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ECSPONENT LIMITED - Update on various transactions

Release Date: 26/09/2018 17:29
Wrap Text
Update on various transactions

ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
Debt Issuer Code: ECSP
(“Ecsponent”, “Company” or “Group”)


UPDATE ON VARIOUS TRANSACTIONS


1.       INTRODUCTION

1.1.       Shareholders are referred to the announcement released on the Stock Exchange News Services
           (“SENS”) dated 29 June 2018 (the “First Announcement”), wherein shareholders were advised
           that, subject to the fulfilment of various conditions precedent:

1.1.1.     Ecsponent Treasury Services Proprietary Limited (“Ecsponent Treasury Services”), a wholly
           owned subsidiary of Ecsponent, has entered into an acquisition agreement to acquire 100% of the
           issued ordinary shares of Pink Orchid Limited (“Pink Orchid”), an investment holding company yet
           to be incorporated, from Purple Orchid Limited (“Purple Orchid”), a wholly owned subsidiary of
           Ecsponent Capital (RF) Limited (“Capital”), a related party, for a total consideration of R280 million
           (“the Pink Orchid Acquisition”);

1.1.2.     Ecsponent has entered into a subscription agreement with Invest Solar Africa Limited (“Invest
           Solar”), a related party, in terms of which the Company has agreed to subscribe for a maximum of
           40 million shares in Invest Solar at a subscription price of BWP1.00 (one Botswana Pula) per share,
           pursuant to a private placement of 70 million Invest Solar shares by Invest Solar (“Private
           Placement”) with various investors (“Invest Solar Acquisition”), in advance of the initial public
           offering (“IPO”) referred to below;

1.1.3.     Ecsponent has also agreed to fully underwrite the Invest Solar IPO in order to raise BWP30 million,
           to be undertaken concurrently with the listing of the ordinary shares of Invest Solar on the Venture
           Capital Board of the Botswana Stock Exchange (“Invest Solar Underwriting”);

1.1.4.     Ecsponent has entered into an investment management agreement with MHMK Capital Botswana
           Limited (“MHMK”), a related party, which is controlled by George Manyere, a material shareholder
           and a non-executive director of the Company, in terms of which MHMK Capital will manage the
           portfolio of assets and investments owned by Ecsponent Limited (incorporated in Botswana), a
           wholly owned subsidiary of the Company (“MHMK Management Agreement”),

           (collectively “the Transactions”).

1.2.       Shareholders are advised that the Board has decided to implement the Transactions set out above
           in stages, in order to ensure that Ecsponent timeously benefits from each of the Transactions.


2.       TIMING OF IMPLEMENTATION OF THE TRANSACTIONS

2.1.        Ecsponent will proceed with the Pink Orchid Acquisition in the first instance and expects to distribute
            a circular to shareholders in due course on or about 15 October 2018.

2.2.        Shareholders will be advised in due course of the progress of the implementation of the Invest Solar
            Acquisition, the Invest Solar Underwriting and the MHMK Management Agreement, it being noted
            that Ecsponent fully intends to proceed with these transactions, and that the parties have agreed
            the date of fulfilment of the conditions precedent of the transactions to be as follows:

       2.2.1.   in relation to the Invest Solar Acquisition, as soon as reasonably practicable following Ecsponent
                receiving approval from its shareholders for the Invest Solar Acquisition;
       2.2.2.   in relation to the Invest Solar Underwriting, 30 November 2018, or such later date as agreed
                between the parties; and
       2.2.3.   in relation to the MHMK Management Agreement, 31 October 2018, or such later date as agreed
                between the parties.


3.       AMENDMENTS TO THE TERMS OF THE PINK ORCHID ACQUISITION


3.1.        Shareholders are further advised that the terms of the Pink Orchid Acquisition have been amended
            such that:

3.1.1.          at the time of acquisition by Ecsponent Treasury Services, Pink Orchid will only contain the assets
                and liabilities noted in paragraph 3.2 below (“Phase 1 Assets and Liabilities”), and as such the
                parties have agreed to reduce the purchase consideration to R200 million (“the Phase 1 Pink
                Orchid Acquisition”);

3.1.2.          Pink Orchid will endeavour, subsequent to the Pink Orchid Acquisition by Ecsponent Treasury
                Services, to acquire the assets set out in paragraph 3.3 below (“Phase 2 Assets and Liabilities”)
                for a further purchase consideration of R80 million; and

3.1.3.          the date for fulfilment of all conditions precedent to the Phase 1 Pink Orchid Acquisition has been
                extended to 31 October 2018, or such later date as agreed amongst the parties.

3.2.        The Phase 1 Assets and Liabilities will include:

3.2.1.          16.23% of the issued ordinary share capital of MyBucks S.À. (“MyBucks”), a financial technology
                company listed on the Frankfurt Stock Exchange, which provides financial products and services
                to customers locally and internationally;

3.2.2.          34.89% of the issued ordinary share capital of GetBucks Microfinance Bank Limited
                (“GetBucks”), a technology driven, deposit-taking and money-lending microfinance institution
                incorporated in Zimbabwe and listed on the Zimbabwe Stock Exchange, offering a range of
                products from micro-finance loans, mortgage loans, SME banking products and savings and
                money market accounts;

3.2.3.          long term financial receivables equal to R132 million, and short-term receivables equal to
                R33 million; and

3.2.4.          long term financial payables equal to R87 million, and short-term payables equal to R635 million.


3.3.        The Phase 2 Assets and Liabilities are expected to include:

            3.3.1.     100% of the issued ordinary share capital of Invest Solar (prior to the effects of the Invest
                       Solar Acquisition, or the Invest Solar Underwriting), a renewable energy company focused
                       on developing and financing income generating renewable energy projects in selected
                       markets within Africa. Following the Invest Solar Acquisition and the Invest Solar
                       Underwriting, the Ecsponent group’s interest in Invest Solar will, through Pink Orchid
                       and/or another wholly owned subsidiary of Ecsponent:

                     3.3.1.1.     initially dilute to 75% of the Invest Solar issued shares pursuant to the Private
                                  Placement, but before the Invest Solar IPO; and

                     3.3.1.2.     thereafter increase up to a maximum 80% of the Invest Solar issued shares
                                  after the Invest Solar IPO as a result of the Invest Solar Underwriting. In the
                                  event that the Invest Solar IPO is fully subscribed for, and the Invest Solar
                                  Underwriting is not implemented, the Group’s shareholding will dilute to 60%
                                  of the Invest Solar issued shares;

3.3.2.        40% of the issued ordinary share capital of MHMK, a privately held Africa-focused private equity
              investment and advisory firm that manages and provides advice on investments across multiple
              sectors; and

3.3.3.        short terms accounts payable to the value of R62.59 million.


3.4.        It is no longer the intention for Pink Orchid to acquire a 51% shareholding in Energy Systems.

3.5.        Definitive agreements in respect of the Phase 2 Pink Orchid Acquisition have not yet been
            concluded, and therefore the Company will provide an update to shareholders in relation to the
            Phase 2 Pink Orchid Acquisition in due course.

3.6.        The Phase 1 Pink Orchid Acquisition remains a related party transaction subject to shareholder
            approval. The Company is however currently in discussion with the JSE as to the further
            categorisation of the Phase 1 Pink Orchid Acquisition and shareholders will be advised of this in due
            course.



         Pretoria
         26 September 2018

         Sponsor
         Questco Corporate Advisory (Pty) Ltd
         and
         Questco Proprietary Limited

Date: 26/09/2018 05:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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