRM INTENTION ANNOUNCEMENT BY RVF TO MAKE A MANDATORY OFFER
1. INTRODUCTION
Shareholders of Finbond (Finbond Shareholders) are referred
to the announcement released by Finbond on the stock exchange
news service of the JSE Limited (SENS) on 7 April 2017
stating that holders of ordinary shares in the Company are
advised that RVF and Conduit Capital Limited (Conduit
Capital) have acquired a beneficial interest in ordinary
shares of the Company, such that their beneficial interests
of the securities of the Company amounts to 36.8% of the
total number of shares in issue.
Finbond Shareholders are also referred to the announcement
released by RVF and Conduit Capital Limited on SENS on the
same day, stating that pursuant to an acquisition of
beneficial interests in ordinary shares in Finbond
(Acquisition), RVF, Conduit Capital, Protea Asset Management
LLC and Ithuba Investments LP (Concert Parties) are able to
exercise more than 35% (thirty five per cent) of the voting
rights attached to the issued ordinary shares in Finbond
(Finbond Shares)
The Acquisition gives rise to an obligation to make a
mandatory offer in terms of section 123 of the Companies Act
read with Chapter 5 of the Companies Regulations, 2011
(Companies Regulations).
The purpose of this announcement is to advise Finbond
Shareholders of the terms and conditions of the mandatory
offer referred to above, in compliance with Regulation 101
of Chapter 5 of the Companies Regulations.
2. THE OFFER
Terms of the Offer
RVF will make a mandatory offer (Offer) to acquire all the
issued Finbond Shares other than those beneficially owned
by:
- RVF and the other Concert Parties;
- Finbond Chief Executive Officer, Dr Willie van Aardt,
through Kings Reign Investments Proprietary Limited;
- Net1 Finance Holdings Proprietary Limited and its
affiliates;
- Buckley Capital Management, LLC; and
- the subsidiaries of Finbond,
(collectively, the Excluded Finbond Shareholders).
The registered holders of Finbond Shares, other than those
beneficially owned by the Excluded Finbond Shareholders,
are referred to hereinafter as the Offeree Shareholders
and the Finbond Shares held by them are referred to as the
Offer Shares.
An Offeree Shareholder shall be entitled to accept the
Offer in respect of all or any of its Offer Shares.
RVF as the offeror under the Offer is acting in concert
with the other Concert Parties.
Offer Consideration
RVF shall offer to acquire all the Offer Shares from the
Offeree Shareholders for a cash offer consideration of
R2.91 (two Rand and ninety one cents) per Offer Share
(Offer Consideration), being the highest price paid within
the 6 (six) month period before the date of this
announcement.
The Offer Consideration represents a discount of:
9,06% (nine comma zero six per cent) discount to the
closing price of a Finbond Share on the JSE on Wednesday,
24 May 2017 of R3.20;
9,91% (nine comma nine one per cent) discount to the 30
day VWAP of Finbond shares on the JSE of R3.23 up to
Wednesday, 24 May 2017;
19,39% (nineteen comma three nine per cent) to 30,88%
(thirty comma eight eight per cent) discount to the fair
value range determined by BDO.
The Offer Period
The Offer will open for acceptance one day after the date
of posting of the combined offer circular to be distributed
to the Offeree Shareholders in respect of the Offer
(Combined Offer Circular) and will, in accordance with
Regulations 102(4) and 105(5) of the Companies
Regulations, be open for a minimum period of 30 (thirty)
business days (Offer Period).
Cash Confirmation
In accordance with Regulation 111(4) and Regulation 111(5)
of the Companies Regulations, Bowman Gilfillan Inc. has
provided Finbond and the Takeover Regulation Panel (TRP)
with an irrevocable cash confirmation, which confirms on
and subject to the terms thereof that RVF has sufficient
cash resources held in escrow by Bowmans Gilfillan Inc. to
satisfy payment of the Offer Consideration for the Offer
Shares in full.
No set-off of the Offer Consideration
The payment of the Offer Consideration to which any Offeree
Shareholder is entitled under the Offer will be made in
full in accordance with the terms of the Offer, without
regard to any lien, right of set-off, counterclaim or other
analogous right to which RVF may otherwise be, or claim to
be, entitled against the Offeree Shareholder.
Offer not made where unlawful
The Offer shall not constitute an offer to purchase or the
solicitation of an offer to sell any Finbond Shares in any
jurisdiction in which such offer, solicitation or sale
would be unlawful under the laws of such jurisdiction.
3. RATIONALE FOR THE OFFER
As an unintended consequence of the Acquisition, RVF and the
other concert parties’ shareholding in Finbond has increased
to above 35% (thirty five per cent), obliging RVF to make a
mandatory offer to Finbond Shareholders for their Finbond
shares in terms of section 123 of the Companies Act read
with chapter 5 of the Companies Regulations.
4. SUSPENSIVE CONDITION TO THE OFFER
The Offer and the implementation thereof will be subject to
the fulfilment of the suspensive condition (Offer Condition)
that, by no later than 30 September 2017 (or such later date
as is agreed between RVF and Finbond), and to the extent
applicable, all and any requisite regulatory approvals
required for implementation of the Offer have been obtained
(either unconditionally or subject to conditions acceptable
to RVF, acting reasonably), including all and any requisite
approvals to the extent applicable:
- of the TRP, including among other things, the issue by
the TRP of a compliance certificate or exemption in terms
of the Companies Act in relation to the Offer;
- in terms of the Exchange Control Regulations, 1961 made
in terms of the Currency and Exchanges Act No. 9 of
1933, and all directives and rulings issued thereunder;
and
- of the JSE.
The Offer Condition may be waived (in whole or in part) by
RVF, in writing, to the extent the waiver is permissible in
law.
Pursuant to Regulation 105(5) of the Companies Regulations,
an announcement will be published on SENS within 1 (one)
business day after the Offer Condition has been fulfilled
or, if applicable, waived.
5. INTEREST OF RVF AND THE CONCERT PARTIES IN FINBOND
RVF and the other Concert Parties currently directly and/or
indirectly beneficially own a total of 280 541 431 Finbond
Shares, representing 36.81% of all the Finbond Shares.
6. IRREVOCABLE UNDERTAKINGS NOT TO ACCEPT THE OFFER BY
SHAREHOLDERS OWNING 53.92%
RVF has obtained irrevocable undertakings from, or on behalf
of, the persons listed below, beneficially owning, in total,
53,92% (fifty three comma nine two per cent) of the Finbond
Shares in terms of which (amongst other things) they have
irrevocably undertaken, with respect to the Finbond Shares
beneficially owned by them, and subject to the terms of such
undertakings, to be excluded from the Offer and accordingly
to be Excluded Finbond Shareholders.
There will be no change to the nature of Finbond’s business
or its strategy, and no change to its board of directors or
executive management, pursuant to the Offer. Finbond Shares
will remain listed on the JSE following the completion of
the Offer, subject to Finbond continuing to meet the public
shareholder spread and related requirements of the JSE
Listings Requirements.
Name No. of Finbond Percentage
Shares of all
Beneficially Finbond
Owned Shares
Kings Reign Investments 182 595 351 23.96%
Proprietary Limited
Net1 Finance Holdings 197 522 435 25.91%
Proprietary Limited
Finbond Property Finance 15 451 014 2.03%
Proprietary Limited
Buckley Capital 15 372 116 2.02%
Management, LLC
Total 410 988 916 53.92%
7. FINBOND GROUP LIMITED SHARE APPRECIATION RIGHTS SCHEME
(Finbond Scheme)
RVF shall comply with any obligation it may have under the
Companies Act and the Companies Regulations to make a
comparable offer to the holders of the Share Appreciation
Awards (SAA) under the Finbond Scheme (Comparable Offer).
As at the date of this announcement, there are 43 500 000
SAAs in issue, all of which, in terms of the rules of the
Finbond Scheme, have become unconditional, or will as a
result of RVF and the other Concert Parties beneficially
owning in excess of 35% (thirty five per cent) of the issued
Finbond Shares become unconditional.
The cash confirmation referred to in paragraph 2.4 will
accordingly include an amount of R23 874 342 (twenty three
million eight hundred and seventy four Rand three hundred
and forty two Rand) in relation to RVF’s obligation under
the Comparable Offer.
8. RECOMMENDATION AND INDEPENDENT EXPERT OPINION
The Independent Board of Finbond (Independent Board) has
been formed for the purposes of considering the fairness of
each of the Offer and the Comparable Offer in accordance
with the Companies Regulations.
The Independent Board has appointed BDO Corporate Finance,
an independent expert to provide the Independent Board with
independent, external advice in relation to the Offer and
the Comparable Offer and to make appropriate recommendations
to the Independent Board.
BDO Corporate Finance has considered the terms and conditions
of the Offer and, subject to the conditions contained in its
opinion, has expressed the view that the Offer is not fair
to Finbond Shareholders.
BDO Corporate Finance has determined, based on its valuation
procedures, a fair value range of R3.61 (three rand sixty
one cents) to R4.21 (four rand twenty one cents) per Finbond
Share.
9. VIEWS OF THE FINBOND BOARD ON THE OFFER
Finbond’s board of directors (Finbond Board), having
considered the terms of the Offer and the opinion of the
Independent Board and independent advisor, is of the view
that the Offer is not fair and recommends that Finbond
Shareholders reject the Offer.
This view is based on inter alia:
- BDO Corporate Finance having determined a fair value
range of R3.61 (three Rand sixty one cents) to R 4.21
(four Rand twenty one cents) per Finbond Share; and
- BDO Corporate Finance having considered the terms and
conditions of the Offer and subject to the conditions
contained in its opinion having determined that the
Offer is not fair to Finbond Shareholders.
- the Offer being priced at R 2.91 (two Rand and ninety
one cents), being a:
o 9.06% (nine comma zero six per cent) discount to
the closing price of a Finbond Share on the JSE on
Wednesday, 24 May 2017 of R3.20;
o 9,91% (nine comma nine one per cent) discount to
the 30 day VWAP of Finbond shares on the JSE of
R3.23 up to Wednesday, 24 May 2017;
o 19,39% (nineteen comma three nine per cent) to
30,88% (thirty comma eight eight per cent)
discount to the fair value range determined by BDO.
The members of the Finbond Board, and companies owned and
controlled by them, will not be accepting the Offer in
respect of the Finbond Shares beneficially owned by them.
10. POSTING OF THE COMBINED OFFER CIRCULAR
Full details of the Offer as well as the independent expert’s
opinion and the views and recommendation of the Finbond Board
will be included in the Combined Offer Circular which will
contain, inter alia, the terms of the Offer, pertinent dates
relating to the Offer and a form of acceptance, surrender
and transfer for use by certificated Offeree Shareholders.
The Combined Offer Circular is expected to be distributed to
Finbond Shareholders by no later than 26 June 2017.
11. RESPONSIBILITY STATEMENTS
The board of RVF accepts responsibility for the information
contained in this announcement insofar as it relates to RVF
and the Concert Parties. To the best of its knowledge and
belief, such information is true and nothing has been omitted
which is likely to affect the importance of such information.
The Finbond Independent Board accepts responsibility for the
information contained in this announcement insofar as it
relates to Finbond. To the best of its knowledge and belief,
such information is true and nothing has been omitted which
is likely to affect the importance of such information.
Johannesburg
26 May 2017
Sponsor to Finbond
Grindrod Bank Limited
Date: 26/05/2017 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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